let me call this meeting of select revenue measures subcommittee to order part of the american dream has always been the hope that our kids will do better than us and a college education is one way to ensure that as the parent of four kids i can tell you that that matters and how you prepare for college oftentimes requires a need for some help i thought it had i had it tough when i went to college first generation college student from my family i worked in a bakery for all four years to pay tuition and fees drove a sixty three and palla back and forth to a community college and in the next generation as a parent i found myself with three of my four kids in college at the same time while i felt blessed that they had been admitted to excellent schools springfield college trying to teach college and boston college that combined private school tuition was simply overwhelming even for a member of congress during the peak to ition year of ninety thousand dollars i actually qualified for financial aid with three kids in private universities so i did what most american families do took out a second mortgage on my home i took a second job teaching at the university of massachusetts and i borrowed from my retirement account part of the bargain was that each of my kids would commit to pay for one year on their own all of us will be paying off this debt for years to come and in my instance one example i will finish the last to wish in payment when i'm sixty eight years old but i cannot imagine any other decision for my children it was an investment in our future and most importantly their future and imagine my relief when my last child with a spectacular jump shot received a four year scholarship to play basketball at the division one level that was sally university i thought at that juncture there really is justice franklin roosevelt noted that school is the last expenditure upon which america should be willing to a condom ice i certainly understand that sentiment congress has responded over the years by creating a variety of tax benefits for families with higher education costs we may have over responded though with conflicting and overlapping incentives g a o will tell us today that a quarter of taxpayers with education expenses either don't claim the right benefits or missed those tax incentives altogether and half of those tax returns were done by professional preparers we will also hear that these incentives may help keep down the cost of those already attending college but may not help those for whom college is out of reach have assembled a diverse set of witnesses who will explain these issues and opera suggestions about how to improve these incentives and i must say as i conclude this opening statement to those who are seeking the presidency or those who are seeking federal office this is the sort of issue that the american people are talking about every day this is precisely what congressional focus ought to be when you talk about timing  right now i would like to recognize my friend and the ranking member on the gentleman from pennsylvania mr english for his opening statement thank you mr chairman and i'm going to keep this grave this is an area of great interest to me and has been since i came to the committee as the chairman well knows access to higher education for every american who strives to achieve a college education has long been a priority not only for me but for a whole range of leaders in this institution i look forward to an examination of the benefits and shortcomings of the current maze of tax incentives for higher education as a longtime advocate of breaking down the barriers to college savings i've engaged with my colleagues on the committee to advance many of the programs that we're going to hear about from the witnesses today including the two issues deduction the section five twenty nine plans like the pennsylvania to wish an account program and expanding the deductibility of the slid the student loan interest deduction and my view education is an investment in the future congress has a fundamental responsibility to encourage the pursuit of higher education and to allow individuals in a free society to maximize their opportunities in a good faith effort to achieve these goals congress has created myriad tax provisions to help save for college and to make college more affordable some of these are coordinated with aid programs some of them frankly are not with respect to the tax credits that testimony that we will receive today will reveal something that comes as little surprise to any of us that the credits are complex and as a result many working families who should benefit from them failed to do so today's hearing will give us a chance to consider whether simplification of those policies those credits making them partially refundable as proposed by my colleagues mr emanuel and mr camp would increase access to affordable higher education it is my sense that it would simplification which i know is dear to your heart mr chairman as in other areas of the tax code would likely be a good started in the area of education tax policy in my view however we should also   sure that we maintain the broader goal of simplification and realignment and that these do not disadvantaged students and working families in the short run to that and congress should ensure that the expired tuition adoption and other education incentives that are anticipated to expire in two thousand and twenty ten should be extended or made permanent until any consolidated program is put in place i've introduced legislation in congress to do that if i might post your chairman if it was if it is appropriate i'd like to yield to my colleague mr kemp who is an original sponsor the number two sponsor of this legislation that he might complete by state well thank you i want to thank the general feeling to me i thank you chairman neal for holding this hearing education tax incentives that frankly this is an area the tax code that is long overdue for reform  subcommittee is taking a closer look at this issue and hopefully the committee will use this hearing as a platform in which we can make some real improvements to the current confusing maze of credits and deductions i'd also like to like to recognize my colleague on the committee congressm congressman rahm emanuel together we introduced the universal higher education and lifetime learning act our bill really goes to the heart of reform and simplification i know that several of the witnesses here today will discuss our bill in greater detail but the key point of our legislation is to strengthen and simplify the three existing tax breaks students currently use to help pay for higher education the hope scholarship the lifetime learning credit and the deduction for tuition  these three existing tax breaks i mentioned all have different rules for eligibility and differing maximum credit amounts americans should have to be experts to take advantage of these incentives and it's no wonder that the government accountability office found that many americans don't use these incentives and its two thousand and six report g a o found that seventy seven percent of the two thousand to tax returns were eligible to claim one or more of these three tax preferences however jail found that twenty seven percent of those returns about three hundred seventy four thousand american and their families failed to use any of them are built combines and simplifies these credits into one larger three thousand dollar tax credit by eliminating the complexity duplicate the cation more students will get the financial help congress intended it's a commonsense proposal that will help more young adults get the college degree and technical skills they will need to excel in life again thank you for giving me the opportunity to be here today in support of this bill and i look forward to working with you mr chairman and ranking man member english and mr emanuel and dancing this bill in the committee thank you no you'll back thank you mr kemp let me welcome our witnesses this morning on the first panel we will hear from mike rowe stick the director of tax issues at the g a o who will be accompanied by george scott director of education issues at the g a o they have studied not only tax incentives but also how these interact with federal aid programs we also welcome for the first time before the committee miscarry gilbreath sole deputy assistant secretary for tax policy united states treasury department and our second panel we will hear from dr deborah callously the president of nichols college in dudley massachusetts nichols is a private four year college and a member of the national association of independent colleges and universities we will also i'm dr wayne watson the chancellor of the city colleges of chicago in chicago illinois dr watson will share his perspective as chancellor and the views of the american association of community colleges next we will hear from dr susan dynasty a professor at harvard universit kennedy school of government in cambridge massachusetts dr darcy has written extensively on the efficiency of tax incentives and finally we welcome director dan ever sold of the georgia office of treasury and fiscal affairs in atlanta georgia this rubber soul will share his thoughts as the director of the office administering the georgia five twenty nine college savings plan he also serves as the chair of the college savings plan network an affiliate of the national association of state treasurers which represents the interest of state run five twenty nine plans without objection any other members wishing to insert statements as part of the record may do so all written statements written by the witnesses will be inserted into the record as well and with that let me recognize mr terminate mr english and members of the subcommittee thank you for the opportunity to testify today on the federal government's efforts to financially support attendance at post secondary education institutions american higher education has long been crucial to the development of our nation's cultural social and economic capital this hearing is an opportunity to consider whether any changes should be made in the government's overall strategy for providing such assistance or to individual assistance programs and tax provisions this is important because we face large and growing future deficits and we need to consider how the government allocated to resources in addition to his noted that a fundamental reexamination of government programs policies and priorities is necessary to assure them that twenty first century needs my statement focuses on four topics differences between tax preferences and title for assistance apparent ineffective use of tax preferences possibly due to their complexity some issues that may arise if simplification is pursued and a lack of research about post secondary education assistance comes post secondary student financial assistance provided through programs authorized by title four and the tax code differ in three key ways first title for granting a loan programs traditionally provide aid to students while they're in college tax preferences help while in college but also help families save before and pay after college next all student aid programs and tax preferences serves students and families across a wide range of income groups some title for programs particularly the pell grant program provide much of their assistance to students and families with lower average incomes pell grants to dependent students ninety two percent of the dollars for those went to families with incomes of less than forty thousand dollars in school year two thousand and three two thousand and four in contrast in two thousand and