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KEEPING COLLEGE WITHIN REACH: 

DISCUSSING WAYS INSTITUTIONS CAN 

STREAMLINE COSTS AND REDUCE TUITION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HIGHER EDUCATION 

AND WORKFORCE TRAINING 

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, NOVEMBER 30, 2011 

Serial No. 112–48 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: 

www.gpo.gov/fdsys/browse/committee.action?chamber=house&committee=education 

or 

Committee address: http://edworkforce.house.gov 
(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Thomas E. Petri, Wisconsin 

Howard P. ‘‘Buck’’ McKeon, California 

Judy Biggert, Illinois 

Todd Russell Platts, Pennsylvania 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Bob Goodlatte, Virginia 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Scott DesJarlais, Tennessee 

Richard L. Hanna, New York 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Kristi L. Noem, South Dakota 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Dennis A. Ross, Florida 

Mike Kelly, Pennsylvania 

George Miller, California, 

Senior Democratic Member 

Dale E. Kildee, Michigan 

Donald M. Payne, New Jersey 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Lynn C. Woolsey, California 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Dennis J. Kucinich, Ohio 

Rush D. Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

David Loebsack, Iowa 

Mazie K. Hirono, Hawaii 

Jason Altmire, Pennsylvania 

Barrett Karr, Staff Director 

Jody Calemine, Minority Staff Director 

SUBCOMMITTEE ON HIGHER EDUCATION AND WORKFORCE TRAINING 

VIRGINIA FOXX, North Carolina, Chairwoman 

John Kline, Minnesota 

Thomas E. Petri, Wisconsin 

Howard P. ‘‘Buck’’ McKeon, California 

Judy Biggert, Illinois 

Todd Russell Platts, Pennsylvania 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Richard L. Hanna, New York 

Larry Bucshon, Indiana 

Lou Barletta, Pennsylvania 

Joseph J. Heck, Nevada 

Rube ́n Hinojosa, Texas 

Ranking Minority Member 

John F. Tierney, Massachusetts 

Timothy H. Bishop, New York 

Robert E. Andrews, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

David Loebsack, Iowa 

George Miller, California 

Jason Altmire, Pennsylvania 
(III) 

C O N T E N T S 

Page 

Hearing held on November 30, 2011 ...................................................................... 1 

Statement of Members: 

Foxx, Hon. Virginia, Chairwoman, Subcommittee on Higher Education 

and Workforce Training ............................................................................... 1 

Prepared statement of ............................................................................... 3 

Hinojosa, Hon. Rube ́n, ranking minority member, Subcommittee on Higher Education and Workforce Training ......................................................... 4 

Prepared statement of ............................................................................... 5 

Statement of Witnesses: 

Foster, Tim, president, Colorado Mesa University ........................................ 33 

Prepared statement of ............................................................................... 35 

Manahan, Ronald, president, Grace College .................................................. 23 

Prepared statement of ............................................................................... 24 

Merisotis, Jamie P., president, Lumina Foundation ..................................... 28 

Prepared statement of ............................................................................... 30 

Wellman, Jane V., executive director, Delta Project on Postsecondary 

Costs, Productivity, and Accountability ...................................................... 13 

Prepared statement of ............................................................................... 16 

Additional Submissions: 

Altmire, Hon. Jason, a Representative in Congress from the State of 

Pennsylvania: 

Prepared statement of the Pennsylvania Association of Private School 

Administrators (PAPSA) ....................................................................... 8 

Mrs. Foxx: 

Prepared statement of the Education Finance Council (EFC) .............. 7 

(1) 

KEEPING COLLEGE WITHIN REACH: 

DISCUSSING WAYS INSTITUTIONS CAN 

STREAMLINE COSTS AND REDUCE TUITION 

Wednesday, November 30, 2011 

U.S. House of Representatives 

Subcommittee on Higher Education and Workforce Training 

Committee on Education and the Workforce 

Washington, DC 

The subcommittee met, pursuant to call, at 10:02 a.m., in room 

2261, Rayburn House Office Building, Hon. Virginia Foxx [chairwoman of the subcommittee] presiding. 

Present: Representatives Foxx, Petri, McKeon, Biggert, Roe, 

Thompson, Bucshon, Heck, Hinojosa, Tierney, Bishop, Andrews, 

Davis, Grijalva, and Loebsack. 

Staff Present: Jennifer Allen, Press Secretary; Heather Couri, 

Deputy Director of Education and Human Services Policy; Daniela 

Garcia, Professional Staff Member; Amy Raaf Jones, Education Policy Counsel and Senior Advisor; Brian Melnyk, Legislative Assistant; Krisann Pearce, General Counsel; Mandy Schaumburg, Education and Human Services Oversight Counsel; Linda Stevens, 

Chief Clerk/Assistant to the General Counsel; Alissa Strawcutter, 

Deputy Clerk; Aaron Albright, Minority Communications Director 

for Labor; Daniel Brown, Minority Junior Legislative Assistant; 

Jody Calemine, Minority Staff Director; John D’Elia, Minority Staff 

Assistant; Brian Levin, Minority New Media Press Assistant; and 

Michael Zola, Minority Senior Counsel. 

Chairwoman FOXX. Good morning, everyone. 

This is a fairly small room, and we are all going to be very 

friendly today because we are in tight quarters. And it may get a 

little warm in here. But I want to welcome everybody to this hearing. 

A quorum being present, the subcommittee will come to order. 

I would like to thank the witnesses for joining us today. We appreciate the opportunity to hear your thoughts on the growing cost 

of higher education in America. 

Over the past decade, the cost of attending college has increased 

dramatically. According to the College Board, in-State tuition and 

fees at public 4-year colleges and universities have increased approximately 72 percent since 2001. In my home State of North 

Carolina, the sticker price for 4-year public colleges has jumped 25 

percent in the past 2 years alone. 
2 

This troubling trend of higher prices has several causes, including weak local economies, increased spending on student services 

and academic support, and State budget crises. States facing deficits and persistently high unemployment have been forced to cut 

spending across the board. As a result, public colleges and universities can no longer rely upon the same level of State financial support and must make tough decisions to help make ends meet, including cutting services or raising student fees. 

Leaders in Washington have long recognized the value of higher 

education in preparing students to compete in the global workforce. 

In 1965, Congress created the Higher Education Act to help lowincome students pursue a college degree. As a result, last year 

more than $169 billion in federal financial aid was disbursed to undergraduate and graduate students, up 81 percent since 2005. 

However, as our nation struggles with trillion-dollar budget deficits and unprecedented national debt, continuing to increase federal subsidies to supplement the growing cost of college is simply 

unsustainable. 

In the last school year, the federal government provided roughly 

three-quarters of all student aid. Despite this tremendous taxpayer 

investment, millions of students are still struggling with significant 

student loan debt burdens. 

Clearly, the rise in the cost of higher education in the United 

States is a problem, but the answer cannot be found in loan-forgiveness gimmicks or federal takeover of the student loan industry. 

As we continue to rethink our role in education, we should use our 

influence to encourage accountability and transparency. Our end 

goal should be for the States, postsecondary institutions, and students to determine the best path forward. 

Higher education has remained fundamentally unchanged since 

its inception, with most universities and college relying on professors lecturing to a classroom of 18- to 22-year-old students who live 

on or nearby the campus, adding significantly to their cost of attending college. To help reduce tuition and fees, institutions of 

higher education should be looking for innovative ways to incorporate new technology and better address student needs. 

Under the current system, there is little incentive for schools to 

enact lasting changes or accountability measures for the billions of 

taxpayer dollars spent each year. States, students, and parents 

must demand accountability for the investment, not depending 

solely on the federal government. 

In fact, in some instances, the federal government has done more 

harm than good. For example, we have seen this administration restrict academic freedom and tamp down on innovations through inappropriate regulatory policies. 

Prospective students and their parents must make it a priority 

to educate themselves about the true cost of attending college. 

Meanwhile, colleges and universities must do their part to streamline costs and lessen the burden for students whenever possible. 

Fortunately, some innovative institutions have already taken it 

upon themselves to do just that. Many colleges and universities 

have dramatically reduced administrative costs by eliminating or 

consolidating duplicative services. Others have found ways to make 
3 

use of empty classroom space, offering courses late at night and on 

weekends to help working students pursue a degree. 

The University of Washington and some campuses in the University of Wisconsin system recently implemented accelerated degree 

programs. These programs help the institution save on operating 

costs and pricey student services while also allowing students to reduce their debt load by graduating in a shorter period of time. 

As The Chronicle of Higher Education recently noted, Cabrini 

College in Pennsylvania is working to cut tuition and fees by more 

than 12 percent without lowering merit scholarships for incoming 

freshmen. Indiana’s Grace College and Colorado Mesa University 

are also working to reduce costs, and we look forward to learning 

more about their initiatives during today’s hearing. 

Each of these initiatives helps ensure a more affordable college 

education remains available for students across America. We 

should continue to share best practices like these while also encouraging increased transparency in the reporting of annual college 

costs. By making the most up-to-date information on tuition and 

fees available to the public, students and their families can better 

understand the cost, any loan commitment they will make, and develop a plan for managing any resultant debt before stepping foot 

on campus. 

I look forward to a productive discussion with my colleagues and 

our witnesses on how we can work together to help keep college attendance within reach for students nationwide. 

I would now like to recognize the ranking member, Rube ́n Hinojosa, for his opening remarks. 

[The statement of Chairwoman Foxx follows:] 

Prepared Statement of Hon. Virginia Foxx, Chairwoman, 

Subcommittee on Higher Education and Workforce Training 

Good morning, and welcome to today’s subcommittee hearing. I’d like to thank our 

witnesses for joining us today. We appreciate the opportunity to hear your thoughts 

on the growing cost of higher education in America. 

Over the past decade, the cost of attending college has increased dramatically. According to the College Board, in-state tuition and fees at public four-year colleges 

and universities have increased approximately 72 percent since 2001. In my home 

state of North Carolina, the sticker price for four-year public colleges has jumped 

25 percent in the past two years alone. 

This troubling trend of higher prices has several causes, including weak local 

economies, increased spending on student services and academic support, and state 

budget crises. States facing deficits and persistently high unemployment have been 

forced to cut spending across the board. As a result, public colleges and universities 

can no longer rely upon the same level of state financial support, and must make 

tough decisions to help make ends meet, including cutting services or raising student fees. 

Leaders in Washington have long recognized the value of higher education in preparing students to compete in the global workforce. In 1965, Congress created the 

Higher Education Act to help low-income students pursue a college degree. As a result, last year more than $169 billion in federal financial aid was disbursed to undergraduate and graduate students, up 81 percent since 2005. 

However, as our nation struggles with trillion dollar budget deficits and unprecedented national debt, continuing to increase federal subsidies to supplement the 

growing cost of college is simply unsustainable. In the last school year, the federal 

government provided roughly three-quarters of all student aid. Despite this tremendous taxpayer investment, millions of Americans are still struggling with significant 

student loan debt burdens. 

Clearly, the rise in the cost of higher education in the United States is a problem—but the answer cannot be found in loan forgiveness gimmicks or a federal 

takeover of the student loan industry. As we continue to re-think our role in edu-
4 

cation, we should use our influence to encourage accountability and transparency. 

Our end goal should be for states, postsecondary institutions, and students to determine the best path forward. 

Higher education has remained fundamentally unchanged since its inception with 

most universities and colleges relying on professors lecturing to a classroom of 18- 

22 year old students who live on or nearby the campus, adding significantly to their 

cost of attending college. To help reduce tuition and fees, institutions of higher education should be looking for innovative ways to incorporate new technology and better address student needs. Under the current system, there is little incentive for 

schools to enact lasting changes or accountability measures for the billions of taxpayer dollars spent each year. States, students and parents must demand accountability for the investment, not depending solely on the federal government. 

In fact, in some instances, the federal government has done more harm than good. 

For example, we have seen this administration restrict academic freedom and tamp 

down on innovations through inappropriate regulatory policies. 

Prospective students and their parents must make it a priority to educate themselves about the true costs of attending college. Meanwhile, colleges and universities 

must do their part to streamline costs and lessen the burden for students whenever 

possible. Fortunately, some innovative institutions have already taken it upon themselves to do just that. 

Many colleges and universities have dramatically reduced administrative costs by 

eliminating or consolidating duplicative services. Others have found ways to make 

use of empty classroom space, offering courses late at night and on weekends to help 

working students pursue a degree. 

The University of Washington and some campuses in the University of Wisconsin 

system recently implemented accelerated degree programs. These programs help the 

institutions save on operating costs and pricey student services, while also allowing 

students to reduce their debt load by graduating in a shorter period of time. As the 

Chronicle of Higher Education recently noted, Cabrini College in Pennsylvania is 

working to cut tuition and fees by more than 12 percent without lowering merit 

scholarships for incoming freshmen. Indiana’s Grace College and Colorado Mesa 

University are also working to reduce costs, and we look forward to learning more 

about their initiatives during today’s hearing. 

Each of these initiatives helps ensure a more affordable college education remains 

available for students across America. We should continue to share best practices 

like these, while also encouraging increased transparency in the reporting of annual 

college costs. By making the most up-to-date information on tuition and fees available to the public, students and their families can better understand the costs, any 

loan commitment they will make and develop a plan for managing any resultant 

debt before stepping foot on campus. 

I look forward to a productive discussion with my colleagues and our witnesses 

on how we can work together to help keep college attendance within reach for students nationwide. I now recognize the ranking member, Rube ́n Hinojosa, for his 

opening remarks. 

Mr. HINOJOSA. Thank you, Chairwoman Foxx. 

I would like to welcome and thank our distinguished witnesses 

for joining us today. 

This hearing is an opportunity for this committee to reaffirm its 

commitment to affordability, accessibility, equity, and student success in higher education. As we look for innovative strategies to reduce college costs and bolster college completion, it is vitally important that we do not create new obstacles for low-income, first-generation college and nontraditional and minority students. These 

populations are entering our colleges and universities in record 

numbers and must have the opportunity to go on and succeed. 

As ranking member of this subcommittee, I am deeply concerned 

that college costs have risen dramatically in the last decade. According to the College Board, between the school years 2010 to 

2012, in-State tuition at public 4-year institutions rose by 8.3 percent and the 2-year institutions experienced a sharp increase of 8.7 

percent. 
5 

In a recent national, bipartisan poll conducted by the Young 

Invincibles, The Institute for College Access and Success, known as 

TICAS, and the Demos, 84 percent of the young adults surveyed 

said that making college more affordable should be a priority for 

U.S. Congress. 

Today, thousands of students find themselves incurring an inordinate amount of debt to finance their education. College seniors 

who graduated in the year 2010, for example, have an average of 

$25,250 in student loan debt, according to TICAS. These trends are 

especially troubling given that the jobs of tomorrow will require 

students to have at least 2 years of postsecondary education and 

most States are slashing their education budgets. 

In the past several years, Democrats have taken historic steps to 

make a quality higher education more accessible and affordable for 

greater numbers of students. The passage of the Student Aid and 

Fiscal Responsibility Act, known as SAFRA, enacted as part of the 

Health Care and Education Reconciliation Act of 2010, made the 

largest investment in student financial aid since the GI Bill. 

In the 111th Congress, Democrats ended the taxpayer-subsidized, 

Federally guaranteed Federal Family Education Loan Program, 

known as FFELP, and replaced it with the William D. Ford Federal Direct Loan, making federal college loans more stable and efficient at no cost to taxpayers. By transitioning to the Direct Loan 

Program, Congress was able to reinvest $68 billion in federal student aid. 

SAFRA increased the maximum Pell Grant award, enhanced the 

capacity of minority-serving institutions and community colleges, 

and strengthened the income-based repayment, and increased investments to other federal programs. 

The bipartisan-passed Higher Education and Opportunity Act of 

2008 increased transparency and investments in federal student 

aid. Under HEOA, the U.S. Department of Education is required 

to collect and publish lists of tuitions and fees at all U.S. postsecondary institutions, holding colleges accountable for rising fees and 

tuition. Those institutions with the largest percentage increases in 

prices most submit a detailed description to the Department of 

Education outlining the reason for the increased costs. HEOA also 

encourages the use of innovative strategies to reduce costs, such as 

need-based grant aid incentives. 

While Democrats have made great strides in tackling this issue 

through the federal investments in Pell Grants, direct loans, the 

American Opportunity Tax Credit, and the enactment of HEOA 

and SAFRA, I agree with Education Secretary Arne Duncan that 

we must continue to do more to rein in college costs and reduce individual student debt. I look forward to hearing from today’s witnesses on how we can expand the affordability, accessibility, and 

student success in higher education and reach our Nation’s collegecompletion goals. 

Thank you. 

[The statement of Mr. Hinojosa follows:] 

Prepared Statement of Hon. Rube ́n Hinojosa, Ranking Minority Member, 

Subcommittee on Higher Education and Workforce Training 

Thank you, Chairwoman Foxx. 
6 

I would also like to welcome and thank our distinguished witnesses for joining 

us today. Today’s hearing is an opportunity for this committee to reaffirm its commitment to affordability, accessibility, equity, and student success in higher education. 

As we look for innovative strategies to reduce college costs, and bolster college 

completion, it’s vitally important that we do not create new obstacles for low-income, 

first-generation college, non-traditional, and minority students. These student populations are entering our colleges and universities in record numbers and must have 

the opportunity to go to college and succeed. 

As Ranking member of this subcommittee, I am deeply concerned that college 

costs have risen dramatically in the last decade. According to the College Board, between the 2010-11 and 2011-2012 school years, in-state tuition at public four-year 

institutions rose by 8.3 percent, and two-year institutions experienced a sharp increase of 8.7 percent. 

In a recent national bi-partisan poll conducted by the Young Invincibles, The Institute for College Access and Success (TICAS), and Demos, 84 percent of the young 

adults surveyed said that making college more affordable should be a priority for 

Congress. 

