Summary of House E&W Hearing on Challenges and Opportunities in Higher Education

On Tuesday, February 7, the House Education and the Workforce Committee held a hearing titled, “Challenges and Opportunities in Higher Education.” The hearing was presented by Chairwoman Virginia Foxx (R-NC) as an opportunity to “examine the current state of America’s higher education system and explore ways to strengthen the system for students, parents, institutions, and taxpayers.” The hearing was the panel’s third of the 115th Congress, and second on education, following the previous week’s session examining “school choice” in K-12 education. Reauthorization of the Higher Education Act (HEA) is a priority for the education committees in the House and Senate this Congress. Members and witnesses covered a number of issues and strategies intended to strengthen higher education, including simplifying and improving student aid; promoting innovation, access, and completion; and ensuring strong accountability and a limited federal role. According to Committee Republicans, “Advancing reforms to help make higher education more accessible and affordable is a leading priority for the 115th Congress. It is also part of the Republican “A Better Way” agenda.

WITNESSES
Dr. Beth Akers, Senior Fellow, Manhattan Institute, New York, NY
Dr. William E. Kirwan, Co-Chair, Task Force on Federal Regulation of Higher Education, Rockville, MD
Dr. José Luis Cruz , President , Lehman College of the City University of New York, Bronx, NY
Mr. Kevin Gilligan, Chairman and Chief Executive Officer, Capella Education Company, Minneapolis, MN

OPENING STATEMENT & DISCUSSION

Chairwoman Foxx opened the hearing, noting happily that “everyone” was there, “even Duncan Hunter.” She then discussed the state of affairs in higher education, noting that the notion of a “traditional student” has been “turned on its head” and lamented the continued growth in the cost of higher education, without commensurate growth in degree attainment. She noted that the HEA’s reauthorization gives lawmakers an opportunity to improve federal policy, streamline loan and repayment options, making the overall aid system simpler and cheaper to administer and easier for students and parents to navigate. She said, “It’s time for the federal government to get out of the way,” and closed her comments with, “Let’s get to work.”

Ranking Member Bobby Scott (D-VA) followed Representative Foxx’s comments noting that the reauthorization of the HEA presented an opportunity for the Committee to build on past bipartisan collaborations. He reminded his audience of former President Lyndon Baines Johnson’s hopes for the HEA as a measure to ensure any student anywhere could access the funds necessary to get a four-year degree, and said the current policies fall short of that goal. He noted the various types of institutions that serve higher education aspirations, noting that declines in state support for public institutions has been a contributor to escalating costs for students. He urged an increase in the maximum Pell Grant, noted the importance of schools that serve specific populations and cited the benefits of varied repayment options for borrowers. He also warned of bad actors in higher education, noting that some schools and financial institutions have failed their student customers, which speaks to the need for federal policies that protect students and protect taxpayer dollars.

WITNESS STATEMENTS

Dr. Beth Akers
Saying, “Perhaps one of the most well-known facts about higher education is that it is expensive and continues to become more so,” Dr. Akers asserted that while prices continue to rise, most graduates leave school with moderate student loan balances that are small compared to their lifetime earnings. She did note that those with high balances, or—worse—those who accumulate significant debt without getting a degree—are faced with personal and professional challenges and pose a problem for federal policymakers. She said. “College is a gamble. It’s always been a gamble.” She said that the federal government has a number of “easy” fixes to some of the current system’s complexities. She suggested simplifying the FAFSA, sharing data between the Department of Education and the Internal Revenue Service, and urged that income-contingent repayment be the default repayment options for borrowers. Referring to suggestions that the private sector re-engage in the now entirely federal direct student loan program, Akers said such involvement, “isn’t a bad idea, but a return to the FFEL program would be a step in the wrong direction.”