five sixty percent of the benefit of the tuitions deduction went to families with incomes exceeding eighty thousand dollars students and families also have more responsibility for appropriately using tax preferences compared with title for aid for title for aid students and families fill out the free application for federal student aid form and submit it to the department of education education calculates the students and families expected family contribution the students educational institutions then determine a eligibility the amount in packaging of awards in contrast users of tax benefits must identify all the applicable preferences understand the rules understand how these preferences interact with one another and with federal student aid keeper sufficient to support their tax filing and correct correctly claim any credit or deduction on their returns these tax preferences can be difficult for families to understand perhaps due to their complexity hundreds of thousands of taxpayers fail to claim tax benefits that they are entitled to or do not claim tax benefits that would be most advantageous to them for example for tax year two thousand and five we estimate that about four hundred ten thousand taxpayers for whom we could make a nest and sailed to claim an education credit or the tuitions deduction to which they were entitled to about one hundred ninety thousand additional tax payers use one provision when another would have been better for them about half of those taxpayers making self after more choices used paid preparers the complexity of post secondary education programs might be simplified by consolidating them perhaps as a single credit or otherwise such simplification might well reduce confusion among taxpayers and considering simplification some key issues would need to be understood such as whether the benefits would be provided before costs are incurred versus afterward or the budgetary consequences of differing simplification options finally we found that congress has received little evidence concerning the effectiveness of assistance provided under either title for or through the tax preferences in promoting for example post secondary attendance or choice amongst educational institutions we found no research on any aspect of effectiveness for several major title for programs and tax preferences for example no research examine the effects of education tax preferences on students persisten in their studies or the type of institution they chose to attend gets into research on post secondary education programs may be due in part to date in methodological challenges proving difficult to overcome the relative newness of most  has also challenges because relevant data are just now becoming available that concludes my statement mr scott and i will be happy to answer questions can proceed i don't have a stable at this time mr chairman here to answer questions ok missile you mr chairman ranking member english and distinguished members of the subcommittee thank you for the opportunity to appear before the subcommittee today to discuss tax incentives for higher education education is important to the administration and we recognize there may be room for improvement in the tax benefits currently provided through the internal revenue code to encourage higher education we believe as you do that is important periodically to assess the provisions in our tax code to determine whether modifications are warranted and we appreciate your leadership in starting this important subject from a broad perspective it is also important to keep in mind that these tax incentives are just one aspect of an array of governmental and other programs that help individuals and families meet the challenge of financing higher education and that figure into their decisions regarding higher education well i'm not an expert on the non tax offerings we believe the non tax programs must be taken into account when assessing the efficacy of the higher education tax incentives my testimony today highlights the myriad tax incentives and acted over several decades to help families by for college and finance higher education from available data we know that certain of these incentives are being utilized by a significant number of america's students and families however are available data does not tell us whether the incentives are being used optionally by taxpayers to maximize their benefits further it does not tell us whether the incentives are effective in influencing a higher learning have made considerable progress during the past seven years improve savings related incentive notably the two thousand and one tax legislation expanded coverdell education savings account and section five twenty nine plans to make distribution from plan accounts for supposed secondary education expenses tax free and to allow private educational institutions to create section five twenty nine plans the pension protection act of two thousand and six made the changes to section five twenty nine permanent which help eliminate uncertainty with respect to this education administration's budget for fiscal year two thousand and nine include the proposal to extend the savers credit to contributions to section five twenty nine plans in order to encourage an assist low income families and saving for higher education those students and families who are facing immediate education related costs without the benefit of savings however confront a patchwork of education related tax incentives which are complex often overlapping and can have varying applications to individuals in different circumstances for example tax credits and deductions to help families pay for higher education include the home credit and the lifetime learning credit parents supporting college students may claim a personal exemption deduction or and income tax credit if applicable for full time student page nineteen through twenty three more children over the age of eighteen otherwise do not qualify as dependents to name a few others a student may exclude from gross income the amount of a qualified scholarship or loan that is forgiven at the student works for required period of time a certain professions or locations there is also an unlimited gift tax exclusion for two isn't paid directly to the school on behalf of a student given the range of available education tax benefit is understandable that many find them difficult to parse the incentives vary in terms of who may receive benefits which expenses may be covered and how large an exclusion deduction or credit may be allow for example part time student may be eligible for the education credits and savings bond interest exclusion only full time student may qualify of the dependent deduction provisions like the hope credit are calculated per student while others like the lifetime learning credit the student loan interest deduction are calculated pro tax their different expense of qualify under different provisions and phase out the different thresholds applied a different because of this complexity may be difficult for a student or parent to determine the value of the tax incentives in addition the value of incentives based on adjusted gross income is necessarily retrospective unless the student or parents can predict their income with precision the more difficult it is to predict the value of the tax benefit accurately the less the fact of these benefits are as incentives for the pursuit of higher education my written testimony include the number of examples that illustrate the complex nature of the existing tax provisions and the differing outcomes that can occur for students and families  different situations and conclusion while there is clearly a need to address the complexity concerns arising from the current welter of tax incentives is important to remain cognizant that revisions to the tax regime may lead to unintended consequences recognizing budgetary constraints legislative reform of the existing tax incentives will almost invariably result in winners and losers further considering that the population of students band so many circumstances and situations there may be no one  fits all solution legislative reform of tax incentives would also need to address transition issues for those students and families who currently rely on existing provisions or plan on them in the near term to minimize the adverse effects of any reform on educational pursuits thank you again mr chairman ranking member english and distinguished members of the subcommittee for this opportunity participate today i would be pleased to present your questions thank you very much mr brooks will be discussing your testimony with my staff i concluded that we were pretty impressed with the details that you offered considering it was your inaugural visit to the committee you certainly took the task seriously in the examples included the confusing choices the typical family might face are extremely instructive for the committee on the much tougher question of how we simplify however your testimony is more silent and i don't blame you obviously the choices are not easy and i know the administration has proposed some changes to the tax benefits in the past can you tell us where the treasury is currently looking at an serve families well going forward there's been significant advancements in the section five twenty nine accounts uncovered all savings accounts to allow for tax free with dollars for post secondary education and in addition our current budget proposes to extend the favors credit to the section five twenty nine savings plan as you also are aware in our two thousand and five fiscal two thousand and five budget we recommended simplifying and bringing together some of these tax incentives for simplification purposes mr brozak your research is astounding twenty eight percent of the filers either missed education tax benefits or did not claim the right benefit for the maximum credit g a o recommended some time ago that the department of education consulting with treasury study the effectiveness of the combined aid in tax programs but little has really been done do you think that a very detailed federal financial aid form which by the way is pretty challenging might be one place where families could be tipped off to the potential tax benefits or already so complex that this would simply confuse the matter well that's certainly an option as you rightfully note though that is a long and quite complex and it's still about before assistance is provided as a tax benefits savings provisions are generally after the expenses have occurred i think it might be better to have a flag like  that when it would be contemporaneous with the tax payer making a decision about which provision to use so for instance the educational institutions send the taxpayer a form ten ninety eight that indicates their child did attend the institution and also in some cases includes the expenses that form might be a better place to fly to the taxpayer that they can use various tax benefits in that they need to carefully select among them to choose the one that's best for them and miss kilburn a sole you mention the burdens on taxpayers of claiming these benefits including additional and more complicated tax forms after reading your taxpayer examples where the wrong choice penalizes the taxpayer by hundreds of dollars it seems we are already forcing these families to seek professional tax assistance and that certainly lends itself to additional costs that counterintuitive correct that whenever there are multiple tax provisions that could apply to a single expenditure that creates complexity i will note that the treasury and the i r s have worked very closely with the department of education to provide information