Today, thousands of students find themselves incurring an inordinate amount of 

debt to finance their education. College seniors who graduated in 2010, for example, 

had an average of $25,250 in student loan debt, according to TICAS. 

These trends are especially troubling given that the jobs of tomorrow will require 

students to have at least two years of postsecondary education and states are slashing their education budgets. 

In the past several years, Democrats have taken historic steps to make a quality 

higher education more accessible and affordable for greater numbers of students. 

The passage of the Student Aid and Fiscal Responsibility Act (SAFRA), enacted 

as part of the Health Care and Education Reconciliation Act of 2010 (HCERA), 

made the largest investment in student financial aid since the GI bill. 

In the 111th Congress, Democrats ended the taxpayer-subsidized, federally guaranteed Federal Family Education Loan Program (FFELP) and replaced it with the 

William D. Ford Federal Direct Loan (DL), making federal college loans more stable 

and efficient at no cost to taxpayers. 

By transitioning to the Direct Loan program, Congress was able to reinvest $68 

billion dollars in federal student aid. 

SAFRA increased the maximum Pell Grant award, enhanced the capacity of Minority-Serving Institutions (MSIs) and Community Colleges, strengthened the Income-based repayment, and made other investments to federal programs. 

The bi-partisan passed Higher Education and Opportunity Act of 2008 (HEOA) increased transparency and investments in federal student aid. 

Under HEOA, the U.S. Department of Education is required to collect and publish 

lists of tuition and fees at all U.S. postsecondary institutions, holding colleges accountable for rising fees and tuition. 

Those institutions with the largest percentage increases in prices must submit a 

detailed description to the Department outlining the reason for the increased costs. 

HEOA also encourages the use of innovative strategies to reduce costs such as 

need-based grant aid incentives. 

While Democrats have made great strides in tackling this issue through federal 

investments in Pell Grants, direct loans, the American Opportunity Tax Credit, and 

the enactment of HEOA, and SAFRA, I agree with Education Secretary Arne Duncan that we must do more to rein in college costs and reduce individual student 

debt. 

With that, I look forward to hearing from our witnesses on how we can continue 

to address affordability, accessibility and student success and provide all students 

with a high quality education. 

Thank you. 

Chairwoman FOXX. Thank you so much, Mr. Hinojosa. 

Pursuant to Committee Rule 7(c), all subcommittee members will 

be permitted to submit written statements to be included in the 

permanent hearing record. And, without objection, the hearing 

record will remain open for 14 days to allow statements, questions 

for the record, and other extraneous material referenced during the 

hearing to be submitted in the official hearing record. 

[An additional submission of Chairwoman Foxx follows:] 
7 

Prepared Statement of the Education Finance Council 

For nearly 20 years, the Education Finance Council (EFC), the trade association 

representing nonprofit and state agency student finance organizations, and its members have been working to improve access to and affordability of postsecondary education. EFC members have a deep expertise in postsecondary education financing 

and a long history of educating students on the range of options to pay for college. 

EFC and its members understand the financial hardship borne by student borrowers struggling to meet the rising cost of college during an economic recession and 

distressed job market. However, student loans, when properly understood and managed; provide necessary financing for students that have no other option to fund 

their postsecondary education. Student outreach; financial literacy education; and 

responsible borrowing initiatives provided by nonprofit and state agency student finance organizations help to prevent over-borrowing of student loans, which in turn 

aids in managing the cost of college. These programs allow students to understand 

their student loan obligations before they borrow and repayment options when they 

graduate. The innovative college access strategies offered by nonprofit and state 

agency student loan providers are keeping college within reach for numerous students. 

Nonprofit and state agency student finance organizations work closely with secondary and postsecondary institutions, financial aid officers, guidance counselors, 

and other local educators as well as directly with students to provide vital college 

access and completion programs. Programs range from financial aid awareness, 

early awareness, financial literacy, college planning, and training for educators. 

Nonprofit organizations educate students on postsecondary options, the cost of each 

option, and funding opportunities. Through one-on-one counseling, these organizations provide in-person guidance to students such as scholarship searches, filling out 

the FAFSA, completing college entrance applications and essays, and other handson activities. Many EFC members offer interactive online portals to promote smart 

college planning. Interactive portals allow students to align their interests with potential college majors and careers and view education options for each choice, the 

estimated cost of each choice, and the estimated salary after graduation. Portals include a range of other tools; including lesson plans on personal financing, strategies 

for higher education funding, details of postsecondary institutions in the student’s 

state, and available scholarships and grants. Oftentimes, nonprofit and state agency 

student finance organizations serve as the go-to resource in their states for student 

support. This private-sector collaboration has been a key driver in better preparing 

students to manage higher education costs. 

In today’s world, education and training after high school are requirements for 

earning a middle class income. Students must choose the education or training option that best meets their needs and which will not impose higher costs than they 

can afford. School counselors spend more and more of their time providing guidance 

to students on their personal lives and challenges. As a result, counselors have less 

time to work with students to develop a postsecondary education and training plan. 

EFC member institutions work with students and families to explore their interests, 

aptitudes, and career goals to link these interests to the education and training programs required to achieve their goals. Importantly, nonprofit and state agency student finance organizations provide unbiased counseling to help families select education or training options that will meet their needs without forcing them to incur 

greater debt than makes sense for their anticipated income. 

Beyond programs to promote access and affordability, nonprofit and state agency 

student finance organizations provide a responsible funding option for students to 

fill the growing higher education financing gap. As tuition continues to rise and financial aid remains stagnant, students must have access to loans with transparent 

terms and affordable rates in order to attain a postsecondary degree. EFC members 

provide supplemental student loans with low, fixed-interest rates—most times below 

the Department of Education’s Parent PLUS loan interest rates—and consumerfriendly borrower benefits. All programs require the student to have a qualifying 

credit score or qualifying cosigner. Nonprofit lenders provide extensive entrance and 

exit counseling regarding the loan’s terms to prevent over-borrowing and ensure 

each student understands repayment obligations and options. In addition, most EFC 

members require that schools certify the enrollment of each borrower. School certification acts as a check that the loan is being used for an educational purpose and 

that the amount borrowed is in-line with the college’s costs and the borrower’s 

needs. 

Recent government efforts to reduce student debt are inadequate and ineffective 

in view of the economic burden students face today. In the past, EFC members were 

able to offer loan forgiveness programs and other borrower benefits. These programs 
8 

allowed borrowers to pursue fields such as teaching and nursing they might otherwise not have been able to afford to pursue. With rising tuition and unemployment 

rates staggeringly high, students need better options to fund their postsecondary 

education and better guidance on the options that are already available. Congress 

and the Administration must reengage nonprofit and state agency student finance 

organizations to utilize proven-effective programs to promote college affordability 

and success. 

[An additional submission of Mr. Altmire follows:] 

Prepared Statement of the Pennsylvania Association of 

Private School Administrators (PAPSA) 

The Pennsylvania Association of Private School Administrators represents the 

more than 300 for-profit career schools, colleges and universities in the Commonwealth. 

PAPSA is deeply concerned about student overborrowing. What schools have 

found is that over borrowing is a big part of the loan debt problem, especially among 

unsophisticated borrowers. And it is increasing despite aggressive loan counseling. 

Schools constantly report stories of students asking for all the financial aid they 

are entitled to, paying their tuition and then walking away with thousands of dollars which ends up paying for a newer car, Christmas presents, plastic surgery, bail 

money or big parties which the school usually ends up hearing about. These cash 

stipends can be, in one case, as high as $24,000 for an associate degree. Despite the 

best efforts of schools to curb overborrowing, the U.S. Department of Education 

mandates that schools must disclose to students all the loan money they are entitled 

to borrow. How can schools be responsible for repayment when the US Department 

of Education encourages irresponsible overborrowing? 

Overborrowing is defined in three ways by our schools: 

• Students transfer or move from school to school and continue to mount debt 

which goes into deferment while they are attending another college or school. 

• Commuter students, living at home, borrow available funds in excess of direct 

school costs (tuition, fees, books) without regard to debt consequences. While these 

dollars make sense for traditional college students, they are not appropriate for commuter students. Since schools must disclose all the loan money available to these 

students, they often access these significant additional dollars with no thought to 

the future. 

• Students also overborrow when they receive an unexpected increase in PELL, 

OVR, state grant, public assistance or WIA funding. As a result, more grant money 

is received than students originally planned. But when the school counsels and encourages them to return the excess loan money, the students almost always decline 

the request and keep the extra loan amount. 

The following are actual examples of student overborrowing in Pennsylvania: 

A small cosmetology school in Central Pennsylvania—In 2007-08-09, the school 

had a zero percent tuition increase and .06 percent enrollment increase, yet overborrowing increased from four to 41 students (a 925 percent increase). Overborrowing 

loan amounts increased from $2,064 in 2007 to $68,473 in 2009 (over a 3000 percent 

increase). 
9 

CHART 1

OVERBORROWING LOAN AMOUNTS—COSMETOLOGY SCHOOL

Three Business school campuses in Northwestern Pennsylvania—In 2007-08-09 

the school averaged a 3.8 percent total tuition increase with a 43 percent enrollment 

increase, but a 152 percent increase in overborrowing—from $234,000 to $590,000 

in two years. 

CHART 2

OVERBORROWING LOAN AMOUNTS—THREE BUSINESS SCHOOLS IN

NORTHWESTERN PENNSYLVANIA

One business school campus in Central Pennsylvania—Between 2007 and 2009, 

the school averaged a 1.7 percent tuition increase each year and no increase in enrollments or borrowers. Yet, overborrowing increased by 104 percent (from 36 to 74 

students) and overborrowing dollars tripled from $100,193 in 2007 to $363,983 in 

2009. 
10 

CHART 3

OVERWORKING LOAN AMOUNTS—ONE BUSINESS SCHOOL IN CENTRAL PENNSYLVANIA

Three small Pittsburgh technical schools under one ownership—While the number 

of students overborrowing remained the same between 2007 and 2009, the total 

amount of over borrowing increased by 99 percent ($32,651 to $61,316). Although 

tuition increases averaged 6.2 percent a year and enrollment increased by only 1.2 

percent on average over the period, the dollar amount of overborrowing increased 

as the same number of students chose to increase their overborrowing. 

CHART 4

OVERBORROWING LOAN AMOUNTS—THREE SMALL PITTSBURGH TECHNICAL SCHOOLS

Nineteen small cosmetology schools throughout Pennsylvania—Although tuition 

increases averaged less than one percent per year for 2007 to 2008 to 2009 and the 

average enrollment increase was 3.8 percent a year, the number of students overborrowing increased from 757 in 2007 to 6,033 in 2009. Actual overborrowing loan 

dollars increased six-fold, from $1,169,261 to $6,551,978 over the three year period. 
11 

CHART 5

OVERBORROWING LOAN AMOUNTS—NINETEEN SMALL COSMETOLOGY

SCHOOLS IN PENNSYLVANIA

A trade/technical school in Northwestern Pennsylvania—Between 2007 and 2009 

the school had a five percent total tuition increase; a 42 percent increase in enrollment; and no change in the student demographic. Yet, they experienced a 4,250 percent increase in overborrowing—from $6,496 in 2007 to $255,680 in 2009. The number of students overborrowing increased from ten in 2007 to 180 in 2009. 

CHART 6

OVERBORROWING LOAN AMOUNTS—TRADE/TECHNICAL SCHOOL IN

NORTHWESTERN PENNSYLVANIA
12 

A business school in Northeastern Pennsylvania—Between 2008 and 2010, 65 per- cent of the students each took more than $1,000 in extra loan stipends, averaging 

$5,351. Thirty-five percent took less than $1,000. The 65 percent however, represented over 97 percent of the total amount of loan stipends issued, or $1,480,000 

of the $1,530,000 in extra stipend money. 

The point in this example is the school’s concern that 65 percent of the students who borrowed more than $1000 averaged over $5000 in extra stipends. The school 

felt the students were taking on unnecessary expenses and would have a higher 

likelihood of default. 

A 37 campus private group of schools in Pennsylvania and in other states—Over- borrowing increased from $17,601,189 to $34,883,339 a 101 percent increase in the 

private school group. Over the three year period, there was a 7.6 percent tuition increase and a 41 percent increase in enrollment. 

CHART 7

OVERBORROWING LOAN AMOUNTS—A 37 CAMPUS PRIVATE SCHOOL GROUP IN

PENNSYLVANIA AND OTHER STATES

Large private college in Western Pennsylvania—Compare the previous data to the 

data provided by a more expensive two year college in Western Pennsylvania. Student overborrowing increased only slightly from $1,329,854 in 2007 to $1,373,764 in 

2009. The tuition increase averaged 3.5 percent a year. Enrollment between 2007 

and 2009 increased an average of one percent a year. There was no change in student demographics. 

CHART 8

OVERBORROWING LOAN AMOUNTS—LARGE PRIVATE COLLEGE IN

WESTERN PENNSYLVANIA

In this instance, tuition was above the state average in 2007 and students were 

already borrowing larger amounts for all years in question. The conclusion is clear. 
13 

More expensive private colleges do not see an increase in over borrowing since their 

students have traditionally borrowed at higher levels. Relief, however, from mandatory loan disclosure to students is needed at lower tuition institutions. 

The three year trend appears clear. While there were minor tuition increases, no 

change in student demographics, stable or moderate enrollment increases due to 

some new campuses, only over borrowing, as was defined earlier, increased exponentially. In addition, from all early indications the upward trend toward excess borrowing will continue in 2010 and possibly beyond. 

The problems PAPSA sees now with overborrowing will only be exacerbated in the 

future by the recent gainful employment regulations that the Department of Education has implemented. If career schools are going to be penalized for high debt, 

(and currently are under cohort default limit requirements) debt problems should 

be addressed at the front-end of the loan as well by curbing over borrowing and considering other front-end approaches. 

PAPSA would like to see Congress or the US Department of Education consider 

additional methods beyond counseling for limiting student borrowing. We propose 

Federal changes to allow an institution to use professional judgment to decrease the 

loan amount approved for a student based on the appropriateness of the budgeted 

items and Satisfactory Academic Progress (SAP), as long as the loan amount fully 

covers the cost of attendance (COA), as we understand COA to be defined, and there 

are no other government programs that contribute to the COA. We would be happy 

to provide legislative language if requested. 

Thank you. 

Chairwoman FOXX. It is now my pleasure to introduce our distinguished panel of witnesses. 

Jane Wellman is the creator and director of the Delta Project, a 

research and policy organization that works to improve productivity in higher education through more effective management of 

resources. Since 1995, she has also been a senior associate with the 

Institute for Higher Education Policy. 

Dr. Ronald Manahan is the fifth president of Grace College and 

Seminary, having served as president since 1994. Dr. Manahan has 

also served as the school’s professor of biblical studies, vice president of college academic affairs, and provost. 

Mr. Jamie Merisotis is the president and CEO of the Lumina 

Foundation for Education. Before joining the Lumina Foundation 

in January 2008, he was the founding president of the Institute for 

Higher Education Policy. 

Mr. Tim Foster was appointed as the tenth president of Colorado 

Mesa University in March 2004. Mr. Foster previously served as 

the executive director for the Colorado Commission on Higher Education and as head of the Colorado Department of Higher Education. 

Before I recognize you to provide your testimony, let me briefly 

explain our lighting system. You will have 5 minutes to present 

your testimony. When you begin, the light in front of you will turn 

green. When 1 minute is left, the lights will turn yellow. And when 

your time has expired, the light will turn red, at which point I ask 

that you wrap up your remarks as best you are able. 

After you have testified, members will each have 5 minutes to 

ask questions of the panel. 

I now recognize Ms. Wellman for 5 minutes. 

STATEMENT OF JANE V. WELLMAN, EXECUTIVE DIRECTOR, 

DELTA PROJECT ON POSTSECONDARY COSTS, PRODUCTIVITY, AND ACCOUNTABILITY 

Ms. WELLMAN. Thank you very much. 
14 

Good morning, Madam Chairwoman and members. It is a pleasure to be here speaking about the research done by the Delta Cost 

Project, a nonprofit, nonpartisan research group focusing on where 

the money comes from and where the money goes in higher education. 

I am going to speak quickly about what we see as some of the 

major patterns or major trends in the revenue and spending data 

for higher education. Our data cover public and private nonprofit 

institutions. I will be focusing on the time period roughly 1999 to 

2009. Because we use expenditure data as well as revenue data, 

there is a bit of a time gap involved. So you can mentally adjust 

for some of the numbers I am going to be talking about for the last 

couple of years since 2009 when we know that there have been continued dislocations, particularly in public institutions. 

First comment, first pattern. We have some slides but I think 

they are not going to work, so this will be more Zen than usual. 

You have little, teeny versions of these in the testimony. So bear 

with me and I will just get through them quickly. 

The first pattern has to do with levels of economic stratification 

and the real differences between public and private—here we go; 

we are getting something popping up—between public and nonprofit private institutions over this period. 

One of the really big stories over the last decade has been the 

growing bifurcation between public and private institutions, with 

the majority of new enrollments, 1.6 million-plus new enrollments, 

going into public community colleges and an awful lot of increased 

spending occurring primarily in a relatively small handful of elite 

institutions with endowments. 

You can see on this chart, the way we have organized all of these 

data are by broad sector, Carnegie categories. On the left, we have 

private research universities, and on the right, community colleges. 

The green line here is what has happened in increased spending 

per student on average in that sector since 2009. The purple line 

is where the enrollments have gone. So you can see sort of quickly 

here what the differences have been. 