Dr. William E. Kirwan
Speaking of his time with the Commission, Dr. Kirwan noted that he and his colleagues worked to identify ways to reduce regulatory burdens for institutions and others while honoring the responsibility of transparency and accountability. He said the panel’s work found, not surprising that many regulations are poorly framed, complicated and misguided and are costly for institutions to manage—a factor the contributes to increased costs on campuses. Task force highlighted ten of the most problematic burdens and regulations. He noted that the Senate Health, Education, Labor and Pensions Committee has agreed with much of the Commission’s findings in its debate of federal higher education policy. While the Committee’s work is substantial, he shared two broad recommendations in his statement: the Department of Education (ED) should recognize when institutions are acting in good faith; and, ED should be required to act in a timely manner when doing program reviews. On the latter point, Kirwan noted that schools are required to adhere to strict timelines; ED has no timelines and took 17 years to report on a program review issue and the associated fine at Yale University.

Dr. José Luis Cruz
Noting the diverse student body that Lehman College serves, and speaking as a former student, faculty member and administrator and advocate, Dr. Cruz lamented that fewer low-income students enroll in higher education now than in years past and are more likely to end up at institutions that do not end up giving them a degree. Lehman is an outlier in this environment, giving students the academic options they need to be successful via innovative partnerships with businesses and services supportive of their socially and economically diverse student body. Cruz offered the Committee four recommendations: establishing strong federal-state partnerships that empower institutions to serve their students well, based on their local needs; investing in the Pell Grant program to give it more buying power ; simplifying the direct loan program and lowering its interest rates; improving the quality of data available to consumers, including the retention and enforcement of the gainful employment rule and restrictions on certain compensation models in admissions offices.

Mr. Kevin Gilligan
Gilligan opened his remarks by celebrating Capella’s reputation as an innovator in higher education, as a competency-based, adult-focused institution. He also echoed his fellow panelists’ remarks regarding what he considers to be the overregulation of institutions of higher education. He then went on to note that Capella has found great success with its “Flexpath” model—which breaks with the traditional reliance of higher education on “credit hours”. This innovation allows students to progress “without wasting time and money,” borrowing and spending less to get the same degrees as students at other schools. As the panel considers changes to the HEA, he recommended they “develop smart, responsible policy around competency-based direct assessment.”

MEMBER QUESTIONS

Chairwoman Foxx opened the question and answer with a query for Dr. Kirwan. Noting that she read in his report that institutions spend 21.6 million hours complying with ED requirements, she asked whether a reduction in that burden might result in lower costs for students and families. Kirwan said it would, citing a Stanford study that suggested that such requirements add 7.4 cents to every tuition dollar for today’s students. He said the burden forces choices between fewer services or higher costs, which shortchanges students.

Noting the $1.3 trillion balance in outstanding student loan debt, Foxx asked Akers about the burden on borrowers—specifically, who is borrowing the most and who is most likely to default. Akers noted those with the highest balances are actually not the most likely to default—it’s those with less than$5,000 in debt. She went on to say that policy recommendations should be reconciled with this reality—not the perception that high-balance borrowers are in the most trouble.

Referring to what she called a “coordinate attack” on for-profit institutions during the Obama Administration, Foxx asked Gilligan how regulatory and other actions from ED have hindered attempts to better serve students at his institution. Emphasizing his institutions commitment to transparency, he cited two recent regulations that have adversely affected Capella. The gainful employment package and its requirements have created pressure for the school and its graduates, as has the defense to borrower package. He argued that these packages address the sector’s worse actors, forcing administrative burdens on the good faith institutions.

Representative Suzanne Bonamici (D-OR) took issue with the $27 billion figure for compliance cost that Representative Foxx cited in her opening statement as an inaccurate one, explaining that it includes figures it shouldn’t. She then went on to share her academic experience, noting that she accumulated debt in her seven years of higher education, entered public service and had a relatively easy time repaying her debt. She then asked Dr. Cruz about the regulation of for-profit versus public institutions. He answered that for-profit schools are subject to “state authorization”, which he called largely “symbolic,” while non-profits are subject to federal and state oversight mechanisms. She then asked Akers about her opinion on legislation she introduced last year that would have automatically re-certified borrower income information for those in income contingent repayment—Akers supported the bill’s intent. So did Cruz. The panel also said that more partnerships like one in Oregon that engaged schools and businesses would help students, schools and businesses.