to the education department that could be disseminated to students and families in addition the i r s has a very thoughtful eighty page publication that in plain english tries to identify all the tax provisions that are available on a plane and go style with  computational aids that can help families figure this out i'm actually quite impressed with the publication if you have had a opportunity to look there which i guess you have based on your experience it is done in plain english and as a very useful tool but that i have no doubt that because the complexity there are things that are math and possibly options that are not taken that should be taken before i yield to mr english and every january i host two forums on financial aid which we assemble experts from across the field and invite constituents to attend i must tell you the crowds are overwhelming and much of it relates to the whole issue of complexity and the people that walk through that door of goodwill and good purpose are genuinely confused by the options that are available to them seven are typically last for two hours and i must tell you again nobody gets up to leave they stay through the whole demonstration process and they leave maybe with a little bit of relief that they're going to get through it but again the issue of complexity frightens to overwhelm the process and with that i'd like to yield to mr english thank you mr chairman and i guess my questions will follow very much in the same vein mr bra stick in examining this field i understand many experts believe that taxpayers are often simply not aware of the existence of the hope or lifetime learning tax credits when making a decision about whether this sort of the child to college or how much college they can afford  instead for those taxpayers the credits come as a surprise the following april when they file their taxes did any of your research confirm this we didn't gather any specific information on that but given the number of individuals we found who didn't claim any of the provisions they can certainly suppose many people were unaware of what our congress was options apart from simplification which i'm strongly supportive of to make sure that the credits have their desired effect of helping people who are making a decision about whether they can afford college there i think it would have to be educational assistance before the expenses are incurred before the decision is made to go to college and it is possible that additional assistance with the fastest form perhaps not on the form but accompanying it would be made available to taxpayers to make them understand that there are tax benefits available how much those benefits might be worth perhaps there could be some  tools made available either at iris or perhaps in the department of education for people who have computer access to go in and get some sense if they have they're saying current financial circumstances how much might they get i f they use one of the benefits in your testimony you know that you note that one hundred percent of tax returns that showed eligibility for one of the federal tax benefits were fire for higher education had failed the claimant you also said that many of these richards were prepared by professional preparers the latter fact is especially disturbing video attempt to determine why even professional preparers failed to claim available education tax benefits for their clients we haven't determined that but we have at least a little bit of indirect evidence couple of years ago we did some mystery shopping during the tax season we went into some paper pairs pretending to be tax payers with a couple of scenarios one of which was an individual who had a child who is eligible for one of these tax benefits and the impression we had was that the paper pairs were not all that knowledgeable themselves and the software programs almost all paper terry's use software programs didn't seem to be giving them the kind of prompts that may have of college and university business officers in two thousand and six the seven universities with the largest imbalance were sitting on more than one hundred billion dollars of a down assets average endowment asset growth of these schools was seventeen percent from the year before some of these and dollars are from years of tax exempt investment income earned by the universities some of these adama dollars are from charitable contributions for which a doption was taken decades ago yet the university has not yet used the money for an educational purpose has the g a o examined whether we are getting a good rate of return on our investment such as through lower tuitions or greater financial aid for students in need and shouldn't we be asking questions about universities that sharply raise tuition at the same time number of issues that need to be considered a significant portion of endowments as i understand it have strings attached a donation to the institution requires that money to be used for various identified purposes which may to some extent constrict the college's ability to use it for student assistance directly for instance i do think it's a very important topic as you note it's a relatively small number of institutions that have very large and d and there are many many more institutions who don't have those and down that but have needy students thank you m states congress for almost forty years i am somewhat familiar with the complexity what you're up to so i'd like to ask the question i'd like you to step out of your role here and be a counselor at the university of washington or at the seattle central community college which newsweek said was the best community college in the united states a young woman comes in single thirty's thirty thousand dollars salary is a secretary she's got two kids she's got one year done in the community college she's trying to go from being a secretary to a legal assistant in the office in which she's working which program should she try to access well that's a very good question and i would think you know i appreciate that that's a vote of confidence i would have to do some research on the situation why would you have to do research you guys have been studying his stuff well there's a bit of a difference between doing the research that we've done  from the tax records how many people may have made a poor choice to actually analyzing the specific situation of an individual involved and i have to admit that a lot of the expertise that went behind our calculations on who made the best choice was not my own personal expertise but the expertise of people who work with me in my office the the others of you have any idea what you'd tell a young woman is trying to get ahead i think some of the question the question you raised and more generally the issues that are involved here at the heart of why the complexity surrounding the tax preferences as well as the title for higher education programs are important terms of looking for ways to enhance the financial literacy of student she was can access title for can she she's got to go half time and she's working full time and raising two kids under thirty thousand so the likelihood of her go into school half time is probably student financial advisers on campus opera sister in terms of making sure she applies for the broad range of programs that she might be eligible for did you look at the question of whether any of the colleges had those kinds of advisors in sufficient numbers to actually help them figure out this maze for this study we did not look at the availability of student financial aid advisors on campus generally the most colleges and universities community colleges do have a number of staff are available in the financial aid office to assistance financial aid officers are the ones who based on the information they receive from their part of education from the facile form develop the finance package for student where do they get the money to finance the financial aid office my specially general administrative cost borne by the university so we don't put any money into these programs that can be accessed by schools to finance their financial aid office that has to be out of state money or tuitions money or some other place that they might come up with the money to hire the people who are smart enough to help this young woman figure out how to work the way through the maze i'm not aware of any direct federal subsidy to assist schools with the financial aid ministration financial aid and is there are the programs that she's going to be offered i me grants that are available from sources other than the federal government and certainly a local aid office or hopefully would be aware of some of those opportunities that might be available locally i think in the circumstance you're describing the individual probably could claim to have a ph d to win your way through the financial aid system and that's standing in the way of an awful lot of people accessing she can't this woman that i'm talking about can't take courses if it's not related to her work and get the tax credit because it has to be just sort of related boeing can give their employees time off as long as it's supposedly related to what the boeing aircraft company does but if they want to get themselves upgraded somewhere else the tax credits don't seem to work very well now you back to thank the gentleman the gentleman from georgia mr linder th between one nine hundred ninety and two thousand and five federal aid for just federal aid to students increased by seventy seven percent and enrollment increased by twenty six percent why this disconnect and why should we  this change is going to increase in a moment congressman wonder that's a very interesting observation that you're making i must say that i'm not really qualified to make any observation on my own with respect to th we haven't studied that either george do you have any thank you with that the gentleman from connecticut would camp was also here earlier i also like to acknowledge dr watson is head of the community colleges in chicago is he going to be testifying in for holding this hearing both to you and to the ranking member you know i mean what we have here and i want to follow up on what my colleague jim mcdermott was talking about and i helped in ninety seven when we did the balanced budget creating hope and lifetime credits our intention here is a good thing it got messed up we just one of the good things will do is if we figure it out and make knowledge you when you have twelve different credits and deductions on the books with different instructions all trying to help people do on thing go to college it's time for some reforms because when twenty eight percent over a quarter can't get it right either missing not filling it out right errors in their judgment not getting the right type of credit or deduction of missing dollars we have a problem houston we've got a problem here and when the i r s and the g a o if i found this out even in our block which is professionals fifty percent of time got it wrong that's why  example there's no way this one will get it right and these are well intentioned programs and as somebody who helped pass this both the hope and lifetime being the to the more significant of the of the twelve we i believe it's time for reform to consolidate which is why dave camp and i've introduced legislation bipartisan legislation with a lot of sponsors here on the ways and means committee because it is imperative that if people are not getting the deductions or the dollars or the resources they need to get an education they not only suffer but the country suffers and the single largest reason people are not going to college would be that community college or