DEPARTMENT OF EDUCATION
I am pleased to appear before you to discuss the Administration's proposal for the reauthorization of the Higher Education Act of 1965 (HEA). The President has emphasized universal access to postsecondary education and lifelong learning as top priorities of his Administration. Our reauthorization proposal builds upon the President's proposed HOPE Scholarship, $10,000 tax deduction, and increases in Pell Grants and Work Study. It will set the direction for Federal support of higher education as we enter the next century.
More than ever before, education is the fault line between those who will prosper in the new economy and those who will be left behind. Today's good jobs increasingly require skills and training beyond a high school education, and effective and accessible postsecondary education is critically important to individuals as well as our Nation's economy and democracy. In fact, the most recent estimates available from the Census Bureau show that a person with a bachelor's degree earns about $600,000 more in today's dollars over the course of a lifetime than a person who did not continue his or her education beyond high school.
For over 30 years, the HEA has worked to promote access to postsecondary education, with college enrollment increasing from 5.9 million students in the fall of 1965 to 14.3 million in the fall of 1995. Under our Fiscal Year (FY) 1998 budget proposals, we expect 7.7 million students, or about one-third of all postsecondary students enrolled throughout the year, to receive nearly $40 billion through HEA student financial aid programs, costing the Federal government $12.7 billion. This is a good investment in America's future.
But we have an unfinished agenda. Students whose parents have less income and formal education still enroll in higher education at lower rates than do their peers from more affluent and better educated families. Ninety-one percent of 1992 high school graduates from the highest socio-economic quartile (based on income and education) entered college within two years, compared to only 71 percent of students in the middle quartiles and 49 percent of students in the lowest quartile. Ensuring access is therefore the first critical principle underlying our HEA reauthorization proposal. The other three are supporting high standards and high achievement; improving outreach to potential students and linkages to employment and elementary and secondary education; and simplifying program delivery and improving management. I am encouraged that the Congress and the higher education community share these objectives.
The challenge in this reauthorization is to maximize the effectiveness of our investment in postsecondary education. Our overall proposal will be aggressive, but realistic. We will recommend targeted program improvements and reforms that we can fund in the context of the Bipartisan Budget Agreement.
ACCESS: OPPORTUNITY WITH RESPONSIBILITY
Ensuring access to postsecondary education for all Americans continues to be the most important goal of Federal postsecondary education policy. President Clinton extends the concept of educational access to mean "opportunity with responsibility." As the principal beneficiaries of postsecondary education, students should be expected to study hard and pay some of the costs of their own education, if possible. Nonetheless, the student's family, the States, postsecondary institutions, and the Federal government also have important roles. The student's family has an obligation to prepare the student for a fulfilling and productive future. States provide crucial governance and financial support to the Nation's higher education system, especially through annual appropriations that cover large portions of public institutions' operating budgets. Each institution also has a duty to provide high-quality and efficiently administered programs, support students, and manage Federal funds responsibly. Any consideration of the Federal role in postsecondary education must recognize the roles and responsibilities of these multiple players.
We are concerned that students and parents, especially those from low-income families, have incomplete, and sometimes misleading, knowledge of the cost of attending postsecondary education, the availability of financial aid, and eligibility requirements for aid. Also troubling are recent reports indicating that parents of even very young children view college costs as one of their foremost worries. Although it is not the role of the Federal government to determine tuition levels, we can do more to allay fears about college costs and also to encourage long-term planning for education after high school. We are examining a number of options, including one that would identify and publicize the amount of Federal aid that postsecondary students in participating programs are eligible to receive and the typical costs of education.
We are also concerned that our current need analysis formula -- which determines how much financial aid a student is eligible to receive -- may discourage students from working and families from saving. To address this concern, we are considering ways to modify the treatment of assets in the calculation of expected family contribution. We know that Congressman Clay has recently introduced a bill, H.R. 1435, that would increase the amount of income that is excluded from assessment in the need analysis formulas for both dependent and independent students. We are reviewing this proposal in terms of its benefits to students and its conformity with a balanced budget.
Pell Grants, which are the foundation of Federal student aid, have made postsecondary education possible for millions of low-income students who otherwise would not have had this opportunity. Recent bipartisan support in Congress has resulted in considerable increases in Pell Grant funding and an increase in the number of undergraduate student recipients. We would like the reauthorized HEA to provide a strong Pell Grant program, and in future budgets we hope to propose substantial annual increases in the maximum Pell Grant award, as long as they can be paid for within a balanced budget. To this end, the Administration proposed a $3,000 maximum award in the 1998 budget, and the President fought for this increase in the Bipartisan Budget Agreement.
