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S. Hrg. 114–530 

A REVIEW OF THE DEPARTMENT OF EDUCATION 

AND STUDENT ACHIEVEMENT 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 30, 2015 

Available via the World Wide Web: http://www.fdsys.gov/ 

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

KEITH B. ASHDOWN, Staff Director 

SATYA P. THALLAM, Chief Economist 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

DEIRDRE G. ARMSTRONG, Minority Professional Staff Member 

MICHAEL SANTORA, Legislative Assistant, Office of Senator Carper 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN M. CORCORAN, Hearing Clerk 
(III) 

C O N T E N T S 

Opening statements: Page 

Senator Johnson ............................................................................................... 1 

Senator Carper ................................................................................................. 3 

Senator Ernst .................................................................................................... 17 

Senator McCaskill ............................................................................................ 19 

Senator Lankford .............................................................................................. 23 

Senator Ayotte .................................................................................................. 26 

Prepared statements: 

Senator Johnson ............................................................................................... 49 

Senator Carper ................................................................................................. 51 

WITNESS 

WEDNESDAY, SEPTEMBER 30, 2015 

Richard K. Vedder, Ph.D., Director, Center for College Affordability and Productivity ................................................................................................................ 6 

Kevin Carey, Director, Education Policy Program, New America ....................... 8 

Hon. Theodore R. Mitchell, Under Secretary, U.S. Department of Education ... 31 

ALPHABETICAL LIST OF WITNESSES

Carey, Kevin: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 65 

Mitchell, Hon. Theodore R.: 

Testimony .......................................................................................................... 31 

Prepared statement .......................................................................................... 70 

Vedder, Richard K.: 

Testimony .......................................................................................................... 6 

Prepared statement .......................................................................................... 53 

APPENDIX 

Responses to post-hearing questions submitted for the Record: 

Dr. Vedder ......................................................................................................... 79 

Mr. Carey .......................................................................................................... 80 

Hon. Mitchell .................................................................................................... 81 

(1) 

A REVIEW OF THE DEPARTMENT OF 

EDUCATION AND STUDENT ACHIEVEMENT 

WEDNESDAY, SEPTEMBER 30, 2015 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 9:35 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Ron Johnson, Chairman of the Committee, presiding. 

Present: Senators Johnson, Lankford, Ayotte, Ernst, Sasse, Carper, McCaskill, and Peters. 

OPENING STATEMENT OF CHAIRMAN JOHNSON 

Chairman JOHNSON. Good morning. This hearing is called to 

order. I want to thank the witnesses for appearing today and taking the time to come here as well as for taking the time to prepare 

some very thoughtful testimony. 

The concept of this hearing really is the first in a series of what 

I would like this Committee to do, which is basically take a look 

at all the departments of the government, very similar to the way 

a business looks at the different divisions or departments, and kind 

of basically do a budget review process, laying out this is how much 

this department has spent since its inception, or we will figure out 

a particular timeframe; what are the stated goals of the department or agency; what are the metrics that prove whether those 

goals have been met; and then, finally, what are some of the intended or unintended consequences of department actions. So we 

are going to try and attempt to do that today for the Department 

of Education (ED). 

I will say that over the last couple of weeks, as we prepared for 

this hearing, it was frustrating trying to get the information. For 

example, I kept asking my staff, because I saw a graph that 

showed student loan debt at about $95 billion about 20 years ago, 

growing to about $1.3 trillion, but the only graph we could come 

up with reliable information only had about 10 years’ worth of data 

from about some $300 billion up to about 1.15. And we did find out 

from the Federal Reserve Bank (FRB) of New York that they get 

the data, but they get it from the Department of Education. They 

do not view it as reliable information. It is frustrating to actually 

get uniform information on some of the questions I was asking. 

Just to kind of run through the basic facts, since 1980, when the Department was established, it spent about $1.5 trillion of taxpayer money. Divided by 35 years, that is an average of about $43 
2 

billion per year. In fiscal year (FY) 2015, the appropriated amount 

of money was about $87 billion. I think the question that this Committee is asking and that I think taxpayers need to ask, the American taxpayers, is: Are we getting our money’s worth out of it? 

The metrics we ought to be looking at is what has happened 

since 1980 in terms of test scores. Have we improved the performance in K–12 and postsecondary education? We will take a look at 

those. If there has been improvements, it has been pretty negligible. 

The other important metric is how good are we at through our 

education system matching educational outcomes to the requirements of employers and really to societal needs. Are we doing a 

good job preparing our children for the job market and for other societal functions? Evidence proves that there is an awful lot of problems in terms of that. 

I was really involved in Oshkosh, before I became a U.S. Senator, 

not only as a manufacturer but volunteering in the education system in Oshkosh. One of the things we did within the Catholic 

school system was initiate a program we called the ‘‘Academic Excellence Initiative.’’ And the tag line of it was: ‘‘How do you teach 

more? How do you teach better? How do you teach easier?’’ So 

more, better, easier. Basically educational productivity. 

I remember at the time—quite a few years ago—I typed into my 

Yahoo! search ‘‘educational productivity,’’ and I got zero results. I 

do not think I misspelled it. But it is a concept that is—certainly 

productivity—it is table stakes in terms of the private sector and 

business. You have to improve productivity if you are going to succeed in education. It is really not something that people think 

about a whole lot, unfortunately, and that is part of the problem. 

I was part of the focus group for the Oshkosh area school district, 

and they were going through their budget, and I was, kind of the 

skunk in the room as they were talking about how it costs about 

$10,000 per student, and they were just coming under all kinds of 

pressure, which I understand. It is not an easy task. But I just 

asked the question, ‘‘Well, if you give me $10,000 and give me 20 

students, that is $200,000. I think as a business guy I could do a 

pretty good job of educating 20 kids for two hundred grand.’’ 

Now, that is only $10,000. I think the national average for 

K–12 is higher than that. We see some jurisdictions—Baltimore, 

Washington, D.C., I think it is closer to $25,000. So $25,000 times 

20 students, that is half a million dollars. Are we getting our money’s worth? 

Now, that is not all, Federal money. Most of that is State and 

local. I think those are the kind of questions we have to ask, those 

common-sense—this is what we are spending. What kind of output 

are we getting? 

College, by the way—and, again, it depends on what you are 

looking at. For ease of math, let us take $20,000 per year, cost of 

college, times 20 students. That is $400,000. Again, give me 20 

kids, $400,000, I think I can give them a first-class education. 

So that is a key question we have to ask: Are we getting the 

bang for the buck? We are spending an enormous amount on education, and I am not convinced that we are getting the proper results. 
3 

One question I have, as I started looking into this, is, the cost 

of college has exploded. Depending on what numbers you look at, 

somewhere since the mid-1960s to 1970s, the cost of college has increased somewhere between 2.5 and 2.8 times the rate of inflation. 

Now, think of that. What is different about what colleges and universities spend their money on that their costs—tuition, room, 

board—would increase 2.5 to 2.8 times the rate of inflation? That 

is a legitimate question to ask. 

Then my final question is: Student debt has exploded in this country. Again, I started out, about $95 billion, $100 billion 20 

years ago, now about $1.3 trillion in total. About 7 percent of our 

national debt. Now, is that a good thing, $1.3 trillion? And why is 

that? How is that related to the explosion in the cost of college. 

We have some pretty good witnesses here that will address that, 

and the second panel with the representative from the Department 

of Education. Hopefully we can get some answers to those questions, or at least point us in the direction for where we need to ask 

additional questions and get some additional data. 

With that, I will turn it over to our Ranking Member, Senator 

Carper. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Thanks, Mr. Chairman. 

To our witnesses, welcome. For those of you who came all the 

way from Athens, Ohio, a special warm welcome. That comes from 

a Buckeye, an Ohio State guy. Happy to see you, Dr. Vedder. 

George Voinovich, one of our former colleagues, former Governor of 

Ohio, spends a fair amount of his time there. I think he was an 

undergraduate and went to law school at Ohio State. But he is one 

of our favorites here. We miss him every day. But it is great to see 

you. We welcome you warmly. 

Mr. Carey, I do not think we have met before, but we are happy 

you are here and very much look forward to your testimony, as well 

as that on our second panel of Ted Mitchell, Under Secretary of the 

U.S. Department of Education. 

As it turns out, these are issues that I am hugely interested in. 

I said to our Chairman, we have a working group working on international tax reform in the Finance Committee that I am a part of, 

and we are meeting literally at the same time. And I want to be 

here, and I want to be there. We have not figured out how to do 

cloning yet, and when we do, I will be able to be in two places at 

once. But I will be in and out, and it is not because I am not interested, but it is trying to do—and we are all busy, so it is trying 

to do that. 

Let me just say that the role of government is diverse. We are 

responsible for any number of things—homeland security, defense 

around the world—any number of things—the environment and so 

forth. 

One of the things that we are responsible for is creating a nurturing environment for job creation and job preservation. A nurturing environment for job creation and job preservation. 

I was born in West Virginia. My grandfathers made their living 

off the strength of their backs. My sister and I and our siblings 

make a living more out of the strengths of our minds. We do man-
4 

ual labor sometimes, but not like my grandfather, my grandparents 

did. And it is important that we have strong minds and that we 

start early on. 

I like to focus on what works and do more of that. I was privileged to be Governor of Delaware for 8 years and Chairman of the 

National Governors Association (NGA). I also chaired something in 

the NGA called the ‘‘Center for Best Practices,’’ and what we focused on was find out what works and do more of that. And among 

the things we found out what works in raising student achievement 

is making sure that parents understand and are prepared to be 

parents and to be a partner with their sons’ and daughters’ teachers and educators. We focused on early childhood development, 

very early childhood, 2, 3, 4, 5 years of age, fully funded Head 

Start. George Voinovich and I were the first Governors to fully 

fund Head Start in our States using State money to supplement 

the Federal money, which was inadequate. 

Another key is having teachers who are good at what they do, 

know their subjects, love kids, love to teach, and that is critically 

important, and the way we train them and prepare them to work 

in any wide range of classrooms and schools and different kind of 

demographics. 

Another key is enlightened, capable school leadership. You show 

me a school that has a lousy principal, and I will show you a school 

that is not going to do too well. Show me a school that has a great 

principal, and I will show you a school that is on the way up. And 

the same is true of other school leaders within school districts. 

I think another key is having rigorous academic standards, what 

we expect kids to know and be able to do. And we are not smart 

enough—as smart as my colleagues and I are, we are not smart 

enough to figure out what kids ought to know and be able to do. 

But in our State, we just reached out to the private sector and we 

reached out to colleges and universities and said, ‘‘What should 

kids know and be able to do in math and science and English and 

social studies? ’’ And we urged and encouraged our schools to align 

the curriculum with the academic subjects and then measure 

progress from time to time. 

I believe extra learning time is critically important. Senator 

Lankford over here, from Oklahoma, Senator Lankford may be able 

to learn faster than I am. I can still learn. I just might need more 

time. So what we do is in my State we try to provide extra learning 

time for those of us who need that extra time. 

There is any number of ways to raise student achievement, and 

those are some of them. 

I just want to say on the postsecondary side there is a lot we 

could talk about there. It has changed a lot. When I was a naval 

flight officer (NFO), my squadron’s home station was near Menlo 

Park, California, Moffett Field Naval Air Station, when we were 

not overseas. And I think the tuition at the University of California 

colleges was free. It was essentially free in the late 1960s, early 

1970s. That has changed enormously. Our youngest boy grew up in 

public schools in Delaware, but he went to William and Mary, a 

public school in Virginia, and we paid—I do not know—$45,000 a 

year to help send him there. The State support dried up in Virginia 

and States across the country. And one of the reasons why the 
5 

Feds have stepped in to help a little bit is because the States have 

really drawn back. 

The other thing, I think we are starting to witness a sea change 

in the way we teach postsecondary, and a lot of that involves the 

Internet and distance learning. Some of it is done very well; some 

of it is not done well at all. And what we have to do is we go 

through this period of time to figure out what works and do more 

of that. 

The last thing I will say is this: I spent 23 years of my life, 5 

on active duty in a hot war in Southeast Asia, another 18 right up 

to the end of the cold war as a naval flight officer. And my dad, 

my parents, my grandparents, they were like World War II vets 

and Korean War veterans and so forth. In 1952, we found that the 

GI bill was being squandered in some cases with money that went 

to enroll people in for-profit colleges or postsecondary training. We 

created a law that was called ‘‘85–15,’’ and the law that at least 

15 percent of those enrolled under the GI bill at for-profit schools 

had to be non-veterans. If the school could not attract at least 15 

percent of their students from non-veteran sources, they were not 

going to get the GI bill students. 

We changed that in 1992, and we changed it from enrollees to 

the standard of revenue, so that at least 15 percent of a school’s 

revenues had to be from non-Federal sources. But it was only Title 

IV stuff. Only Title IV stuff. And now what happens is we have 

for-profit colleges and universities where 100 percent of the revenues—100 percent of the revenues—are coming from the Federal 

Government. That is not a good situation. It is something that we 

need to change, and my hope is that we will. 

I could go a lot longer, but my time has expired, and I thank you 

for your patience. Thanks and welcome again. 

Chairman JOHNSON. Thank you, Senator Carper. 

It is the tradition of this Committee to swear in witnesses, so if 

you would both rise and raise your right hand? Do you swear the 

testimony you will give before this Committee will be the truth, the 

whole truth, and nothing but the truth, so help you, God? 

Dr. VEDDER. Yes. 

Mr. CAREY. Yes. 

Chairman JOHNSON. Please be seated. 

Our first witness is Dr. Richard Vedder. Dr. Vedder is the Edwin 

and Ruth Kennedy Distinguished Professor of Economics at Ohio 

University, an adjunct scholar at the American Enterprise Institute, and Director of the Center for College Affordability and Productivity. I like that word. He has written several books and over 

200 articles on economics and public policy. Dr. Vedder. 
6 

1The prepared statement of Dr. Vedder appears in the Appendix on page 53. 

TESTIMONY OF RICHARD K. VEDDER, PH.D.,1 DIRECTOR, 

CENTER FOR COLLEGE AFFORDABILITY AND PRODUCTIVITY 

Dr. VEDDER. Thank you, Chairman Johnson and Members of the 

Committee. My oral remarks, by the way, today are extended in a 

statement that I submitted for the record. 

In assessing the impact of the Department of Education on universities, I think some historical perspective is in order. Looking at 

higher education from 1950 to 1980, before we had a higher education department, enrollment quintupled, going from 2.4 million to 

12 million. Whereas, in 1950, barely 6 percent of Americans over 

25 had at least 4 years of college, by 1980 that proportion had 

nearly tripled to 17 percent. 

College ceased to be mainly for the elite well before we had a Department of Education or massive Federal student loan and grant 

programs. Indeed, the rise in the proportion of adult college graduates is by some measures even less today in the era of the Department of Education than in the preceding period. 

Or look at research. From 1972 to 1979, right before the Education Department was created, 40 percent of the Nobel Prizes 

awarded were to Americans or persons associated with American 

universities. Americans dominated the world of research long before the Department of Education existed. 

So what are the unique strengths of American higher education? 

The 50 States have pursued different approaches to educational excellence, and the diversity of choices has made American universities I think more creative and competitive. 