a four year institution is cost the average graduate today graduates with nineteen thousand dollars in debt so before even to get their diploma they get their first visa bill and this is crazy now we've introduced legislation to make it more uniform and to bring it in line where you consolidate the top three and have all the standards deduction so you get eighty pages of recommendations on how to fill it out get rid of that because it's too complicated and you need a ph d before you fill out the information to get your backsliders we've got a serious issue here one question though for the administration which i treasure which i don't understand in zero five in the zero five budget the the president has proposed a series of reforms to consolidation except for but the recent budget didn't i can't believe that folks in the treasury thought that we'd be making a lot of improvements here and that i mean either this is an oversight a mistake you know or there's another statement here what is the reason for that congressman emanuel you raised some very interesting points in your question the mere fact that our two thousand five hundred proposal was not included in years after it does not indicate that we are not in support of of simplification of this complex web of tax incentives as you as your colleague congressman mcdermott point fou assessing the tax incentive program and what where we should go from here and evidently requires a hard look at all the other incentives that are available through the federal government as well as as well as private institutions chairman on the legislation and i know the ranking member also spoke about it and i want to thank him in favor of it is that if you consolidate hope lifetime any other credits he would apply both to community colleges for years to to graduate schools and have a standard three thousand we would go a long way toward simplification so before we get to the debate of the things we've got to do or other resources simplification would increase participation that's true also  have argued before on the earned income tax credit where we have great programs that participation rates are low because of complexity not because of missed something else that's wrong with the graham and  rates up here i know one other thing to fill this out is about eighty pages any recommendations from the i r s if you are boeing or microsoft or any other user the export import  bank which has hundreds of lawyers and accountants the entire form for the loan is thirteen questions and they got lawyers and all these kids got their parents not the parents are good but the forms for going to college and getting the hope are lifetime or the facile should not be the leading cause for divorce in america ok it's ridiculous not i have nothing wrong with given boeing and x m x m thirteen questions they figured out how water here i thank you mr chairman thank you for for this hearing and i really appreciate the work that is being done by my colleagues to try and simplify this process certainly i think many of us have been talking a good deal about the importance of going to college of higher education that's really competitive world we live in understand that access to college is increasingly important always was but even more so in such a competitive marketplace as you students or potential students the the income limit tends to be at least family income under about one hundred ten thousand dollars that's of the upper income i could find in all these different programs and certainly in my district there are many families are in that category but there are many families who are just above it and i hear from them a good bit and you know particularly in this difficult economic time to wage earners earning one hundred thousand dollars seems like a lot of money they thought they would be doing fine but by the time they pay their mortgage in they got a better one that didn't get a really risky one in the philadelphia area philadelphia or its suburbs but time to pay energy costs  obviously health care bills are a major concern maybe so helping to support parents it's really the idea of actually finding the hard dollars these are after tax dollars by and large you know of for college tuition as well as the cost of room and board they're really it's really difficult and here for many parents are saying how am i don't know how i'm going to manage to do this and yet they don't really qualify for any of these programs if you're making one hundred twenty one hundred fifty thousand dollars a year and these are people again they thought they'd be much more comfortably assume they could send their kids to college and they can't so they have more than one chill child and they're actually close together in age and if you compound that which is the others you want to ask about is also about four nontraditional students who are going back for additional education they are also only seeing themselves well how can i possibly afford it maybe the same time the children are going to college to be able to find those dollars and they may even be earning maybe working full time earning far more but know that they need to get i get a college degree so could you speak to the whether you also agree that we might need to look at as we simplify the access to these loans look at the income eligibility as well do you think you could you speak to whether in fact you think we're at the right place or whether you would agree that there are families that are making more money than are in any of these programs but in fact are also finding it very very difficult to to be able to find the hard cold cash that it needs to the need to go to college it's clearly an important policy issue for policymakers such as yourselves to decide who all should be assisted by the programs in your first example part of what one through my mind as you were speaking is there is the college savings route perhaps part of the problem is people not having sufficient financial literacy early in their careers to understand how much they need to set aside to fund their hoped for college expenses when their children are older so that may not require an adjustment to the assistance available while you're in college may require more education up front of people early in their careers to set money aside and well do you determine the five twenty ninth's which certainly we've tried to do in pennsylvania really be aggressive about telling parents and grandparents potentially about putting dollars away but still that is a certain amount of outreach to people know that it applies to them but we know is that so many families assume that they're not actually eligible for government programs government so this is that's one that they need now but even even if it doing what they thought they should do in terms of savings it's still hard to have say that amount of money for a couple kids maybe three kids even to to go to college  did anyone else want to make a comment about about the in caliper income levels so i think you make excellent point and i would echo the comments by the g a o i think there's also an interesting and important learning when you compare the current benefits as they relate to families versus individual students who are seeking higher education i think that probably needs to go into of a determination of where the benefits would ultimately ultimately land i would also point out that any an kind of wholesale rewriting of these rules and trying to simplify them and bring them together could inevitably result in winners and losers and those groups of individuals would need to be a factor determine whether that is the right target group  it's something i would actually sort of suggest i might add more for the conversation my colleagues about how we do this certainly targeting the lowest income is something we were deeply concerned about because they have the most difficulty but again we were in a position where people who would have thought they have course could go to college or find themselves not able to or dropping out because their families absolutely can't find from the dollars so it's something that i think we'll raises an issue for my colleagues as much as for the panel thank you very much i want to thank the panelist but i have one last question i serve on the board of trustees at mount holyoke college and mr scott or the other panelist malcolm gladwell immortalized the term tipping point is there a tipping point and i ask this question sort of line that your data would instruct those to pursue we don't have any analysis that shows us that kind of choice definitively but it certainly makes intuitive sense at some point something's out of reach it does suggest that there are other types of educational institutions that someone might attend that are less expensive but maybe aren't what kind of dreamed of attending is there also any data that would indicate a trend line as it pertains to ability to pay are we beginning to see the really great colleges are they more and more taking into consideration the ability to pay as opposed to a need based assessment and trying to put together a diverse student body increasingly we are seeing some schools primary large schools we talked about them previously those with  large endowments are increasingly looking for to provide more grant aid versus loans in terms of the financial aid package i want to know that's a real small number of schools who are in a position to do that some schools for example of said no families  in terms of sending school children to school when we looked at the data last fall we did find that the number of folks attending college in universities is continuing to increase and that the vast majority of students are  are about sixty percent are at schools charging relatively affordable tuitions and fees only percentage of students are actually attending college and universities where the tuitions fees over twenty five thousand dollars a year so despite a number ledger four million kids choose not to go to college because the cost that's four million people left out of the american dream you are right it's increasing but that's a demographic fact not the one we're dealing with here which is how to make financial access to higher education less intrusive on people's lives so i would i want to although you're right on that statistic we're dealing with something else here which is the cost of college education the complexity of the tax code which is our purview it's something we've been active can we make it better and easier and when four million people to choose not to go because of cost we've got a responsibility to whether we're a contributing factor to that second wind over a quarter of the people who fill out the form either don't get the right credit or deductions for them or baby i make errors or mistakes because of the complexity that doesn't make us unique from our responsibility to simplify so i agree with you on the demographics i don't agree with you on the preview of what this hearing is all about and i left off one thing i wanted to add my hope my statement earlier when we passed the higher in the coming weeks we will have in there the simplification of the faz a form which will dramatically reduce the one hundred eight questions down in half and force it to be consumer friendly english like we force businesses to do the full government formal actually come down a half and that is half the battle the next half is making the tax code as simplified as we are now doing with the platform  let me welcome our panelists and as a customary courtesy i'd like to call on mr emanuel at this time to introduce one of his constituents to dr watson who runs community colleges in chicago who is a