If you will go to the next slide, one of the consequences of this, 

as you will see, is a real unevenness in access to resources between 

the relatively small handful of elite institutions and the majority 

of institutions where students are enrolled, with average spending 

per student in the elite institutions somewhere around $35,000 per 

student versus public community colleges where spending is closer 

to $10,000 per student. So it is a real pattern of differences. And, 

other than this one, generalizations about finance in higher education are always suspect; there are such differences. 

The second major comment has to do with what has been happening to tuition, which I know is of primary interest to this panel. 

You know the story of rising tuitions, which have been continuing 

to rise well above inflation for the last 20 years. However, there 

has been a growing difference between growing prices charged to 

student and spending per student or cost per student. So the growing price and cost gap is one of the other big patterns we see in 

higher education. 

For the majority of institutions, increased tuition revenues are 

not translating into greater spending. The reason for this is cost- 
15 

shifting. As other revenue sources are evaporating in the institutions, rather than reducing their spending—and some might argue 

they can’t reduce spending that much—but rather than reducing 

spending, they are shifting the cost on to student tuition. 

So costs are here; tuitions are here. And what you see in a year 

like 2009, a time of recession, what you see is both cost-cutting by 

the institutions and price increases. And having those two things 

happening simultaneously is one of the real unsustainable patterns 

in higher education. 

If you look at some of the data here, this figure here shows just 

a 1-year change, between 2008 and 2009, in what has happened in 

tuition revenues—how much the institutions are capturing in revenues per student—versus what they are getting in public institutions from State and local resources versus what they are spending 

on the students. So looking at that gap between tuition and State 

revenues and spending gives you a pretty good snapshot of what 

is going on. 

Just to read one of them off, in public research universities, tuition revenues, average increase in 1 year of $369, at the same time 

that the institutions were losing on average $751 per student from 

State and local appropriations. Despite that, they kept spending 

about flat, very modest increase, 92 bucks, probably because they 

were spending down reserves during that period. 

If you look at the next chart, you will see a 10-year pattern and 

the same kinds of numbers. And what you see is that over that 10- 

year period most of the new spending in higher education is coming 

in from tuition revenues—the same kind of pattern of a price and 

cost disconnect over that period. 

Third comment—I don’t have charts on this one, so let me just 

speak to it, and it has to do with where the money is going in higher education. One of the patterns we have seen—and it has been 

commented on widely in higher education—has been a modest erosion, but a consistent erosion, in the amount of money that is going 

to pay for the direct cost of student instruction and an uptick in 

spending that is going for administrative activities, academic support, which could be computing, and for other types of functions. 

So you have seen this winding down, very modest but consistent, 

in all types of institutions, from the elite Ivies to the community 

colleges, reduction in spending for instruction and an increase in 

spending for administration. 

What we saw in 2009 was an interesting and we hope welcome 

slight change in that. In the first year of the great recession, when 

you see evidence of spending cuts in institutions, this time we saw 

greater attention—oh, I am sorry, I am red already—to the efforts 

to control administrative expenses and make the cuts there versus 

what is going on in spending on instruction. So they are protecting 

instructional spending. 

I am going to jump very quickly to one other major point, and 

then I will stop. And that is, if you looked for a smoking gun in 

higher education about where the spending has been going up, the 

single biggest factor for increased spending is employee benefits 

and specifically health care, up 5 percent per year consistently over 

time. So if there is one area where spending has to get cut if we 

are going to take care of tuition, it is going to be health care. 
16 

My apologies for rushing through that. Thank you. 

[The statement of Ms. Wellman follows:] 
17 
18 
19 
20 
21 
22 

Chairwoman FOXX. Five minutes goes by in a hurry. 

Ms. WELLMAN. Well, I didn’t even see the—my apologies. 

Chairwoman FOXX. You went 2 minutes over. 

Ms. WELLMAN. I beg your pardon. 

Mr. HINOJOSA. Madam Chair, I ask unanimous consent that we 

all agree to extending the time of 5 minutes to a minimum of 7, 
23 

possibly 8, so that we can really go over these numbers that have 

been extremely of great concern to many of the members on both 

sides of the aisle. And I think that it is worth giving them that additional time, if you have no problem with that. 

Chairwoman FOXX. Thank you, Mr. Hinojosa. Let’s see how our 

panelists can do within the time frame. And Ms. Wellman has set 

a pattern here, and we will try to be fair to everyone involved. But 

we won’t set the time at 7 minutes, we will leave it at 5, and try 

our best to let people finish their thoughts. And we will be fairly 

lenient in the questions. How is that? 

Mr. HINOJOSA. I have no problem with that. 

Chairwoman FOXX. Thank you. 

Dr. Manahan? 

STATEMENT OF RONALD E. MANAHAN, TH.D., PRESIDENT, 

GRACE COLLEGE AND SEMINARY 

Mr. MANAHAN. Thank you, distinguished committee members, for 

the opportunity to testify this morning. My name is Ron Manahan, 

president of Grace College and Seminary, an accredited residential 

Christian institution of arts and sciences in Indiana. Grace offers 

undergraduate and graduate programs and enrolls over 1,600 students from 36 States and 8 countries. 

Thank you for the opportunity to testify and provide you with information regarding our institution’s efforts to address the rising 

cost of college education. 

For a number of years, we had been concerned about this issue, 

but the economic turbulence of 2008 and beyond made even clearer 

that our campus had to address rising costs with greater urgency 

and that federal and State support of higher education was challenged. We could not simply stand by and wait for help. 

Grace has received the most attention because of its 3-year degree option, but we reviewed many aspects of our college—and we 

have more to do—to determine where savings and reforms can be 

made. Specifically, we addressed rising costs in four ways. 

In 2007, our strategic plan called for the evaluation of every academic program in terms of data points such as enrollment patterns, 

staffing, cost-effectiveness, demand among high school students, 

job-market issues, et cetera. Each program was placed in one of our 

four categories, listed in my prepared testimony. 

The review was completed in 2009. This led to program adjustments in some cases and the teach-out and elimination of six programs. Grace helped students either finish at Grace or transfer to 

another institution offering the student’s program choice. Several 

programs were added that focused more directly on areas of student program interest and regional needs. 

A second way Grace addressed cost was by reviewing institutional operations. For more than 8 years, Grace has taken steps to 

reduce operational costs by seeking more efficient ways to serve 

students and employees. After thorough reviews, the campus strategically aligned physical plant operations, food service, publications, marketing, and printing with regional businesses that provide good service. We have been able to contain or reduce cost. 

A third way Grace addresses cost was by exploring innovation. 

We developed a 3-year degree option for every baccalaureate degree 
24 

program Grace offers. This innovation required an intense 2-year 

development and preparation process and had five goals, among 

which are requiring 120 credit hours for all baccalaureate degrees 

and achieving increased accountability. 

Though the option began just this semester, very, very early results are positive. Forty-eight percent of freshman students indicate they plan to graduate in 3 years. Freshmen are averaging a 

semester credit-hour load of nearly 17 credit hours. Applications 

and deposits for next year are up substantially, partly I think because of this new option. The 3-year degree option reduces cost 25 

percent compared to the 4-year option. 

A second innovation addressing cost is Grace’s Weber School. 

This 2-year degree program is designed to make education affordable in more at-risk areas among individuals much to lose in this 

economy. Fort Wayne and Indianapolis are our first two locations. 

We are looking seriously at other Great Lakes cities. This program 

matches the first 2 years of our on-campus 4-year degree option. 

The annual cost for a full-time student in this program is only 

$7,800 before any aid is applied. 

A third innovation is Grace’s Placement Promise. Students meeting certain criteria may be eligible to earn an additional year of undergraduate education tuition-free if they don’t find employment or 

gain graduate school acceptance within 6 months of graduation. 

A fourth way Grace addressed cost was through collaborations 

and partnerships. For example, Grace collaborated with two 4-year 

institutions to offer nursing and engineering, and designed and offered the nation’s only graduate program in orthopedic regulatory 

and clinical affairs in order to meet a regional and critical business 

need. 

We realize that our 3-year degree option and our Weber School 

are not for everyone, but we believe they are right for us. We believe our changes address cost and strengthen education and access, and we have more to do. 

Thank you for the opportunity to tell you about our efforts. I am 

grateful for federal funding to help students, but higher education 

must be vigilant in controlling cost, ensuring access, and increasing 

employability. Thank you for your interest in this topic. 

[The statement of Mr. Manahan follows:] 

Prepared Statement of Ronald Manahan, President, Grace College 

Good morning Madam Chair and other Distinguished Committee Members. My 

name is Dr. Ronald Manahan, President of Grace College and Seminary in Winona 

Lake, Indiana. Founded in 1937 and located in the northern part of the state, Grace 

is an independent, regionally accredited institution of higher education offering undergraduate and graduate degrees. Thank you for the opportunity to testify about 

strategic changes made at Grace College to address the serious matter of rising college cost. I am pleased to provide you with information regarding our institution’s 

intentional efforts to address cost through efficiency, innovation, and collaborations. 

Institutional Profile 

Grace College and Seminary is comprised of a liberal arts college offering undergraduate and graduate degrees and a graduate seminary. The institution’s mission 

states that Grace is an evangelical Christian community of higher education which 

applies biblical values in strengthening character, sharpening competence, and preparing for service. Grace has a fall 2011 enrollment of 1,616. The incoming undergraduate class had average standardized test scores of 24 on the ACT and 1055 on 

the SAT. The average high school grade point average was 3.54 (4.0 scale). Students 

at Grace this year come from 36 states and 8 countries. Full-time student tuition 
25 

is $22,546 (covers up to 18 semester hours each semester) and room and board is 

$7,214. Approximately half of our students come from Indiana. The incoming students for fall 2011 came from homes with an average adjusted gross income of 

$66,717. 95% of our students receive financial aid. Our institutional default rate for 

the three most recent years is 2.9% (2007), 0.8% (2008), and 2.1% (2009). A general 

overview of institutional grants and federal grants and loans follows. 

Financial aid 2009–10 2010–11 2011–12 

Grace Institutional Grants (minus grad/non-trad.) .................................... $10,649,409 $10,696,166 $10,170,690 

Pell Grants .................................................................................................. $1,535,320 $1,808,685 $1,948,386 

Perkins Loans .............................................................................................. $463,879 $466,801 $512,036 

Stafford Subsidized Loans .......................................................................... $3,247,397 $3,535,621 $4,014,510 

Stafford Unsubsidized Loans ...................................................................... $2,976,818 $2,856,314 $3,710,399 

Background 

For a number of years our institution has been concerned about the rising cost 

of college education and specifically the cost of a Grace College education. We realized we were pricing ourselves out of the very group of students we desired to serve. 

As a result of this concern we undertook steps to address the cost of our college 

through review of institutional programs, institutional operations, innovation, and 

partnerships and collaborations. The economic turbulence of 2008 and beyond made 

even more clear (a) that our campus had to address rising cost with the greatest 

urgency, (b) that federal and state support of higher education was challenged, and 

(c) that we must find ways through our educational mission to contribute to the 

local and regional health of our economy. We could not simply stand by and wait 

for others to help us with these concerns. 

Addressing Rising Cost through Review of Institutional Programs 

In early 2006 our institution approved a five-year strategic plan that included 

among its goals the review and evaluation of educational programming within the 

institution. • Strategic Initiative 3.7: Determine the most efficient and effective academic 

structure • Strategic Initiative 3.8: Implement aggressively the College’s current policies on 

the conduct of comprehensive assessments of each academic department • Strategic Initiative 3.9: Examine the potential for adding new majors 

In the case of every program the evaluation included enrollment patterns, staffing, cost effectiveness, demand among high school students, competitive advantages 

over similar programs at other institutions, and other such data points. Potential 

outcomes of this thorough review were placing each program into one of four categories and their respective outcomes: (1) Program is strong, nurture its strength; 

(2) program can be strengthened by selected strategic help; (3) program needs substantive changes that, if not achievable within a couple of years the program will 

be closed and taught out; and (4) the program must be closed and taught out. The 

result of that major evaluation was that six programs were taught out and eliminated. In each case the institution helped students either finish at Grace or transfer 

to another institution offering the student’s program of choice. By the end of the 

2008-2009 academic year all program reviews were completed. During this same period several programs were added that focused more directly on areas of student 

program interest and local and regional needs. 

Addressing Rising Cost through Review of Institutional Operations 

For more than eight years Grace has been taking steps to reduce operational cost 

by seeking more efficient ways to serve students and employees. As a result of thorough reviews the campus has strategically aligned physical plant operations, institutional food service, publications, marketing, and printing services with regional 

businesses that provide good and cost-effective service. In these cases we have been 

able to contain or reduce cost while advancing service to students and employees. 

Addressing Rising Cost through Institutional Innovations 

(1) Three-Year Degree Option 

In 2009 Grace College undertook a thorough study and review of an innovative 

approach to all of our institution’s four-year baccalaureate programs. Our goals for 

this review were to stay committed to our institutional mission, maintain baccalaureate programming that in every case requires at least 120 semester hours (these 

hours as defined by regional accreditation and federal requirements) for graduation, 

increased focus on competence (not simply content), incorporate applied learning ex-
26 

periences as a part of program requirements, increase affordability for students and 

their families, and make use of in-depth research through a recognized firm. 

Grace College took dramatic steps to achieve these goals. The result was development of a three-degree option (the four-year degree option is still available to students selecting that option) for all Grace undergraduate degree programs (approximately 54). The institution still continues the four-year degree option but makes the 

three-year degree option available in every program. This required a change to the 

institution’s academic calendar and restructuring every course to be taught in the 

altered academic calendar: 

• Each semester was lengthened to include two eight-week sessions. The two sessions in a semester are separated by a brief vacation break. 

• Students using the three-year degree option take three three-hour courses each 

eight weeks, completing a total of eighteen credit hours each semester. 

• Students take eighteen hours each of the two semesters of a year and do this 

for three years totaling 108 semester hours of credit. Of course, students often bring 

with them credits earned through advanced placement, community college courses, 

etc. 

• Students take six hours on online course work provided by the campus for each 

of the two summers between the first and second year and between the second and 

third year totaling 12 semester hours of credit. Because summer work is online, students can live most any place for work or travel and still complete the courses. No 

tuition is charged for full-time students taking the 12 hours of summer online 

courses. 

• Taking the three-year degree option instead of the four-year option offers a 25% 

savings to full-time Grace students paying tuition, room, and board, meaning at today’s prices a total cost of $89,280 instead of $119,040. These are the costs before 

any federal, state, institutional, and other student financial aid is applied. 

• The average institutional financial aid for Grace freshmen students for the 

2011-2012 year is $10,033. At today’s prices this further reduces the total cost for 

a full-time three-year degree option student to $59,181 ($89,280 minus $30,099). 

• Grace College’s annual pricing increase for the three most recent years averages 

3.3%. 

• The three-year degree option allows the student to enter the workforce a year 

earlier than the four-year degree option, meaning the ability to gain up to an additional year of full-time income. 

Extensive faculty interaction and training was required to accommodate all these 

changes. The new three-year degree option was launched with the beginning of the 

fall 2011 semester. To date we have completed the first eight week session and are 

half-way through the second session of the fall semester. While the three-year degree was just recently launched, several institutional data points suggest the students’ attraction to the three-year degree option. 

• Full-time freshman enrollment for fall 2011 was 21% higher than for fall 2010. 

• According to the Grace Office of Registrar 47% of first-time students entering 

fall 2011 indicated at the beginning of the fall semester that they were taking the 

three-year degree option. 

• Halfway through the fall 2011 semester 48% of the entering freshman class indicated they are planning on graduating in three years because of the three-year 

degree option. 

• The average credit hours taken by freshman increased substantially for fall 

2011 over the previous four years: 

Average Credit Hours Taken 2007–08 2008–09 2009–10 2010–11 2011–12 

New Freshmen ........................................................................... 15.53 14.86 14.90 14.90 16.95 

• Recruitment for fall 2012 year-to-date is running ahead of recruitment for fall 

2011 year-to date: 

Year-to-Date Recruitment Fall 2009 Fall 2010 Fall 2011 Fall 2012 

Inquiries ......................................................................................... 11,097 11,488 12,299 14,963 

Applications ................................................................................... 1,058 1,630 1,983 2,559 

Accepts ........................................................................................... 412 669 967 1,410 

Deposits ......................................................................................... 34 33 34 72 
27 

(2) Two-Year Weber School 

• The two-year Weber School at Grace College is designed to be offered in multiple urban areas where family incomes make the cost of independent higher education unaffordable. This program was designed after the campus evaluated specific 

research conducted regarding the need for a cost effective alternative to independent 

higher education. • The annual cost for a full-time student in the Weber School is $7,800, a dramatic savings when compared to the average cost of independent higher education 

in Indiana of $25,547 (tuition only in 2010-11) or of all U. S. independent education 

of $27,793 (tuition only in 2010-11). • The program is offered close enough to a student’s home that room and board 

expenses at the Weber School are eliminated. • In the summer of 2011 Grace received approval from the Higher Learning Commission to offer a two-year associate degree in two urban cities in Indiana, Fort 

Wayne and Indianapolis. • All courses in the program are designed and approved by on-campus full-time 

resident faculty. • All courses are taught by either full-time or part-time faculty who meet the college’s faculty requirements regarding graduate degrees, successful higher education 

teaching experience, and other such requirements. • This program, named to honor a faithful supporter of Grace, is designed to be 

a cost effective alternative for students and their families who cannot afford to attend an independent college such as Grace. • This two-year program matches the first two years of the on-campus four-year 

degree option. • This allows a student completing the associate degree to transition to Grace’s 

Winona Lake, IN, campus to complete the student’s four-year baccalaureate degree. • If preferred, the two-year Weber School graduate can transfer to a baccalaureate program at an institution other than Grace. 

Addressing Rising Cost through Institutional Partnerships and Collaborations 

Through several means Grace College is addressing the rising cost of higher education through forming institutional partnerships and collaborations with other institutions and organizations. 