In part because of the diminishing value of the Pell Grant in real terms throughout the 1980s, many students and families increasingly rely on student loans to finance postsecondary education. Given borrowers' financial obligations, we will not consider any proposal that would increase the cost of borrowing for students or parents. On the contrary, the President's 1998 budget proposed substantial reductions in the loan origination fees that student borrowers must pay, and we will continue to work to eliminate these fees entirely if it is possible within the framework of a balanced Federal budget. To improve HEA programs for graduate education, we are considering the consolidation of Title IX's Javits, Harris, and Graduate Assistance in Areas of National Need programs into one flexible, comprehensive fellowship program focused on national academic needs. We are preparing a proposal that would define national need in terms of both academic discipline and population representation. The new program would provide flexibility while retaining important elements of the programs that would be consolidated.
We also want to respond to changes in the demographics of the college population as well as technological innovations. Nearly half of all college students are now working adults over 24 years of age who cannot easily take time from their jobs or other commitments to participate in traditional higher education settings. Exciting new technologies are enabling postsecondary institutions to respond to popular demand from these students by offering enhanced distance learning opportunities. For example, students can now take courses over the Internet and interact with instructors via e-mail.
Where institutions offering distance learning programs seek to participate in the Federal student aid programs, we will ask accrediting agencies to develop and enforce appropriate outcome standards in order to ensure program quality. To provide equivalent student aid opportunities for all learners, while making sure that this is a good investment of Federal education funds, we propose to modify several provisions of the HEA. In addition to taking steps to ensure educational quality through accreditation of these programs, we intend to modify some provisions that limit institutional eligibility for Title IV aid, including those based on percentages of students and programs in distance learning. Also under consideration is a proposal that the non-tuition cost of attendance for students in distance learning programs be computed under the same methodology used for other off-campus students, if this is possible within the framework of a balanced Federal budget. Support Effective Education: High Standards, High Achievement In addition to ensuring access, Federal programs should continue to promote and enhance outstanding educational opportunities and encourage students to take advantage of them. Several of our reauthorization ideas address this objective of promoting high standards and high achievement.
We are considering ways to reward needy students who excel academically. We also plan to propose limiting the length of time students may qualify for Pell Grants -- perhaps to 150 percent of the usual program length -- thereby encouraging timely degree completion and safeguarding taxpayer dollars. Taken together, these proposals reinforce our commitment to ensure access for all students and reward those who achieve at the highest level, yet also promote student accountability.
We can also encourage and promote high standards and achievement on the part of educational providers by continuing to support the Fund for the Improvement of Postsecondary Education (FIPSE). The postsecondary education community overwhelmingly endorses this program, which supports reform and enhancement projects in areas ranging from student preparation to faculty development and improvement of campus environments. We will stress dissemination as an important feature of the reauthorized FIPSE, thereby encouraging replication of the exciting and effective projects it funds.
We want to continue to support improvements in academic quality and institutional management at institutions serving disadvantaged and minority students. Our plan to create separate parts of Title III for Hispanic-Serving Institutions and Tribally-Controlled Colleges underscores the importance of these institutions. We will also encourage all Title III schools to strengthen the use of technology in both academic and administrative operations.
Finally, we are concerned about the current level of support for teacher preparation programs. We will propose to improve teacher preparation programs to help meet the President's goal of ensuring a talented, dedicated, and well-prepared teacher in every American classroom. Without effective teaching, the highest standards in the world will not yield a well educated society. Our Nation faces major challenges in this undertaking, as we will need an additional two million teachers to keep up with student population growth over the next decade. We are considering a new teacher preparation program, in which colleges and universities that have demonstrated excellence in preparing teachers would partner with other postsecondary institutions that are committed to improving their own teacher preparation programs. In addition, we are considering improved teacher recruitment programs to include paraprofessionals, mid-career people, and individuals willing to work in underserved areas.