Representative Tim Walberg (R-MI) noted that competency-based programs are innovative strategies for addressing the country’s skills gap and complimented Mr. Gilligan on the work of Capella. He discussed workplace experience and how it differs from classroom learning. He then gave Gilligan an opportunity to explain how Capella addresses this disconnect in its programs. Gilligan discussed the various paths to endorsements available at Capella and the school’s collaborations with businesses.
Representative Susan Davis (D-CA) asked Kirwan about the work of the Task Force and Title IX protections of students regarding sexual assaults. She noted that Jerry Falwell of Liberty University, who has recently been tapped as a Trump Administration advisor on higher education, has called for the elimination of the Title IX protections.. Kirwan noted he and his colleagues did not recommend rolling back these protections, saying they are “very important.” He did note that there is some confusion in what is defined as “crimes” under the Clery Act versus the Uniform Code which is problematic for campuses. She then asked Dr. Cruz about what kinds of data students need as they make decisions about higher education. He said students and institutions need information about indebtedness and success rates for students like them—part-time students, low-income students, etc.

Representative Brett Guthrie (R-KY) addressed the affordability of college, noting he has two children currently enrolled. He then asked about some perverse incentives to “over-borrow.” Akers said these incentives come into play in the forgiveness benefits available to students in income-driven repayment plans. Explaining that students deduct that once they hit a certain level of debt, additional debt is highly likely to ultimately be forgiven, leading to them borrowing more. Guthrie then asked Kirwan about state authorizations of distance education programs. Kirwan noted that historically, both Congress and ED have required that programs only seek state authorization in the program that it is located; ED has proposed that they be required to do so in every state where there is even one student taking the program via a distance education offering. That would require state institutions to seek authorization in multiple states at great cost. He hoped a reauthorization of HEA would clarify that a single authorization is required for such programs.

Representative Joe Courtney (D-CT) opened by praising Akers’ comments suggesting private lenders’ reentry into the student loan program was a bad idea. She clarified that revisiting FFEL is misguided, but there could be an opportunity to use private sector entities efficiently in a modified program. There was then a discussion of providing subsidies to certain borrowers, with Akers saying that such subsidies may be warranted, but should be delivered outside of the federal student aid programs. Courtney then turned to Akers’ suggestion that perverse incentives lead to misuse of the program; they both agree that this particular abuse applies to a small population of borrowers. Addressing refinancing student loans, Courtney said that the federal government should not be “making money” off of federal student loans.

Representative Luke Messer (R-IN) asked the panel about an “income share” agreement and the challenges of incorporating the concept into federal policy. Akers said such an agreement would be mutually beneficial to students and the would-be lender, noting that the practice is an “emerging market”, but an admittedly “risky investment” for some. She also said Congress could help growth of such programs by clarifying that they are legal.

Representative Jared Polis (D-CO) noted that his district includes two of his state’s flagship institutions and said he hears much about the many federal higher education policies in his office. He then praised the higher education cost-fighting strategy of growing dual and concurrent enrollment programs and asked Dr. Cruz how these programs help low-income students. Cruz noted that such programs help low-income and first-generation students by cutting costs and speeding up completion times. Polis noted his intention to introduce legislation on this point soon. He then turned to open-source text books and how they can be used to lower costs and again asked Cruz how they are being used in New York at his schools. He referred to his time with the Cal State system, noting that state law there required the school to sue such resources, to great benefit for students. Turning to Dr. Akers, Polis asked about income based repayment and what “best practice” looked like. She said there should be a single program, and said parameters would be flexible beyond the date of enactment of a revised HEA.