(1) Articulation Agreements with Regional Two-Year Institutions 

Grace has a degree completion program called GOAL (Grace Opportunity for 

Adult Learners) and has entered into articulation agreements with two regional 

two-year institutions, Ivy Tech State College and Ancilla College. The GOAL program allows students who have earned an associate degree to complete a baccalaureate degree in sixteen months. Graduates from these two institutions receive a 

discounted rate which means these students are paying $300 per credit hour. 

(2) Collaboration with Four-Year Institutions Offering Nursing and Engineering Programs 

Grace has collaborated with two four-year institutions who offer nursing degrees 

(Bethel College) and engineering programs (Trine University). In both cases Grace 

students take the nursing and engineering courses on the Grace campus. This arrangement gains efficiencies for Grace, Bethel, and Trine. 

(3) Graduate Education Programming Needed by Regional Businesses 

Three of the five largest orthopedic companies in the world are located within several miles of the Grace campus. Additionally, two major suppliers and several startup companies are located in close proximity as well. Grace approached these companies, asking what is the greatest educational need the companies had that, if addressed, would be of great help. All the companies said graduate education in regulatory and clinical affairs. Currently Grace offers a successful masters program in 

orthopedic regulatory and clinical affairs. The program was designed in collaboration with experts in the field and is the only such program in the country. 

(4) Orthopedic Scholar Institute 

Since 2003 Grace has offered the Orthopedic Scholar Institute (OSI) to students 

who are accepted into the program. Those accepted receive strategically designed 

learning experiences to enhance transferable skills expected by the orthopedic industry. OSI provides students accepted into the program with an opportunity to 

meld liberal arts learning with marketplace learning and technology. These students are given internship experiences within the industry, and their learning experiences are designed to help give them preferred employment opportunities when 

they graduate. 
28 

(5) Arranging Applied Learning Experiences with Regional Organizations and 

Businesses 

All Grace students are required to take twelve credit hours of applied learning. 

These experiences, completed under the supervision of faculty, are designed to provide learning opportunities that interface classroom work with real world experiences through internships or other applied projects. 

(6) Pursuing Campus Business Incubator Designated as Certified Tech Park 

by State 

During the past many months Grace has been working with our county economic 

development corporation, state entities, and regional businesses to establish a business incubator on the campus and have this campus facility recognized as a Certified Tech Park. Good progress is being made. The incubator would provide business, engineering, and other students with significant internship opportunities as 

well as enhance the students’ employability. We and others believe this will be a 

great advantage to our region in terms of developing future jobs. 

Conclusion 

We at Grace College realize that our three-year degree option is not for everyone, 

but it is right for us. It has produced encouraging early results. Our applications 

for fall 2012 are up. We have attracted interest from significant external groups 

within Indiana. Through our two-year Weber School we have expanded our educational service to Fort Wayne and Indianapolis. And we are looking to expand to 

other urban areas within the Great Lakes region. Our intention is to reach into 

more at-risk areas among individuals with much to lose in this economy. We believe 

the innovative programs and services we developed to address cost and strengthen 

education and access are the right moves for our time and our campus. 

Again, I thank the Committee and express my appreciation for the opportunity 

to tell you about Grace College and our efforts. Higher education must be vigilant 

in controlling cost, ensuring access, and increasing employability. I personally appreciate your interest in this subject and stand ready to assist in whatever way I 

can on this important subject. 

Chairwoman FOXX. Thank you, Dr. Manahan. 

Mr. Merisotis? 

STATEMENT OF JAMIE P. MERISOTIS, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, LUMINA FOUNDATION FOR EDUCATION 

Mr. MERISOTIS. Good morning. Chairwoman Foxx, Ranking 

Member Hinojosa, thank you very much for this opportunity to be 

here. I am Jamie Merisotis. I am president of the Lumina Foundation, the nation’s largest private foundation focused exclusively on 

postsecondary education access and success. 

Streamlining costs and reducing tuition in higher education isn’t 

just a good idea, it is essential to our future. Equity of educational 

opportunity is an American value that gives every person the 

chance to succeed and contribute. But the most important reason 

for streamlining costs and reducing tuition in the modern economy 

is simple: It is jobs. 

Recent estimates show that by 2018 more than 60 percent of 

American jobs will require some form of postsecondary education. 

Today, only about 40 percent of American adults have an associate 

or bachelor’s degree. For young adults between the ages of 25 and 

34, this level is only good enough for the U.S. to rank 15th among 

developed countries. By comparison, a stunning 63 percent of 

young adults in South Korea have a college degree. 

Lumina believes that 60 percent of Americans will need a highquality degree or credential by 2025 for the U.S. to remain economically competitive. Much, if not most, of this increase will need 

to come from low-income, first-generation, minority, and adult pop-
29 

ulations. Unfortunately, we don’t have the resources to scale up our 

current system to the size it needs to be in order to be able to 

produce the number of graduates our economy needs while maintaining or improving the quality of its graduates. 

The best way to increase the number of highly qualified college 

graduates to the level that we need is for the higher education system to become more productive. To meet the big goal of raising college attainment rates to at least 60 percent, productivity improvements will require a substantial increase in the number of highquality degrees and certificates produced at a lower cost per degree 

awarded, while improving access and equity for the least wellserved populations. 

To this end, Lumina is working with States and institutions 

throughout the U.S. to redesign higher education to produce more 

graduates at lower cost, working with our partners to confront the 

core assumptions of how higher education is structured, funded, 

and delivered. 

Our work on productivity of U.S. higher education is based on 

four specific strategies. The first is performance funding or targeting incentives for colleges and universities to increase college 

completion for underserved populations; to shorten time to degree 

or credential; and to reduce the cost of delivery. 

Many States are moving to performance-funding models that 

base some portion of institutional support on the number of graduates produced rather than just the number of students enrolled. 

Tennessee is it now distributing 70 percent of its higher education 

appropriations based on results and quality rather than just enrollment. This concept has spread rapidly, with nearly 20 States already using or developing performance-funding systems. 

The second strategy is using student incentives to increase 

course and degree completion. A good example is found right in my 

home State of Indiana at Indiana University Kokomo, where students who commit to completing 30 credit hours per year, maintaining continuous enrollment and making satisfactory academic 

progress, receive 3 successive years of discounted tuition, producing 

a savings equal to 1 full year’s tuition by the end of the program. 

The third strategy is to develop and implement new models of 

delivery. For example, a consortium led by the University of Texas 

at Austin is working with Carnegie Mellon’s Open Learning Initiative to offer redesigned general education courses, which can be 

completed faster, in some cases twice as fast, than traditional 

courses, with the same or better student performance and knowledge retention over time. 

The fourth strategy for increasing productivity of higher education is to introduce business efficiencies to produce savings that 

can be used to graduate more students. Much of what needs to 

happen here is to encourage cooperation and collaboration among 

institutions to improve quality and reduce costs. Since Ohio began 

requiring annual efficiency savings, their public colleges report 

more than $900 million in reduced costs. 

Now, in my written testimony I discussed some of the implications of State and institutional efforts to increase productivity related to the critical issues of federal financial aid, data systems, 

and quality assurance. For now, let me just say that federal stu-
30 

dent aid continues to be the bedrock of support for low-income populations and must be sustained. But innovation and creativity will 

be required to serve the increasing numbers of college graduates 

that our Nation needs. In addition, it is urgent that we develop 

comparable data at the national level on student progression toward degrees, college graduation, and ultimately job placement. 

And in terms of quality assurance, we need to realize we are on 

the cusp of a fundamental change in American higher education, 

a shift away from a system based on time to one that is based on 

learning. In a knowledge-based economy, degrees and other credentials must represent real skills and knowledge, not the amount of 

time a student has spent sitting in a classroom. 

Increasing the number of Americans with high-quality postsecondary degrees and credentials is vital to our economic future. 

These dramatic improvements cannot happen unless we streamline 

costs and reduce tuition by making the higher education system 

more productive. As you have heard, Lumina Foundation is working on this issue on many fronts, and we stand ready to share any 

and all of what we are learning with all of you. 

Thank you very much. 

[The statement of Mr. Merisotis follows:] 

Prepared Statement of Jamie P. Merisotis, President, 

Lumina Foundation 

Chairwoman Foxx and Ranking Member Hinojosa, thank you for the opportunity 

to testify before the subcommittee on a topic of such critical importance to millions 

of Americans and the future prosperity of our country. 

I am Jamie Merisotis, President of the Lumina Foundation. Lumina is the nation’s largest private foundation focused specifically on postsecondary education access and success, and we are based in Indianapolis, Indiana. I also previously founded and served as President of The Institute for Higher Education Policy, a nonpartisan research organization, and as executive director of a bipartisan Congressional commission on student aid that operated in the early 1990s. So the topic of 

keeping college within reach for all Americans is one that I strongly believe is of 

great importance to our nation. I also am proud to say that Pell Grants and other 

Federal, state, institutional, and private aid helped me afford college, so I know 

first-hand the challenges of paying for the ever-increasing cost of higher education. 

Streamlining costs and reducing tuition in higher education is not just a good 

idea—it is essential to our future. We’ve known for many years that the benefits 

of higher education are numerous, with society gaining as much, if not more, than 

individuals. Equity of educational opportunity is an American value, one which 

gives every person—irrespective of their financial or family circumstances—the 

chance to succeed and contribute to our collective well-being. But perhaps the most 

important reason for streamlining costs and reducing tuition in the modern economy 

is simple—jobs. Jobs that require skills and knowledge that can only be obtained 

through postsecondary education are growing much faster than those that don’t. 

Based on an analysis of employment data, the Georgetown University Center on 

Education and the Workforce has estimated that by 2018 more than 60% of American jobs will require some form of postsecondary education. This trend toward increasing skills is worldwide, and many of our economic competitors are responding 

by increasing higher education attainment rates to levels well above of ours. Only 

about 40% of American adults have an associate or bachelor’s degree, and the rate 

doesn’t vary much between older Americans—those between the ages of 55 and 64— 

and younger adults between the ages of 25 and 34. Among those young working 

adults between 25 and 34, this level is only good enough for the U.S. to rank 15th 

among developed countries. By comparison, a stunning 63% of young adults in 

South Korea have a two- or four-year degree. 

Lumina believes that 60% of Americans will need a high-quality postsecondary degree or credential by 2025 for the U.S. to remain economically competitive. Many, 

if not most, of this increasing proportion of Americans who require degrees or credentials will need to come from low-income, first-generation, minority, and adult 

populations. I mention this to put the issue of streamlining costs and reducing tui-
31 

tion into perspective. We all know that the increasing cost of higher education is 

placing a burden on families and individual students. But the challenge is far greater than that. Put bluntly, we do not have the resources to scale up our current system to the size it needs to be to produce the numbers of graduates our economy 

needs, while maintaining or improving the quality of its graduates. That scale of 

expansion cannot take place solely by increasing the investments made by the Federal government, states, parents and students. 

So how do we get there, without increasing costs even more? 

The best way to increase the numbers of highly qualified college graduates is for 

the higher education system to become more productive. In order to meet the Big 

Goal of raising college attainment rates to at least 60 percent, productivity improvement must not rely on making higher education more selective, or be used as an 

excuse to serve fewer students. Indeed, real productivity will require a substantial 

increase in the number of high-quality degrees and certificates produced, at lower 

costs per degree awarded, while improving access and equity for the least wellserved populations. 

To this end, Lumina is working with states and institutions throughout the U.S. 

to redesign higher education to produce more graduates at lower cost. When we 

began this work a few years ago it was somewhat controversial, in part because 

budget-cutting in the name of productivity previously had been used to justify serving fewer students. Few had seen the opportunities that real productivity represents 

to fundamentally rethink how we finance and deliver higher education. Today, however, in the increasingly difficult financial conditions faced by states and higher education institutions, we are finding that more and more state and campus leaders are 

willing to confront the core assumptions of how higher education is structured, funded, and delivered. 

Our work to improve the productivity of U.S. higher education is based on four 

specific strategies described in Lumina’s recent report, Four Steps to Finishing 

First. 

The first is performance funding, or targeting incentives for colleges and universities to graduate more students with quality degrees and credentials. Providing a 

significant portion of funding in this way gives institutions the means and incentive 

to invest resources in ways that increase college completion for underserved populations, shorten time to degree or credential, and reduce the cost of delivery. The 

particular type of performance funding that many states are moving to bases some 

portion of institutional support on the number of graduates produced rather than 

just the number of students enrolled. This concept has spread very rapidly, and 

nearly 20 states already have performance funding plans in place or under development. Tennessee, Ohio, Pennsylvania, and Indiana all have plans that are worth 

your study. Tennessee is now distributing 70% of its higher education appropriations based on results and quality rather than enrollment. Ohio has a new set of 

formulas that differentiates completion incentives by institutional mission. The 

Pennsylvania state colleges have stuck with performance funding for a decade and 

achieved a 10 percentage point increase in four-year graduation rates, with increases of 6 and 9 percentage points, respectively, for African American and Latino 

students. 

The second strategy for improving productivity is using student incentives to increase course and degree completion, specifically through the strategic use of tuition 

and financial aid. There is a lot of innovation taking place in states and institutions 

that use student aid to increase completion and to make the higher education system more cost effective. In my opinion, Federal aid programs could learn much from 

the lessons of these approaches. A good example is found at Indiana University Kokomo, which is piloting a student success tuition discount program for students who 

commit to completing 30 credit hours per year, maintain continuous enrollment, and 

make satisfactory academic progress. These students receive three successive years 

of incremental discounted tuition beginning at 20 percent, then 30 percent and ending with a 40 percent reduction in the senior year. For students, the overall impact 

is a tuition discount over four years that is equivalent to one-year’s tuition saved. 

The third strategy for lowering costs while increasing our capacity to educate students and improving quality is to develop and implement new models of delivery. 

Too often, our discussions of this issue end up as a debate between the pros and 

cons of traditional vs. for-profit delivery models, or place-based versus online delivery. The reality on the ground is much more interesting. For example, a Texas consortium of systems and institutions, led by the University of Texas at Austin, is 

working with Carnegie Mellon University’s Open Learning Initiative to offer redesigned general education courses which can be completed faster (sometimes twice 

as fast) as traditional courses, with the same or better student performance and 
32 

knowledge retention over time. Even better, research has found that students are 

more likely to complete them. 

Another example of true innovation is found in Indiana, where Governor Mitch 

Daniels had the idea to bring Western Governors University to the state and make 

it a state institution called WGU Indiana. Indiana promotes WGU’s accredited, online, competency-based degrees as an affordable way to educate the state’s adult 

population, many of whom previously may have attended college but not received 

a degree. The state also offers students the opportunity to apply for state needbased financial aid to reduce their WGU tuition, which, by the way, has not increased since 2008. Tuition and fees for a full-time student is $5985, which is 27% 

less than the average public in-state four-year tuition. WGU Indiana does not receive state support through the higher education funding formula. This model is 

being replicated in Washington and Texas. 

Last but by no means least, the fourth strategy for increasing the productivity of 

higher education is to introduce business efficiencies to produce savings that can be 

used to graduate more students. Much of what needs to happen here is to encourage 

cooperation and collaboration among institutions to improve quality and reduce 

costs. There are many ways institutions can collaborate. Ohio has formed a statewide shared purchasing consortium and is engaged in cost-saving collaborations 

across a number of institutions. Since its state system began requiring annual efficiency savings, Ohio public colleges report more than $900 million in reduced costs. 

Cooperation is even possible across states. One great example is the Midwestern 

Higher Education Compact, which offers purchasing cooperatives for liability insurance, information technology, and student health insurance which save states and 

institutions millions of dollars a year. 

Do these state and institutional strategies to lower cost and improve completion 

and quality have any implications for Federal policy? I believe the answer is an emphatic yes. 

First is the critical issue of financial aid. Federal aid continues to be the bedrock 

of support for low-income populations and must be sustained. But the fiscal climate 

and broader economic challenges means that innovation and creativity will be required to enhance the capacity of the current Federal student aid system to serve 

the increasing numbers of college graduates our nation needs. One of the most important elements of a reframed student aid system will be to ensure that all Federal 

aid programs are designed to support student success—as measured by well-designed indicators such as on-time progression, course and program completion, and 

graduation. This does not mean that access should be any less important in designing a new aid system—quite the contrary. We need to continue to increase access 

for the nation’s fastest growing populations in order to meet our employment and 

competitiveness goals as a nation. Yet access alone should not be enough. Federal 

financial aid remains a critical piece of the college success puzzle, and we must ensure that it is structured to meet the nation’s growing needs for more graduates 

with high-quality degrees and credentials. We must have the courage to re-examine 

the entire system of grants, loans, tax credits, and work study to make sure it all 

works as effectively and efficiently as possible to support the success of low-income 

students that desperately need it. 

Second, we must deal with the unglamorous but essential area of data. It is impossible to move the entire system of higher education to the levels of efficiency and 

effectiveness our nation needs without basic information on its outcomes. It is inexcusable that we do not have comparable data at the national level on student progression toward degrees, college graduation and ultimately job placement. In the absence of reliable Federal data, states are developing their own systems to provide 

these and other critical data. But it is hard for states to solve this problem alone. 

Often, it is difficult to obtain data about students at private and for-profit institutions, and the interstate mobility of students and graduates poses an additional 

challenge. It would be far more efficient for the Federal government to step up and 

provide a genuine service to states and the public through modernizing and improving its higher education data system. At the very least, the Federal government 

should help to assure that state and institutional data are comparable and can be 

easily shared to help everyone improve the performance of higher education. 

