Hearing of the House Education and the Workforce Committee - Keeping College Within Reach: The Role of Federal Student Aid Programs

Hearing

In the coming months, we will work together to reauthorize the Higher Education Act. Established in 1965, this law is intended to help low- and middle-income students earn a degree. The 2008 reauthorization of the law included several provisions to help enhance transparency, requiring colleges and universities to make information about price, demographics, financial aid, and graduation rates available to the public for the first time.

However, more work must be done. College costs continue to skyrocket, and too many students struggle to navigate our financial aid system. Families face uncertainty about repayment options and confusion about the differences between various aid programs.

Under the Higher Education Act, there are several student financial aid and college access programs - from Pell Grants and Stafford Loans to GEAR UP and Federal Work-Study programs. Each program has unique characteristics, eligibility requirements, and funding streams.

As we begin exploring ways to strengthen the Higher Education Act, we must first take a hard look at federal student aid programs to determine what is and is not working for students, families, and taxpayers.

Without a doubt, there are opportunities to strengthen the current system. The Bill and Melinda Gates Foundation's Reimagining Aid Design and Delivery project recently released several reports from business, higher education, civil rights, and public policy leaders that offer proposals to improve federal financial aid so more students can realize the dream of a college degree.

The reports offer a wide range of suggestions, including reducing the current aid system to a "one grant and one loan" structure, eliminating program inefficiencies, and simplifying the federal aid application process by linking it with IRS information.

The reports also raise the question of whether the federal government should maintain its traditional focus on improving access to higher education, or should move toward a system that ties federal aid to student outcomes, job placement, or graduation rates. President Obama has indicated his support for the latter, proposing campus-based federal aid only be allocated to higher education institutions that limit tuition increases and provide good value.

In this debate, we find ourselves at a crossroads between accountability and limited government. The federal government spends more than $140 billion on financial aid programs annually. Given the significant amount of taxpayer money being spent and our nation's budgetary challenges, we all want to ensure dollars are actually helping more students earn college degrees.

However, we must also be mindful of the consequences that could come with expanding the federal government's role in the allocation of financial aid. Federal financial aid programs intended to help low-income Americans pay for college should never be used as bargaining chips to impose federal price controls, nor should we take any action that could limit students' ability to choose the institution that best fits their needs. Additionally, adding more reporting mandates could create more costs and red tape for institutions, which could trickle down to students in the form of higher tuition.

We are fortunate to have with us today a panel of higher education leaders who can discuss the merits of various proposals for reform as we begin a larger discussion on the appropriate federal role in higher education, and I look forward to their testimony.

Before I yield to my distinguished colleague, Mr. Rubén Hinojosa, I'd be remiss if I did not mention the president's fiscal year 2014 budget proposal, which was released last week after much delay and anticipation. While the plan as a whole is disappointing, there is one bright spot in the higher education arena.

I am very pleased to see that the president seems to have embraced Republicans' proposal to shift the calculation of student loan interest rates away from Washington politicians and toward a market-based formula. As you may recall, this was the subject of a recent hearing before the full committee, where we heard from economists and higher education experts about the ways this plan will help provide more stability for borrowers and taxpayers. I hope we can work together with the administration to find common ground on a student loan interest rate plan.

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