California, for example, pioneered an extraordinarily comprehensive three-tiered system, the elite research-oriented University of 

California that Senator Carper talked about just a minute ago, an 

affordable State university system and many junior colleges. 

By contrast, New Hampshire, with lower taxes and a rich tradition of private education, also has a high proportion of college graduates, but with an altogether different but still effective approach. 

I think this contrasts somewhat with the blandness of much of 

European higher education where centralized ministries of education stifle diversity and intercollegiate competition. Our Department of Education’s quest for uniformity inevitably, I think, dilutes 

somewhat the diversity our Federal system provides. 

While America still maintains its research dominance and the 

abundance of foreign students suggests we still have a superb 

international reputation, there are many disturbing signs. Let me 

mention six. 

First, in the 40 years prior to the Department’s creation, American tuition fees, adjusting for inflation, rose roughly one percent 

a year. In the last 35 years, the rate of tuition increase has more 

than doubled, to about 3 percent a year. I think this is largely a 

function of a dysfunctional Federal student financial assistance 

program. 

Second, a smaller proportion of recent college graduates are coming from the bottom quartile of the income distribution now than 

at the time of the creation of the Department of Education. 
7 

Third, studies by Arum and Roksa and others suggest graduating 

seniors today have only slightly better critical reading and writing 

skills than freshmen, but get far higher grades than in the era before the Department of Education. I am in my 51st year of teaching, by the way, at a university. Literacy of college graduates is declining by some measures. Students spend less than 30 hours a 

week on their studies compared with 40 hours around 1950. 

Fourth, the accreditation system overseen by the Department is 

a disaster. It provides almost no useful information to consumers, 

does little to eliminate poor-quality schools. Accreditation promotes 

anticompetitive behavior, increases barriers to useful innovation, 

and is rife with conflicts of interest. 

Fifth, some regulatory efforts of the Department are intrusive 

and sometimes even violate basic American principles of due process. The Department’s Office for Civil Rights Regulation on the college handling of sexual harassment cases, for example, has almost 

certainly led to unjust Kafka-esque treatment of some of the accused, resulting in condemnation from persons from all over the political spectrum, from, the Harvard law faculty, for example. The 

Free Application for Federal Student Aid (FAFSA) form required 

for student aid is byzantine in its complexity, keeping many lowincome persons from even seeking financial assistance. 

Sixth, not only do over 40 percent of those entering college not 

graduate within 6 years, nearly half of the graduates become underemployed, taking jobs historically filled by high school graduates, the point that Senator Johnson alluded to in his opening remarks. 

Thus, I doubt on the whole that the Department of Education 

has improved the American higher education environment. In 

1979, the bill creating the Department cleared the House Education Committee on a 20–19 vote and was opposed not only by 

most Republicans and seven Democrats on that Committee, but 

also by the New York Times, the Washington Post, the AFL–CIO, 

and leading Democratic intellectuals like Senator Daniel Patrick 

Moynihan. The modern history of higher education suggests to me 

that this opposition was probably largely justified. 

In conclusion, the data has been mentioned informally and formally as a problem. One service the Department should provide is 

good information to students and policymakers. Even here it has 

often floundered, only recently finally issuing its College Scorecard—which I like very much, by the way—but which left out, 

some colleges—even left out colleges like Hillsdale, Grove City, Patrick Henry, and Christendom. And we have several other problems 

associated. Pell grant data, I have challenged the Department for 

years to tell us what percentage of college graduates on Pell grants 

graduate in 6 years, and they have had data problems. But, in 

short, the overall record in my mind is somewhat mediocre. 

Thank you very much. 

Chairman JOHNSON. Thank you, Dr. Vedder. 

Our next witness is Kevin Carey. Mr. Carey directs the Education Policy Program at the New America Foundation here in 

Washington, D.C. He is a contributing writer for The Chronicle of 

Higher Education and edits the annual Washington Monthly College Guide. Mr. Carey. 
8 

1The prepared statement of Mr. Carey appears in the Appendix on page 65. 

TESTIMONY OF KEVIN CAREY,1 DIRECTOR, EDUCATION 

POLICY PROGRAM, NEW AMERICA 

Mr. CAREY. Thank you, Chairman Johnson, Ranking Member 

Carper, and Members of the Committee, on behalf of New America. 

Why has college become so expensive? Unlike Dr. Vedder, I 

would not put primary blame on the existence or actions of the 

U.S. Department of Education. Certainly over the last 8 to 10 

years, much of the expense of higher education has been driven by 

disinvestment at the State level. States have reacted to the 2008 

recession. They have disproportionately cut funding for public universities, and many public universities have increased tuition as a 

result. 

I do acknowledge, however, that is an incomplete answer to this 

question. It does not take into account increasing prices among private colleges, and it is the case that over the long term, colleges 

have increased tuition in good times, in bad times, and more or less 

all times in between. And in the end, I think they did that mostly 

because they wanted to and because they were able to. 

It is not a mystery why colleges would want to raise tuition. All 

institutions like to have more money. The real question is why 

were they able to. Why were colleges able to increase tuition at the 

rate that Dr. Vedder described? And I think we could just start 

with some basic math. 

If we go back to 1972, which was really the founding of the modern system of Federal financial aid, there were roughly 1,400 public 

2- and 4-year colleges in the United States, and there were about 

9 million college students. 

Since then, we have increased the number of public colleges by 

about 11 percent and increased the number of students by 111 percent. So we have many more students competing for spots in the 

same number of institutions, at the same time that we have experienced seismic changes in the nature of the American labor market. 

The blue-collar economy collapsed in many regions. So even as population increased, more students were driven into higher education, 

but we had only the same number of institutions in order to educate them. So supply and demand, much more demand for a service 

that became much more valuable, and the same number of institutions giving them much more pricing power in the higher education 

market. 

A good question is: Why didn’t new institutions spring up to 

meet that demand? I agree with Dr. Vedder that accreditation has 

a lot to do with that. To legally offer college degrees and receive 

Federal financial aid, colleges must have accreditation. The accreditation process is managed by associations of existing colleges. 

Standards for accreditation are based on how existing colleges operate—the kinds of people they hire, the degrees they offer, the 

way they manage their libraries, departments, and programs. 

Accreditation defines away the possibility of radical innovation 

and productivity increases in higher education. Imagine if, back in 

2007, the Apple corporation had to get permission from a trade association of existing mobile phone manufacturers in order to sell 

the iPhone. That is how higher education works today. 
9 

Colleges are also subject to little or no market discipline when 

it comes to their core mission of teaching undergraduates. There is 

very little information about how much students learn at individual colleges, and as a result, the market for higher education is 

not driven by the basic value proposition of benefits weighed 

against costs. 

Instead, colleges compete with one another for status, based on 

expensive things that have little to do with student learning, such 

as intercollegiate athletics, research prowess, Olympic-caliber gymnasiums, and luxury dormitories. 

College administrators do not sit down every year and determine 

how much it costs to provide students with a high-quality education and set tuition accordingly. Instead, they sit down every 

year and determine the largest tuition increase that the private 

market and the political economy can bear and then charge that 

much and spend the money on the things they care about. And, increasingly, it seems the things that they care about are themselves. 

The ranks of college administration have grown over time. The 

ratio of administrators to students has increased, at the same time 

that the percentage of classes taught by tenured professors has declined. Many more classes are taught by adjunct professors now, 

not tenured professors. 

Higher education has also, uniquely among major informationcentered industries, avoided almost entirely the disruptive pressures of information technology (IT). Today, most colleges offer 

some form of hybrid or fully online classes, and millions of students 

are enrolled. Yet colleges charge the same tuition for these classes 

as for in-person classes, even though online classes are much less 

expensive to provide at scale. 

What, if anything, can the U.S. Congress do about this? 

I think many Federal lawmakers are appropriately cautious 

about interfering with an industry that has long been seen as a 

global leader and which has traditionally been the responsibility of 

State governments and private markets. 

However, I would argue there are some important things that 

only the Federal Government can do. And now that the U.S. Department of Education is the single biggest financier of higher education, providing $165 billion a year in grants and Federal loans, 

the question is really not whether there will be a strong Federal 

role in higher education. There is one. The question is whether that 

role will continue to be limited to providing blank checks to organizations that are steadily pricing the middle class out of higher education, and thus the American dream. 

The Federal Government should not tell colleges how to teach. It 

can, however, expand the definition of who gets to be a college and 

help consumers make better choices about which colleges to attend. 

Yet during the last reauthorization of the Higher Education Act, 

in 2008, language was included at the behest of industry lobbyists 

that actually prevents the U.S. Department of Education from modernizing its information system and providing information to students who are most likely to move among different colleges during 

their careers. This shields colleges from accountability, and I believe that provision should be repealed. 
10 

The Federal Government should also expand its longstanding 

commitment to university-based research to include more research 

about universities. We spend billions of dollars to develop cuttingedge technologies and virtually nothing to evaluate the effectiveness of a hugely subsidized industry that is crucial to our Nation’s 

future economic and civic prosperity. 

Finally, we should create more room for higher education innovation by allowing entrepreneurs to compete on a level financial playing field with established colleges. In the long run, the higher education cost problem cannot be solved with price controls and public 

subsidies alone. We also need greater productivity—I also like that 

word—through the creation of new organizations built from the 

ground up with the growing capacities of information technology in 

mind. 

That does not mean ignoring consumer protection. Many students have been defrauded by organizations in recent years. But 

this is really not a matter of too much regulation or too little regulation but the wrong kind of regulation. All of the worst colleges 

were operating inside of the accreditation system and taking advantage of that system’s inattention to student learning. 

Instead, the Federal Government should experiment with giving 

public, nonprofit, and for-profit organizations that may look nothing like traditional colleges equal access to Federal funds, in exchange for being held rigorously accountable for outcomes defined 

not by government bureaucrats but by employers and members of 

the academy. 

Without such changes, colleges will continue to increase tuition, 

because they want to, and because they can. 

Chairman JOHNSON. Thank you, Mr. Carey. Let me go right to 

you. You opened up talking about the reduction in State support 

of public institutions, which, no doubt about it, that contributes. Do 

you have a dollar figure on that in terms of how much has been 

withdrawn? Because that does not affect—and I think your testimony stated this, too. It does not affect the tuition rise in private 

institutions, correct? 

Mr. CAREY. So there was a substantial disinvestment—I would 

like to go back and give you the exact numbers. There was an absolute decline in funding in the years after the recession. Some 

States have begun to fill that gap in, but many States have not. 

Chairman JOHNSON. That does not explain the rise in cost of tuition and the cost of college in private institutions. 

Mr. CAREY. It does not, no. 

Chairman JOHNSON. Do you have a relative increase in tuition 

and the cost of college between private and public? 

Mr. CAREY. They have been roughly comparable. They are starting from different baselines, so a percentage basis and an absolute 

basis, not the same. Public institutions have probably increased 

their tuition more since the recession, but private institutions were 

charging more to begin with. 

Chairman JOHNSON. OK. It certainly describes the price pressure 

on public institutions, but it does not at all—something else is at 

play with private institutions, and, again, you are talking about the 

supply and demand ratio. 

Mr. CAREY. Yes. 
11 

Chairman JOHNSON. So I think it is pretty stark. The supply has 

gone up about 14 percent, and the demand has gone up 111 percent. That is going to put pricing pressure on any system. Then 

your conclusion was because of the accreditation process you have 

certainly limited—you have barriers to entry to increase the supply. 

Mr. CAREY. Yes, 

Senator CARPER. Before you answer, could I just ask—we started 

a vote, I believe, and we are about 11 minutes into the vote. Do 

you want me to run and vote and—— 

Chairman JOHNSON. Sure. 

Senator CARPER. Then we will play tag team. This is how we do 

it here. 

Chairman JOHNSON. Are you familiar with the study from the 

Federal Reserve Bank of New York that is really kind of studying 

the increase in colleges, college costs? 

Mr. CAREY. Yes. 

Chairman JOHNSON. So their conclusion, as best as I can interpret it, is that for every dollar that the Federal Government has 

poured into higher education, tuition has increased 65 cents. You 

are familiar with that conclusion? 

Mr. CAREY. There is an active debate among academic economists about the relationship between public—Federal subsidies and 

prices. I think broadly speaking there probably is one, but it varies 

quite a bit, depending on which part of the industry and the sector 

we are talking about, public versus private, for-profit versus nonprofit, elite versus non-elite. 

Chairman JOHNSON. I will acknowledge it is complex. Let me 

just throw out some numbers here for you, because I was intrigued 

by that result, again, looking for why is college so much more 

unaffordable. We all want access to higher education, but if you 

make it unaffordable, you actually decrease access. 

So I took a look at since 1970 how much money the Federal Government has poured into higher education, and it totals about $2.1 

trillion in total. That is in grants and student loans. If you take 

65 percent of that, that is about $1.37 trillion. Now, is it a mere 

coincidence that the outstanding student loan debt is about $1.3 

trillion? I am asking—and, again, I am an accountant. I am taking 

a look at these things. It seems like possibly the Federal Government poured $2.1 trillion into higher education. Those institutions 

obviously sucked that money up, again, felt pretty unrestrained in 

terms of tuition increases and who is left holding the bag is our 

young people with $1.3 trillion of student loans. 

Mr. CAREY. During that time there has been a substantial increase in the number of people going to and graduating from college, and so part of that money I think was spent providing that 

access and giving primarily lower-income people access to higher 

education who would not have had it otherwise—— 

Chairman JOHNSON. Which, of course, we all agree with that 

goal. But, Dr. Vedder, you were talking about since the Department of Education the percentage of lower-income individuals actually going into college or getting degrees has actually leveled off or 

declined slightly. 
12 

Dr. VEDDER. That is correct, as I read the evidence. And that 

goes back, by the way, to about 1970 or 1972 when Mr. Carey was 

talking about. And the numbers that come to mind is, I think, 

roughly 12 percent of recent graduates in 1970 or even 1980 were 

from the bottom quartile of the income distribution. Now it is about 

10 percent. 

So my take on that, since you are interested in this, Senator, is 

that the rise in tuition fees and everything that has accompanied 

the student loan phenomenon and Pell grants, et cetera, has 

pushed sticker prices up so much, it has caused low-income people 

disproportionately to just say, ‘‘College is too expensive for me.’’ 

Now, that may be wrong. It may be incorrect. 

And then we also say, ‘‘Oh, by the way, you want to go? You got 

to fill out this 120-question questionnaire that is worse than the income tax form to fill out.’’ That scares away low-income people disproportionately to upper-income people who can figure out a way 

to get around that or have their accountant fill out the form. 

So I think the great goal of these programs from day one—Senator Pell and all of them—let us provide greater access. And, there 

are many other—Kevin will point out there are many other things 

going on at the same time. The income distributions are changing, 

everything else is going on. But I cannot see how these programs 

can be viewed as a success in providing access. I just simply do not 

see it. 

Chairman JOHNSON. Let me state we all share the same goal. 

Education has value, and we all want every American to have the 

opportunity to access education so they have the tools to lead a successful and productive life. That is a goal. We have to really take 

a look at how much money the Federal Government has expended, 

what type of mandates, what type of control do they put over the 

system, when prior to the Department of Education, according to 

Dr. Vedder’s testimony, things certainly were not worse; if anything, potentially a little bit better; and we had a State-run system 

that was actually working pretty well. 