dear friend and  i just mentioned the faz of form when i introduced that legislation when i first ran for congress to simplify this fazul form dr watson with i at the harold washington community college in chicago in the loop was there and  that announcement of six years ago almost to the day in about three weeks from now will hopefully become law and dr watson has been a great leader in making the community colleges in chicago which i have won the right community college in my district is a great leader in education in our country and it's been a dear friend of our family let alone that we share a similarity given that i have a background in ballet and dr watson has a background in tap dancing he's a far better dancer and educator  cell and seems to work good morning thank you mr chairman and members of the committee for the opportunity to testify today i will keep my comments brief and leave written testimony with more details for your review town and i'm president of nichols college in dudley massachusetts nichols as a four year private institution with a student body of more than fifteen hundred full and part time students who are enrolled in nichols undergraduate and graduate program we have an alumni body of about eleven thousand the mission of nichols is to develop tomorrow's leaders through a dynamic career focused business education more than ninety percent of nickell students achieve gainful employment in their field of study within six months of graduation and the average starting salary of last year's class was about forty thousand many of our graduates and students are first generation college students the vast majority of our students ninety three percent are dependent upon financial aid to help pay their college expenses eighty nine percent receive nichols college aid specifically at nichols college we have an annual budget of about twenty seven million and we give financial aid of about ten million our college does extensive outreach programs by providing education and information on access to at risk popular shins through programs like kids to college and gear up are admissions and financial aid staff are active in the community facilitating dozens of financial aid information sessions both on campus and across the state and we include parent education on tuitions tax benefits there are several higher education tax incentives some current and some expired that are enormously important to the students and families of private colleges like nichols two provisions that i would like to mention first are the tuition deduction and the ira charitable rollover both of these provisions expired at the end of two thousand and seven and have not yet been renewed the tuition deduction allowed students or parents who cannot claim the hope for a lifetime tax credits to deduct qualified higher education expenses from income this deduction provides relief to self supporting students and to families whose adjusted gross income is too high to qualify for the hope and lifetime learning credit for the expiration of deduction in december of zero seven has caused great concern among students and their parents i urge the subcommittee and full committee to extend this important education tax benefit the ira rollover relatively new charitable giving incentives that allow donors to rollover access retirement savings to any public charity without tax without tax penalties for non retirement use of retirement funds a recent survey by the national association of independent colleges and universities found that ira rollover guess totaled one hundred forty four million just a month ago i received a call from a trustee asking if he could use an ira rollover to endow one hundred thousand dollars our ship nichols and sadly i had to tell him not right now this is private money that helps colleges and universities with scarce resources and rising costs as with the tuitions deduction i urge the prompt and retroactive extension of the ira charitable rollover other current tax incentives important to colleges and universities our students and families would include the student loan interest deduction the sections of internal revenue code section one twenty seven which provides for employer provided education assistance tax favored education savings account and section five twenty nine college savings plans and the hope and lifetime learning tax credits and i applaud the efforts of the members of this committee for extending important expiring provisions and simplifying the credits republic representative english has introduced h r one forty seven which would make permanent those tax benefits set to expire at the end of two thousand and ten representatives emanuel and camp have taken the lead on simplification by introducing h r twenty four fifty eight the bill would make college more affordable for the middle class by providing a larger credit than current law allows and increases the income caps for individuals eligible to claim the credit in conclusion mr chairman i asked the subcommittee in the full committee to continue their commitment to our students and our institutions by retroactively extending both the tuition deduction and the ira charitable rollover in addition i urge members to make permanent the important provisions that will expire at the end of two thousand and ten in return i offered the continued commitment of private institutions like nichols to advance and improve our own efforts to control costs increase a good morning chairman male ranking member in english and members that is so committee including chicago's own rahm emanuel time dr watson chancellor of the city colleges of chicago which rolls more than one hundred ten thousand students annually am here today representing my colleges and the american association in the american association of community colleges which represents the nation's nearly one thousand two hundred community colleges many policymakers are still surprised to learn that our colleges and roll forty seven percent of all u s undergraduates unfortunately the tax incentives folks post secondary education a simply do not work for the financially disadvantaged college students who needed help the most a two thousand and three study by harvard researcher bridget naam found that existing tax credits have had no impact on increasing college enrollment a common thread runs between urban in urban rural america and that common through it is poverty unemployment and lack of access to education and two thousand and six were areas tended to have higher rates of poverty fifteen point two percent then urban areas eleven point eight percent for students whose families live on or below the poverty line their personal resources that dedicated to so fiber needs like food and shelter their decision to place education at the bottom of the priority list  choice but more a lack of a choice the bridge that can help solve both urban and rural poverty in america's community colleges to bridge they can solve both urban and rural america poverty is america's community colleges and a c c believe that that's some fairly simple changes to the tax code can alter this disparate impact as our written testimony outlined access i college remain highly correlated with income with this by way of context let me outline three key principles first major items in a code higher education finance provision need to be consolidated although the of lifetime learning intuition duction share the common goals of helping students pay for college these programs differ from different in the amount in type of expenses they cover since calls are essentially to same for students as they move through college the assistance available here remains the same the current patchwork of text programs lives in g a o to a degree to conclude that post secondary taxes centive are difficult for families to understand and  fact hundreds of thousand of the taxpayers fail to claim the tax preferences to which they are entitled and often do not even claim the per france that would be most advantageous chairman rangle is pursuing overall tax reform and these provisions crying out to be included second the higher education provisions must reflect total student expenditures the hope of a lifetime learning credit intuition is destined only cover tuition this is profoundly unfair to community college students for them to wish it is only a small component of their overall college costs the average community college student is two thousand two hundred sixty one dollars per year a lot of total average cost of attendance is more than thirteen thousand the exclusion of man to ensure expenses contradicts longstanding higher education at policies as well as the code to college savings provisions third higher education tax incentives should better assist financially disadvantaged students and b we funded both the current tax incentive for the bulk of their benefits to students coming from middle income and more of fluent families while the students can use the help it really makes a difference as to whether they will attend college according to this summit one point three million community college students had no tax liability in two thousand and seven a c c urges an act of the universal higher to cation and lifetime learning act because it is the fission efficiency consolidates the hope and lifetime learning credit intuition eduction its three thousand the tax credit would increase benefits for all students thus increasing college access and reducing borrowing if you use the higher education act suden a budget for eligible expensive this provides consistent treatment across a major federal funding sources for college and will treat students attending voter wishing colleges more furloughs this will also enhance program administration lastly h r twenty four fifty eight makes the new credit fifty percent refundable this tax code currently denies help to those who needed most precisely because they are too poor please note the a c c supports full refund ability but the legislation provision were very present english and members of the committee i'm honored to testify before you today first i want to say is that a college education is a good investment over a lifetime a worker with a bachelor's degree earns on average about a million dollars more than a worker with just a high school degree might this fact college remains out of reach for many thirty four percent of young white people earn a b a but only one hundred cent of african americans and ten percent of hispanics grab that golden ticket and i give you these statistics to get a spanking about how we can best use tax incentives to encourage college attendance tax incentives can increase schooling only if they put money into the hands of kids for whom price is a barrier to college for our tax breaks to truly act as tax incentives they need to cut the price of college for those students who would not go to college without the subsidy and who are these potential college students they're disproportionately non white or hispanic they're from low income families just half of low income you go to college right after high school compared to eighty percent of their upper income classmates they go to school the local community college where tuitions these average twenty three hundred dollars or a state university where cost average sixty two hundred dollars a year now this is who we should keep in mind as we design tax incentives to get people more into college a low income person attending an inexpensive public college the fortunate student who's admitted to yale or williams or suave more whose family earns upward of one hundred thousand dollars is going to go to some college with or without a tax incentive and i feel that we