Third, and perhaps most urgent, is the Federal role in quality assurance in higher 

education. We are on the cusp of a fundamental change in higher education—the 

shift away from a system based on time to one based on learning. In a knowledgebased economy, degrees and other credentials must represent real skills and knowledge, not the amount of time a student has spent sitting in a classroom. WGU and 

other competency-based approaches are the harbingers of change, but the full ramifications of this shift affect all aspects of postsecondary education. We must recognize the prior learning of displaced workers, returning veterans, and millions of oth-
33 

ers who want and need to improve their knowledge and skills to advance their career or improve their life. We need transparent credentials based on learning that 

allow us to seamlessly connect the workforce development system and higher education. I know the subcommittee has taken a particular interest in this topic, and 

I applaud you for it. Finally, employers, students, and the public should have a clear 

understanding of what degrees and credentials represent in terms of skills and 

knowledge learned. Lumina is working with states, institutions, and others to develop the tools that will allow these new approaches to emerge—tools like the Degree Qualifications Profile, which defines common reference points for degrees 

across disciplines and institutions. These approaches will have significant implications for the way quality assurance is addressed by the Federal government. 

Again, thank you for the opportunity to appear before you today. Increasing the 

number of Americans with high-quality postsecondary degrees and credentials—particularly those populations that are the fastest growing and most vulnerable in our 

society—is vital to our economic future. Indeed, there is no more important public 

policy issue facing our nation. These dramatic improvements cannot happen unless 

we streamline costs and reduce tuition by making the higher education system more 

productive—substantially increasing the number of high-quality degrees and certificates produced, at lower costs per degree awarded, while improving access and equity. As you have heard, Lumina Foundation is working on this issue on many 

fronts, and we stand ready to share any and all of what we are learning with you. 

Chairwoman FOXX. Thank you very much. 

Mr. Foster? 

STATEMENT OF TIM FOSTER, PRESIDENT, 

COLORADO MESA UNIVERSITY 

Mr. FOSTER. Thank you, Madam Chair, Ranking Member Hinojosa, and members of the committee. It a pleasure, in fact, to be 

in front of you. It is actually an honor. And having not been in 

front of a congressional committee, I am probably a little more 

nervous than Jamie. We were supposed to be in Denver talking 

about this very topic but decided to come here instead and testify 

in front of your committee. 

Chairwoman FOXX. Showing good judgment. 

Mr. FOSTER. Based on the plane flight, I think it was a bad 

choice. 

Our State is home to one of most efficient, according to the Delta 

Project, systems of higher ed in the country. I think we are second 

as you measure baccalaureate degrees, or bachelor’s degrees, based 

on dollars invested. We also rank amongst the top 5 or 10, depending on the year, percentage of our population with a bachelor’s degree or higher. 

That said, we face the same stresses and strains that institutions 

in other States face. We took a 30 percent reduction in State support over the last 2 years. The Governor’s budget proposes an additional reduction of another 10 percent. And, quite frankly, we anticipate that might increase to 25 percent. 

This is not news to anyone. We have been watching the growth 

primarily in Medicaid, which is driving those kind of cost-shifts in 

State budgets. And so we have been preparing for this at CMU for 

the better part of 7 years. 

Counterintuitively, what we have done is, on the revenue side, 

went to a pricing model that charges students for every credit hour 

that they take. Surprisingly enough, what we saw when students 

pay for each credit hour, their credit-hour activity actually went 

up, rather than down. And we think their speed to degree will accelerate. 
34 

We also have done a lot of different things in terms of financial 

aid. And so we do a merit financial aid system, where if you are 

at 3.75 or above and have one of the other two, either top 5 percent 

in your graduating class or a 29 ACT, we give you a full tuition 

and fee scholarship. What we found was that 59 percent of our students who have need also qualified for those merit scholarships. 

And so what we also found is because we have higher expectations 

in terms of academic performance, the retention of those students 

is higher, and we think the graduation rates are going to increase 

as well. 

For middle-income students who get left out of the financial aid 

conversation, we looked at work study. And work study I think has 

been one of things sort of ignored at the federal and State level. 

Because students who are engaged in work study also retained at 

higher levels. And so we offer up to 20 hours of work-study money 

to students regardless of need and, again, see a significant increase 

in the retention. And it is really the connection to the institution 

and connection to people at the institution which we think is the 

critical element in that gain. 

On the expenditure side, and with some trepidation with Chairman Foxx, we early on decided and looked at our structure, our administrative structure—president, vice president of academic affairs, deans, chairs, faculty, students—and we spent about $1 million 6 years ago on deans. We made a decision on our campus to 

do away with deans. Clearly, we don’t save $1 million; we saved, 

conservatively we estimate, about a half a million dollars. And 

while our faculty I think missed that voice in administration, I 

don’t think our students have missed the expenditure of those 

funds whatsoever. 

We also—because of those ongoing budget reductions, it is sort 

of a continuous budget-cutting exercise. And I say ‘‘budget-cutting,’’ 

and then I will tell you that, in talking with folks in our region, 

they push me a little bit and say, ‘‘budget cuts or efficiencies,’’ and 

I would have to concede, most of them are efficiencies. 

And so we have done a number of things in addition to the 

deans, with rebidding copier systems to having the largest renewable energy program, where we use ground source heat exchange 

to heat and cool our buildings, which saves us about 75 percent of 

the cost of heating and college buildings. We get suggestions, like 

in summer we now concentrate all of our classes in one or two 

buildings, and so we don’t cool and maintain and clean the other 

buildings. And I could go on and on, but I would be way over my 

5 minutes and get in trouble with the chairwoman. 

I will tell you, according to our State agency, there are over 500 

accredited institutions of higher learning in the State of Colorado. 

If Adam Smith anticipated a perfectly competitive marketplace, I 

would submit to you we see it in higher ed. And I think that is true 

in most States. If we are not doing a good job, our students tell us. 

And if we are not doing a good job, our parents tell us. I have an 

open office hour every Monday at 2:00. I meet every 2 weeks with 

our student government. I go to every dorm every semester and we 

have pizza and talk about what their experience is. And we try to 

listen to what our students tell us, in terms of what we are doing. 
35 

Recently, we have been fortunate—I think Mr. Hinojosa talked 

about the percentage increase. Our percentage increase this year 

was 4.7 percent on tuition and fees. Regrettable, but, again, there 

is this two-edged coin which is affordability and quality. And I 

would submit to you that if we slash quality, then I don’t care how 

affordable it is, if it is not worth experiencing, then it is not worth 

spending time and money on. And the reverse: if it is high-quality 

and you can’t afford it, then obviously it is absolutely meaningless. 

I will tell you, a little nervously, we do spend a lot of time and 

energy trying to comply with and understand directions from the 

U.S. Department of Education. For example, we operate a satellite 

campus in Montrose, Colorado, and have for about 20 years. That 

community asked us to bring our medical office assistant program 

to Montrose, and because of recent rules with the Department of 

Ed, we have to actually submit a formal change request, which is 

about a 40-page document and will take us untold hours and time 

to try and get that approved so we can meet the needs of that community. 

We also spend at the financial aid office an inordinate amount 

of time every year poring through policies and directives because 

the goalposts move every year. 

And last but not least, and with due apologies, this is a requirement in terms of what information we have to put where on our 

Web site that has to be one or two clicks away. This cost us hundreds of hours of staff time. And, again, I guarantee you, with 500 

choices, students, if they can’t find the information that is contained here conveniently, whether it is expense, safety, quality of 

programs, again, they let us know, and they let us know with their 

feet by going somewhere else. 

So I have gone over a little bit, and so, with my apologies, 

Madam Chairwoman, and I will wrap up right there and just say, 

thank you for having us. We think this is a critical issue and, like 

Jamie, the future of this country is based upon our continuing efforts in educating both young people as well as adults. 

[The statement of Mr. Foster follows:] 

Prepared Statement of Tim Foster, President, 

Colorado Mesa University 

Thank you, Madam Chair, Ranking Member Hinojosa and members of the Committee for the invitation to this important hearing. I’m honored to be with you 

today. Colorado Mesa University may be thought of as the workhorse of Colorado’s 

higher education system and we greatly appreciate the opportunity to tell our story. 

Our mascot is the Maverick, so we’re used to bucking trends, challenging the status 

quo and using innovation to lead. 

CMU is a regional, public four-year teaching university with offerings ranging 

from technical and associate’s degrees (delivered by our community college branch) 

to a broad array of baccalaureate liberal arts and professional programs, as well as 

targeted graduate programs that serve our region and state. We are located in 

Grand Junction, Colorado, a community of approximately 100,000 people and we’re 

the largest regional hub between Denver and Salt Lake City. With an annual economic impact of over $317 million, CMU serves all of northwest Colorado; a region 

roughly the size of South Carolina. 

The topic of your hearing today is quite timely. As you’ll hear from Ms. Wellman 

with the Delta Cost Project, Colorado has one of the most productive higher education systems in the United States. Further, our state is home to one of our nation’s highest percentages of adults with postsecondary education. That being said, 

we face numerous challenges with access, affordability and making sure our doors 
36 

are always open to every student who has worked hard and is interested in pursuing a higher education. 

As an access institution, we pay special attention to first generation students and 

students with documented financial need as this is a significant proportion of our 

region’s population. Recently, CMU has seen high need enrollments jump from 2,481 

students in 2009 to 4,643 students enrolled this year. Interestingly enough, last 

year we found that 59% of students receiving institutional merit based awards also 

had documented financial need. As a matter of principle, we have found that granting students institutional financial assistance based on merit—rather than arbitrary 

financial calculations—results in greater retention and a drive to perform academically to maintain eligibility for the award. On our campus, we have seen first-hand 

the positive impact of students earning a hand-up, not simply receiving a hand-out. 

Along with our efforts to focus resources on merit-based aid is our university’s 

commitment to work study. As we’ve watched the number of federal and state work 

study awards shrink in recent years, we developed our own program known as 

MavWorks to match students that want to work with jobs around our campus. 

These students work no more than 20 hours per week during the semester but they 

wind up with a direct connection to the institution in the form of contributing to 

our shared success. Equally important are the human connections student workers 

develop in departments ranging from athletics to grounds-keeping. This direct connection results in higher retention which we all care about. 

If you look around our state and region, you won’t find an institution more focused on low administrative overhead, conservative budgeting and strategically 

serving students than Colorado Mesa University. To be sure, budget cuts at the 

state level have keenly focused our attention on running a tighter ship while striving to keep costs low and transparent for students. 

When our administration took the helm in 2004, the institution was operating in 

the red, enrollment was flat and our community was eager to see CMU live up to 

its full potential. Right away, we began scouring the budget to identify cost savings, 

efficiencies and opportunities for self-sufficiency. This analysis included a hard look 

at our price point. 

With apologies to Chairwoman Foxx whose great experience in higher education 

probably included the title of ‘‘Dean’’ along the way, we immediately flattened our 

organization by eliminating Dean positions on our campus, which saved us more 

than $500,000 per year. 

We convened an Academic Program working group to assess all academic program 

offerings in the context of our role and mission to make recommendations on which 

programs the university should continue to fund. The process was tough, it included 

many difficult conversations around our campus, but it resulted in our Board of 

Trustees actually eliminating twelve programs and reluctantly letting go a very talented, tenured faculty member. 

Much like Colorado’s system of higher education in general, CMU has been a 

leader in university efficiency. Our faculty members carry a 4-4 teaching load 

(teaching four classes in the spring along with 4 classes in the fall); double that of 

most R1 institutions. On the operations side, we have created a continuous improvement mentality whereby every year we identify new ways to operate better, smarter, more efficient, and for lower costs. From re-bidding copier services; to developing 

our region’s largest renewable energy ground-source heating and cooling system; to 

shuttering unused buildings in the summer time; CMU is diligent about keeping operations costs low. We do this because it allows us to reinvest in what matters in 

our line of business: top notch faculty, facilities, technology and support for students. Because people are at the center of our success as a university, I personally 

interview every single prospective faculty member to ensure their professional value 

system aligns with what we value at the university. It’s that important. 

To be sure, this new approach took some getting used to around our campus. But 

I’m proud to say that our entire campus community has embraced it because it 

yields results and it puts students first. To us, this is more than a slogan, it defines 

our operating philosophy and how we conduct business. 

For example, on move-in weekend, you’ll see our leadership team and our trustees 

helping students move in to residence halls. Throughout the semester you’ll see us 

eating pizza with students in every dorm across campus soliciting feedback and asking for suggestions on how to improve what we do. What we find is that by listening, really listening, to what our students are telling us, we can innovate and stay 

ahead of things that might otherwise serve as barriers to student success. 

You see, Madam Chair, CMU understands who our customers are. Students. In 

Colorado alone, over 500 accredited institutions are competing with us. On our campus, we believe competition is a good thing, whether it’s athletics, entrepreneurship 

or academics. Irrespective of how regulators in Denver—or even right here in Wash-
37 

ington, D.C. tell us how to run our institution, if we’re not doing a good job, I’ll hear 

about it. I have an open office hour every Monday afternoon and if we’re not doing 

something right, students are not afraid to come and tell me. Perhaps even more 

importantly, if we do not prioritize student success and the conditions necessary for 

students to thrive, our customers (our students) vote with their feet. And right now, 

our focus is to keep costs in check, provide students a great value, and deliver to 

them an outstanding undergraduate education. Watching our enrollment grow by 

double digits over the past few years leads me to believe we’re on the right track. 

In visiting with students and parents, I can assure you that families are very 

aware of cost and finding the best value for their education dollar. This year in Colorado, the average tuition and fee increase at other public colleges and universities 

was over 13%—ours was less than 5%. I’ve heard many times that families chose 

Colorado Mesa University not only for the quality of our programs but also because 

each education dollar can be stretched further on our campus. All of the aforementioned cost savings measures coupled with our constant focus on interaction with 

students allows CMU to keep costs in check for students while investing in those 

things that matter. 

It is worth noting that none of our success would have been possible without a 

strong, engaged Board of Trustees. Our Board constantly challenges me to define 

success and help identify ways to measure it. To me, success is defined by providing 

a high quality educational experience with a sharp eye towards the costs associated 

with delivering it. If first generation and middle income students cannot afford our 

tuition, the level of quality is rendered significantly less meaningful. 

Because higher education is such a competitive arena, I implore you to let the 

market work. Keep an eye on regulations that unnecessicarily burden institutions 

that are trying to do the right thing for students. Seek out innovation and flexibility 

measures that enable institutions like CMU to do the most good for students. Ultimately, keep your eye on the prize—and trust students and prospective students to 

keep us accountable. As public financial support continues to shrink for institutions 

like CMU, we will have no choice but to continue innovating and enhancing our selfsufficiency. We think we’re up to the challenge and I look forward to your questions. 

Thank you, Madam Chair. 

Chairwoman FOXX. Thank you very much, Mr. Foster. 

Again, thanks to all of you. I think you did a commendable job 

of transmitting a lot of information in the short period of time that 

you were given, and I appreciate the effort that you made. 

I will begin now with our questioning from the members to you 

all. And most of us make some comments before we go ahead and 

do the questions. And I did want to say that I appreciate—I read 

your written comments last night, and these will be in the record. 

And I want to say to anyone who is interested in getting a fuller 

perspective on the things that you said that I would commend the 

materials that you submitted. And I will make two or three brief 

comments, and then I will ask a couple questions. 

Number one, Mr. Foster, I really appreciated your saying—and 

you didn’t mention this in your comments—that CMU understands 

who our customers are: students. As someone who worked in institutions of higher education, I think too often there is a failure on 

campuses to recognize that. 

Ms. Wellman, at some point I think we should talk a little bit 

more about the area of benefits and how that is driving costs, because I am not sure that we have had a full enough discussion of 

that. 

And as somebody who has, again, worked in this system for a 

long time, or did work in the system for a long time, I would like 

to see us talk a little bit more about what we have known about 

innovative programs for a long, long time and how they are working. It seems to me we have known a lot of these things. We have 

known about student learning styles, we have known about dual 
38 

credits and things like that that I think perhaps don’t get enough 

attention in the public arena and aren’t presented as alternatives 

to increasing spending that are ways that we could reduce cost. 

And, Mr. Merisotis, I could not let this meeting go by without 

commenting on the really impressive comments that you made 

about a system based on learning and not on time. I am very impressed with that approach that the Lumina Foundation is taking. 

And, obviously, we need to do more of that in higher education. 

I wonder, Ms. Wellman, if you have any other examples that you 

would like to give about how institutions are dealing with State 

spending shortfalls. Very, very quickly, do you have any other examples that you would like to present? 

Ms. WELLMAN. The general pattern, as I mentioned, historically 

has been for public institutions to offload a lot of the reductions in 

State spending on the student tuitions. I think in this recession institutions figured that they have hit the wall on that, and we see 

much more evidence now of big public systems, as well as small institutions, paying a lot of attention to cost-cutting and productivity. 

They are cutting back on—they are paying attention to student 

credit accumulation. They are going into purchasing cooperatives. 

They are tackling health care. So I think there are a lot of good 

examples, more now than we have ever seen before. 

Chairwoman FOXX. Mr. Foster, would you mention something 

more about what kind of scaling back—you mentioned scaling back 

administrative and operational costs. Tell me a little bit more 

about how you address some of those concerns. I am intrigued 

about, for example, the summertime, using only a couple of buildings and cooling them. That seems to me to be something that 

more and more schools could do; the same thing in the wintertime. 

Would you mention something more about that? And how did you 

address the concerns that were expressed on your campus? 

Mr. FOSTER. Well, when I first got to campus, we were actually 

operating slightly in the red. And so, one of the first things—that 

is not a sustainable model, as we all appreciate. And so, the dean 

concept came up. We did the traditional approach, which convened 

a committee, unfortunately an even-numbered committee. I was 

not very seasoned at the time. And they came back three-three and 

said, you know, we would tie on whether we eliminate deans. Although, the other three said, if money is an issue, then we would 

have to join those who say it is time to walk away from deans. 