I would kind of like you to address just that basic premise from 

Dr. Vedder’s testimony, Mr. Carey. 

Mr. CAREY. Well, the—— 

Chairman JOHNSON. In other words, do you think there has been 

a marked improvement in terms of higher education based 

on—since the Department was stood up? 

Mr. CAREY. Dr. Vedder cited some, I think, correct and very worrisome statistics about the amount that students are learning in 

higher education. There are international comparisons that are, 

frankly, just as grim. I think that we have succeeded as a Nation 

both at the State—because of a combination of both State and Federal programs providing more access to higher education for people 

who could not afford to have it otherwise. It is why we have one 

of the highest percentages of people with a bachelor’s degree in the 

world, although other countries have been catching up with us. So 

in that sense, I think the programs have been a success. 

What we have not done is design programs that provide incentives for institutions to restrain their tuition and to focus on student learning at the same time. 
13 

Chairman JOHNSON. The marketplace provides those types of restraints. I am not sure government control has ever proved successful at restraining prices. 

I do want to talk about what I think is quite troubling. There 

was a Northeastern University study a couple of years ago that 

came out and said that of recent college graduates, close to 50 percent are either unemployed or underemployed—in other words, 

with a job that required little or no college education whatsoever. 

The Federal Reserve Bank of New York just came out with a similar study saying about 44 percent. Dr. Vedder, you were talking 

about that in your testimony. 

Dr. VEDDER. I have done one of those studies too. If you want 

one, I will give you another one. 

Chairman JOHNSON. So your conclusion is, and why? 

Dr. VEDDER. Well, there are different sources of data, and there 

are different—what is the skill requirements for a given job? There 

are honest differences of opinion, and I think legitimate in some 

cases, about what is required. But there is no question we have 

credential inflation in the United States. We now have baristas 

who have college degrees; 15 to 20 percent of taxi drivers now have 

college degrees; in 1970, less than 1 percent. We have 115,000 janitors with bachelor’s degrees in 2010, according to the census data. 

So we have huge increases in people. You can make a decent case 

that we are overinvested in higher education, that we are putting 

too many resources into getting people to get formalized 4-year degrees. Now, that is not necessarily to say they should not be getting something, some sort of training. Maybe more of them should 

go to welding school. Welders make more money than anthropologists. And maybe, you could make a case that we are misinvesting 

our money or even overinvesting our money, because guidance 

counselors tell everyone, ‘‘You have to go to college.’’ President 

Obama tells us we want to increase the proportion with degrees. 

The Lumina Foundation—that is what they are all telling us. But 

what is happening to the graduates? How is it helping society? And 

now a bar owner can advertise, ‘‘I will only accept applications 

from college graduates for a bar tender’s job.’’ You do not need a 

bachelor’s degree to mix drinks. One in chemistry might help for 

some of the more exotic drinks, I suppose. But you do not really 

need a degree. So we have added this on. 

And, of course, there is another dimension to college, and there 

is a socialization dimension to college. There is also a notion that 

college is more than about vocational things. It is about developing 

virtue and so forth. But I do not even see the evidence there that 

there has been an enormous improvement, say, in civic virtue, civility, these other things that allegedly college graduates have. 

I am in my 51st year of teaching. I am leaving here early, and 

I demanded you move the hearing up to 9:30 so I can get back to 

students. I am on the firing line still at age 74—and not getting 

paid for it, by the way—because I think it is a calling. It is an important calling. But I do think we have been terribly inefficient. I 

agree with everything Kevin said, virtually everything he said. All 

these barriers we put up to new forms of innovation are there, all 

the failure to use the Internet. Teaching is the only profession, 

with the possible exception of prostitution, in which there has been 
14 

absolutely no productivity advance in the 2,400 years since Aristotle taught Socrates, and Aristotle, too, taught the youth of Athens. So we have not taken advantage of technology. We have conflicts of interest—Kevin talked about this; I talked about this—in 

the way we decide who can enter the field. The supply constraints 

that he mentioned and that you picked up on are partly predicated 

on that. That is something that although they are technically done 

by a private accrediting association, the Department has a very 

strong role to play in, and I think I would agree with Mr. Carey 

that that is an area we ought to—— 

Chairman JOHNSON. I can certainly attest to the fact, because I 

have gone all around the State of Wisconsin for the last 41⁄2 years 

and visited manufacturing sites, and I come from a manufacturing 

background myself, somebody who has had a very difficult time for 

the last 20, 25 years hiring people for manufacturing. There is not 

one manufacturing plant I visited in Wisconsin that can hire 

enough people. Not one. So there is demand. Those are good-paying 

jobs as well as oftentimes those manufacturers will pay for education so our kids do not have to put themselves into what is on 

average—and, by the way, is this a correct figure, about $29,000 

on average is what students are leaving college with? 

Mr. CAREY. Among those who borrow, yes. 

Dr. VEDDER. Yes, among those borrowing. 

Chairman JOHNSON. I really want to hone in on this: 40 to 50 

percent of recent college graduates that are either unemployed or 

employed in positions that require no college education whatsoever. 

How much of that is due to the fact that the degree programs are 

not matching what employers are looking for? On the one hand, if 

you need welders, you need manufacturers, You are already potentially overeducating people and causing them to go into debt. The 

way I always refer to it, the fill-in-the-blank studies degrees, again, 

have value, higher thinking, liberal arts, I am not denigrating that, 

but in terms of the evaluation or the metric of matching outcomes 

with employer and societal needs, how are we doing along those 

lines? I would like to hear your thoughts on that, Mr. Carey. 

Mr. CAREY. Well, the skills requirements for job categories have 

changed a lot over time, so, manufacturing used to be a semiskilled job, but now it requires a lot of advanced training. You have 

to understand—— 

Chairman JOHNSON. Just hang on here. 

Mr. CAREY. Yes. 

[Pause.] 

Chairman JOHNSON. I am getting close to the end of the vote. I 

was hoping somebody would come back to keep this thing going, 

but I may have to put this in recess for a while, or a pause. What 

is the proper term? 

[Pause.] 

A pause? OK. Let me go vote. When somebody else comes in, 

they can start asking the questions. Thanks. 

Mr. CAREY. Thank you, Mr. Chairman. 

[Recess.] 

Senator CARPER [Presiding.] Well, thanks for waiting. We do this 

all the time, trying to keep things moving, and we appreciate your 

bearing with us. 
15 

Thank you both for being here. Fifty-one years, that is extraordinary. Extraordinary. We thank you for all of those. If you ever 

see George Voinovich, give him my best. 

Dr. VEDDER. I see him frequently, and he is a great public servant, and he is a great graduate of my university. 

Senator CARPER. There you go. But I want to start and, Dr. 

Vedder, I am going to ask you a question. One of the questions I 

like to ask of witnesses, I am always looking for common ground. 

Always looking for common ground. And I thought you both said 

a lot of things that were important, correct, and I want to ask you, 

Dr. Vedder, to sort of like—not spell check but some of the things 

that Mr. Carey said, especially toward the end of his testimony, 

that I just want to ask you to react to some of what he said. He 

said basically we write out a blank check, and we do not ask for 

much in terms of results. Would you just kind of react to that for 

us, please? 

Dr. VEDDER. Yes. I very much agreed with almost everything 

that Mr. Carey said. We were not carbon copies of one another because he picked up on other things that I did not. 

Senator CARPER. One of the things that I do not think you agreed 

on is the role of the Federal Government funding, Pell grants and 

so forth, you all do not agree that is—— 

Dr. VEDDER. Well, I think we might have some differences of—— 

Senator CARPER. But where do you agree, especially with the 

things—— 

Dr. VEDDER. First of all, on the information side, that is one area 

where we agree. There is a lot of things that go on in education. 

We know appallingly little about what kids actually learn during 

the course of their college years, and if we do know any more, we 

have some generalized national information. We do not know the 

difference between the learning at the University of Delaware visa-vis the Iowa State University, since Senator Ernst just walked in 

the room. And we do not know. Do the kids at Iowa State learn 

more during the course of their years in college than the students 

at the University of Delaware? We have no—that is a fairly fundamental question. We do not know the answer to that. And getting 

the answer is difficult. It is not easy, and there is some disagreement, how do you measure learning and so forth. 

But we are in the business of grading students all the time. We 

are evaluating students all the time. Why can’t we get better assessments of what the colleges are doing? And I think Kevin and 

I in general are in agreement with that. 

The area of accreditation, both of us hit pretty hard on this, that 

we do not think—I should not speak for Mr. Carey, but I think we 

would both very strongly agree that the accreditation system, while 

it has a legitimate purpose for certain, is not working as well as 

it should. Does it really weed out the bad schools? No. Is there a 

conflict of interest inherent in it? When the colleges themselves 

more or less regulate themselves, and to get accredited, you have 

to do what the other colleges do more or less, with some modification. 

Senator CARPER. I am going to ask you to wrap up because I do 

not have a lot of time. Just finish your sentence and then I am 

going to come back to Mr. Carey. Go ahead. 
16 

Dr. VEDDER. Yes, the last thing I would say, along with him, the 

incentive systems within the academy to be efficient and to be productive are very, very limited. 

Senator CARPER. OK. Thanks for that. 

Mr. Carey, if we take nothing away from your testimony today, 

take nothing away but maybe two or three points, including some 

of the stuff you said at the end, just hammer it home, please. 

Mr. CAREY. Sure. The Federal Government I think has an appropriate role in providing information about higher education to consumers. It is a national market, and so really it is the only body 

that can provide consistent data. In fact, just a couple of weeks 

ago, the Department of Education released earnings and loan repayment data for the very first time about every college and university in America. Very interesting information, some of it quite 

disturbing. Actually, a number of institutions where many graduates earn no more than high school graduates do; many institutions where very few students are able to repay their loans on 

time. I think that is an appropriate role. 

Senator CARPER. And when you look at it, is there an inordinate—for those students who are unable to pay their—graduate 

with a degree, or maybe without a degree, if they are unable to pay 

their loans on time, in terms of like public schools, private schools, 

for-profits, is there any differentiation there that you are aware of? 

Mr. CAREY. Certainly the loan repayment rates are worse in the 

for-profit industry. 

Senator CARPER. Why do you suppose that is? And it is not just 

by a little bit. 

Mr. CAREY. Sure. There are, I think, a significant number of forprofit colleges that, first of all, they enroll—because, as you had 

said earlier, many are almost entirely dependent on the Federal financial aid system for revenue, they enroll students who are eligible for financial aid who are, by definition, lower-income students. 

So they enroll students who have very little money. They charge 

prices that are much more expensive, often, than public institutions or even private nonprofit institutions. And some of them—not 

all, but I think a significant number—are offering degrees that 

do not have a lot of value in the job market. So students just cannot—they do not get paid enough to pay their loans back. 

Senator CARPER. OK. We have this law on the books that I mentioned before—it used to be 85–15; it goes back like sixty-some 

years—where scam artists, for-profit schools were taking advantage 

of the GIs and the GI bill, and we established the 85–15 rule that 

said 15 percent of enrollees in a for-profit school have to be not 

paid for by the Federal Government. And then we upgraded that, 

I think 85 percent of the—15 percent of the revenue of these forprofits had to come from non-Federal sources. And then we made 

that 90–10 so that 10 percent of a for-profit school’s revenues had 

to come from, non-Federal sources. But then we find out that there 

is a loophole that allows the schools to take students on the GI bill, 

take students that are on active duty, and that does not count 

against the 90 percent. So some schools have 100 percent of their 

moneys coming from Federal sources. What should we do about 

that? 
17 

Mr. CAREY. I believe it is a loophole. I believe some colleges actively recruit members of the military because every dollar of the 

GI bill counts in the 10 percent. So if you get $1 in military—in 

GI bill money, you can go and get $9 more from the regular Title 

IV system. I think it has led to abuses. I think it contravenes the 

spirit of the 90–10 and previously 85–15 rule, which says that colleges ought to be able to convince someone to pay their own money 

for college, and if they do not, it says something, I think, that we 

ought to take a look at. So I think it is a loophole. I think it should 

be closed. 

Senator CARPER. Thanks so much. 

I think, Senator Ernst, you are next. He asked for you to defend 

Iowa State. 

Mr. CAREY. I am also an Ohio State graduate. 

OPENING STATEMENT OF SENATOR ERNST 

Senator ERNST. Well, fantastic. We could go around and around 

all day, couldn’t we? 

Thank you, Senator Carper, very much. Gentlemen, thank you 

for being here today. 

First, I want to just talk a little bit about financial literacy of 

those students that are going into higher education. When I was 

back at Iowa State University, I had a great friend who was receiving a Federal student loan. He had gotten his loan check in the 

mail, and in our conversation, he stated, ‘‘Oh, I am so glad I got 

my check today. Now I can pay my girlfriend’s rent.’’ I was confused. I did not think that is what the Federal student loan program was for. 

So, anyway, I think there are a lot of—and I do not want to call 

them abuses. I just do not know that students are adequately prepared when they get those Federal student loan dollars. Maybe 

they should know that this is for books and tuition and your own 

use toward higher education. 

But just for both of you gentlemen, in your opinion, how can we 

improve the ways that we are educating those that are receiving 

these loans or those that are potential borrowers about the risks 

of overborrowing, which is oftentimes what happens, or using borrowed funds inappropriately? How can we do better in that area? 

Any thoughts? 

Dr. VEDDER. Well, it is an information problem, and the College 

Scoreboard which was recently put out is a step in the right direction. It tells for each college the amount of borrowing that students 

are doing. It says what percent have even failed to make a single 

dollar payment on their loan. Some of that provides information to 

students in general, particularly in terms of selecting a college. I 

have often thought—my wife is a high school guidance counselor in 

a low-income area and pushed very hard for years to get more and 

more kids to go to college. I think that is an admirable thing to do. 

But I think sometimes we give unrealistic information to students. 

We do not tell students that 40 percent of the people that enter college do not graduate in 5, 6 years. We do not tell them the risks. 

We tell them the benefits. You will earn an extra $1 million over 

a lifetime, which is what it says on the Department of Education 
18 

website today, if you go on and look at it right now. I can show 

it. 

Senator ERNST. Wow. 

Dr. VEDDER. You earn $1 million more if you go to college. ‘‘Oh, gosh, I want to earn $1 million more.’’ It does not say there is a 

40-percent probability based on national evidence you will not get 

through college in 6 years, not 4. It does not even—the colleges do 

not tell you, ‘‘You are not going to graduate in four. There is a 40- 

percent chance you will graduate in four, but a third of the kids 

who graduate take five or six. It does not tell you that. They do 

not tell you that stuff. 

The colleges provide a rosy scenario, and it is the duty of others, 

I think, to provide information, including the magazine rankings. 

I do the rankings for Forbes magazine for colleges and universities. 

I think we provide a little bit of a service in that way. 