should not build our education policy around the prices that she faces now as currently structured the education tax incentives do just about nothing for low income students at inexpensive public colleges because the tax incentives first of all are not refundable many low income families can't get them a family of four needs to have an income above forty thousand dollars to get the maximum tax credit right now one third of all families and happy families with kids have no tax liability and cannot get an education tax credit currently only student to pay tuition fees over ten thousand dollars a year to get the full lifetime learning credit that's nearly double the cost of a typical four year college and four times that of the typical community college right now nearly seventy five percent of college students attend these expect inexpensive public colleges the tuition deductions are least valuable to those in the lower tax brackets a thousand dollars to action deduction is worth three hundred thirty dollars for somebody in the thirty three percent bracket but it's only worth one and if you dollars for somebody in the fifteen percent bracket the repressive of the of the tax incentives is not all that hampers their effectiveness they're just too complicated and confusing to actually effect schooling decisions families simply can't respond to a price subsidy if they don't understand it or know about it again let's keep our target student firmly in mind those in the margin of college entry are disproportionately low income non white hispanic parents did not go to college or perhaps even graduate from high school for many of these families english is a second language and viewed in this context it's clear that the tax incentives are currently too complicated to do their job as was noted before the publication devoted to explaining them is eighty pages long it may be clearly written but the fact that you need eighty pages to explain these incentives is evidence that they're too complicated so here's what i suggest that we focus the incentives on those who are on the margin of attending college and we simplify the incentives so that families can understand and respond to them so number one as has already been proposed i would suggest creating a single refundable tax credit for tuitions these room and board a single credit would significantly reduce complexity and enable families to estimate their credit well in advance make the credit refundable so families in the lower tax brackets can access it count tuitions these room and board as eligible expenses for the purposes of the credit this matches the definition used by the five to nine in the coverdell accounts which are available to upper income families it also extends the full credit to the vast majority of students who do attend public colleges second deliver the credit at the time of college enrollment the student who needs the credit most is the one who drops out because she can't find the money to pay the registrar in september and she's not helped by a credit that arrives a year or fourteen months after the bills are due so we need to put our heads together and find a way to get these credits to students at the time of enrollment otherwise we're excluding the very students whose enrollment depends on the credit and that's no way to design an incentive after the fact one suggestion is to use income from a previous year to determine eligibility for the credit so eligibility for the credit for the wait oh nine school year could be based on two thousand and seven income this is the approach used in determining eligibility for the  even more radically simplify federal benefits for college by consolidating all of the federal subsidies for college students into one streamlined system college students in their families now face to parallel duplicative and we'll be back received to provide aid for college the tax system and the aid system consolidating this process would substantially simplify life for the families of college students saving the tens of millions of hours now spent filling out repetitive and mindnumbing forms consolidation would also save billions of tax and thousand dollars that are centrally spent moving pieces of paper back and forth between different agencies of the federal government back and forth between i r s and the department education and i've entered into the record a detailed simplification proposal that i've written in coordination with my co author to to scott clayton it's in the record for your perusal thank you and i'm happy to take any questions georgia my office also administers the path to college five to nine plan georgia's five twenty nine college savings plan which currently has over six hundred million dollars in assets and i'm also the chair of the college savings plan plans encourage families to save for college and to help make higher education and affordable reality for all to accomplish mission c s band is the leading national advocate for strengthening and enhancing college savings plan and we welcome the opportunity to work with congress as you strive to make higher education and section five to nine programs even more accessible to all american families beginning in the one nine hundred ninety s and through today the states working with congress have been instrumental in creating and improving five to nine plans with five to nine plans are enormously successful allowing millions of families to prepare or save for college every state in the nation and the district of columbia offer these plans we have seen growth from two point six million accounts in zero one to over ten and a half million accounts by the end of the last year assets invest these families and these plans have grown over that same period from fifteen billion to one hundred thirty billion as part of this growth it is important to ensure that families at all income levels are encouraged to save in five to nine accounts because states are involved in the establishing that and immiseration those plans we ensure that outreach efforts to target all segments of the population including those not typically reach the state to leverage their experience as major institutional investors to establish low cost low fee college savings investment options for families and ensure for example that a low initial investment in the range of say twenty five dollars like in the georgia plan is all it takes to open an account i'd like to note that the states continue to seek new and innovative ways to attract under served populations to participate in five to nine programs for example in illinois state treasurer alexi committed three and a half million scholarships to illinois students including two point eight million in need based grants awarding up to four hundred scholarships each year and almost three thousand scholarships to illinois students through the life of the program in pennsylvania the state has developed an innovative program that makes use of individual development accounts to encourage college savings through five to nine plans finally massachusetts emphasizes outreach using grassroots marketing initiatives targeting low committing come families through early college savings seminars financial aid seminars and educational events such as literacy events that boys and girls clubs reading events at public libraries across massachusetts given all the success of five to nine plans and we believe that there is still room for improvement in the federal tax treatment of these plans specifically treating computers as an allowable expense for section five to pop plans which would conform and simplify the treatment across different types of education standards now in a coverdale plan it can garner can get a  puter as an allowed expense but not in a five to nine plan we'd also like to see a five to nine plan contributions by lower income families eligible for a savers tax credit and we believe that more can be done in the employer employee e context using five to nine plans as a vehicle as either a training program for the employee or as an employee benefit in conclusion thank you for allowing me to testified today states of work hard to make sure section five to nine plans encourage families to save early providing prepayment of tuitions and low cost investment options paired with low investment minimums to ensure that everyone who wants to go to college has a vehicle to save for college and finally i want to touch on one aspect of that section five to nine plans which is less concrete but non very important when families put savings and a section five to nine plan for a newborn a five year old or even a fifteen year old that family is sending a very important message to the child that the family believes that the child can and w go to college but college education remains the surest path to success and higher achievement saving early on a section five to nine accounts send a powerful and positive message to our children that they can and should go to college thank you very much thank you mr ever soft dr tirelessly you have said that one half of your students may be eligible for the hope and lifetime learning tax credits since we've heard so many eligible families miss out to your financial aid advisors help these families in any way to ensure that they get the maximum credit available well we do training our financial aid office to mission staff to training on fafsa and when his that's where we see it reported whether or not they might have claimed that is on the fast online so we offer to all of our families prospective parents and current parents training on how to fill out the fafsa only mention that when we get to that section there's opportunities to apply for the hope and lifetime credit or tuitions benefit to adoption that's how we do it with our families and dr watson as you know many of us are very supportive of extending and expanding these tax benefits but we're also operating under now some very significant budget constraints which certainly don't appear to be improving time soon which of the tax benefits do you think provides the most benefit to your community college students and their families well we have to take a look at our students our efforts you know one fifth of our students are below the poverty level so they do not make enough money to even be eligible for some of the tax credit because because they would do not pay taxes of course till grant is out there but if the terms of the tax credit i guess i would say the hope but i must also say that it is possible and and i highly command what you've done consolidate it is possible to consolidate the whole lifelong learning and tax deduction and i still counted not at ease because you know like asking me to choose between three children you know and after hearing congressman three congressman ok but after hearing your statements or when you open up i mean you're like the poster child i want to take you and put you on a post of what you're doing it's possible to consolidate the parents of the poorest and a lot of our kids are just independent their nine hundred twenty years of age they're living on our own they don't have to and then the parents like yourself they need all three education is expensive is thirteen thousand dollars total when you look at all of the expenses flow communicator soon our students are actually making choices between eating going to college between shelter and going to college between taking care of their child and going to college and when you have to make those choices you know and on top of all they still make the choice to go to college and  they move in with somebody in an earlier conversation this morning with dr tyldesley we talked extensively about the role of the community