Testimony of Kate Rube,
State Public Interest Research Groups' Higher Education Project and Ajita Talwalker,
U.S. Student Association
Thank you for the opportunity
to submit testimony regarding our recommendations on making college more affordable.
Since the Higher Education Act was passed in 1965, this nation has made enormous
strides towards realizing the dream of equal access to a college degree. However,
we are still falling far too short of ensuring educational opportunity for every
achieving American, regardless of income.
The hurdles to pursuing higher education are mounting for many students. Already,
the average undergraduate student borrower takes on $19,000 in student loan
debt over the course of his college career, with loans now accounting for the
majority of the average student's financial aid package. In addition to loan
debt, students are increasingly working long hours while in school to help cover
college costs. Nearly half of working full-time students are employed for 25
or more hours each week. For low-income students, the average number of hours
worked is 24 hours each week. [1]
Increasing federal investment in grant aid is the most important step Congress
can take to expand accessibility and affordability. Each year, nearly 170,000
college-qualified students forego pursuing a college education due to its cost.
This loss-estimated to reach 2 million students by the end of the decade-will
harm not only those individuals, but will threaten the future of our country's
economy and our communities.
Improving affordability and access starts by increasing the funding levels for
the Pell Grant and other federal need-based grant programs included in the Higher
Education Act. Today, the $4,050 Pell maximum covers only 35 percent of the
average $11,354 yearly cost of a four-year public school. For the last three
years, the maximum Pell award, as appropriated by Congress, has been frozen
at $4,050, despite the escalation in college costs. To ensure that students
from low-income families have equal access to higher education, the Committee
should increase the maximum Pell Grant authorization to at least $10,200. We
also urge Congress to repeal unfair policies, including the 'work penalty' and
the taxation of student financial aid, which currently reduce financial aid
awards for students.
Increasing investment in federal student aid programs is only part of the college
affordability equation, however. Given that the majority of students now borrow
heavily to afford higher education, we urge Congress in this Reauthorization
to reduce the burden of borrowing for students and families.
Given that student loan interest rates that are scheduled to double over the
next five years and students will borrow even more money, we urge Congress to
lower the interest rate cap on federal education loans from 8.25 to 6.8 percent.
Lowering the interest rate cap would help to shield borrowers from interest
rate hikes, and ensure more affordable loan repayment for student borrowers
in the future.
Congress must also uphold important borrower benefits in the consolidation program,
and continue to allow borrowers to lock in low, fixed rates on their loans.
The fixed rate in consolidation saves the average undergraduate borrower nearly
$5,500 in interest payments, the Congressional Research Service calculated last
year, as opposed to interest paid under a variable rate. Student borrowers should
have greater choice in the consolidation program, as well. We support student
borrowers having a choice between fixed or variable rates in the consolidation
program. We also urge Congress to completely eliminate origination fees that
are assessed on student borrowers.
In addition, Congress must ensure that every dollar spent on the federal higher
education programs is being used in the most efficient manner possible to increase
college access and affordability.
We are extremely concerned that billions of dollars could be spent to increase
student aid funding but are instead currently used to subsidize student loan
companies.
We urge Congress to pass the Student Aid Reward Act as a part of this Reauthorization
process, as this bipartisan legislation would transfer subsidies from loan companies
to grant aid for the neediest students. The Congressional Budget Office has
estimated that this bill, which would encourage colleges to use the more efficient
student loan program, would generate $17.25 billion in additional student aid
without any additional cost to taxpayers.
When this country first passed the Higher Education Act in 1965, President Lyndon
B. Johnson said that it signaled a commitment to the country-that every qualified
American should be able to pursue the dream of a college degree, regardless
of income. We urge Congress to recognize this commitment and enact legislation
to make college more affordable and accessible.