But I think the risks associated with going to college are understated. The benefits are overstated. And as a consequence, we get 

people whose expectations are dashed at the end. They go to school 

for a few years. Either they do not graduate, or they do graduate, 

or they graduate and then get a job working at Starbucks or 

Walmart, and they are having a heck of a time paying back, and 

they are living in-—Arum and Roksa in their second book said 24 

percent of recent graduates, 2 years, live in the base—well, I am 

not sure they live in the basement of their parents. They live in 

their parents’ house. Sixty percent are still receiving financial aid 

from their parents 2 years after graduation. And that is not the 

way it is supposed to be. When you go to college, you do not expect 

to be relying on your parents after you graduate. 

Senator ERNST. Right, and I do think that we see a lot of that. 

Mr. Carey, do you have any thoughts? 

Mr. CAREY. Yes, Senator Ernst. There is kind of a push and pull 

between making the Federal aid system kind of bureaucratic and 

rule-bound in a way that would constrain how students spend their 

money and making it open enough and giving students choices, and 

they might not all make the right choices. So I think that is kind 

of a tradeoff we have to wrestle with. 

One thing we could do, right now colleges bear none of the risk 

of students defaulting on their loans, because they get the money 

up front. As we found out recently, there are hundreds of institutions where 5 or 7 years after graduation the majority of students 

have, as Dr. Vedder said, paid none of their loans back, they have 

either defaulted or they are only paying interest or they are sitting 

out there, the colleges have almost no risk at all. And so some people have proposed—and I think this is a good idea—to have colleges share in some of the downside risk of the loan program 

where, if their graduates default on the loans, they would be responsible for some percentage of that money. That might give colleges incentives to provide better counseling to students and make 

sure that they spend their money wisely, borrow enough money but 

not too much money. 

Senator ERNST. Certainly something to think about. I think financial literacy, whether it is part of the orientation process or 

even in high school, whether it is guidance counselors, some way 

we just have to instruct those young people that, proper use of 
19 

those funds and this is for your education. But I think we can 

also—whoever that ‘‘we’’ might be, but a better understanding of 

also the programs that are offered through colleges or universities 

and what their outcome is with employment, hey, philosophy 

sounds great, but, what kind of job are you going to get in philosophy or world history or, civilization? I do not know. 

So there needs to be a realistic expectation on the part of those 

students what degree program they go into and then what the outcome of that degree will be. Maybe even a scale of this is what on 

average people in your field will make once they have secured employment, I think that is maybe perhaps helpful as well. 

Any closing thoughts? 

Mr. CAREY. Well, I would just note that, only 21⁄2 weeks ago, the 

Department of Education for the very first time published information about what the average earnings are of students who graduated from an individual college and the 10th percentile, 25th, 

90th percentile, earnings for men, earnings for women. So we do 

now have the ability by matching information from the Federal student financial aid system with information from the Internal Revenue Service (IRS) to provide that kind of information to students. 

So we will have to see and train guidance counselors to use that, 

to provide that as students make choices. 

Senator ERNST. Very good. Thank you, gentlemen. I appreciate it. 

Thank you, Mr. Chairman. 

Chairman JOHNSON [Presiding.] Thank you, Senator Ernst. 

On a side note, and this is a very unscientific study, but my own 

focus group, every time I have asked a student who is in debt, I 

ask them, ‘‘Did anybody ever—high school counselor, college counselor, financial counselor—talk about paying this loan back? ’’ And 

it will change now, and I am saying this publicly. To date, the answer has always been, ‘‘No, nobody ever talked to me about it,’’ 

which— again, that is the kind of counseling we have to give. 

But, anyway, Senator McCaskill? 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Do either of you believe we should eliminate 

the Department of Education? 

Dr. VEDDER. I think a case could be made to do that. I think 

higher education in America is no better today, maybe marginally 

worse than it was 34 years ago. 

Senator MCCASKILL. OK. 

Mr. CAREY. I do not believe. 

Senator MCCASKILL. OK. The vast majority of the funding in the 

Department of Education goes to three programs: the Pell grants, 

funding for special education needs in K–12, and grants to local 

State school systems. Of those programs, should all three of them 

be eliminated, Dr. Vedder, if we eliminate the Department of—— 

Dr. VEDDER. I did not talk about program elimination. First of 

all, the hearing is on higher education. I do not favor the elimination of Pell grants. The other two programs are not higher—— 

Senator MCCASKILL. And where should they be administrated if 

the Department of Education is gone? 

Dr. VEDDER. First of all, I do want to eliminate some of the student loan programs. 
20 

Senator MCCASKILL. OK. 

Dr. VEDDER. I do. I want to be on record on that. 

Senator MCCASKILL. All right. Less than 10 percent of the education funding in this country comes from the Federal Government, 

and a huge amount of the money that is going into higher education, of course, or student loans, which even though many of 

them are not paid back, the majority of them are paid back. And 

in the process, these kids are getting a college education. Even less 

of the management decisions are being made at the Federal level. 

I would guess that the management decisions in higher education 

are being made, what would you estimate, 95 percent at the local 

level? 

Dr. VEDDER. Well, I do not know how you define management decisions. 

Senator MCCASKILL. Well, we are not deciding to raise tuition, 

Dr. Vedder. The Federal Government is not. 

Dr. VEDDER. What do you suppose, Senator, why do you suppose 

tuitions have gone up 3 percent faster than the rate of inflation? 

Why do you suppose—— 

Senator MCCASKILL. Well, we have not even talked about tenure. 

Dr. VEDDER [continuing]. Textbook prices are going up more than 

the prices of other books? 

Senator MCCASKILL. We have not even—— 

Dr. VEDDER. It is the financial aid system, Senator. 

Senator MCCASKILL. OK. So I understand that there is an argument and there is a huge debate about whether or not, as Mr. 

Carey indicated, a huge debate among accomplished economists 

about what is the driving cost. I guess the point I am trying to 

make is the Federal Government has such a small role in the policies and the financing of higher education, and if higher education 

is doing such a bad job, isn’t that an indictment on the State and 

local and for-profit institutions as opposed to the Federal Government? 

Dr. VEDDER. It is an indictment on the entire system. The Federal Government is only part of it. But I would not agree—— 

Senator MCCASKILL. A small part of it. 

Dr. VEDDER. I would not agree with your characterization. $180 billion, $160 billion is sloshing around in student loans every year, 

and Pell grants, et cetera. That is not a minor part of a $400, $500 

billion industry. Admittedly, it is loans. And you say, well, we do 

not count that because those are going to be paid back someday. 

But it has a disproportionate impact on what goes on. 

When the Department of Education tells colleges and universities 

what standards they will use on Judiciary hearings on sexual assault, for example, that is an interference by the Federal Government on local decisions. 

Perhaps you understated the role that the Federal Government 

plays—— 

Senator MCCASKILL. Let us talk about sexual assault. My office 

did the first—— 

Dr. VEDDER. I am against it, by the way. 

Senator MCCASKILL. We all are. And it probably is not humorous. For the first time in decades, we did a statistically valid survey of colleges and universities in this country last year. If you 
21 

have not had a chance to read it, I would recommend it to you. I 

would certainly recommend that you look at the underlying methodology because I think you will be impressed that the underlying 

methodology was—I made sure it was bulletproof, as a former auditor. Understand now that any complaint of sexual assault on a college campus is supposed to be investigated. Forty percent of the 

higher education institutions in this country said on that survey 

that they had not done a single investigation in sexual assault in 

5 years. 

Do you believe, Dr. Vedder, that that is an accurate reflection of 

whether or not there was any sexual assault going on on those 

campuses? 

Dr. VEDDER. I suspect there is a shameful lack of reporting. I 

suspect you are absolutely—— 

Senator MCCASKILL. Or a shameful lack of acknowledgment by 

the universities that they have a problem. 

Dr. VEDDER. Universities like to hide problems. They like to hide 

bad publicity, and this is an area which is particularly true. I am 

sure you are correct. 

Senator MCCASKILL. And one in five admitted that their athletic 

departments had a role in adjudicating these cases against their 

athletes. 

Dr. VEDDER. I believe that, and I think there is a scandal in 

intercollegiate athletics, too. 

Senator MCCASKILL. So my question is: Do you believe that Title 

IX was good in terms of equality for women in terms of sporting 

opportunities? That Federal law, do you believe that—— 

Dr. VEDDER. I think it is probably a good thing. I have no problem with it. 

Senator MCCASKILL. That that was a good Federal role? 

Dr. VEDDER. Yes, sure. 

Senator MCCASKILL. OK. But you do not believe that there 

should be a Federal role in giving young women an opportunity or 

young men an opportunity to tell the university when there is an 

environment on their campus that is unsafe? 

Dr. VEDDER. I raised in my testimony, which you were probably 

voting at the time, or whatever—— 

Senator MCCASKILL. I read your testimony. 

Dr. VEDDER. We use standards in sexual assault cases—and this 

is not my area—I am an economist. This is not my area of expertise. But we use preponderance of evidence standards, which 28 

members of the Harvard Law School, who are not particularly 

known as being hidebound conservatives, said it was inappropriate 

to be used, and—— 

Senator MCCASKILL. By the way, I am a conservative on this 

topic because I believe that preponderance of the evidence is completely appropriate when the only punishment they can possibly 

get is leaving the campus. We are not talking about depriving 

somebody of their liberty. We are not talking about incarcerating 

them. We are not talking about them having to register as a sex 

offender. We are not talking about them having something hang 

over their head for the rest of their lives in terms of being charged 

with a crime. We are talking about most of the time they are getting book reports or being suspended for 3 weeks. The worst that 
22 

could happen under Title IX is that they have to leave the campus. 

Now, do you not believe that under those circumstances the safety 

of the campus, if it is a preponderance of the evidence, that is 

not—I think this is a conservative position, not a liberal position. 

I think the liberal position is let us make sure that we give every 

benefit of the doubt to people who have been accused of raping 

women on campus? 

Dr. VEDDER. I think that cases of this kind should be referred to 

the courts in the judiciary, to the prosecutor’s office, and that 

crimes of sexual assault are crimes, and crimes should be handled 

by police. And I do think that often campuses hide this. I think it 

is shameful. I agree with you, Senator, on that. 

Senator MCCASKILL. Well, perhaps—— 

Dr. VEDDER. There are a lot of things going on in campuses that 

are shameful. The interesting issue, though, is how should these 

things—should they be settled from D.C. or should they be settled 

at the State level? And I think that there are honest differences of 

opinion. 

Senator MCCASKILL. I think there are honest differences of opinion, and I know I am out of time, but I will close. Mr. Carey, one 

of the things our legislation will do that some of us are cosponsors 

of the legislation—Senator Ayotte is one of the cosponsors—is it 

would provide a climate survey that would allow an apples-to-apples comparison of how students feel about how safe they are on 

these campuses, which goes to your point about consumer education. Right now, the Clery statistics, nobody has any idea what 

they are. They do not know how to get to them. They are not being 

done in a way that even allows a comparison campus to campus. 

And I think unfortunately right now too many parents are looking 

and seeing schools that do not have any investigations, thinking, 

oh, that must be a safe place, when in reality it is just the opposite. 

So I am assuming the climate surveys that would allow something like the Scorecard in terms of earning capability and graduation rates would be something that you think would be an appropriate Federal role? 

Mr. CAREY. I do, yes. 

Senator MCCASKILL. Thank you. 

Thank you, Mr. Chairman. 

Chairman JOHNSON. Thank you, Senator McCaskill. I think that 

information gathering and publication process is something we can 

all agree on. I really do. Senator Lankford. 
23 

OPENING STATEMENT OF SENATOR LANKFORD 

Senator LANKFORD. Thank you for the conversation. Let me 

switch over to the accreditation conversation that had started earlier as well, and I want to give you a chance to spend some additional time on that. 

Accreditation is one of those key areas where basically other 

campuses that—or other schools limit the innovation of other campuses, and my concern is: How do we actually encourage more innovation rather than limit innovation? What are recommendations 

and ideas that you have? And what role can we have in the accreditation process? 

I am one of those folks that believes we have the greatest educational system for higher education in the world. The envy of the 

world still is here, and one of the worst things that we can do is 

to get increased Federal involvement to something that is going 

well. But when there are clear areas that are not going well, like 

limiting innovation, we need to find a way to be able to engage in 

that. 

So, Mr. Carey, you started this conversation. Dr. Vedder, you 

also engaged in this as well. What are ways that we can actually 

improve the accreditation process to make sure that we encourage 

innovation rather than stifle it? 

Mr. CAREY. I would recommend experimenting in a controlled 

fashion with alternatives to traditional accreditation that would 

allow either for-profit or nonprofit organizations that want to take 

an innovative approach to higher education, that may not be whole 

colleges and whole degree programs, and give them a shot, as long 

as they are willing to be held accountable for outcomes, which, 

frankly, the current accreditation system does not have. 

For example, like right now, Massachusetts Institute of Technology (MIT) and Harvard have created a nonprofit organization 

called ‘‘edX’’ that offers free online classes that are taught by MIT 

and Harvard professors. You can basically take the entire MIT 

freshman curriculum, extremely high quality classes online, same 

classes, same exams—I have taken one of these classes-—take the 

tests, get a certificate from them. But what you cannot do is then 

use that for college credit because the nonprofit consortium is not 

an accredited college. I think that is crazy. You can get college 

credit and pay a lot of money and give your Pell grant to the 

sketchiest, worst college, for-profit or nonprofit—and there are both 

in this country—but you cannot go and get credit for a Harvard or 

an MIT class that is taught by the greatest professors in the world. 

That is an accreditation problem, and it is because the accreditation system does not know what to do with the nonprofit—— 

Senator LANKFORD. Right. So I am back to the same issue. We 

see rising costs in higher education. We see these innovative models that are out there that can dramatically drop the cost line. And 

one of the biggest issues we have is an increased number of individuals wanting to get into college, which is good, but then increasing costs for every one of those, and they can get away with it because everyone is pushing these students toward college. Good to 

do that, but we cannot get the innovation. Typically when you have 

rising costs, you have—competition floods into the market, and you 

have innovation that occurs, and there are other models. To say if 
24 

you want to spend $100,000 to go to college, there is a place to do 

that. But if you do not want to do that, there is also a way to be 

able to get it done for $10,000. Right now I believe that the accreditation models are stifling that. 

So my question is: How do we fix it? I know it is there. What 

are the ideas on how to actually fix that? 

Mr. CAREY. Because accreditation matters most in the way that 

it grants eligibility to the Federal financial aid system—that is far 

and away the most important thing about it—I think we should experiment with other ways to access the Federal financial aid system that are, again, rooted in evidence of student learning and not 

rooted in you are like all the colleges that came before you. 

Senator LANKFORD. Dr. Vedder. 

Dr. VEDDER. I would agree 100 percent with Mr. Carey on that. 

Colleges, you have to remember, are packaging devices. You get a 

piece of paper at the end after you have taken 45 courses, or whatever the number is for a bachelor’s degree, and in a sense colleges 

have a monopoly on providing education while the person is at the 

university, pretty much. They can transfer in and out a little bit 

of credit. Even there, there are some obstacles. 

So coming up with allowing an individual provider of courses as 

opposed to degrees, to get those courses in effect accredited in some 

fashion, given—be anointed as being OK to get Federal aid for 

would be a huge step forward. The massive open online courses 

(MOOCs), the so-called massively open online courses, what everyone said would be a great success, have been sort of in some people’s minds a bit of a disappointment, not because they are a bad 

idea or the quality is bad, but because the obstacles of turning 

learning, real learning into something that can be certificated and 

proven as learning is very difficult. 

