TESTIMONY BEFORE U.S. DEPARTMENT OF EDUCATION PUBLIC FORUMS ON COLLEGE AFFORDABILITY GEORGE MASON UNIVERSITY ARLINGTON, VIRGINIA NOVEMBER 13, 2013

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1 TESTIMONY BEFORE U.S. DEPARTMENT OF EDUCATION PUBLIC FORUMS ON COLLEGE AFFORDABILITY GEORGE MASON UNIVERSITY ARLINGTON, VIRGINIA NOVEMBER 13, 2013 DR. DAVID H. SWINTON PRESIDENT, BENEDICT COLLEGE COLUMBIA, SC AND CHAIRMAN, UNCF MEMBER COLLEGES

2 The opening statement in the Fact Sheet states that A higher education is the most important investment that students can make in their own futures. We agree. In fact we would go even further and add that it is the most important investment our society can make to ensure America s future. America s students and their families have been making this investment with the proportion of the population enrolling and attaining some college education doubling over the past 3 decades and this is a primary reason for the increase in the cost of college. [The proportion completing high school has risen sharply from 68.6 percent for all races in 1980 to 87.6 percent in The proportion of 18 to 24 year old high school graduates that were enrolled in College increased from 1980 to 2008 by 41% for Blacks, 28% for Hispanics, and 50% for Whites. The proportion with some college has almost doubled during this period rising from 32% in 1980 to 57% in The percent of Americans over 25 years old that have completed four or more years of college has risen from 17 percent to 31 percent. ] The cost of education has also increased because of the great increase in investment required by the technological revolution, increased expectations for high quality living learning environments, increased regulatory requirements and the greater human capital investment required to maintain a high quality competitive faculty and staff. Our public and private non-profit educational institutions have responded to the societal challenge of educating increasing proportions of our diverse population in our increasingly complex highly technological world which has led to the increasing cost of education. The affordability crisis exists because of two primary reasons 1. Family /Household income especially for the lower 60% of the population have essentially stagnated for the last three decades. 2. Federal and state support for higher education has not kept pace with the increase in cost. The per-student spending for all levels of government on higher education has declined significantly while the per-student cost has increased. The government has promoted this broadened and increased access to an internationally competitive higher education but it has not expanded the proportion of GDP spent on education at the same rate. Therefore, the increased cost has passed to students and their families in the form of tuition increases and given the stagnation in family income this has precipitated the affordability crisis.

3 Moreover, the resources provided by the federal government sector to students and their families have mainly been provided in the form of loans. Low and moderate income families that have been increasingly encouraged to enroll in college do not have enough personal resources and grant/scholarship aid to pay their way through school. Therefore, the only way they have been able to attend is to borrow money. The increases in the level of indebtedness, the level of the default rate and the low level of the graduation rate are also directly related to the societal goal to encourage increased, broader and more diverse college enrollment coupled with its failure to provide sufficient non debt funding to accommodate these goals. Increasing the proportion of low income and disadvantaged students enrolled in and graduating from college of necessity leads to more dropouts and defaults. This will especially be true if resources to attend college are limited for the low income and disadvantaged students. The inadequate resources will cause these students to have to endure more financial, social, and psychological hardships and make it more difficult to remain continuously enrolled. The heart of the President s Plan to Make College More Affordable (the Plan) is his plan to measure college performance through a new rating system so that students and families have the information to select schools that provide the best value. While this may sound simple, this is a very complex undertaking fraught with many dangers of leading to a myriad of unintended consequences because our educational sector is very complex and it is doubtful that any simple rating system can provide this guidance. There were 4,409 degree granting postsecondary institutions in , 2,774 four year colleges (approximately 75% private and 25% public) and 1,721 two year colleges (approximately 34% private and 66% public). Each of these institutions has different resources, missions, educational programs, student body compositions, locations, environments, histories, and cultures. More than 18,576,000 students were enrolled in public and private nonprofit colleges in 2009 and another 1,852,000 were enrolled in for profit institutions. These students are very diverse and their individual peculiarities will dictate the college which is the best value for them. Currently, parents and students are already deciding their college choices with a great deal of information provided by the colleges and other sources. It is not clear that the addition of

4 another rating system will provide any improvement in the college selection process or make college more affordable. We are very concerned that the federal government will not be able to develop a sufficiently nuanced rating system that can capture all of the subtleties of the individual circumstances of each student and the institutions to determine which institution can best serve the student. We are especially concerned because of the demonstrated over reliance in the current government score card on simplistic notions such as raw graduation and tuition rates and average financial aid packages. Research has shown that raw graduation rates have more to do with the selectivity of the institution than with the value added by the institution. Once one adjusts for the disadvantaged student characteristics and other institutional factors, the institutions (such as the UNCF institutions) that specialize in serving the disadvantaged have better performances in graduating disadvantaged students than do the highly selective affluent institutions. The notion that aid should be awarded on the basis of outputs rather than inputs may sound good, however, as already stated schools that educate the truly disadvantaged will of necessity have lower raw outputs than others. An improperly designed rating system could penalize these schools for serving the societal goal of increasing the number and diversity of students enrolled and graduating from college. Given the low likelihood that the valuing system can truly take account of the myriad of factors impacting outcomes it seems risky, inefficient, and unfair to allocate aid on the basis of the proposed rating system. Besides, given the large number of colleges of all size and missions it would seem that the market ought to work relatively efficiently to guide students and parents to their optimum choices. Encouraging students to base their enrollment decisions on average grants and discounts is misguided since most institutions tailor specific packages for the circumstances of each student. What each student gets in the way of grants and scholarships depends on the characteristics of the student, their family s access to resources, and their demonstrated need and merit. Other student outcomes, such as post-graduation earnings, advanced degrees, etc. also depend very much on the characteristics, accomplishments and attributes of individual students.

5 Our fear is that an improperly designed rating system will mislead students into selecting institutions based on average outcomes that will not maximize their individual chances for success. We also believe that using an ill designed rating system to allocate Title IV funds could have even more disastrous impacts on students and their families as well as the higher educational system. We believe that the Plan s intent to make it easier for borrowers to repay their debt is commendable. Capping the repayment and making it conditional on the borrower s earnings could be a useful innovation. This could reduce default rates. We also feel that providing enough aid to enable students to remain in school until they complete their degree is equally if not more important to the objective of reducing default rates and increasing graduation rates and we encourage the administration to explore options to accomplish this. It is also interesting that the Plan does not seem to even be aware of some of the Department s current policies. For example, (although suggested as potential new policies) Department rules already require the College to return unearned financial aid when a student withdraws before the semester ends even if the withdrawal is not officially reported to the school. Department financial aid regulations already require student aid recipients to make satisfactory academic progress which already includes earning a certain proportion of their credit hours attempted and earning a satisfactory grade point average. Finally, we support and encourage all efforts to innovate to increase the effectiveness of and lower the cost of higher education. However, we have two caveats. 1. First, innovation will require investment in research and evaluation and will most likely require significant investments in technology and human resources by the individual institutions and unless this is subsidized this could in itself increase tuition cost at least in the short run. 2. Second, a College education involves much more than the acquisition of technical knowledge. College provides a safe environment for our youth to transition to adulthood, learn social skills, develop their personal values and self-concept and learn to be productive and involved citizens. Over emphasis of cost and affordability can distort the true value of a college experience.

6 In conclusion, we are all in favor of improving higher education, but we caution against rushing to implementation of such a major change as letting the federal government usurp the role of our educators by establishing a hastily improvised college rating system. We believe that the goal of implementation in fall 2015 is too quick and does not allow for appropriate due deliberation. Thank you for your attention.