colleges in america's future and i think there's one thing that there's almost universal agreement upon and that is that the community college is going to continue to play a more important role annually in resolving many of the issues that you've raised i don't think there's any question about it so you have great advocacy here on behalf of the role that the community college place in america i mean community colleges and you know there was a hallmark on milestones that in one thousand nine hundred forty six when president truman came up with the truman commission at that time he put forth that community colleges are really to answer to getting america back on their feet after world war two and at that time he it was his goal in the truman commission to make college education easier free or minimal a a cost and he really struck out hard and i commend congress for all the years to struggling to do that but i think th now is almost fifty years exactly you know it's not fit well it's it's almost sixty years where we have an opportunity to take what's what president truman tried to put forth in the truman commission and see if we can enhance it again and make education both community college four year colleges and i also represent the board of knopfler desk national american association to cation that's one hundred twelve historically black colleges also represent that boy making it possible for all of these colleges and universities to put young men and ladies the role the community college would like in american life the doctor was very interested in your suggestion that we can deliver these credits in advance rather than a year later when the taxpayer files the annual tax how would you suggest that the i administer in advance credit run through organizations that could provide a template for what we would do here so right now you know the pell the stafford they are advanced and what we do is we use the colleges to confirm that the student has enrolled and the student doesn't enroll the money is withdrawn so i think what we would need to do is use the institutions themselves to basically administer the funds so eligibility would run through i r s but funds would flow through the institutions themselves simple enough so with that i would yield to mr english and financial aid available however many don't know about the education tax credits when nichols sends information to prospective students and their parents about possible sources financial aid how do you inform them about the hope of a lifetime learning credit well as i mentioned we do it through training sessions at all of our open houses we have training sessions on financial aid we have  orientation we have students and families there we do training sessions again for parents and students and we cover the fast and how to fill it out when we get to that section we mentioned that they should look into those opportunities on their tax form because they would be able to fill that in on fast as well so we do it through all of our training sessions at open houses and orientations with students and their parents and also when we do training at high schools across the state we send our financial aid staff out to do that very good i was curious elsewhere in your testimony you are the prompt and retroactive extension of the charitable ira provision that expired last year i'm just curious how does  extending the provision retroactively create any incentive for new nations well i think if it was within this year it would help us to be able to offer that currently to our education tax benefits are received after filing one's tax return in april but the two a should is usually due in the fall of the prior year as a result there's a considerable lag between the time the cost is incurred and the credit received leave though this for a long time this leg may prevent the tax credit from fully achieving its goal of making college accessible for more students i'm curious would making the tax credit advance a ball solve this problem i'm not don't think i'm the one who is able to answer your question would anyone like to comment on comment when you talk about the advanced tax credit the  had private school like nicholson to the association of private independent colleges and universities we would take the position that to do it fronts would be a very difficult thing to accomplish  student aid comes up front we do have systems in place to manage that if we had to do the up front tax i think we would probably have to hire another staff member to carry that out and when we look at the higher education reauthorization one of the things that we do have concerns about is the additional reporting in the more and more reporting for we have to do the more and more costs go up because we need people to actually sell all those things out thousand sixty dollars and a number of our students are not eligible fully eligible for the tax credit and i think that we knew do need to take this into consideration tax credit thank you dr watson would anyone else like before my time completely runs out to take a run at the design of the tax benefit and specifically the fact that the lifetime learning credit right now provides a greater tax benefit to those who go to more expensive schools is that the appropriate way to structure the credit i would say that the student who's deciding between whether to go to college or not is going to a community college so we want we want to focus our efforts and our funds on that type of student so a structure that gives more money to people who are going to the most expensive schools no i don't think that's the right way to structure it i would also like to answer a question that you asked a few minutes ago about the advance ability of the credit i agree it would be hard to deliver the funds up front but it's incredibly important it's the whole point is to make it possible for students to go to school they need the money when they register for college they don't need it a year and a half later so yes it's the hardest part but it's the part that would actually make it possible for people to go to school who can't afford it right now and so i think given the brainpower that exists in this room and in the colleges and universities of our country we can find a way to make this work and we should find a way to make i think both of your answers are full and well rounded and i think we're going to have to wrestle with that thank you so much thank you mr english the gentleman from washington mr mcdermott the more i listen the more confused i think my thirty year old secretary is about what's available i think the question that i think i'm old enough to remember when the university of california was absolutely free and when we invested millions of dollars in this country in the g i bill of rights when we were pouring investment into education and it's been a gradual process the last few years to gradually shift the cost on to the student and leave the student in debt when they get out of college and i it's it seems to me that one of the problems here is that we've shifted some of our educational benefits over to the military please join the military and if you join the military we'll then we'll give you some tax benefits or we'll give you some money to go to college  as though our only way of having a volunteer army is to somehow make it harder for somebody to simply go to school but a lot easier if they want to go the military route and pick up the benefits and i'm what i'm concerned about is the fact that we seem unable to figure out what the people there's forty million families living at poverty or below in this country now their kids can a this i or a business that's just nonsense to talk about iras with them or that their parents should have been put in the bank on the way while they were growing up but always all those programs are designed for middle class and above the question is what's the best program to how if you were designing a blank sheet of paper what's the best program to give to deal with the people who are under forty thousand median income and who either themselves are trying to go or trying to help one of their kids go i'd like to hear what you think the best thing we could do in that regard to deal with them because the ones with the money to start with their kid is one year old and putting money into their i'm worried about it but not very worried in comparison to what i'm worried about with this whole huge bunch of kids who are afraid to go to college because they're going to get in debt so they say let's go in the military and see how it works out so i'd like to hear your best proposal any one of you i'll jump in i think the best system and i agree it would not be the one we have right now is one that is transparent standpoint certain you want families to know when their child is in grammar school that college is affordable we've got money spread across dozens of programs at this point in the tax code and on the revenue side and pooling those funds into one simple certain program i think could make for a very powerful incentive so i would love to see basically pulling the money that we're spending on the tax incentives with the money that we're spending on pell grant and the other campus programs into one super program that we can communicate simply to students  say upfront you've got seven thousand dollars a year for college that's enough to cover you know a four year university state university and you know that when you're in grammar school and you know that when you're graduating from high school application could be through the fund through the tax form itself just a check off in the tax form and basically base it on income and on family size and those to be the criteria if you look at the financial aid formula really what doctor almost all of it is income and family size the other one hundred twenty five questions on the financial aid form don't really have much of an effect on the pell grant so put it together with the tax expenditures that we're using right now and make one super effective program so i think we've made a major step right on the verge of getting really make a major step with regard to universal higher education and life term learning that's a major step if we were to do that the consolidation raising it to three thousand nine to issue being included and fifty percent refundable now being that you gave me a blank check though i would make that one hundred percent refundable all right and i would think that we would have done the truman act a major and major compliment sixty years later and terms of combining the the tax credits with the grant i would be hesitant to at this point just because of the fear of the peroxide see that my follow along with it i would like to keep them separate at this step in helping the forty million individuals that you spoke of that do you run your own program of pell grants or do you put it out into the banks city college of chicago made a list that came out about two weeks ago saying that there comes to some colleges said are not that are not encouraging their students to take loans we are one of those colleges because we see thousand tens of thousands of students come to us after having attended schools where they have nine hundred thousand twenty thousand dollars in loans and still have not graduated from college we are a community college and we are there for a purpose  try to get sick young men and young ladies through college without a debt you can attend a city colleges of chicago and attend all two years and and not have to take out a loan to wish an is two thousand two hundred dollars per year and what pell grant and if we would do this with the with with the universal higher