In that area in particular, I think there is, room for—why don’t 

we accredit courses rather than universities? Why doesn’t a person 

that has 45 courses from 20 different universities be able to get a 

degree if there are a few other minor issues associated with it, but 

why not in principle can’t that happen? 

Senator LANKFORD. Right. 

Dr. VEDDER. And so I am in complete agreement with Mr. Carey. 

Senator LANKFORD. So the question obviously on that is the who. 

Who does that accreditation? Who actually examines that course? 

Who signs off on it, sets the standards? We have accrediting agencies now for universities. Universities are not going to accept every 

other course that is out there. They will not accept other things 

that are accredited, and even then they will evaluate whether it is 

going to work on their degree. Who does that type of accreditation? 

How would that work? 

Mr. CAREY. My recommendation would be that it either come 

from business and industry, because many higher education classes 

are explicit—programs are explicitly designed to lead to skills and 

outcomes in the professions and in industry, or the academy. So we 

should not ask the U.S. Department of Education to decide what 

a good calculus class is. 

Senator LANKFORD. Right. 

Mr. CAREY. We should ask mathematicians in our universities 

who very much know what a good calculus class is. We can tell, 
25 

as Dr. Vedder said earlier, who is learning math and who is not. 

They should decide what the standards are. And we should allow 

anyone who can prove that they can through maybe very different 

methods bring people up to those skills to compete on a level financial playing field in the context of Federal aid. 

Senator LANKFORD. OK. Dr. Vedder, any comments on the who? 

Dr. VEDDER. No. I completely agree with Dr. Carey. 

I would say this: I have been yelling at the U.S. Chamber of 

Commerce and other business groups, ‘‘Why don’t you get into the 

business of accreditation? Just declare yourself an accreditor.’’ 

Businesses will listen to what other businesses say perhaps. I do 

not know if it is the U.S. Chamber or the National Association of 

Manufacturers or National Federation of Independent Business 

(NFIB). Why aren’t they getting in the business of saying what is 

acceptable to them in terms of placing people? And I think perhaps 

we ought to encourage more militant—greater discussions with the 

business community about doing this and picking up on Mr. 

Carey’s point. 

Senator LANKFORD. I would tell you, the State of Oklahoma 

years ago invested at a very high level in our career and vocational 

education, and the business community is very, very engaged in 

making sure that that actually lines up with the skills that they 

need to be able to hire. And the Oklahoma model for career tech 

has been extremely successful and is a very unique model around 

the country. So that is actually possible on it. My challenge would 

be if we are fighting with the inevitable cost, we cannot have the 

Federal Government say we are just going to continue to pay the 

same amount for these courses that are online that may cost a fraction of the amount. If the goal is to be able to provide that student 

the opportunity to be able to get a degree, maybe $5,000, $6,000 

for a college degree they can do mostly online with high-level classes, when Federal dollars start rushing into that, the costs of the 

online courses are going to skyrocket, and it should not be that 

way. So we have to be able to find a way that the Federal Government is not the engagement on that, but we have true competition 

in the process with the accreditation. So I would appreciate the ongoing conversation on this in the days ahead. 

Thank you. I yield back. 

Chairman JOHNSON. Thank you, Senator Lankford. 

Before we move off this point, if I could interrupt on Senator 

Ayotte’s time here, isn’t it true that the Federal Government decides who the accreditation agencies are for any university that is 

going to get Federal Pell grants and student loans? 

Mr. CAREY. Yes. 

Dr. VEDDER. That is correct. 

Chairman JOHNSON. It is not like somebody can just—they have 

to get federally approved to be an accreditor of that. So the Federal 

Government controls that process, right? 

Dr. VEDDER. Yes. 

Mr. CAREY. Yes. 

Chairman JOHNSON. And in terms of innovation, the marketplace 

is the greatest innovator, so, Mr. Carey, you talked about the accreditation process limiting additional supply. We have a 14-percent increase in supply, 111-percent increase in demand in this 
26 

thing. What else is limiting the supply? Do you really view that as 

the primary factor limiting the increase in supply of colleges and 

universities and courses? 

Mr. CAREY. I do think that a consequence of our investments in 

Federal aid, which I very much support and think were important, 

they unleveled the financial playing field. So if you are a competitor, students can bring a $5,500 voucher to pay for their classes, 

and you are not in that system and you are $5,500 behind, that is 

such a disadvantage that I think nobody even wants to try to come 

in and compete. 

There are a few places now, we see in like coding academies, for 

example, very high demand, very high skill areas where actually 

there are new organizations that are existing outside the aid system. But that is for jobs that pay $90,000 a year, and they cannot 

get enough people. 

Chairman JOHNSON. Limiting the supply is really tied to the 

Federal Government control over the accreditation process and the 

financing, the student loans and the grants, is your conclusion. 

Mr. CAREY. Yes. 

Dr. VEDDER. Yes. 

Chairman JOHNSON. OK. Senator Ayotte. 

OPENING STATEMENT OF SENATOR AYOTTE 

Senator AYOTTE. Thank you. I wanted to ask about a related 

topic to what Senator Lankford just asked about. And as we look 

at our education system, one of the experiences that I have is when 

I travel around New Hampshire, I hear from employers directly, 

many of them in the manufacturing field, that they have many unfilled positions, and they are very good paying positions, frankly, 

much better paying positions than many of our 4-year graduates 

are able to get when they get out of college. And we have a disconnect right now between our employment needs and our opportunities that we are seeing with some resurgence in manufacturing, 

and it is advanced manufacturing. People sort of have this outdated view of manufacturing that is in this dirty factory. These are 

very technical jobs. They require obviously an understanding of 

how to use computers. They require some basic mathematics and 

engineering understanding. But they do not necessarily require a 

4-year degree. 

So I wanted to get your thoughts on, Senator Kaine and I actually have a bill, both of you, that would allow you the flexibility, 

if you need your Pell grant, to take a short-term skills program, a 

Career and Technical Education (CTE) program, a training program, say you are going to go to a community college or let us say 

you want to go to a welding program or whatever it is, because 

there are a lot of opportunities for good-paying jobs, and it goes 

back to this issue of transparency. We need to tell our young people, too, that here is where there are jobs and here is what the average pay is here so that they know when they are taking out a 

college loan, what the implications of that are, but also what are 

the opportunities for me to earn in the long term, and where are 

the jobs available? 

So I wanted to get your thought on this idea of—I know we are 

talking about higher education today, and one of the big gaps we 
27 

have in higher education is Science, Technology, Engineering and 

Math (STEM) overall, but it is also beyond just the traditional 4- 

year degree. I want to get both of your thoughts on how do we provide people bigger opportunities here in looking at higher education 

in a broader, more flexible sense. 

Dr. VEDDER. I completely agree with everything you said, Senator. Indeed, while you were out of the room, I spoke some to the 

very issue you mention. First of all, colleges and universities are 

organized in medieval ways. They are in departments, the history 

department and this department and that department. They are 

not quick, nimble, and fast. They are bureaucratic. They are not 

able to see the changes going on. They do not have the market incentives to see that changes are coming. 

Apple brought this out last week. This is the 6S. They sold 3 million last Friday. You can be sure Samsung and others are working 

day and night to come up. That does not exist in higher ed, so we 

have to facilitate what you are talking about in different ways. 

One way is to extend Federal aid, where Federal aid goes—— 

Senator AYOTTE. Give you flexibility in how you use—— 

Dr. VEDDER. Yes, exactly. Maybe we ought to use the word ‘‘postsecondary’’ instead of ‘‘higher ed.’’ And if you want to go to welding 

school with that money, my view is go to welding school, if that is 

what is best for you. Welders make more money, for every education dollar spent on welding. It is a heck of a lot better—— 

Senator AYOTTE. If you want to talk value, if you have a good 

welder, I mean, you could write your ticket. 

Dr. VEDDER. Yes, I mean, welders or plumbers are golden. 

Senator AYOTTE. Yes, I know. They are golden. 

Dr. VEDDER. Yes, absolutely. 

Mr. CAREY. Thank you, Senator. I also agree with what you said. 

I think in many ways our higher education system discriminates 

against programs that are designed to provide people with skills 

that lead to good jobs. We tend to relegate those to the less 

resourced part—— 

Senator AYOTTE. And, also, I think we have kind of developed a 

bad attitude that is not right in terms of those jobs, that these are 

very important, productive jobs for our country. 

Mr. CAREY. One of the problem we have is it is very difficult if 

you say you went to a community college and got a 2-year degree 

that leads to employment, it is very difficult to transfer those credits and get a bachelor’s degree if, say, you want to move up into 

management, and often management jobs you need a bachelor’s degree or even a master’s degree. Those things we can change. And, 

also, to pick up a little bit—— 

Senator AYOTTE. We should change that, absolutely. 

Mr. CAREY. Absolutely. 

Senator AYOTTE. You should be able to use that and have transferability to go on to that next step in your career. 

Mr. CAREY. I agree with that, and to respond a little bit to something related to what Senator Lankford said earlier, we do not 

have to make a full Pell grant available for every program. We do, 

but we do not have to. 

Senator AYOTTE. Right. 
28 

Mr. CAREY. You could imagine saying, what we really want are 

lower-cost programs, and so in exchange for the flexibility to try 

something new and not be like a regular accredited college, you 

only get half a Pell grant, and see what happens, see who responds 

to that. 

Senator AYOTTE. I also like this idea—you mentioned it—of skin 

in the game for the colleges and universities and higher education, 

because that I think would focus them more on informing people, 

letting the students know what all of their options are, and, for example, that they do not have to take out the full amount of the 

loan if they have other sources. The fact that if they had some skin 

in the game on repayment themselves, they would also, I think, be 

giving people stronger counseling and advice on what is available, 

and obviously that is going to go back into the high schools. 

So how do you see us doing that, the skin in the game? I know 

there is a bill here, which I am supportive of, that has been introduced in the Senate, but what thoughts do you have on the policy 

end that we could make sure that we get the higher education institutions in this, too? 

Mr. CAREY. I think it is relatively straightforward from a policy 

standpoint. I think it is mostly a political issue. I imagine you will 

get a lot of phone calls from college presidents here and elsewhere—— 

Senator AYOTTE. I probably will after this hearing, right? 

Mr. CAREY [continuing]. Who for obvious reasons would rather 

keep the system they have now. 

Dr. VEDDER. Yes, the problem is overcoming the higher education 

lobby. It is a political issue. I mean, there is no question it should 

happen. There is no question that if colleges are giving advice that 

is distorted or wrong, they should pay a price for that if there are 

negative consequences. It is simple. 

But you try to get by Terry Hartle of the American—I will name 

names—the American Council on Education or other lobbyists. He 

is a fine man, by the way, but he will kill you on this issue, or try 

to. And so it is a political issue. 

Senator AYOTTE. It would not be the first time that we have all 

faced those kinds of issues, right? But I think what you are hearing 

from all of us is a real desire to understand how we can give our 

students an opportunity to pursue with knowledge what they want 

to pursue and have the nimbleness within our system to give those 

opportunities, because the system now, with the way that prices 

are rising, you can get to a point where it is just how do we sustain 

this, and that is going to be a real issue for all of us. So I appreciate your both being here. 

Chairman JOHNSON. Senator Ayotte, I appreciate your line of 

questioning here. Coming from a manufacturing background myself, also volunteering in education, right before I ran for the U.S. 

Senate, the initiative of our Partners Education Council was really 

next step after high school. How do we provide students and their 

parents all the information on all their options after high school? 

One of the main points I kept talking about, is we have to stop 

denigrating the trades. All work has value. There is no first-or second-class way of realizing your full human potential. Here is the 

good news in manufacturing, I had the same comment in Wis-
29 

consin. There is not one manufacturing company that I have visited 

that can hire enough people, and for a number of reasons—— 

Senator AYOTTE. I agree. 

Chairman JOHNSON [continuing]. Partly because we tell all of our 

kids, ‘‘You have to get a 4-year degree,’’ and thereby imply that 

manufacturing is a lesser way of realizing your full human potential. 

The good news is with apprenticeship programs through unions, 

and manufacturers are paying for education. Happy to work with 

you on a Pell grant initiative, but we need to let our kids know 

that there is such a shortage of welders and manufacturing jobs 

available. Most manufacturers, my own company as well, we paid 

for technical college. We paid for full degrees for those individuals 

working for us. 

There is no option here: going into manufacturing, having manufacturing companies pay for education. You end up with a degree 

and zero debt. We just do not tell our kids that those options are 

really available. 

Senator AYOTTE. And this goes to the guidance counselor issue 

in high school, too. 

Chairman JOHNSON. Yes. We were trying to get this ingrained in 

our comprehensive counseling model, starting in eighth grade into 

tenth, getting that information out there. The good news is that requires no Federal Government involvement whatsoever providing 

that information. Individuals at the local school level can provide 

that information and start opening up students’ and parents’ minds 

to all their option. I appreciate the line of questioning. 

We do like to give our witnesses a chance to make some closing 

comments before we seat the next panel, I will start with you, Dr. 

Vedder. 

Dr. VEDDER. Yes, well, thank you. Higher ed is an unusual industry. It does not have the incentives, it does not have the market 

discipline, it does not have the forces of innovation. Institutions 

like tenure can stifle initiative as well. Resources, too many resources are going into non-academic pursuits in recent years. Mr. 

Carey mentioned the explosion of administrative staff as a good example of this. So there is serious need of reform. 

The issue partly is where does the reform start from. Does it 

start here in Washington at the State level? Maybe it takes a little 

at both levels. I would concede that. We need to change incentive 

systems. Skin in the game is a great idea. Why don’t you do something, a little something on skin in the game? Why don’t you do 

a little experimentation on new approaches to learning, such as Mr. 

Carey suggested? I think this would be a good start. It is not the 

end of the story, but it is a good start. 

And if you do not mind, Senator, in a minute I am going to have 

to go teach a class, which I am doing in Ohio, so I am still in the 

trenches on the other end of this, so if you do not mind, I will—— 

Chairman JOHNSON. We appreciate your chosen vocation. I also 

appreciated your discussion of certification versus degrees. I think 

that is another thing that we ought to be exploring. You are excused. 

Dr. VEDDER. Thank you. 
30 

Chairman JOHNSON. Mr. Carey, I want to give you a chance for 

a closing comment, but because Dr. Vedder mentioned it, you 

talked about the explosion of the ratio of administration staff. You 

can maybe just answer that question in terms of what stat you 

have on that and then make your closing comment. 

Mr. CAREY. Thank you, Mr. Chairman. I believe that strong public support for higher education is crucial for the Nation’s future 

civic and economic prosperity, and I do believe the Federal Government has a role to play. I think if we look in history, from the 1865 

Morrill Land-Grant Act to the GI bill, our measure to support for 

research funding, Federal investment in higher education that respects the diversity of the market and the autonomy of States, 

these have been wise choices. 