We have also engaged the campus as a whole, though. The classroom idea in the summertime—we have a suggestion spot on our 

Web site, and we get suggestions all the time. We have rebid our 

insurance. We were able to pull out of the State’s insurance pool, 

and we were effectively underwriting the Department of Corrections and Department of Transportation, which are obviously much 

riskier than teaching on a college campus. And so we are able to 

save money there. 

From a student perspective, I should go back and say—because 

we chatted a little bit earlier—one of the things that our students 

have the ability to do and I think was an experience you had when 

you were president was dual-enrollment: students who in high 

school can take college credits while they are in high school. And 

in Colorado, the school district actually pays for those courses. And 
39 

so we have students who increasingly start with 20, 30, 40, as 

much as a full year under their belt, and so it just gives them a 

running start. And really, maybe they aren’t completing in 3 years, 

but it somehow feels like they are paying for much less. 

Chairwoman FOXX. One more quick question. The program that 

you mentioned that you want to take to another place, is that program already approved by all the approval systems on your campus 

and you are having to do the regulatory process all over again just 

because you are moving it to another place? Is that what I understood? 

Mr. FOSTER. Yes, ma’am. What is ironic about it is, in Colorado 

we are actually—and it is one of these federal agency trumping 

State, kind of, statutes as well as State regulations—we are designated as a regional educational provider for the western part of 

the State, about the size of the State of West Virginia. And so, 

what we are supposed to do is deliver all of our programs, which 

are all completely approved and as you described. And so it is just 

a matter of that community would like us to take that program 

within our region 50 miles down the road. 

And for some reason—and I think it has to do with the debate 

you all had about proprietary schools and those sorts of things here 

fairly recently. And so them trying to ratchet back and tighten up 

the controls on colleges’ abilities to offer programs in different 

locales. It just makes absolutely no sense to me whatsoever. But 

we will write a 40-page report and go through the process, right? 

Chairwoman FOXX. Well, our subject today is not regulatory reform, but it is an issue we are very concerned about. 

Mr. Hinojosa? 

Mr. HINOJOSA. Thank you. 

I have found your presentations, each one of you, very interesting, and I certainly hope that we can take advantage of your 

sharing your success stories. 

My first question is to Jamie from Lumina Foundation. The federal government’s continued role in ensuring access to low-income 

and traditionally underserved populations is exceedingly important 

throughout the country. Briefly, tell us how do you square the national goal of increasing the number of college graduates with controlling costs. 

Mr. MERISOTIS. Yeah, thank you very much. 

You know, I think there is no issue more important than increasing high-quality degree attainment for our nation’s least-served 

populations: low-income, first-generation, minorities, and the important population of adults as well. 

I think that we need to think hard about these issues of productivity and not see productivity as something that is actually being 

done by somebody to somebody but, in fact, represents an opportunity to increase the capacity of the system to serve more students. And so, we can’t expect parents and their students to bear 

the increasing cost of higher education without there being very 

high consequences for us as a country. And what we have done in 

the last decade or so is essentially shifted more and more of that 

burden to them. 

So productivity represents the best path forward in terms of increasing the capacity to get the students into and through college 
40 

as quickly as possible and help them to become productive members of our workforce and our society. 

Mr. HINOJOSA. May I ask, will you elaborate on how the federal 

government can work with States and institutions to better collect 

and disseminate clear and concise information on those college 

costs that you all talked about? 

Mr. MERISOTIS. Yeah, I think it is going to be extremely important that we have comparable data based on progression, on completion, and on job placement for students. There are lots of cases 

where the data systems simply don’t allow to us make effective decisions about how well students are doing and whether or not the 

system of higher education is actually serving our goals as a country. 

In moving from that time-based to that learning-based system of 

higher education that I mentioned, where student is the unit of 

analysis and not institutions, I think we have an opportunity to 

better serve the students by using these federal data systems, as 

well as the State institutional data systems and collaboration, to 

help us better understand where the challenges are and how to 

serve those students better. 

Mr. HINOJOSA. Thank you. 

Tim Foster, in your written statement, you used the phrase ‘‘arbitrary financial calculations.’’ What do you mean by ‘‘arbitrary financial calculations’’? And are you referring to the calculations 

used to determine student eligibility for the federal Title IV program, or is it something else? 

Mr. FOSTER. We would be referring to the Pell Grant and the eligibility for Pell Grants, as well as their student loans, and how 

those change and how much attention we have to pay and our financial aid staff have to pay, because the rules change every year 

in terms of, if you are in this major, are you making this much 

progress. 

And, at some point—you know, I served in the State legislature, 

and I will never forget, we had a district attorney; we were debating sentencing. And he said, you have to have some confidence in 

the district attorney’s judgment. And I would submit to you that 

we would be much more effective if we had a little more confidence 

in financial aid officers’ abilities to package and have flexibility in 

terms of students that they want to give that aid to and feel are 

making progress. Trust me, they are not out there trying to give 

aid to students who aren’t progressing. 

And, you know, there just are inconsistencies in terms of what 

my major is, and if I fail this class and it is not my major, okay, 

then I am still eligible, but if I fail this class and it is in my major, 

then I am not eligible. And it is just the sort of one-size-fits-all parameters that just really gets in the way and leads to all sorts of 

crazy gyrations and machinations to try and maintain those students in college. 

Mr. HINOJOSA. Mr. Foster, CMU saved $500,000 by eliminating 

all the dean positions. Will you point specifically to where the savings was invested in students attending—CMU students? 

Mr. FOSTER. What we have been able to do—and, again, the 

chairwoman will appreciate this. On a college campus, you really 

can’t start new programs, because new programs are like small 
41 

businesses. They all lose money the first year. You can imagine, if 

we started a new program, a bachelor’s degrees of nursing or, you 

know, pick a construction management program or mechanical engineering program—all programs we have started—none of them 

will be fully enrolled, and none of them will carry themselves. And 

so, what that half-million dollars in savings allowed us to do was 

to have actual revenues over expenditures so that we could start 

those kind of programs. 

And it is those kind of programs—and I guess I would go back 

to the old NAACP ads, which were, you know, ‘‘Go to college, get 

a better job.’’ All right? If you don’t have those degree programs— 

and we have added the better part of about 20, all of which have 

double-digit employment opportunities over the next decade. And 

first-generation students, in particular, find it very compelling, as 

do all students: If I go into this major, what am I going to do with 

it afterwards? 

And so those revenues enabled us to start those variety, 1-year, 

2-year, 4-year degree programs, which create wonderful opportunities. And, for us, our strength as a 2-year, 4-year, and graduate institution, you can come and in 1 year have your certificate, be a 

nursing aid and be working, pursue your 2-year AAS R.N., continue working, pursue you bachelor’s in nursing, continuing working, come back now and get your doctor of nurse practice. 

And so, those sorts of things are what we think are going to help 

people and keep them committed, because they lose focus. Why do 

I need a college education? And it is really that employment opportunity. 

Mr. HINOJOSA. Thank you very much. 

My time has expired, but I hope that one of my colleagues will 

address Grace College’s 3-year degree program, because that really 

caught my attention. 

Chairwoman FOXX. Go ahead. 

Mr. HINOJOSA. I yield back. 

I can ask that question? 

Chairwoman FOXX. Sure. 

Mr. HINOJOSA. Excellent. 

Ronald Manahan, I liked your discussion with us, your dialogue 

with us on the 3-year program, saying that it ends up offering 25 

percent savings to the full-time Grace students paying tuition, 

room, and board. 

Tell us a little bit more about the few years that you all have 

carried this out and why more colleges are not using your model. 

Mr. MANAHAN. Thank you for the question. 

Our understanding was that we were, in some sense, beholden 

to more of an agricultural calendar on the economic year. And we 

asked the question, is there another way to conceptualize the academic calendar? And we did. And the basics of the program is simply this: that each semester is divided into two 8-week sessions 

with an extended weekend break between them. And that is repeated both in the fall semester and the spring semester. 

When students enroll in the 3-year degree option, they take three 

3-hour courses in the first 8 weeks. So the focus is narrowed down 

to three as opposed to five courses, and it comes at them more 
42 

quickly, if you will. They repeat that again in the second 8 weeks, 

so at the end of the first year they have completed 36 hours. 

Mr. HINOJOSA. So that means that it is the equivalent of taking 

18 credit hours per semester under the regular program that we 

know? 

Mr. MANAHAN. That is correct. 

And what we have learned about that is this: having taught for 

a lot of years in a more traditional format, Monday, Wednesday, 

Friday, so on, there is a lot of stop-and-go traffic that happens in 

the classroom. You teach, then there is a long weekend, and you 

come back and you are hooking up to the previous time, and you 

are moving forward. This reduces some of that. 

And we have learned from students that, once they adjust to the 

pace of it, they are intrigued with and seem to prefer narrowing 

the focus to three as opposed to five scattered over a longer period 

of time. 

Mr. HINOJOSA. That is an interesting response to my question. 

And I will close by saying, is it possible that those taking that program, that 3-year program, that they could work some number of 

hours per week of, say, 10, 15, or 20 hours? Is that possible? 

Mr. MANAHAN. I think it is, if they chose to. Another element of 

that 3-year degree option is that we require of all students 12 

hours of applied learning. That is, they must participate in an actual, real-world situation to test the value of what they are getting 

in the classroom, how they are progressing. And we do that to advance their employability. And there are some other elements to 

that, but I will—— 

Mr. HINOJOSA. Thank you, Madam Chair. 

Chairwoman FOXX. Thank you, Mr. Hinojosa. 

Ms. Biggert? 

Mrs. BIGGERT. Thank you, Madam Chairwoman, and thank you 

for holding this hearing. I think this is really very timely and very 

important. 

And thank you, all the witnesses, for being here. 

In thinking about this and the revenues that come in, one thing 

that wasn’t mentioned—and I know that colleges really try and 

keep their alumni involved by participating in the fundraising that 

the universities and colleges do. 

Maybe, Mr. Foster, you could speak to that. We have seen a reduction in the appropriations from the State and federal. Has there 

been a decrease in the giving by alumni or others to the universities? 

Mr. FOSTER. Well, Madam Chairwoman, as you identify, you 

know, those reductions in State support, one way that we can try 

to make that up is, in fact, with donor and particularly alumni. 

And I would say that while the dollar amount per gift has declined, 

actually the number of gifts have increased. And so we have a 

broader pool, although they are giving less intensely. 

And so it helps. It is not the entire solution. It is like any problem you have, you look around and you try and find as many possible contributors to solving that problem. And that is certainly one 

of them. 

Mrs. BIGGERT. Okay. Thank you. 
43 

And then, Ms. Wellman, you know, there is thought to be a view 

that in higher education that institutions like to keep up with the 

Joneses and the other universities. I took a tour of one of the universities in my State of Illinois, and it was great. The one thing 

that I noticed was this huge building that was just being built, and 

it was beautiful, huge. And I asked what it was, and they said, 

‘‘Oh, that is the fitness center.’’ 

Now, this is very important to me, and Illinois is the only State 

that even has PE every day for K-12. So fitness is very important. 

But in this time of—and I asked, ‘‘Well, why are they building 

this?’’ And they said, ‘‘Because we need to have that to get the students to come to the university.’’ 

How could we, you know, make sure that the colleges provide the 

things that are necessary for kids? But is this something that is 

done to really keep up with other universities, the competition? 

Ms. WELLMAN. It is a good question. I don’t have a great answer. 

I think that many institutions face a double-edged sword in this 

environment. It is a very competitive environment. They are looking more and more to students as a consumer. They need to get 

the students who have the money to pay, and the students who 

have the money to pay want to have those facilities. And so they 

say they need to have it in order to compete in the market they 

are in. 

I think that the competition for amenities rather than for academics, putting the money into the academic program, is of great 

concern to a number of educators. You see spending going up on 

athletics more than it is going up on academics. It is going up in 

dorms; it is not going up in student support. 

I think it is the nature of the consumer reality, though, that 

those kinds of immediate, palpable benefits are ones that students 

seem to want to have. And so I think it is a tension that isn’t easily 

resolved. 

Mrs. BIGGERT. Thank you. 

Then, I co-chaired the House Financial and Economic Literacy 

Caucus with Mr. Hinojosa. And we have had this for years and 

years. And I think that it is really important that—it is critical for 

information like this to be available to students and their parents. 

And, Mr. Foster, given your close interaction with students, how 

much of this responsibility should fall on students to be informed 

consumers? And are they, when they are coming to the school? And 

is there more that students and parents can do, as consumers, to 

help increase the competition among institutions of higher education so that they are picking the school that really fits their financial needs? 

Mr. FOSTER. Well, I would say a lot of responsibility obviously 

falls on our shoulders, in terms of making sure that information is 

available to them. And we really look at—a good match for the student is critical for us. You know, not having them retain and finish 

at Colorado Mesa University is kind of a personal affront to us. 

And I would tell you, increasingly—and you could probably go 

back, you know, to 9/11—that, all of a sudden, I think you saw a 

change in terms of family, parents, and students, and 

nontraditionals’ behavior in terms of their inquiry and pursuit of 
44 

information relative to: If I come, will my son or daughter finish? 

What is the total cost of attendance? 

And we emphasize to them total cost of attendance, because they 

always want to whittle it down and assure themselves that they 

will be able to afford it. And we try to say, don’t do that because 

you have to be prepared for this cost. Mind you, ours cost is significantly less than a lot of the institutions that we have talked about. 

But it is a two-way street, I guess would be my answer to you. 

And I think it is a place State agencies can play a big role, in terms 

of—when I was at the Department of Higher Education, we really 

transitioned away from that regulatory role to being more—and 

published a consumer guide and found that people in Colorado had 

more faith in that because it was a third-party, objective listing of 

costs, expenses, graduation rates, retention rates. And then you 

can evaluate for yourself which school you want to go to. 

Mrs. BIGGERT. Thank you. 

I yield back. 

Chairwoman FOXX. Thank you, Ms. Biggert. 

Mr. Bishop? 

Mr. BISHOP. Thank you very much, Madam Chair. And thank 

you very much for having this hearing. I think it is a very important topic, and I think our witnesses have provided us with very 

helpful testimony and very enlightening testimony. 

Mr. Foster, I wasn’t going to do this, but I just wanted to start. 

You made reference in response to the question from Mr. Hinojosa 

to shifting eligibility for federal assistance based on a student’s 

academic major. I am not aware of any eligibility standard that the 

federal government maintains that differs for any of the Title IV 

programs based on a student’s major. Am I missing something? 

Mr. FOSTER. Let me do this, let me get you some additional information. I am not a financial aid expert, I am just a president, and 

so we are obviously the least informed. 

But as we talked about in preparation for this hearing, we talked 

about the fact, if, in fact, I take—and it ties to satisfactory academic progress. And so if I am taking biology, for example, as a biology major and I fail that course, then, in fact, that puts in doubt 

my eligibility for federal financial aid. If I am not a biology major, 

I am a political science major, I fail that same course—— 

Mr. BISHOP. I am going to respectfully disagree with the advice 

that you have gotten. Eligibility for financial aid on the federal 

level, to the best that I know—and I administered student financial 

aid programs for a number of years before I came here—is rooted 

exclusively in information provided on the FAFSA, which is subject 

to a so-called uniform methodology which spits out a bottom line 

called the ‘‘expected family contribution,’’ which, by the way, is not 

perfect but it is, I think, the best system we have. 

So if you do learn of something, I think we would—I, at least, 

would like to know about it. And I thank you. 

Ms. Wellman, thank you for your testimony. 

I just want to be clear. You have found that the principal driver 

of increased student tuition is cost-shifting—that is to say, reduced 

State appropriations for publicly supported colleges and for all colleges reduced philanthropy, reduced income from endowment and 

so on. Is that correct? 
45 

Ms. WELLMAN. Yes. In the public sector in particular, it is costshifting. There is a little bit more evidence of increased spending 

driving tuition among some private but not all private institutions. 

Mr. BISHOP. When you say ‘‘some private’’ with increased spending driving tuition, is that more localized in what we might refer 

to as the elite privates? 

Ms. WELLMAN. Actually not. It is the institutions that don’t have 

the endowments that—— 

Mr. BISHOP. That are trying to keep up? 

Ms. WELLMAN. That is right. 

Mr. BISHOP. So they are trying to walk that tightrope that Mr. 

Foster talked—— 

Ms. WELLMAN. That is right. 

Mr. BISHOP [continuing]. About, about increasing quality while at 

the same time maintaining affordability? 

Ms. WELLMAN. Yes. That is exactly right. 

Mr. BISHOP. Okay. 

One of the things that we hear frequently is that—and there is 

a very forceful proponent of this notion that I am about to suggest, 

a man named Richard Vedder, who we hear frequently tell us that 

the reason costs are increasing is that federal student aid is increasing, and because federal student aid is increasing, that gives 

college administrators the license to raise costs beyond what they 

normally would. 

Does your data give you any evidence that that is true? 

Ms. WELLMAN. No. 

Mr. BISHOP. Okay. Thank you. I appreciate that. 

Dr. Manahan, I administered a small college that was particularly good at being not for profit. And I wanted to commend you 

for your efforts, and I really think they are very good and very innovative. 

But I wanted to quickly—the little over $10 million of institutional aid that you administer, what proportion of tuition revenue 

does that represent? So, in other words, what is your discount rate? 

Mr. MANAHAN. It is about 40 to 41 percent, in that range. 

Mr. BISHOP. So, if you will, your gross sales are 100 percent and 

your net sales are roughly 60 percent; is that right? 

Mr. MANAHAN. Yes, exactly. 

Mr. BISHOP. And does that represent discounted tuition, or does 

that represent income from endowment and philanthropy that allows you—— 

Mr. MANAHAN. It is almost entirely from tuition. 

Mr. BISHOP. Okay, so you discount tuition to that extent. 