education and i tourney with the change that is being proposed loans are not necessary for of students with a c c that's one thousand two hundred colleges that is forty six percent of all students in higher education it would not be necessary sir except for those very very select programs so i don't want to mislead you and say where there are no loans i do have some programs with students must take loans because programs are extremely expensive dental hygiene a very very expensive program in and that i say programs we do not encourage representative after event i would take the same position as my colleague in the community college as i think that that would benefit students great i would also encourage that we do maintain opportunities for middle income families as well who are trying to send their children to school that's the real beauty i think of american higher education is that there is diversity  choice in higher education had to nichols we work strongly with the community colleges through articulation agreements and so students that might not have an opportunity to go all four years certainly can start at a community college and have great savings and in fact in some community colleges we've begun in massachusetts to work on what we're calling an a to b program which is an associate to bachelor's program and students can take certain courses through the community college that we've agreed to ahead of time for three years and they earn an associate's plus one year and then the fourth year they can transfer to nichols college and they can either do it online because we have our program of on line at a lower cost they can come for the residential experience in the last year if they would like which is obviously the most expensive option or they can take classes in the evening which again is relatively low cost and the students then have the opportunity to earn an associate's and a private school bachelor's in business administration degree from nicholls college so we do work closely with community colleges a lot of my colleagues in private higher education do so i would encourage that we maintain those benefits across all levels and income groups for opportunity mr mcdermott very much the gentleman from connecticut mr larson is recognized thank you mr chairman thank you for putting together these very thoughtful panels and continuing on a similar line of question mr mcdermott had  what kind of shape are our computer labs in our community college system today mr watson would you me yes or you know you've heard of unfunded mandates and that is something that the community colleges and universities are pretty much faced with their software upgrades that we must do in order to response to the g a o and to all the different  bodies to ask us for reams of data every every year and we must of grade those those software upgrades cost tens of millions of dollars to each community college that's an unfunded mandate are underfunded mandates which is to your question and that is in order for our students to remain competitive internationally internationally and just for locally sometimes we are being put in a situation where we have to turn over our hardware like every four to five years and that is expensive and there is no fee there are very few funding sources that make  revenue available to us so you've got a serious infrastructure problem that's underfunded and mandated but not funded at all never get take that a step further when i was looking at your statistics mr watson he was saying  we're comparing how eighty percent of particular social economic group goes on to higher education whereas forty percent of a lower socioeconomic group goes well do the math that means sixty percent or twenty percent where are those students or those individuals going who don't go to colleges and where do they get their training to facilitate  lifetime of work in a global economy and if our community college jews don't have appropriate labs and are able to provide the transition and don't become what i fear is just a minor league for the college system where you can afford to go to college well if you spend a few years in the minors you'll be ok and then we can matriculate you on up but it still leaves out a vast majority of people not only who seek to enter college for higher education every year but those that are in the workforce currently and trained and without skills in a global economy that shrinking as fast as technology and innovation can make it would community colleges be open to keeping if they were funded keeping their buildings open during the evening for the retraining of individuals within the community because as you noted the level of technology changes and skill levels and whether it's i t or ip or how people are going to process information it's changing rapidly all the time and if our community colleges aren't the facile flexible means of dealing with this where are we and what do you think that cost would be to say on weekends or three nights a week to keep the colleges open and make sure that they had appropriate labs and teachers to do the training any idea what we right now my community college and i can speak for the other one thousand two hundred community colleges we are now open you know doors on a weekend and at night we all have night school we all have weekend programs the borough of manhattan community college they have a thousand students taking courses on a weekend all right a thousand some students you know we have thousands of students taking courses on a weekend and we're to a point right now we're open at eight in the morning to ten o'clock every night we're now working on a plan we're thinking about going up to twelve o'clock at night in order to meet the needs we are as you have clearly stated we are that economic engine that can get america back to work no question about it we are at it you know where do you get the resources from and we've made a mistake as community colleges where like the mikey at the table you know feed it to mikey he'll eat it and reason why i say it's a mistake it's because we always make do to make sure that we try not to ever turn anybody away and we have taken our dollars over the last decade and we've not turned students away and we've raised tours and you've seen the creeping to wishes of community colleges were up to seventy two dollars seventy two dollars you know when my father tended my community college my father  we have to charge more to wish into our students were seventy two semesters to community colleges are hundred ten but you also said something else there i must address and i really thank you for the opportunity you say that  some community colleges we don't want to become second class schools where individual say well we would just go to a community college because we can't go to a regular college i'm very proud to share with you that two years just approximately three weeks ago there w national competition between universities and community colleges it was a scholastic competition and i can't give you more details because it won't be on television and the network will shoot me but i w just say that the community college beat out eight universities and colleges and national scale lastic competition and i've had more than what i should say i would talk to you privately and tell you exactly what it was but i can't say here so i'm only getting to the point of saying that community colleges junior college was created in one thousand one by william rainey harper the president of the university of that students who come to us for the first two years they do as well or better than students who start out at a university and we have a higher rate assessed to junior and senior year i would agree with all that i see my time is up i thank you karen but if i can get some numbers i'll speak with you after the hearing mr watson in terms of what you think that that would cost to upgrade the labs in our schools to make sure the mandates are funded and then how we can matriculate people into our community colleges as opposed to having to bring in immigrants to man the jobs that we ought to be training our people for you're right you're right there but thank the gentleman from listening to the witnesses it appears that there are strong support amongst you all for making the hope and lifetime learning tax credits we fund of all which are right colleges we'd have a discussion around this i mean we would be in favor of the refund ability as long as the cost to do the refundable credit is not a burden and institution to the institution because then we have to continue to increase in cost which words we're trying to hold the line on we strongly supportive of the refund ability because a number of our students because of their income do not do not have a liability they do not pay any taxes right  credits and so i understand their fears about any changes to the tax program that would make even more complicated for them because they tend to be unfunded complexity we don't recognize across the complexity in the government programs and on the on the not a budget item they're paid for by billions of dollars by the college themselves and run their financial aid offices so i would hope that congress to be cognizant of this in considering any changes but i also hope that he would be focused on designing  in regards to the outreach that's being done by colleges as it pertains to students taking advantage of that of the tax credits and we've been doing some work my office along with chairman l outreach one day you should be require sure to be a requirement in schools is that something that you think would be helpful in terms of making that outreach to students i know that  encouraging those who may be eligible for these tax credits to it to to make access to them i think and the discussion that it it's probably helpful if it is noted fast note you know you are eligible so when they're filling it out they'll see that oh i could have maybe done that i think so that might be beneficial because we have to point it out because they don't really know what should have gone there  so they it might be helpful on the new when the faster does get redesigned and then i think colleges and universities along with banks actually where loans come through  could put it in their literature as a note i hate to require more to be honest i would say maybe a suggestion but certainly the facile would bring it right to them ok if you do so o thing that i would one you're getting ready to do hopefully and that is you're going to consolidate the whole life on earning texted option and simplify that will help advisors you know let's be honest we need to move this one step further you know high school counselors and advisers they need to be required they need to be required to communicate this to every kid to graduate i run across a young man who live in my neighborhood i say are you going to college with no no no i can't afford to as who are you were a pell grant and are you all of the whole  these young men and young ladies if you were to take a survey at a young kid to graduate from the high school as an urban and rural america and i keep connecting the two because there's no difference between urban and rural america in this country today the poverty level unemployment levels the same crime levels the same drug usage of was the same and of those high school counselors were required to give these students information on pale hope you thank you very much mr crowley mr english and i want to thank all of our witnesses today for their thoughtful testimony it is most helpful we may have some written follow up questions and we hope you will respond properly if there are no further comments this hearing