I do think, however, that we are at a point where we lack innovation, we lack productivity. Our institutions have become somewhat decadent, frankly, and not focused enough on providing value 

to students, providing value to taxpayers, and focusing on student 

learning. I think there are some very straightforward actually Federal statistics that the Department of Education has gathered that 

show growing ranks of higher education administration and, as I 

said, fewer tenured professors, less money spent on instruction. I 

think that is a symptom of this larger problem. I think it is a 

symptom of the lack of innovation. And so my recommendation is 

that the Federal Government has an opportunity to, again, not run 

our colleges and universities, but serve as a catalyst for innovation 

by linking the aid that it provides to new markets and new providers of higher learning. 

Chairman JOHNSON. Well, again, thank you, Mr. Carey, for your 

time, your testimony, and your answers to our questions. With 

that, we will excuse you. 

Mr. CAREY. Thank you, Mr. Chairman. 

Chairman JOHNSON. We will ask Secretary Mitchell to come up 

for the second panel. 

[Pause.] 

That was a quick changeover. I appreciate it. 

Welcome, Secretary Mitchell. Again, we have a tradition of 

swearing in witnesses, so if you will please rise and raise your 

right hand. Do you swear the testimony you will give before this 

Committee will be the truth, the whole truth, and nothing but the 

truth, so help you, God? 

Mr. MITCHELL. I do, sir. 

Chairman JOHNSON. Please be seated. 

Mr. MITCHELL. Thank you. 

Chairman JOHNSON. The witness on our second panel is Mr. Ted 

Mitchell. He is the Under Secretary of Education, a position he has 

held since May 2014. He oversees policies, programs, and activities 

related to postsecondary education, adult career and technical education, Federal student aid, and other initiatives. He has previously 

been Chief Executive Officer (CEO) of the NewSchools Venture 

Fund, president of the California State Board of Education, president of Occidental College, and professor and department chair at 

Dartmouth College. Under Secretary Theodore Mitchell. 
31 

1The prepared statement of Hon. Mitchell appears in the Appendix on page 00. 

TESTIMONY OF THE HONORABLE THEODORE R. MITCHELL,1

UNDER SECRETARY, U.S. DEPARTMENT OF EDUCATION 

Mr. MITCHELL. Thank you, Mr. Chairman and Members of the 

Committee, for inviting me here this morning. And before I begin, 

Mr. Chairman, I would like to make two apologies. 

The first apology is that if we have been less than responsive in 

your requests for information, that is not something that I want. 

Chairman JOHNSON. No. Not at all. No need to apologize whatsoever. It is just like anything in the Federal Government, it is hard 

to get information that I do not have questions on. 

Mr. MITCHELL. We like to be user friendly. 

Chairman JOHNSON. Yes, OK. No apology necessary. 

Mr. MITCHELL. The second apology is for the confusion about the 

two panels this morning. I apologize. But I am also grateful for the 

opportunity to engage with the panel directly, so thank you for 

your understanding. 

I appreciate the opportunity to testify today on the Department’s 

goals for higher education. As I think you all know, we have been 

working diligently to achieve a stronger, more prosperous America, 

as you have, with the goal of reclaiming our place as the Nation 

with the highest proportion of college graduates in the world. 

As an agency, we have established a goal of increasing college 

completion by improving access, affordability, and student outcomes. 

A generation ago, America led the world in the proportion of 

adults 25 to 34 who are college graduates; today, we are 12th. But 

by 2020, George Washington University estimates that 65 percent 

of job openings will require some postsecondary education or training. Today, therefore, a great education is not just what every parent wants for his or her child. It is a necessity for individual financial security and national financial security in a globally competitive economy. And, moreover, it is important, critical, for the health 

of our democracy. 

Whether it is a 2-year or a 4-year degree, a certificate, or a career and technical training program, some form of quality postsecondary education is the gateway to opportunity and the middle 

class, and our objective is in administration. 

We cannot have substantial economic mobility in this country 

without equal opportunity to get a high-quality education. Since 

2009, the administration has worked with Congress to increase Pell 

grants by more than $1,000 a year. We have also worked with Congress to create the American Opportunity Tax Credit. By increasing direct support to low-income students, we are making it easier 

for students to achieve their college dreams and our national interest. 

We have significantly simplified the Free Application for Federal 

Student Aid. Today, students and families on average fill out the 

FAFSA in about 20 minutes. And starting in October 2016, students and families will be able to apply for financial aid just as the 

college application gets under way rather than have to wait until 

January. 
32 

Students filling out the FAFSA will be able to electronically retrieve tax information filed for an earlier (prior) year. This will 

mean a reduction in the number of applicants who need to estimate 

their income or taxes paid, only to have to correct their application 

later. This will also result in a significant burden reduction for institutions. 

As you have heard, the Department released a new College 

Scorecard, which focuses on a few key critical measures of institutional performance to provide students and their families with critical information about cost and student outcomes. While no single 

measure is perfect, we believe the Scorecard will help drive the 

conversation forward on access, affordability, and student outcomes 

and create a kind of public accountability for institutions that has 

been lacking. 

At the back end of the college-going process is a part of the administration’s call for the student borrower bill of rights. The Departments of Education and Treasury are working together to determine the feasibility of developing, for example, improvements in 

the recertification process for borrowers and income-driven repayment plans and, more generally, improvements in loan servicing. 

Our Federal Student Aid Office has initiated targeted email campaigns, for example, to borrowers regarding available repayment 

options and has moved to an incentive-based pricing structure for 

Federal loan servicers to ensure accountability, to provide more effective borrower counseling, and outreach to the borrower community. 

We have proposed to address the affordability issue through 

America’s College Promise, sponsored by two members of this Committee, a proposed grant program for States to make community 

college, both technical training and transfer programs, free for responsible students, enabling them to earn a certificate or an associate’s degree without paying tuition and fees. In return, States must 

continue their investment and community colleges must adopt innovative practices and improve student outcomes. But as you have 

heard, between 2009 and 2014, 47 States cut their higher education per student spending by an average of 13 percent. Over the 

past 25 years, State per student spending is down 25 percent after 

adjusting for inflation. And this matters most, Mr. Chairman, because 72 percent of undergraduate students enroll in public institutions across the country. That is an example of what we believe as 

an administration that everybody has their part to play. The Federal Government has their part to play, States have their part to 

play, and certainly, as the previous witnesses discussed, institutions have a role to play in cutting costs and increasing quality. 

Our Department is using Federal dollars to seed new approaches 

at the institutional level to help with this innovation problem and 

to build a stronger body of evidence about what works and to help 

to scale those innovations. 

The good news is that our efforts have begun to move the needle. 

As you know, our high school graduation rate is at its highest point 

in history. Enrollments in college are growing among minority and 

first-generation college students. And so we are pleased to say that 

our quarterly Administration Priority Goal report to you confirms 
33 

that we are on track to meet our goal for increasing the proportion 

of adults obtaining a postsecondary degree. 

At the Federal level, we view all of our efforts to improve college 

access, affordability, quality, and completion through the lens of 

transparency, accountability, and innovation. 

Thank you again for the opportunity to speak with you today 

about the administration’s goals for higher education. I would be 

happy to engage in a conversation, answer questions, and hear 

comments, Mr. Chairman. 

Chairman JOHNSON. Thank you, Mr. Secretary. 

Let us start right with affordability because I think that is a 

huge—— 

Mr. MITCHELL. Yes. 

Chairman JOHNSON. That is the problem. I have seen different 

numbers, pointing to the fact that the cost of one year of college 

has increased somewhere 2.5 to 2.8 times the rate of inflation from 

the 1960s to the 1970s to the present day. Is that in line with what 

you see as well? Are those pretty accurate figures? 

Mr. MITCHELL. So we think that—yes is the short answer. We 

believe that college price and college cost have risen. We know that 

they have risen greater than the inflation rate. We are quite concerned about that. We are concerned that it is stifling access to students and families who look at a sticker price and say, ‘‘I cannot 

afford that,’’ even if perhaps they can. We hope the College Scorecard will help them with that. And we are quite concerned that the 

incentives continue to be misaligned, which is why I think the Secretary was so clear in his speech in July that we need to refocus 

the system on outcome. 

Chairman JOHNSON. I am looking at what has caused that. Mr. 

Carey certainly talked about—and you reference that as 

well—there has been a reduction in State aid to the public institutions, so that explains part of that. But it does not explain why private institutions, and I do not think it explains all of the increase 

in the cost of college at public institutions as well. I thought Mr. 

Carey’s testimony was pretty stark when he talked about the mismatch between supply and demand, how the demand for college 

has increased at 111 percent but the supply has only increased 

about 14 percent. His theory, his explanation, was the fact that the 

accreditation agencies really are a barrier to entry for additional 

entrants—in other words, increasing the supply, increasing innovation, when you have a competitive marketplace—I participated in 

it for 30-some years. I would have loved to have been a monopoly, 

but because of competition, my prices were definitely constrained, 

as well as my quality was higher and so was customer service. So 

competition really works. 

What is your theory as to why the supply has only increased at 

14 percent but the demand has increased 111 percent? Generally 

in a marketplace, supply would definitely catch up, particularly 

after decades, with the demand. 

Mr. MITCHELL. So I think that there has been historically a mismatch between supply and demand. I think that in a classic economic sense, the barriers to entry to new providers have been high. 

Accreditation is a part of that. So has been our model of what a 

college is, and I think the good news is that we are moving—Sen-
34 

ator, at your point, we are moving away from a place where we believe that every college has to be made of brick, have a lot of ivy, 

have a football stadium. And so there are diverse models that are 

emerging. 

Chairman JOHNSON. With the Federal Government controlling 

the accreditation process and also the financing process—and those 

are completely related—we are not going to have to kind of break 

that monopoly and figure out a different model in terms of accreditation, possibly certification? Our previous witnesses were talking 

about certifying courses versus necessarily accrediting a degree. 

Just kind of speak to those innovations. 

Mr. MITCHELL. Sure. So, again, we have, Senator, as the Secretary said in his July speech—and I have often spoken about the 

need to reform accreditation. The irony in the accreditation process 

is that it is both too rigid, standing in the way of innovation, and 

too flexible, accrediting institutions whose student outcomes are deplorable. And so we need to find a new balance there, and we are 

eager to take up that challenge and working on a set of proposals 

for Congress that will help us do that. 

In many ways, the accreditation approval process is controlled by 

a governing statute and governing legislation, so we will need your 

help. We will need your help to be able to focus more rigorously on 

student outcomes. We will need your help to be able to take Pell 

grants and make the delivery of Pell more flexible, to Senator 

Ayotte’s point. And in between now and then, working with Congress, we have developed a series of experimental programs about 

new ways of delivering Pell, new ways of thinking about program 

delivery. But I want to agree with you straight down the line that 

the accreditation process needs to be changed. It needs to be both 

more rigorous around student outcome and more flexible around innovation. 

Chairman JOHNSON. OK. When you look at the history, about 20 

years ago the outstanding level of student loan debt was about 

$100 billion. Now it is around $1.3 trillion, depending on which figures you are looking at. That is really concerning to me. Do you 

view that as a metric of success? Obviously, those student loans 

have certainly made college accessible, but as the Federal Reserve 

Bank of New York States, for every dollar that goes in, about 65 

cents—it has increased tuition about 65 cents, so a 65-percent increase. Aren’t we just ballooning—with the limited supply, the 

price of college and as a result our students, our young people are 

left with this debt burden as they enter their productive life? It is 

an enormous challenge for them. 

Mr. MITCHELL. It is an enormous challenge for them. The good 

news is that the data shows that a college education—whether it 

is a certificate or a 2-year degree or a 4-year degree—is the best 

investment an individual can make, and we feel strongly it is the 

best investment that a nation can make. So that $1.3 trillion investment we have made is an investment in individual students’ 

livelihoods, and it is an investment in our economic future. We 

need those young people to get the skills that will put them into 

the right manufacturing jobs or put them into the right computer 

science environment or the right business entrepreneurship program. So we see that as an investment that is going to pay divi-
35 

dends to individuals and will be responsible for continued economic 

growth in America. 

In terms of the debt burden to students, I think that this is why 

we have been so tightly focused on creating new repayment options 

for students so that perhaps in those early years, when they are 

not settled in a career, they are able to be in an income-based repayment program that will allow them to make payments against 

their student loan, but not the kind of payments that will cripple 

their participation in the—— 

Chairman JOHNSON. That is kind of putting a Band-aid over the 

problem. I just want your comment on these studies that show that 

40 to 50 percent of recent college graduates are either unemployed 

or really employed in a position that really requires no college education at all. How concerned are you about that? What is your explanation for that? 

Mr. MITCHELL. So I think that we need to put some periodicity 

to that, that those recent college graduates have entered the labor 

market in one of the most challenging periods of the last 100 years. 

We see that beginning to even out in positive ways, but we also believe—and you made this point in your opening remarks, Mr. 

Chairman. We also believe that there has been a mismatch between a general one-size-fits-all higher education program and an 

economy that demands very differentiated skills and knowledge. So 

that is why we are very pleased to be supporting and looking at 

programs that are shorter in duration, programs that are competency-based, that directly link what students are learning to the 

needs of employers, and most powerfully, in community colleges, 

where those community colleges can see the needs of the local labor 

market and develop programs that reach out and are able to 

touch—make the bridge between what a student is learning and 

what an employer needs. 

Chairman JOHNSON. OK. Well, thank you, Mr. Secretary. Senator McCaskill. 

Senator MCCASKILL. Yes, thank you, Mr. Secretary, for being 

here. 

Mr. MITCHELL. Thank you, Senator. 

Senator MCCASKILL. I am going to start with student loan 

servicer allotments. We now have metrics that show that the notfor-profits are doing a better job of collecting on their loans than 

the for-profits. For example, Nelnet received 13 percent of the new 

loans and has a repayment rate of 64 percent, while MOHELA, one 

of the not-for-profits, has a 92-percent repayment rate, but they 

only have 6 percent of the loan allotment. 

I am trying to figure out where this 25-percent cap on the allocation of loans for not-for-profits came from. You all did that on your 

own. What in the world would have been the motivation to arbitrarily decide that the not-for-profits were only going to get onefourth of the loan servicing agreements? 

Mr. MITCHELL. So as we moved from the previous system to direct student loans and a multiple-servicer platform, we wanted to 

make sure that the various different servicers had an opportunity 

to integrate with our system to be able to show what they could 

do and then for us to be able to move and recompete with everybody on a level playing field. And we believe that the not-for-profit 
36 

servicers have fully integrated into our system or systems. We believe that they are connected with their borrowers in important 

ways. And we look forward to seeing them compete on a level playing field when we—— 

Senator MCCASKILL. So we are going to make news today? We 

are dropping the 75-percent cap? 

Mr. MITCHELL. No. When we recompete the contract at the end 

of 2016. 

Senator MCCASKILL. So we have to go for another year and a half 

arbitrarily? Why don’t you just drop the cap now and open it up 

for new loans? I mean, they are better at it. 

Mr. MITCHELL. We think that the system that we have is going 

to work through the end of the year, and I misspoke. January 2016 

is when we—— 

Senator MCCASKILL. Oh, OK. Just the end of the year. So what 

you are saying is there will no longer be an arbitrary cap between 

nonprofits and profits as of next year? 