Do you have any sense of where that places you among comparable institutions? I was in New York State. When I left New 

York State, the average discount rate was somewhere in the low 

30s. That was 9 years ago. 

Do you have any sense of where that puts you? 

Mr. MANAHAN. Yes, I do. There are a few discount rates over 50 

percent. We certainly are not there. Depending on endowment levels, if you think of comparable endowments to ours, you might find 

some in the upper 30s. But we have worked religiously to move 

that to this level and find an operational path to succeed on at that 

point, if that is—— 
46 

Mr. BISHOP. Okay. 

Mr. MANAHAN. Yes. 

Mr. BISHOP. And is the $10 million principally need-based, or is 

it a combination of need and merit? 

Mr. MANAHAN. It is a combination of need and merit. But given 

the nature of the students we serve and families from which they 

come, there is—— 

Mr. BISHOP. The merit would have been justified by need anyway. 

Mr. MANAHAN [continuing]. Included in that. 

Mr. BISHOP. Okay. All right. 

Thank you very much, Madam Chair. 

Chairwoman FOXX. Thank you, Mr. Bishop. 

Dr. Heck? 

Mr. HECK. I thank you, Madam Chair. 

And thank you all for your testimony today. 

Student aid and the cost of postsecondary education is personal 

to me on two levels: One being 231⁄2 years since I graduated medical school and still paying what I affectionately call my ‘‘second 

mortgage’’ on my student loans, and the fact that my daughter is 

a recent graduate from UNLV and her deferment period is about 

to end. 

I am intrigued by both Mr. Merisotis’ comments and Dr. 

Manahan’s on your, kind of, training to success as opposed to time. 

After spending 21 years in the military, if there is one thing we are 

experts at, it is training to time and not to standard. We are the 

foremost experts at cramming 30 minutes of information into 2 

hours. 

Of all the areas that we have talked about driving cost, two questions: Do you believe, anybody, that there is an increased cost due 

to duplicity amongst programs in States’ systems of higher education? I can tell you that in my State, Nevada, we went through 

a period where community colleges decided to offer 4-year degrees, 

the State college decided to get into advanced degrees, and the 

competition that causes with the 4-year academic research universities. 

And, secondly, is there an increased cost due to the need, perhaps, to provide remedial coursework for matriculating freshmen 

who aren’t quite up to standard? And is that due to the fracturing 

of the K-12 and postsecondary approach as opposed to a P-16 approach to education? 

Mr. MERISOTIS. The question on duplication—look, I think a lot 

of that has been eliminated. There is still some of that in existence, 

but with the economic crisis that we have faced, there have been 

a lot of tough choices that institutions have had to make in States. 

And one way I think you can see that being promoted is through 

performance-based funding models that I mentioned in my testimony, where you differentiate by mission. You have a better chance 

of being clear about what you expect of institutions based on their 

institutional mission. And, therefore, you can create incentives so 

that you don’t have these overlapping programs and things like 

that. 

So in the time period of cost-cutting where—and I think we have 

gotten pretty close to the end of that because there is not a lot left 
47 

to cut in a lot of States—what we are seeing is that these efforts 

to differentiate mission is a very important outcome, actually a potentially positive outcome, of the unfortunately challenging economic times. 

Mr. HECK. Anybody else on the issue of the requirements for remedial work in a K-12 postsecondary approach versus a P-16 approach to overall education? 

Ms. WELLMAN. Remedial education is clearly a cost-driver. It is 

not a smoking-gun kind of cost-driver. It is actually a fairly lowcost education. I think the big problem with remediation is it isn’t 

working very well. The proportion of students who get into it who 

are successfully remediated who go on to some kind of academic 

success is just way too low. 

So I think we have a big conundrum in there about making it 

more cost-effective, reducing costs, but actually making it work better. It is a big problem. 

Mr. FOSTER. I think it is a student cost-driver. It is a zero-credit 

course—developmental courses, that is. And so it is amazing what 

percentage of students come in and require—primarily in math but 

significantly in reading/writing as well. 

The chairwoman and I spoke a little bit about dual enrollment. 

And you have some districts that are taking a lot of ownership. In 

Colorado, we have community colleges, as well as ours, that partner up with some of our area high schools. We identify those students who need developmental education at the junior level when 

they take the ACT, and then on their campus—actually, we send 

instructors over, and the district pays for those instructors. And 

then when they graduate, they are college-ready. 

But it really is more an individual cost-driver, delaying them in 

time as well as in tuition. 

Mr. HECK. Great. Thank you. 

Thank you, Madam Chair. I yield back. 

Chairwoman FOXX. You get the gold star for today. 

Mr. Grijalva? 

Mr. GRIJALVA. Thank you, Madam Chair, and thank you for the 

hearing. 

Mr. MERISOTIS [continuing]. Did I say it right? No. 

Mr. MERISOTIS. It is fine. 

Mr. GRIJALVA. No, I have a lot of vowels, too, and it is—— 

Mr. MERISOTIS. Yeah. 

Mr. GRIJALVA. Your point about performance funding is a very 

good and valid point, and thank you for that. 

But let me ask you a little bit about the phenomena—not a phenomena—the reality of the income disparity that is happening in 

this country. And one of the—the major tool to close that gap is 

education, and particularly postsecondary education. And so, as we 

look at making sure that that educational equity part of the discussion is applied to the next generation, let me talk a little bit about 

the TRIO programs. 

And can you discuss how increased investments in those programs and similar programs across the country might help mitigate, first, the increased tuition costs by helping students degree 

and the preparation gap that also has to happen? 
48 

Mr. MERISOTIS. Yeah, absolutely. Look, your point about equity 

is absolutely right, which is that equity of educational opportunity 

is extremely important. That equity has to include both improving 

access to higher education and ensuring that those low-income, 

first-generation, minority, and other students actually have an opportunity to succeed. 

And I think that is what a lot of what is going on in these performance-based funding models is efforts to ensure that they are 

actually successful. In Indiana, for example, the performance-based 

funding model actually takes into account the success of low-income students in the population. 

The federal TRIO programs have been one of the most important 

efforts at the federal level to increase opportunities for first-generation and other students for decades, and I think they are extremely 

important in terms of our future. We have to recognize that students don’t just pay for college; they actually have to be prepared 

for college and they have to succeed academically, financially, and 

socially. And that academic, financial, and social support comes 

from TRIO programs because they help students better understand 

the system, work their way through the system, getting into and 

all the way through college. So TRIO is a very important part of 

the overall federal landscape. 

Mr. GRIJALVA. And, if I may, Mr. Foster, you mentioned the regulation issue that Mr. Bishop asked you about. And I agree that 

regulations should be streamlined for schools. But I think there are 

also very important reasons for them. They are important to help 

us understand rising costs, prevent accidental or intentional misuse of taxpayer funds. 

And you mentioned that you have spent hundreds of hours, as 

an additional cost, in preparing the school’s information that the 

students expect to have and that they have to have before they 

make their decision. Doesn’t that information make it—the information you have to generate for the federal government also available in the same sense? 

Mr. FOSTER. And it is an important observation. All of the information that came out and was required to be one or two clicks 

away was contained in different places that we thought were more 

intuitive. And we spent a lot of time—I am sure like Dr. 

Manahan—you know, with focus groups, with students, saying, 

‘‘Where do you look for this information? What do you want from 

us? What do you want when you make a decision?’’ 

Mr. GRIJALVA. So you are saying they are not comparable. 

Mr. FOSTER. I am just saying that what we had is we had it collected where we thought students would go, and then what we had 

to do was reconfigure it to make sure that students could be one 

or two clicks away. 

Mr. GRIJALVA. Okay. If I may, Mr. Foster, let’s talk about that 

reconfiguration. One of the things that I think was a great accomplishment that the last Congress did was creating the incomebased repayment program so that students would be able to manage their debt. 

Can you speak to efforts that your college has undertaken to inform students about that program and as a means for them to be 
49 

able to manage that debt? Is that part of the information they receive? 

Mr. FOSTER. Actually, apart from that information, that whole 

one-click-away, which is really different sort of data and information than what you are talking about, we look and monitor our average student loan debt, and it is an issue that we try to track very 

closely. And so what we have done is actually added a person in 

our financial aid office who all they do is debt counseling. 

Mr. GRIJALVA. Okay. 

Mr. FOSTER. Because in student loans, unlike in a banking situation, nobody sits down and says, ‘‘This is how much you can afford 

to pay back based on your occupation.’’ And so we have tried to create that person who sits down with those students and says, ‘‘This 

is how much you can really afford to borrow as you graduate and 

you want to pay it back and you want to pay it back in a reasonable amount of time.’’ 

Mr. GRIJALVA. Okay. That is excellent. 

The elephant in the room: On the debt side and the loan side, 

40 percent of the debt that students have is through for-profit colleges, which represents about less than 30 percent of the student 

enrollment. 

And do you see that as—anyone—do you see that as a factor affecting cost and as a factor about the regulatory intent of trying to 

find out what debt is and who is responsible for that debt? To anybody. 

I am out of time. That was my best question, too. 

Ms. WELLMAN. If I might very quickly, the data we have on 

spending, revenues and spending, we can’t include for-profits because of the problems in comparable data. It is something that the 

Feds ought to deal with—— 

Mr. GRIJALVA. Thank you. 

Ms. WELLMAN [continuing]. And we have to step up, too. Because 

I can’t answer—— 

Mr. GRIJALVA. Great. 

Ms. WELLMAN [continuing]. Your question because the data 

aren’t there. 

Mr. GRIJALVA. Thank you very much. 

Thank you, Madam Chair. 

Chairwoman FOXX. Thank you, Mr. Grijalva. 

Dr. Roe? 

Mr. ROE. Thank you, Madam Chairman. 

And thank the panel for being here. 

I think our higher education system in America is the best in the 

world. I think there are two great issues that we face in this country right now, and those are rising health-care costs and rising 

education costs. Probably not a one of us sitting up here at this 

dais has not benefited from a great college education—and, basically, public education. I went to school for 24 years, and, Dr. 

Manahan, I went to medical school in 3. I wouldn’t recommend that 

to my worst enemy. But, anyway, that is what we did then. 

One of the concerns I have is, I lived at home when I went to 

college. I had a job. My father worked in a factory. We had no student loans then. I was able to work, live at home, go to college, and 

finish college with no debt. 
50 

Number two, because medical school was affordable at that time, 

I graduated from medical school with no debt. I was able to move 

to east Tennessee in Appalachia, an underserved area, because I 

didn’t have hundreds of thousands of dollars in debt, and take less 

salary and serve that area. 

I see young people now that leave—I get letters all the time, and 

I am sure every one of us do, with hundreds of thousands of dollars 

in debt. How has that happened, where a young man like myself 

from a middle-class family—quite frankly, it was very simple when 

I went to medical school. 

I saw what the tuition was at one great private university not 

too far from where I lived—it was more than what my father made 

in a year—and the University of Tennessee at Memphis, which 

wasn’t, and I made my decision to go there. Both great schools. A 

lot of people do that. That is not hard information to get. And I 

thank the Lord three children of mine all have graduated from college and they are out on their own. 

But how has that happened to us? Because we cannot sustain 

this current 7, 8, 10 percent or kids like myself will never be able 

to go to college. Or, as Dr. Heck said, spend 25 years of your life 

basically paying for a house, which is what it costs to go now— 

$50,000 a year at a private university. When I went to school, probably the State of Tennessee covered 80 percent, 90 percent. Today, 

it is under 50 percent in the State of Tennessee at a public institution, and it is all being shifted to the students. 

Any comments? 

Mr. MERISOTIS. Look, I am a walking advertisement for student 

financial aid in this country. I got a Pell Grant, I got federal student loans, I got State assistance, I got—— 

Mr. ROE. Are you out of debt yet? 

Mr. MERISOTIS [continuing]. Support from my church, I got support from the institution I went to, I worked, I did all those things. 

That was 30 years ago. The problems for today’s students have 

multiplied greatly because of the rising costs of higher education. 

And, to your point, I think the challenge is that students and families really are at their limit in terms of their capacity in order to 

be able to deal with these issues. 

I think part of the challenge comes back to the point in my remarks, which is that we can’t afford to reduce the capacity of the 

system to produce graduates. It is very important to our economic 

future as a country that we increase the number of highly qualified 

college graduates in this country. That means we have to make 

this system much more productive, particularly for those students 

who haven’t had the opportunity, who haven’t had the prior successes from their families, et cetera. 

And I think that is an important issue for us to understand from 

a State policy perspective, from an institutional policy perspective, 

and from a federal policy perspective. There are many things that 

I think need to be done to enhance productivity. 

Mr. ROE. Well, I served on—I was a foundation board president 

at my college before I came here, and I am still on the foundation 

board at East Tennessee State University—both public schools. 

And we have raised money on the private side, and we have shook 

everybody down that we could. And I know Mr. Foster probably 
51 

has done the same thing as president of his college, and Dr. 

Manahan also. But there are limits to all of that. 

And I don’t know, where does this end? 

Ms. WELLMAN. I think we—the good thing about this recession 

has been that we finally, I think, are starting to hit the wall. For 

many years, in the public sector, States and institutions were both 

complicit in allowing this to happen. Nobody decided to make it 

happen. It happened because of other things: budgets went down, 

tuitions went up. But institutions have too long believed that more 

money always was necessary for more quality. 

And I think we are turning the corner. I don’t think we have 

turned the corner. 

Mr. ROE. Well, let me just go over a couple things that Mr. 

Merisotis said and we are trying to do in Tennessee. We have the 

Pell Grants, we have the HOPE scholarship, which is where we use 

our lottery money. And still, young people are graduating. 

But what we have done is, if you go to a community college—I 

remember when I was in school, if you went to a community college, you didn’t transfer to a 4-year college, so you had to repeat 

the same course again. We have stopped that. You can go to Northeast State Community College and then transfer that credit to the 

University of Tennessee. 

We now are requiring our colleges to look at graduation rates, 

not at the number of students that are in there, to get their funding. I think that is an extremely positive step that you mentioned 

just a moment ago. 

There is a higher ed center in Kingsport, Tennessee, which has 

five colleges in it. The city built it, the bricks and mortar, and yet 

University of Tennessee, King College, Northeast Community College all have classes in there, so they don’t have this incredible investment in bricks and mortar, as Ms. Biggert mentioned. And in 

trying to attract students, you can go from a freshman degree to 

a Ph.D. and never leave Kingsport, Tennessee, and go to two different schools and, in doing that, transfer credit. I think that is extremely important. 

And there are many other things—online classes, which are less 

bricks-and-mortar—that we are doing. We have to do these things 

or, as I said, folks like myself will never have a chance or, number 

two, will never be out of debt. 

I thank you all. 

Chairwoman FOXX. Thank you, Dr. Roe. 

Mr. Tierney? 

Mr. TIERNEY. Thank you, Madam Chairwoman. 

I was wondering if Dr. Heck could get some help from Dr. Roe. 

He seems to have some loose cash hanging around. 

I want to thank our witnesses. It really has been helpful, you 

know, on this. This is an issue that has troubled us all the way 

through the last reauthorization and forever on that. 

Maintenance of effort, Ms. Wellman. You know, we have been 

troubled by the fact that this is a partnership. The federal government, the State, the families are supposed to be partnering to try 

to get more people into college in an affordable way, make it accessible and move on. States have, I think, routinely backed away 

from that partnership in a huge way over a period of time. 
52 

So we put into the last reauthorization a maintenance-of-effort 

provision. We have heard tremendous feedback, particularly from 

community colleges but from a lot of 4-year colleges as well, that 

if we hadn’t done that, tuition costs would have gone up even more; 

it would have been more and more difficult. 

Should we enhance that maintenance-of-effort program? Are you 

feeling it is not necessary anymore because schools are now trying 

to deal with this stuff on their own? 

Ms. WELLMAN. I don’t have a good answer. I think the problem 

of State budgets is so much bigger than what is happening in higher education that the pressures on States to cut funding are going 

to be with us for the next several years. Whether the federal maintenance-of-effort requirements put some brakes on that, I think 

they probably do. So I wouldn’t—this is not the time to take them 

off. 

Whether they can be strengthened or rewritten, I honestly don’t 

know. I don’t think the thing that is causing the cuts from States 

is related to federal funding. It is related to what is happening to 

State budgets. 

Mr. TIERNEY. Yeah. Well, thank you for that. 

Endowments to a lot of well-off schools, well-off institutions on 

that. Senator Grassley and I started on this path last time. We got 

a lot of consternation from some. But many of those schools don’t 

even pay 5 percent of their income back into education-related efforts on that. Now, they still maintain their tax-exempt status. 

Is that an area where we ought to be expecting more, we ought 

to be expecting those schools that have billions of dollars in endowments to pay at least the minimum amount that other charities 

have to pay in order to maintain their the tax-exempt status and 

put that back into education efforts, maybe even in a way that 

helps public 4-year and 2-year institutions on that basis? 

Anybody that wants to reflect on that? 

Ms. WELLMAN. The wealthiest institutions are already spending 

a lot of money from their endowments. I guess I am sympathetic 

to your question. My question is why they are continuing to raise 

tuitions at the same time that they have that level of revenue. 

Requiring an even higher payout in this environment in those institutions would be like putting kerosene on a fire. They are already spending a lot of money. 

Mr. TIERNEY. So an institution that has almost $30 billion in an 

endowment that spends 4.3 percent or less of their income from 

that—— 

Ms. WELLMAN. And raises tuition every year. 

Mr. TIERNEY. Yeah—that would be a problem for you? 

Ms. WELLMAN. I think the issue of the public purpose is a really 

important one. 

Mr. TIERNEY. Thank you. 

We see that one of the drivers—I mean, there are a number of 

drivers of cost increases. I was listening to Dr. Roe on that. And 

I also was a State college product and was able to afford to go and 

get through on that. But the cost of safety now—we expect campuses to be little communities. They are responsible for the safety 

of their students. They have huge energy costs. Technology is far 
53 

more expensive than it used to be. The cost of construction, you 

know. 