Representative Jason Lewis (R-MN) turned to the cost of higher education, noting how it is up 190% according to BLS. Kirwan noted that regulation cost is significant, and following his Task Force’s recommendations would reduce operating costs for institutions. Representative Lewis then turned to the value of a four-year degree versus vocational programs; Akers agreed that the four-year degree has been arguably “over celebrated.” Gilligan said innovative models like Capella’s address the varied learning needs of today’s would-be workers.

Representative Federica Wilson (D-FL) also addressed the cost of higher education and its effect on low-income and minority populations. Specifically, she brought up the inability to discharge student and parent loans via bankruptcy. She then took issue with Akers’ suggestion that parents and graduate students should not have federal loan products, but should rely on the private lenders. Akers responded that she believes the federal government should step up when the private sector will not, and the private sector has or would have products to meet these needs. Akers and Wilson had an exchange on subsidies versus loans and their respective effect on closing racial achievement gaps; they disagree on how to close that gap, but agree that there is a federal role for closing it.

Representative Bradley Byrne (R-AL), who was formerly the Chancellor of Postsecondary Education in Alabama, said that he has particular appreciation for the accreditation process—which he believes makes institutions better. He asked Kirwan to expand on his “attack” on that process in his report. Kirwan said he feels the process is important and intended to improve institutions’ academic performance. However, over time, the requirements have grown and a significant portion are not related to academics; this increases costs without improved offerings. Representative Byrne then discussed refinancing options with Akers, who suggested that federally-offered refinancing options actually benefit the borrowers who need it the least, not those who are truly struggling, at great federal cots.

Representative Alma Adams (D-NC), a former college professor, chose to discuss the diminished purchasing power of the Pell Grant program. She asked Cruz how the program might be expanded and improved. Cruz noted how important the program is, saying it is the “foundation” for low-income students financing their studies. He said year-round Pell should come back and that its purchasing power should aim for 50% of cost of attendance over the next ten years. Historically black colleges and universities (HBCUs) graduate 20% of all black students, and these students borrow at higher rates; Adams asked Cruz how these schools’ efforts are affected by lower state contributions and the decreased Pell Grant purchasing power. Cruz said they are significantly affected.

Representative Duncan Hunter (R-CA) asked Dr. Akers about his Student Right to Know Before You Go Act and its provisions that would give consumers better information, according to him. Akers said more data would create better decisions and would hold institutions accountable for outcomes. When asked about eliminating the ban on a “Student Unit Record”, Akers was strongly supportive, saying it would create a more comprehensive, “more correct” data system than is currently available. Kirwan was asked a similar question; he said such a record would be “extremely valuable” in terms of comparative performance, but warned of the complex privacy issues associated with the concept.

Representative Adriano Espaillat (D-NY) referred to previous comments about the cost of regulation and asked whether schools would cut tuition in a rate directly related to a prospective reduction in such rules. Kirwan responded that efficient regulation is his goal, not reduction or elimination, and declined to predict what would happen if “smarter regulation” was implemented. Espaillat then asked Cruz how his institution was preparing students for in-demand jobs, in particular healthcare jobs. Cruz noted a number of local partnerships, such as with high-tech industries that address these needs.
Representative Paul Mitchell (R-MI) took up Representative Hunter’s line of questioning regarding data availability on student outcomes in higher education. Panelists agreed that institutions should be transparent on outcomes to facilitate better-informed purchasing decisions. Mitchell then turned to the gainful employment regulations and its applicability to all programs in higher education, versus only for-profit or “vocational” programs. Akers said she thought such application could be useful.

Representative Lisa Blunt Rochester (D-DE) asked how labor information is used to develop higher education programs. Gilligan responded that Capella uses such information to meet current demands and predict future ones in the development of programs. Cruz responded similarly. When asked about loan forgiveness opportunities, Gilligan said that he didn’t think their availability generally influenced the decisions of his students. Cruz said he thought they were important to his student body.