Mr. MITCHELL. I cannot say that definitively, but I can say that 

we are looking at the process of recompeting the contract in—— 

Senator MCCASKILL. OK. Well, I am anxious to know when you 

can say it definitively, because I do not get it. I do not get why 

there would be—this should all be on metrics. You have a track 

record now. We should be giving the loans to the ones who are 

doing the best job of collecting the loans, period. 

Mr. MITCHELL. And that is why we have moved the compensation structure for the servicers to one that absolutely rewards that 

kind of success. 

Senator MCCASKILL. OK. Where does one go when they have 

been abused or mistreated by their servicer? 

Mr. MITCHELL. One goes to the student loan ombudsman, and 

that is a short-term solution for us because, as the President’s 

memorandum that announced the student borrower bill of rights 

indicated, we will be working on a brand-new complaint—are working on a brand-new complaint system that will be better integrated 

than the ombudsman program is, modeled on the Consumer Financial Protection Bureau (CFPBs) system, and we anticipate having 

that up and running next July. 

Senator MCCASKILL. OK. Could I get data on how many complaints you all are getting through the ombudsman? 

Mr. MITCHELL. Sure. 

Senator MCCASKILL. I am hearing horror stories, I mean just unbelievable horror stories. 

Mr. MITCHELL. Sure. 

Senator MCCASKILL. The payment changes, and then the servicer 

takes out the new payment but continues to take out the old payment, after being continually recontacted. And imagine how that 

wreaks havoc on someone’s life, that all of a sudden they have X 

amount of income a month, and the loan servicer is taking double 

the payment out, and they cannot get them to stop. 

Mr. MITCHELL. Right. So we hope that those are aberrations. We 

would like to know each and every instance of that if we do not 

already. 
37 

Senator MCCASKILL. Well, I am asking people to submit their 

horror stories to my office, so I am thinking we will have a nice 

list for you. 

Mr. MITCHELL. Well, great. If you could send those to us, we—— 

Senator MCCASKILL. Because I just think it is really frustrating, 

when someone is trying to do the right thing and pay, to have incompetence greet them. 

Mr. MITCHELL. May I add to that? Just yesterday, we issued a 

statement with CFPB and the Department of the Treasury on student loan servicing standards, and we by that want to both signal 

and say—— 

Senator MCCASKILL. Does CFPB have jurisdiction over these 

servicers? 

Mr. MITCHELL. No, they do not. 

Senator MCCASKILL. Who does? 

Mr. MITCHELL. We do. 

Senator MCCASKILL. Just you? 

Mr. MITCHELL. Yes. 

Senator MCCASKILL. OK. So you are asking them for help on how 

to do it? 

Mr. MITCHELL. CFPB has jurisdiction if they violate the regulations of the Consumer Financial Protection Bureau or consumer 

law. 

Senator MCCASKILL. Well, the horror stories I am hearing, I can 

guarantee you they are violating the laws of consumer protection. 

Mr. MITCHELL. Then we need to hear this. 

Senator MCCASKILL. Yes, because, a credit card could never get 

away with doing what these servicers are doing to these young people. These are mostly kids in their 20s that have gotten out of 

school and are trying to manage their loan payment along with all 

the other budget needs in their lives, and it is hard when they cannot get anybody to help them. 

Mr. MITCHELL. We want that to not be the case. We want to be 

able to help them. 

Senator MCCASKILL. OK. On campus sexual assault, one of the 

things we have looked at, when the Department of Education determines that a school has grossly mismanaged their safety responsibility on their campus, under the current law the only penalty 

available to the Department of Education is to take away their 

Title IV funding; in other words, require that that university no 

longer participate in any student loans. I know the answer to this 

question, but I am going to ask it rhetorically anyway. Has that 

ever happened? 

Mr. MITCHELL. It has not. 

Senator MCCASKILL. And, of course, it has not. This is like me 

saying to my kids, ‘‘If you do that again, I am never going to speak 

to you.’’ I mean, my kids know better. They know I can love them 

unconditionally, and as mad as I might be, I am going to speak to 

them again. No college or university in the world believes you are 

going to penalize all the innocent students on that campus by removing their ability to get student loans. So isn’t that a meaningless penalty? 

Mr. MITCHELL. Our experience has been different, Senator, and 

we would not measure our success by the number of institutions 
38 

we have eliminated from the Title IV program, but instead by the 

real creativity, real bravery, and real honesty that has come about 

in the settlements that we have secured with institutions. 

Senator MCCASKILL. But, ultimately, these settlements take 

years, Secretary. I mean, I am very familiar with the settlements 

you have been in. I am very familiar with the long list of institutions you are investigating. I am very familiar with the inefficiencies that are embedded in your current system, and I know you 

guys are worried about not holding on to that system. But in my 

experience, a deterrent only works if it is a realistic penalty. And 

they may be entering into negotiations because of the press associated with the problems on their campuses, as nothing is more difficult for a university than publicly being chastised for not protecting young people from sexual assault. But I do not think it is 

because of a threat of a penalty, because none of them take it seriously in terms of it actually being imposed. Don’t you understand 

that it might be even more efficient and these negotiations might 

even go more quickly if there was some kind of interim penalty in 

the form of a fine that might be imposed? 

Mr. MITCHELL. And as you know, have been in discussion about 

interim penalties. That is something that we are quite—we are 

open to discussing. We do feel very strongly, as you do, that we as 

a Federal Government need to protect the civil rights of people on 

campus by insisting that institutions protect young men and 

women from assault. We feel very strongly that this has been an 

underreported problem, an underprosecuted issue, and we are very, 

very proud of our enforcement efforts to be able to bring these 

issues to light and to use the tools that we do have at our disposal 

to create real change on college campuses. 

Senator MCCASKILL. Well, I appreciate that, and I appreciate 

how hard your agency has worked with us in crafting the legislation. Thank you, Secretary. 

Mr. MITCHELL. Thank you, Senator. 

Chairman JOHNSON. Thank you, Senator McCaskill. Senator 

Lankford. 

Senator LANKFORD. Thank you. Mr. Secretary, thank you as well 

for being here. 

Let me follow-up on what Senator McCaskill was talking about 

as well on the not-for-profit loan servicers. It is my understanding 

that in September, just a few weeks ago, there was a one percent 

increase from 25 percent for not-for-profits to 26 percent for notfor-profits. Is that correct? 

Mr. MITCHELL. I do not know that specifically. 

Senator LANKFORD. Well, it was announced on September 1st 

that there was a one percent increase. What I wanted was clarity. 

Does that start next year? Is that this increase or this possibility 

for 2016 that it will go from 25 to 26 percent? Or is that current 

right now? 

Mr. MITCHELL. That starts right away. 

Senator LANKFORD. So that is right away. So then there will be 

another reevaluation for 2016, starting in January 2016, for these 

not-for-profit loan servicers. 

Mr. MITCHELL. And to be clear, 2016 will be a recompete for the 

broad arc of our servicing contracts, yes. 
39 

Senator LANKFORD. OK. And that would begin in 2017? Or when 

would that begin then? 

Mr. MITCHELL. It would begin before 2017. We will do it as 

quickly as we can. We will open the contracting process, and the 

vicissitudes of the Federal contracting process. 

Senator LANKFORD. I do. 

Mr. MITCHELL. We will move as quickly as we can. 

Senator LANKFORD. Which makes it important that this decision 

is made as fast as possible on this percentage, because, again, I go 

back to the metrics. The metrics are clearly in favor of the not-forprofit loan servicers, and we are still trying to figure out how the 

decision was made, even, that 25 percent, and then the decision 

was remade to say, no, it will be 26 percent. Is there any evidence 

that we can get of the process of making the decision to go 

from—to set it at 25 percent in the first place, and then to say, no, 

26 is a better number, 26 percent. How was that decision made? 

Mr. MITCHELL. So I am not familiar with the move from 25 to 

26. I will find out. But, overall, I need to say that we are content 

with the rough allocation that we have now, and we will continue 

that allocation through to the recompete process. 

Senator LANKFORD. I would say there are a lot of folks that are 

not content with that allocation. That makes it very difficult for 

not-for-profits to have such a small portion. It is not sustainable in 

their business model to be able to actually do that, and the concern 

is that in long term those folks will just be driven out. And those 

folks have very good metrics. 

Let me move on to another process-type question, and that is, 

guidance. What is your process in making a decision when you are 

discussing whether you are going to do a guidance document or 

regulation? Is there a written-out process that you have in place to 

say if all of these things or even if one of these things is true, then 

that needs to be a regulation? 

Mr. MITCHELL. So we are guided by the Office of Management 

and Budget (OMB) bulletins and by our own Office of General 

Counsel (OGC), and the bright line, as I believe my colleague Amy 

McIntosh told you last week, is that for us if there is a statement 

that we want to make, a statement, or an area we believe needs 

to be investigated and where we need consultation with the field 

that will result in having the force of law, we believe that at that 

point we are bound to enter into rulemaking. 

Senator LANKFORD. All right. Clearly, the bright line is if it is 

binding, then that is a regulation. 

Mr. MITCHELL. That is right. 

Senator LANKFORD. The challenge that I hear over and over 

again from institutions of higher education is they have a tremendous number of guidance documents that are coming to them, and 

they do not feel the freedom to be able to come back to Education, 

the Department of Ed., and say this smells a lot like a regulation 

to me because this is also where a stream of funding comes from, 

and so they feel like they have to take it, where other entities, obviously private businesses, they get a guidance document come 

down, they file lawsuits, and they challenge and they push back on 

it. Institutions of higher education are actually leaning back and 
40 

saying, ‘‘I do not feel the freedom to be able to challenge this for 

fear that we will also have other things.’’ 

Now, I am sure your answer is, ‘‘They should not be afraid of us. 

We are their friends.’’ But I would tell you they are very concerned 

not only the way the regulations are coming out but the frequency 

of those regulations, and the pure cumulative result of that is they 

are drowning in guidance documents—and ‘‘Dear Colleague’’ letters 

is actually how they are coming from you—and the sheer number 

of ‘‘Dear Colleague’’ letters, they feel like they cannot challenge. 

Mr. MITCHELL. So let me say that I hear the same things when 

I talk to my colleagues in higher education, and in each of those 

conversations, I do try to reiterate what Amy said last week and 

I will say again. Our guidance does not hold the force of law, and 

our recommendations and illustrations of the ways in which we are 

interpreting the statute and the regulations, so we are happy, in 

fact, to continue in conversations with institutions of higher education—— 

Senator LANKFORD. The hope is that this can be an ongoing dialog, because they feel like the ‘‘Dear Colleague’’ letter shows up, 

and they did not have input, unlike a regulation where they have 

the opportunity to be able to write in and say when you do this, 

make sure you consider this. The ‘‘Dear Colleague’’ letter shows up, 

and they assume someone had input, but they were not in the 

clique group that got to have the input on it. So that is a bigger 

issue that we need to deal with. 

You mentioned about accreditation earlier, and the Chairman 

has brought this up in his line of questioning about accreditation, 

which is incredibly important to us. We want to have greater innovation in accreditation. You had said that there are some recommendations and proposals that you all are in the process of putting together to bring to us. When should we expect those proposals? 

Mr. MITCHELL. By the end of the year. 

Senator LANKFORD. By the end of this year? 

Mr. MITCHELL. Yes, sir. 

Senator LANKFORD. OK, great. Will that come to this Committee, 

to the HELP Committee? Where will that come? 

Mr. MITCHELL. We are still figuring out exactly how—the shape 

of those recommendations, and so the recommendations will determine the—— 

Senator LANKFORD. OK. Well, please include us in that, at least 

with a carbon copy. How about that? 

Mr. MITCHELL. Of course. 

Senator LANKFORD. Because we are obviously very interested in 

this as well, and this is a long-term issue for us. 

You also mentioned about student outcomes and trying to measure that. Can you give me an idea of some of the metrics that you 

are able to put together to be able to measure student outcomes? 

Mr. MITCHELL. Well, I think—I want to go back to the basics. 

The Federal Government is not and should not be in the position 

of determining for 7,000 institutions of higher education what their 

outcomes are. 

Senator LANKFORD. Right. 
41 

Mr. MITCHELL. The diversity of American higher education, the 

varied missions of our institutions are all critical to the health of 

higher education in the country. So rather than stipulating either 

specific outcomes or levels against those outcome measures, we 

would like accreditors to be much more serious than they are about 

asking institutions how they are measuring their outcomes and 

hold them accountable to—— 

Senator LANKFORD. To their own metrics. 

Mr. MITCHELL. To those metrics. But I would suggest, as we 

have looked at the use patterns of the College Scorecard, graduation rates, employment rates, repayment of student debt rates are 

things that are very interesting to students and families. 

Senator LANKFORD. Right. It seems to be the repayment of loans 

ends up being the biggest issue because obviously there is the Federal exposure there with the tremendous number of student loans 

that are federally backed student loans. So that seems to be the 

primary issue, which drives me back to the conversation that we 

have: Is the focus about trying to get greater student loans and 

greater student repayment? Or is it about getting greater innovations so college does not cost so much? And it feels like on this 

side—and you can tell me how I am wrong on this—has been how 

do we get more loans, more Pell grants, more emphasis out there, 

and then make sure that we are holding these schools accountable 

so they land jobs so they can repay the loans that we did, rather 

than saying how do we back up and create more innovation so college does not cost so stinking much and many of our middle-class 

families back up immediately and say, ‘‘There is no chance I can 

ever get there, no matter how many loans,’’ or, ‘‘I do not want to 

have a $100,000 loan at the end of it.’’ 

Mr. MITCHELL. Yes. 

Senator LANKFORD. So it looks like we are pushing in the wrong 

area. We are pushing on banks, calling banks predatory and putting all kinds of new regulations on banks on campus. We are 

pushing on loan servicers. We are pushing on all these other areas 

rather than pushing the accreditation side. And how do we create 

more innovation so we have less expensive options for people? 

Mr. MITCHELL. Got it. 

Senator LANKFORD. So tell me where I am wrong. 

Mr. MITCHELL. I do not think that those are mutually exclusive. 

I think that we have to protect against the downside risk on the 

loan side, and I think that that is why we need to continue to do 

all we can on financial literacy, that issue that has come up, to 

help people understand how best to manage their own loan portfolio. 

We need to be sure that we are holding institutions accountable 

to giving people the education that they need to make a living and 

pay back those loans. That is why our gainful employment regulation is so important. 

We need to make sure that there are a variety of repayment 

plans and that our servicers are doing a great job of helping borrowers pick the right plan for them. That is all at the back end. 

On the front end, we are and must continue to support innovation. The good news—and I think it differs a little bit from what 

you—my view differs a little bit from what you have heard this 
42 

morning—is that there is tremendous innovation afoot, even in the 

existing infrastructure. Arizona State just announced a partnership 

with edX that Kevin mentioned to provide a complete freshman 

year online. Southern New Hampshire University has created a 

subsidiary called ‘‘College for America’’ that offers one year of college for $2,500, part online, part in-person. Georgia Tech has a 

$7,000 master’s program in engineering. These are examples of intense innovation under way to create opportunities, pathways for 

students. 