And the benefits, as you mentioned, all of you, the costs of paying for your staff, whether it is administration or faculty, the cost 

of the benefits. So a lot of schools, I have noted, have now switched 

to adjunct faculty. 

Ms. WELLMAN. Yes. 

Mr. TIERNEY. I am not sure that is a great thing for the student 

or the faculty member, but it essentially looks to me as a cost-shift. 

So now the school might not have to pay for the benefits of that 

person but the individual does. So they are getting paid less, have 

higher out-of-pocket expenses for benefits of that nature, or they 

shift it somehow onto a health system within their State on that 

basis. 

That doesn’t seem, to me, the wisest way to proceed. Is there another alternative here? 

Mr. Foster? 

Mr. FOSTER. Boy, you ask the hardest questions, and I am glad 

I ducked the first two. 

I would tell you that I think there is a temptation to do what 

you talked about, and I think some schools have gone down that 

road. And I think most of those that have have turned around and 

gone back the other direction, because it comes down to quality and 

quality of people. And I think we all are scrambling, trying to find 

other places to contain costs. 

Your—I was nodding because it is; technology we used to think 

would be a cost. It is a cost-driver because this generation of students just demands way more robust technology than you and I 

even consider feasible. And so it really has us searching everywhere possible to try and reduce those costs and see if we can’t 

simplify, you know, what we do and what is extraneous to the core 

mission of what we do. 

And so our faculty, for example, teach a four-four teaching load, 

four courses per semester, which is double that of most R-1 institutions. You know, there are just those sorts of metrics that, at some 

point, you know—you are ready to be a college president, it sounds 

like to me. So we will switch places and—— 

Mr. TIERNEY. Sounds attractive, some days around here. 

And, lastly, you know, on that transparency issue that you talked 

about, Mr. Foster, I think that you are probably unusual if you had 

all of the transparency provisions that the Higher Education Opportunity Act asks for. And I commend you if you did. 

You know, the idea of having institutions with the largest percentage increases in tuition prices submit an explanation for that, 

did you have that on before the act or is that something you added 

on? 

Mr. FOSTER. We didn’t hit those percentages, so we didn’t have 

to deal with that particular issue. 

Mr. TIERNEY. Okay. And you have used innovative strategies to 

rein in price increases and use those incentives to keep costs low, 

you share that information with other institutions? 

Mr. FOSTER. We do. I do a monthly email to all of the parents 

of our students and try to two things: one, communicate those sorts 

of issues; and, secondly, as I tell them, the more engaged they are 
54 

in their students’ education—and if you are like me, you ask your 

son—I have four sons—‘‘What happened today?’’ I get no answer. 

If I have a little bit of information, I get a whole lot more back. 

And so we try and give them, you know, ‘‘This is what is going 

on on campus,’’ so then they can engage with their student. And 

we tell them, ‘‘Midterms are coming. You might want to inquire if, 

in fact, they are studying for midterms.’’ And so those sorts of 

things really, we think, help that dynamic. 

Mr. TIERNEY. And just quickly, what kind of feedback have you 

had with your institution’s online net price calculator? 

Mr. FOSTER. You know, the feedback I have gotten—I go out and 

help move students in. And so, this year was the first year that I 

had probably a half dozen parents say, ‘‘We were considering this 

institution’’—generally a private and in a couple instances a public—‘‘and we looked at your programs and your price, and we chose 

here because you are this much less.’’ And so it was the first time 

I had someone just out of the blue say, that was a consideration 

and that is why we are here. 

And so I assume they were doing that using our net price calculator as well as the other institutions they were comparing us to. 

Mr. TIERNEY. Great. Thank you. 

Thank you, Madam Chairman. 

Chairwoman FOXX. Thank you, Mr. Tierney. 

Mr. Thompson? 

Mr. THOMPSON. Thank you, Chairwoman. 

Thank you to the panelists for I think a very good hearing on a 

very important topic, in terms of access to affordable education. 

We have spent a lot of time in committee talking about the burdens of federal regulations, reporting requirements in all forms of 

education. 

This question is specifically for Dr. Manahan and Mr. Foster. In 

your experience with your universities, you know, do you have a 

sense about how much time you spend on federal regulatory and 

reporting compliance? And do you have some suggestions for us 

about how regulations reporting could be eliminated without jeopardizing integrity of the federal financial aid system programs? 

Mr. MANAHAN. I would be happy to begin with that good question. 

We have calculated on our campus that—and we are a small 

campus—we spend about $460,000 a year on salary and benefits to 

address regulatory issues. And then that is not counting equipment 

and other things we need to provide them. So what that equals for 

us is, we spend about $300-plus a year per student to care for regulatory matters. 

We certainly believe there are a number of regulations that are 

very helpful and protective. But those that have less value, perhaps, and fewer changes to continue adapting to, that is a way to 

reduce some of that cost. Because that is passed on in the cost of 

the institution. 

But I would grant you that there are regulations that are very 

helpful, as well, to the student as a consumer and other such 

things. But overreaching regulations make it challenging to carry 

on funding. 
55 

Mr. FOSTER. I tried to give you some sense of just a couple of 

areas. We haven’t quantified it, and now I am glad I haven’t because I would be just absolutely under my bed lamenting how 

much we are spending on regulatory compliance. 

I would say, though, that, you know, the federal collection of data 

we use intensely to compare ourselves to other institutions. And so, 

you know, we track things that the Delta Project puts out or we 

actually go mine that information ourselves. Because you just 

never know how well you are performing or how poor you are performing without getting it in context. And so I would say the collection area is something that is actually very beneficial, I think, for 

all of us, because you use common definitions, everybody knows exactly what that is. 

It is below that radar screen in terms of, you know, increasing— 

and I appreciate the difficulties with proprietary schools and whatever other issues you are dealing with, but it is pulling us into that 

vortex that is really starting to tilt and have us spend hours. And 

we can get you more discrete suggestions in terms of areas. 

If nothing else, if we would just stopped changing the definitions 

in federal financial aid, that would be great. Because then we 

would know and we could tell students year to year exactly what 

those criteria are. 

Mr. MERISOTIS. I just wanted to quickly commend to you the 

brand-new report from the Federal Advisory Committee on Student 

Financial Assistance that looks at the 15 major areas of Higher 

Education Act regulations and ways in which burden and overlap 

and other things can be reduced. And I think that may be helpful 

in terms of the decision-making on the committee. 

Mr. THOMPSON. What role, from your perspective, the panel’s 

perspective, does the integration of online learning, virtual campus, 

have in increasing access and, frankly, potentially decreasing costs? 

Mr. FOSTER. Huge. Like I said, we represent or cover an area 

that is fairly rural. More jackrabbits than people in large portions 

of western Colorado. And so, from an access perspective, for them 

to be able to take classes online, it also, equally, is a matter of convenience for our students. I think the overwhelming majority on 

most campuses’ online activity are students who are actually taking classes physically on campus, and they use it to balance their 

schedule and time management, whether they are working or doing 

other things. 

And then there is the obvious avoidance—it is more intense. You 

know, the theory was, you could scale it and have, you know, hundreds of students in a classroom, and the experience is not that 

way. But it certainly avoids bricks-and-mortar, and so it is extending the life of our classroom buildings. And so we can grow beyond—we anticipate about 20 percent of our credit hours will be 

delivered online because of those sorts of things, and so there is a 

20 percent bump in terms of how many classrooms we won’t need 

because of that online activity. 

Mr. MERISOTIS. I mentioned Carnegie Mellon’s Open Learning 

Initiative, which is delivering the same outcomes in half the time 

for students. 

Another great example is the Western Governors University, 

which is an online, competency-based learning model, which is de-
56 

livering programs in only four key areas: teacher education, business, IT, and nursing. And they are having a very high success rate 

with their competency-based model, but it is using online delivery. 

And we think there is a lot of potential for those competency-based 

models using technologies to proliferate. 

Mr. MANAHAN. We would agree with that. We, in fact, in this 3- 

year degree option, the 3 years allows the 2 summers in between 

to be taken online by courses provided from our campus, and those 

are tuition-free to the students. It allows the student to go—perhaps return to their home for summer employment, whatever they 

need to do. If they need to fulfill some degree component, traveling 

to another country, it still allows that. And we have other uses of 

online, as well, in our graduate programs. 

Mr. THOMPSON. Okay. 

Thank you, Chairwoman. 

Chairwoman FOXX. Thank you, Mr. Thompson. 

Ms. Davis? 

Mrs. DAVIS. Thank you, Madam Chair. 

Thank you to all of you for being here. 

I want to switch the scale here for a second and just talk about 

California, if I may. And I am not expecting that you are experts, 

necessarily, in that system. But in terms of what you know and to 

apply, as you probably know, as well, the Governor’s 2011-2012 

budget is below 1998 funding levels with 75,000 fewer students 

than the 237,000 students that are enrolled today. So, clearly, a 

different scale than what we are talking about. And, of course, 

thousands of people have been laid off, et cetera. 

But I am wondering, you know, at what point does the streamlining and the savings hinder student learning? How far can a 

large system like that really afford to go to afford graduates both 

an opportunity to graduate but to graduate with something substantive to contribute? 

Ms. WELLMAN. California—I worked there for many years, including in the legislature in the Ways and Means Committee. I 

know more about it than I know what to do with. But—— 

Mrs. DAVIS. Well, that is good. 

Ms. WELLMAN [continuing]. It is a tough—it is a tough one. They 

are already—they are cutting access. They are probably cutting 

quality. You can’t cost-manage your way out of the problem California has. 

Having said that, California has weakened its policy capacity in 

the last decade so that they no longer have what they once had, 

which was a way to look at integrated, comprehensive solutions. So 

they are all on their own, sort of flailing. 

I think there has to be a return to policy capacity in that State 

to once again look comprehensively across those institutions. As 

bad as it is, California has still got a lot of money in higher education, but it is not being invested very well. 

Mrs. DAVIS. Uh-huh. And revenues, as we know, are really coming from students at this point. 

Ms. WELLMAN. Right. 

Mrs. DAVIS. I fondly tell groups of people in my district of San Diego that I do recall writing checks for $89 a semester to Berkeley. I don’t want to tell you when that was. But it sent a different 
57 

message to me, certainly, that the State thought I was actually 

pretty important, because they were making an investment. And I 

don’t think students feel that way today. 

I wonder if you could talk just for a second about the transparency issue. Because I understand what you are saying, that people figure out how they want to make comparisons. They know if 

they have some assistance, some scholarship money, whether it is 

cheaper to go to one school than another and still get quality. But 

are there other things that you think families and students really 

should know? 

I heard a statistic this morning: 85 percent of graduating seniors 

this year will be living at home. That is pretty striking. 

What is it that you think is fair for people to know as they are 

making those comparisons? And does the federal government have 

a role in that? Perhaps not by fiat or by regulation, but how is it 

that we can assist and craft for parents and students better information? Or, really, are we there? Is there nothing else, really, that 

needs to be done? 

Mr. FOSTER. Well, I think there is a lot that needs to be done. 

And this goes to, I think, Congressman Roe’s question, and I think 

it builds off of Mrs. Biggert’s question, and that was, where does 

the individual have some responsibility to go seek that information 

out? 

Now, that falls apart with first-generation students because they 

don’t know what questions to ask. And so, for us, it is really trying 

to figure out what they think is important. And it is always surprising to me, the questions you get when you interact with parents and students. And sometimes it is safety, sometimes it is cost, 

sometimes it is whether the dorms—it is just a myriad of things. 

And so, like I said, I think most of the institutions I am familiar 

with are trying to push that information out and make it as available as possible. We do a lot with high schools, with first-generation students to try and educate them and help them understand. 

Because the barrier for them is, they have a desire to go to college; 

it is they have a complete—they tend to shut off, and they just say, 

‘‘It is too expensive; I will never be able to realize that.’’ And so 

it is really the reverse, where we are trying to pull them in and 

say, there are a lot of opportunities for you as a first-generation 

student. 

But, you know, I don’t think there is a limit, in terms of—you 

know, any question those prospective students and families want 

is fair game. I guess I go back to, kind of, Margaret Thatcher, 

which is the market is just more powerful and more reliable and 

a more liberating force than government can ever be. And so the 

pressure we get from those folks is 10 times what you can do in 

terms of a policy directive. 

Mr. MERISOTIS. Three things I think a student or family should 

know about an institution. One is, are students completing at that 

institution, particularly students who look like me? The second is, 

what are they learning, and how can we tell? And the third is, are 

they getting jobs? 

Those three areas of outcomes I think represent the most important things that all students and families should have access to as 

a result of better data systems. 
58 

Mr. MANAHAN. I would just say this. To the degree there is a 

lack of transparency, it diminishes the value of the education, and 

people begin to sense that deeply. And I think the more transparent we are up front with real cost adds to a better value of the 

education and trustworthiness in higher education as a whole. I 

think every campus bears responsibility to make its own contribution to set a level of transparency that helps people make a decision. 

We noticed this remarkably on our campus. As the value of 

homes decreased and people had less access to home equity, they 

became quite well schooled in asking financial questions, commitments on a number of fronts. And we do get people coming to our 

campus and saying, how does this cost compare to that cost and 

what am I getting into? So it is important. 

Chairwoman FOXX. Thank you, Ms. Davis. 

I want to again thank the panel very, very much for taking time 

to testify before the subcommittee today. 

And I want to thank all the members of the committee who came 

and asked such great questions. One of the wonderful things about 

Congress is the diversity that we have, and that diversity causes 

us to ask lots of different kinds of questions and get many differing 

perspectives. 

Mr. Hinojosa, do you have some closing remarks you would like 

to make? 

Mr. HINOJOSA. Thank you, Madam Chair. 

I thought it was very interesting and informative. I like some of 

the new ideas that were discussed. 

I can’t help but think of some of the—I guess comparable to Dr. 

Manahan’s 3-year program—the Western Governors University and 

how they are doing it with about half of the cost and without having all the campuses and all the expensive athletic programs that 

we have in many of our big flagship schools, where we pay coaches 

upwards of $4 million to be a football coach, or other expenses that 

are never discussed as part of the cost of running a university. 

But I think that what I like is the fact that, more and more, we 

are accepting that online courses are going to be more and more 

acceptable by the employers, particularly when they are producing 

a graduate that is capable of coming into a business or to a program and take it to a new higher level in effectiveness and profits 

and so forth. So I think that we are making progress in this committee in terms of looking at new success models. 

And I want to thank the witnesses for sharing their insights with 

us this morning. And I look forward to working with all of you and 

my colleagues on this committee to make college more affordable 

and to achieve our Nation’s college-completion goals. 

Thank you very much. 

Chairwoman FOXX. Thank you, Mr. Hinojosa. 

I want to repeat what Dr. Roe said earlier, and I think sometimes we forget to talk about it. I think we have had the best higher education in the world in this country. I think like many things 

that are being threatened, I think the quality of higher education 

in this country is being threatened these days, and not just because 

of the lack of money. In fact, I think the lack of money is probably 

the least reason that higher education is being threatened. 
59 

And I agree with what someone else has said—I think, Ms. 

Wellman, it was you—that perhaps the squeezing budgets have 

been a benefit, not a negative, because it is forcing people to look 

at what they are doing. 

I think that one of the big problems we have had in higher education and what I have seen happen in higher education in my lifetime is having institutions of higher education decide what it is 

they want to do. I think that Mr. Foster’s comment about focusing 

on the students as customers is very important. But are the institutions focusing on what learning the students are getting, Mr. 

Merisotis, or seat time? Or are they simply providing income to 

maintain the institution? 

So I think there is much that we need higher education to be 

looking at. And I agree with Ms. Wellman; I think that having this 

money crunch may be helpful. And I go back to a comment Mr. 

Foster said, when you had your committee split three and three, 

and one side of the committee said, ‘‘Well, if money is an issue, 

then’’—well, money is always an issue. However, in higher education, people haven’t thought that. 

And I remember when I was a community college president that 

the president of our system came to the presidents one day and 

said, ‘‘The days are gone, ladies and gentlemen, when I could go 

to the legislature and say, ’We are doing the Lord’s work; therefore, 

you should be giving us lots of money.’’’ And I thought that was 

going to happen a long time ago. Because, I think, we had a booming economy, that got sort of waxed over. 

But I also want to say, in conjunction with what Dr. Roe said, 

it is still possible to graduate from very fine institutions in this 

country without a dime of debt. It is up to the student and up to 

the parents to shop. And I think sometimes you sell parents and 

students short—I think our whole society does—in terms of their 

ability to make those decisions. We go out and buy cars every day. 

We go to the grocery store. We are very capable of going out and 

shopping. 

Transparency, though, I think is going to be one of the biggest 

issues. And I think that is something that has to be looked at. 

I want to thank all of you for emphasizing both affordability and 

quality. I do think that we can have both high quality and affordability, I should say. And I think that is an extremely important 

concept for us to keep in mind. We do want, again, I think, too, as 

Tennessee has done, to concentrate on funding results, not necessarily enrollment. 

So there are some things that have to be done. I think you all 

have brought up some really, really important issues to us. And I 

am extremely pleased with the way the panel has gone today, with 

the questions that have been raised and the issues that have been 

raised. 

And I want to say, again, on the issue of parental involvement, 

we have known for 50, 60, 70 years that what makes a good elementary and secondary school is a good principal, good teachers, 

and parental involvement. That is not different from higher education. It should be exactly the same thing. You will get good results if you get the customers involved with checking out the quality of the goods that they are receiving. 
60 

So I want to thank you all for being here and again thank the 

panel. 

And there being no further business, the subcommittee stands 

adjourned. 

[Whereupon, at 11:56 a.m., the subcommittee was adjourned.] 

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