Representative Rick Allen (R-GA) asserted that education is a complacent industry; that it does what it always does. He asked what the community should do to “catch up” in terms of innovation and meeting the needs of students and employers. Kirwan noted that he is quite encouraged by the innovative technology and use of different teaching and learning models on campuses nationwide.

Representative Mark Takano (D-CA) asked about the borrower defense to repayment regulatory package, noting that its existence is a safeguard for students at predatory institutions, saying, “It is our responsibility to defend these students.” When asked why these regulations are necessary, Cruz noted that veterans are particularly vulnerable to bad actors, given that their federal benefits don’t fall under the “90/10” rule to which for-profit institutions are subject. Takano noted that a number of organizations representing service members have asked Congress to not repeal gainful employment and other protections. Gilligan argued that the gainful employment rule is a flawed “one size fits all” remedy to a complex issue.

Representative Francis Rooney (R-FL) asked about the skyrocketing administrative costs found on higher education, including more people and higher salaries for campus leadership. He asked what might be done to address this issue, which, he argues, is undoubtedly contributing to higher education costs, and whether reducing regulatory burden would result in lower costs. Kirwan noted that fewer regulations would result in lower costs. Regarding administrative costs, Kirwan says it needs “greater scrutiny,” but said non-instructive personnel are valuable on campus, sometimes providing crucial support to students who might not graduate otherwise.

Representative Raja Krishnamoorthi (D-IL) asked Dr. Akers about college costs and construction, specifically, noting that students on campuses sometimes perceive new projects as an attempt to provide unnecessary services. Akers said that construction is required to keep up with teaching and learning in a modern way.

Representative Lloyd Smucker (R-PA) noted the excellence of higher education institutions in his state. He then turned to what he termed “trade and vocational education,” saying that such programs are of great value and not adequately supported by state governments. He then specifically praised Thaddeus Stevens Technology Institute in his district, which enjoys high demand from businesses for their graduates, sometimes even luring students away from the institution before graduation with high salaries. He said more interaction between the business community and education is in order.

Representative Mark DeSaulnier (D-CA) noted the challenges of schools in his California district, in particular the price of housing. Cruz noted that he turns to other streams of revenue to meet the needs of students; he sees increased purchasing power of the Pell Grant as a way to help them as well. He then asked Gilligan how Capella meets the needs of students while satisfying the demands of shareholders. His response: “If our learners succeed, we succeed.” Good results bring brand awareness, which brings more students and more good results, according to Gilligan.

Ranking Member Scott (D-FL) noted his desire to talk to Representative Foxx about what the panel heard from witnesses about regulation—its merits and flaws, since they heard both from the panelists. She agreed. Scott then asked the panel what might replace the gainful employment package; Gilligan noted that more transparency is always good and better serves students and said that there are regulatory packages other than gainful employment that serve this purpose. Scott then asked Akers about the FAFSA, noting its lengthy and complexity is a barrier for would-be students. She agreed that eliminating some of the data requests would increase enrollments, which would be a better result than denying these would-be students. Next, Scott and Cruz had an exchange about the need for wraparound services for first-generation students to be successful, specifically mentioning the benefit of TRIO programs.

CONCLUSION
Representative Scott offered some concluding remarks, noting that the four-year degree experience is a transformative one, and that while the discussion at the hearing was wide-ranging, it didn’t touch much on the value of education. Chairwoman Foxx then said she thought the hearing was a good one with illuminating discussions. She then referred to Representative Scott’s comments regarding the four-year degree and said that she concurs that a four-year degree is invaluable and noted it took her seven years to get her own. While she reminds her colleagues that two-year and other programs are also valuable, she agrees that a four-year degree supports higher earnings. Having said that, other pathways, credit for life experiences and modern, innovative programs reduce costs and address the needs of more diverse students, and Foxx hopes people start to “vote with their feet” in the higher education marketplace. Foxx concluded the hearing by thanking the panelists for their time and effort. For more information on this hearing, included written statements and testimony, and an archived recording, please visit here.