While I am on that point, each of those institutions is not only 

looking at creating pathways for traditional 18-to 24-year-old students. These programs—the partial online programs, the 

competency-based degree programs, the cafeteria approach programs—they are particularly designed to meet the needs of working moms, returning veterans, fully employed workers, or workers 

who have been displaced. Those turn out to be the new majority 

students in American higher education. 

So we are doing all we can to support those innovation efforts. 

One of our great programs is the First in the World Program where 

we provide grant support: innovation grant support to institutions 

that want to create better access and opportunity, better completion rates for first-generation and underrepresented students. And 

so we are able to seed that innovation through funds that you provide. 

Unfortunately, Congress has suggested zeroing out that program. 

We think that that would be a tragedy. It would cutoff innovation 

at its very bud. 

Senator LANKFORD. Well, we look forward to getting a chance to 

see the recommendations. Will all these issues come up in this January report that is coming to us? 

Mr. MITCHELL. We are likely to engage with you in the budget 

process, we are likely to engage with you in the reauthorization 

process, and we are likely to engage with you in specific pieces as 

well. 

Senator LANKFORD. OK. I yield back. 

Chairman JOHNSON. Senator Peters. 

Senator PETERS. Thank you, Mr. Chairman, and thank you, Secretary Mitchell, for being here. 

Mr. MITCHELL. Senator, thank you. 

Senator PETERS. I actually want to continue on some of the 

themes from Senator Lankford in innovation, making sure that 

folks have the opportunity to afford education, to get into education, and particularly for some of the students who I think have 

not been the focus of many in the educational community when it 

comes to having access to higher ed. 

Earlier this week, I visited Cody High School in Detroit, and the 

Cody Rouge community there in Detroit is really working very hard 

to reinvent how we think about high school and what school offers. 

In fact, as I was there, I learned that many of the Cody students, 

when they graduate from high school, have the certifications necessary to be an Emergency Medical Technician (EMT), to get into 

firefighter training or be firefighter certified, to really have a first 

step up on their postsecondary careers. 
43 

And, similarly, as you are well aware, dual and concurrent enrollment in early college programs has been proven to increase access to higher education and dramatically help the affordability of 

education as well. So if we are able to shorten the time that it 

takes for someone to get a degree by being in a concurrent enrollment in high school, that is a good thing. It will also help with the 

transition for someone, particularly first-generation folks where 

they get an introduction into that transition out of high school and 

into a postsecondary situation. Although it seems like we have focused a great deal on advanced placement, and we have international baccalaureate programs to help students, which are all 

wonderful things to do, I think you need to have a fairer playing 

field for other folks who may not—that may not fit an advanced 

placement (AP) program and an international baccalaureate, and 

yet they need postsecondary education training and concurrent enrollments to do that. 

So if you could expand a little bit on what the Department of 

Education is doing for concurrent enrollment, how can we expand 

that? Are there ways that Congress can help you in this mission? 

Because I see it firsthand every day in my State and how they can 

transform young lives who might otherwise be left behind. 

Mr. MITCHELL. Sure. Thank you, Senator. We completely agree 

with you about the efficacy of dual enrollment and early college 

programs. We think in both of the ways you suggest—one, accumulating college credit and, two, accumulating cultural knowledge 

about college and just being able to see yourself in a college environment—is critically important to low-income and first-generation 

students. So we have been big supporters of dual enrollment, concurrent enrollment, and early college high school—in fact, to the 

point that in 2013 we launched and had in our budget the High 

School Redesign Initiative to encourage high schools to develop, if 

they had not, or expand, if they had, dual enrollment in early college programs. 

Similarly, in our Race to the Top program, a number of States 

came forward with very aggressive plans that we supported to 

move forward dual enrollment in early college programs. 

In the last several years, we have paid attention to early college 

and dual enrollment through our College Opportunity Summits 

where we have called together colleges and, in the last year, colleges and high schools and community colleges within a region to 

talk about how they are going to commit to developing pathways 

through their system. And so the good news is that we have dozens 

of commitments on the books from high schools, community colleges, and 4-year colleges to build on and expand their dual enrollment programs. 

The tools that we have are limited at the moment, but I think 

that Senator Ayotte mentioned using Pell in different ways or in 

short-term training programs. And in a similar vein, I think that 

your help in making early Pell available to students enrolled in 

dual enrollment or early college high school programs would be an 

example of a way that Congress could act to put dollars behind 

what is, again, a very efficacious program for students. 

Senator PETERS. Would the use of grants, as well, help some of 

these high schools and colleges be able to develop these programs? 
44 

I assume there are some resources necessary. Federal grants would 

be helpful, I assume. 

Mr. MITCHELL. If we could put together a grant program to support that, that would be great. The other thing that you know well 

from your State is that even in advance of America’s College Promise, when communities are coming together to build their own 

Promise programs, Kalamazoo being the oldest and grandest of all 

of them and the best evaluated, oftentimes those programs lash up 

private support to provide funding for dual enrollment and early 

college high school, too. So I think that this is a case of all of the 

above. 

Senator PETERS. And when you mention Kalamazoo and others, 

the strength of public-private partnerships, particularly when it 

comes to this issue, I think is clearly demonstrated work and are 

necessary if we are going to address this issue. 

Mr. MITCHELL. Exactly. 

Senator PETERS. Thank you so much for your testimony. 

Mr. MITCHELL. Thanks for your support. 

Chairman JOHNSON. Senator Carper. 

Senator CARPER. Thank you. 

Mr. MITCHELL. Ranking Member, may I say thank you? Before 

you begin, thank you for inviting me today. 

Senator CARPER. We are happy you are here. Thanks so much for 

coming, Ted. 

First of all, let me just say, you were here—I know you were here 

for the first panel, and I thank you for sitting in and listening. One 

of our witnesses—in fact, our second witness—spoke near the end 

of his testimony, and he went through—it was Mr. Carey. At the 

end of his testimony, he went through, I thought, a really interesting, almost like a checklist of things that we could do to get better results. Would you react to anything that he said that you 

thought was especially sound advice? 

Mr. MITCHELL. I think that what—— 

Senator CARPER. A lot of what he said rang true to me, and I 

think to my colleagues. 

Mr. MITCHELL. It did to me as well, and it rang true to me not 

only in this role but in my previous roles as a campus administrator. 

I think most salient, though, is his injunction for us to experiment within boundaries. 

Senator CARPER. Experiment? 

Mr. MITCHELL. Experiment within boundaries. 

Senator CARPER. OK. 

Mr. MITCHELL. I think that it is very important that we do embrace the world of change in higher education around us, the radically different delivery modes that are now available, the shortterm/long-term blended learning, online learning. I think it is time 

for us to do some strategic innovation, to measure what works, to 

then create policy that supports what works, to scale that around 

the country. I think that that is an obligation that we have as a 

government, and it is one of the things that I think really only we 

as the Federal Government can do because we are the gate holders 

to Federal financial aid, which is how this market gets built. 

Senator CARPER. OK. 
45 

Mr. MITCHELL. I will—if I can? 

Senator CARPER. Yes. 

Mr. MITCHELL. I think that the one place where I would urge 

some caution on Kevin’s checklist is regarding an overreliance on 

the growth of the number of administrators as an example of bloat 

in higher education. When I go around the country and when I look 

at the most successful programs in terms of providing opportunity 

to first-generation college students, minority students, and low-income students, there are programs that invest rather heavily in 

student support, and so I would not want us to mix that up with 

what I do agree is an overgrowth of other administrative categories. 

Senator CARPER. Good. Sometimes in this hearing room I quote 

Albert Einstein, who said famously, ‘‘In adversity lies opportunity.’’ 

And there is a lot of adversity here. We talked about some of the 

heartache and challenges that we face. But there is also opportunity here. And one of the things that my wife and I do whenever 

close friends or relatives have a baby, we send them a baby cup for 

the baby which is inscribed and a handwritten note to the baby, 

and I am going to start changing the note and urge the baby to 

open up a 529 at birth and urge the parents to solicit, whenever 

somebody is looking to make a donation or buy a gift for their 

child, birthday, Christmas, whatever it might be, think about 

just—forget about—make it easy, just make a donation to the 529. 

I know some folks who do this. You probably do, too. It is a very, 

very smart thing to do. 

In our State and I am sure in other States as well, we have 

schools that try to think about ways to save money and offset the 

costs of higher ed, but schools offer advanced placement courses, 

and we are trying very hard to get more kids in advanced placement courses. Not every college or university with take APs, or will 

do well in the advanced placement test, but a bunch will, and that 

is a way to help reduce the cost of going to college. One of our students, one of our children was able to pretty well knock out the 

first year of funding because of doing well on advanced placement 

tests. 

Delaware State University, a historically black college and university in Dover, Delaware, started up a new high school last year, 

grades 9 and 10—eventually it will be 10, 11, grade 

12—and the great thing about the—they call it their ‘‘early college 

high school’’ at Delaware State University—is students can earn 

credit and be able—up to 2 years of college credit while they are 

in high school, from Delaware State University and from other universities as well. 

We have in our State something called the Student Excellence 

Equals Degree program (SEED), whereby the folks can go literally, 

if they do reasonably well academically in high school, they can go 

to Delaware Technical Community College, a 2-year community college, pretty much free. And the administration has called for doing 

that as part of their national initiative. 

We have a really good vo-tech high school in southern Delaware 

called Sussex Tech, and they have partnered with Widener University so that as students go through Sussex Tech, do well, they can 
46 

transfer earned credit to go to Widener should they choose to do 

that. 

Senator Johnson and I and our colleagues have the opportunity 

to nominate kids to go to all the military academies, the service 

academies. We do that every year. I was a Reserve Officers Training Corps (ROTC) guy at Ohio State, and we have all kinds of 

ROTCs where people can get help. 

When I was Governor of Delaware, we really strengthened the 

ability of the National Guard to pay tuition for folks that volunteered to serve in the National Guard. One of my sons did a pretty 

good job on his own, going out and finding scholarship money. 

Somehow if we can encourage people to do that and make it easy, 

not harder, that is helpful. 

I worked a couple jobs. My guess is Senator Johnson worked 

jobs, and probably a lot of us worked—or you worked jobs in college, certainly in high school and in college as well. The best job 

I ever had was in college. I was a pots and pans man. I ran the 

Hobart dishwashing machine in the Delta Gamma sorority house. 

The best job I ever had. 

There are all kinds of things that we can do. We can apply for 

Pell grants. We can serve in the military. And the great thing 

about the GI bill, the post-9/11 GI bill—we just sent off 300 men 

and women in the Delaware National Guard to Afghanistan a 

month ago, and I told them all when they were leaving at the departure ceremony, I said, ‘‘When you come back, most of you will 

be eligible for the GI bill. It pays your full tuition to go to college 

to any public school pretty much in the country. If you do not use 

it, your spouse can. If your spouse does not use it, your dependent 

children can.’’ And that is a great—a lot of families are just leaving 

that money on the table because they are not aware of the benefit 

or they are not taking advantage of it. So there is a lot we can do. 

As my time runs out, I want to come back to a concern, a longstanding concern—it goes back 60-some years—about for-profit colleges and universities. Some of them do a great job, and some of 

them do not. It goes back to 1952 when the 85–15 rule was first 

established that I talked about. And today we have created under 

the 90–10 rule a loophole which allows a private college or university really to realize all the revenues from the Federal Government, 

which I do not think is healthy. It does not harness market forces. 

The reason why we had the 90–10 rules was to try to harness market forces so we did not have to have all this accreditation and 

rules and so forth, and regulations. Markets, market forces, would 

actually help make sure that if schools, private colleges and universities were not doing a good job, then, we would learn from that, 

and the kids would not go to those schools. 

What should we do about the 90–10 rule? What should we do out 

it? 

Mr. MITCHELL. Thanks, Senator, and I want to come back to one 

of the themes in your remarks a moment ago, but first on 90–10, 

we think 90–10 is wrong. We think the loophole is wrong. We want 

to fix it. We are grateful for your work with your colleagues to 

move us in that direction. 

We believe that it is appropriate to have a threshold for Federal 

dollars, but that that should include all Federal dollars. 
47 

We think that one of the ways that the market distortion that 

you talk about has acted is by putting a bull’s eye on the back of 

veterans’ backpacks, and we think that there have been different 

kinds of bull’s eyes on their backs for too long and they need to get 

great information about which programs are going to serve them 

well, and they need not to be targeted by unscrupulous for-profit 

institutions who simply want the GI bill money. We think that that 

is wrong for the country. We think it is a tragedy for our veterans. 

We need to do better. 

Senator CARPER. Amen. Thank you. 

Mr. MITCHELL. Thank you. 

Chairman JOHNSON. Thank you, Senator Carper. 

By the way, that is an experience we share. I started my taxpaying working career as a dishwasher in Walgreen’s grill. Learned 

to tolerate heat on your hands, right? 

We will give you an opportunity to just make a closing comment 

here. I did want to pick up on a point that Senator Carper was alluding to with AP classes. I have certainly seen that with my own 

kids and a lot of their friends. A lot of these kids are starting college, sometimes with a year’s worth of college credit, and yet I have 

seen reports—this is what I really want to get to in terms of 

metrics—where on average it is taking students right now 51⁄2, almost 6 years to complete a 4-year degree. Is that, similar to the 

metrics you are seeing? Can you provide any kind of explanation 

for that? Then you can go right into any kind of closing comment 

you would like to make. 

Mr. MITCHELL. Sure. Fair enough. So I think that this goes back 

to the comments that I was making about the new normal college 

student. The new normal college student is balancing work, perhaps family, other obligations, and so it is generally taking them 

longer. The pure 18- to 22-year-olds who are starting college continue to finish in the 4-to 5-year range at about the same rate. The 

growth at the other tail is largely working adults. 

That does not mean we should not worry about it. I think it is 

why we need to invest more and innovate more in programs that 

reach students where they are and take them to where they need 

to be. And that is where the University of Wisconsin’s flex program, for example, is such a shining light for us. 

Let me wrap up by saying a couple of things. 

First of all, as I said at the outset, we continue to believe that 

a college education, whether it is a 4-year degree, a 2-year degree, 

or a certificate in a technical field, is the best investment an individual can make and the best investment that we can make as a 

Nation. 

There is a lot that we can improve about higher education, and 

there is a lot we can improve about the delivery and the oversight 

of higher education. In America, we are always looking to improve. 

We are always looking for what is that thing that we can fix. And 

today’s conversation has been a great opportunity to engage in just 

that prototypically American dialog. 

For me, I have never been more excited about the future of 

American higher education. I am excited by the diversity of the 

students who are coming to the doors of colleges and universities 

looking to improve their lives, looking to live out the American 
48 

dream. I am excited by the institutions that are responding to the 

challenges of innovation and that are providing opportunities for 

those students. And I am excited by the opportunity to work together with this Congress in the time that we have left to take the 

next steps to building an innovative, creative, accountable, and 

high-quality education so that access, affordability, and quality 

come to life every day in the lives of students in our colleges. 

Senator, thank you for the opportunity. 

Chairman JOHNSON. Well, thank you, Secretary Mitchell, for 

your testimony and answers to our questions. 

With that, the hearing record will remain open for 15 days until 

October 15th at 5 p.m. for the submission of statements and questions for the record. 

This hearing is adjourned. 

[Whereupon, at 11:58 a.m., the Committee was adjourned.] 
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