IMPROVE OUTREACH TO POTENTIAL STUDENTS AND LINKAGES TO EMPLOYMENT AND ELEMENTARY AND SECONDARY EDUCATION
By forging strong links among elementary and secondary education, postsecondary education, and employment, we can establish crucial connections at both ends of the educational spectrum that complement and increase the effectiveness of our investment in student financial aid. Specifically, we aim to provide effective mentoring, academic preparation, and counseling to motivate young people and their families to develop and deepen their aspirations and commitment to pursue postsecondary education. Our goal must not be just to ensure access, but also to encourage students to persist and graduate.
We particularly would like to see increased degree and certificate completion among low-income students, whose rate of completion is one-third lower than that of their high-income counterparts. Thus, we are examining ways to reward institutions that serve large numbers of Pell Grant recipients who complete an educational program. Such incentives would encourage institutions to retain low-income students through degree completion.
We are determined to strengthen the TRIO programs, which support and encourage precollegiate students by preparing them for enrollment and success in college. The Upward Bound and Student Support Services programs help low-income, first-generation college students enter and persist in college. An evaluation conducted by Mathematica Policy Research showed that Upward Bound increases students' educational expectations, prepares them academically, and results in higher college enrollment rates. Similarly, an evaluation conducted by Westat, Inc. showed that participants in Student Support Services earn higher grade point averages, enroll in more classes, and persist at a greater rate than do other similar students.
We also want to strengthen the Federal commitment to mentoring and early intervention for disadvantaged youngsters by stepping up efforts to inform students at an early age that college is a realistic possibility. We are considering a proposal to redefine the Talent Search program as a mentoring and academic support program to help disadvantaged middle school students by instilling motivation and work habits conducive to academic success; providing information on collegiate academic requirements, typical costs, and financial aid availability; and involving parents.
IMPROVE MANAGEMENT AND SIMPLIFY PROGRAM DELIVERY
The reauthorized HEA should continue to improve management and simplify program delivery, our fourth guiding principle. We aim to reduce burden on institutions and provide them the flexibility to manage the programs so that they can serve students well. We will also ensure that students and postsecondary institutions continue to receive efficient, seamless and predictable customer service that enables them to plan ahead.
We will continue to strengthen Title IV program management by improving the Department's oversight of participating postsecondary institutions. In recent years, we have significantly improved Federal Family Education Loan (FFEL) program management. The national FFEL cohort default rate declined from 22.4 percent to 10.7 percent between 1990 and 1994. Federal payments for defaulted FFELs have declined almost 30 percent between 1991 and 1996, despite a 60 percent increase in the volume of loans in repayment during the same period. And collections on defaulted FFELs have more than doubled since 1992.
We also have strengthened the gatekeeping procedures to prevent unscrupulous schools from participating in student aid programs. Over the past four years, the Department's actions have led to the removal of 875 schools, including 672 schools removed from all student aid programs and an additional 203 from Federal loan programs. These actions are the result of careful implementation of legislation enacted by the Congress since 1990, which have given the Department more tools to manage the Federal student aid programs.
We need to continue striving toward a proper balance, however, between protecting students and Federal funds and imposing burdens on schools. To strike this balance, we are proposing to create a statutory and regulatory framework for tailored, performance-based standards -- developed in consultation with the postsecondary community -- in lieu of the current "one size fits all" rules. A gatekeeping and oversight system based on institutions' track records and risk to Federal funds will recognize the diversity of American higher education, reduce burden where appropriate, provide incentives for institutions to be fiscally and administratively responsible, and target Federal oversight resources on high-risk institutions.
We are also working to ensure strong management of our student loan programs and to provide equal benefits for students in Direct Lending and FFEL. The creation and implementation of the Direct Loan program already has revolutionized Federal student loan delivery by providing a simpler, more automated, and more accountable system to borrowers and participating institutions. The existence of Direct Lending has also stimulated improvements in FFEL. The Direct Loan program also offers borrowers a choice of repayment options that have improved borrowers' ability to manage their student loan debt. In our FY 1998 budget submission, we proposed to extend most of the Direct Loan repayment options to FFEL borrowers, improve the terms of FFEL consolidation loans, and prohibit lenders from offering different benefits to selected borrowers. The budget provisions, like our HOPE Scholarship proposal, would provide students additional assistance and flexibility in financing postsecondary education, and we plan to include them in our reauthorization plan, as well.
In the President's 1998 budget, we propose economic incentives for guaranty agencies that would reduce the need for regulation, lower costs to the taxpayers, and improve performance. Our proposal clarifies that guaranty agencies administer guarantees paid by the Federal government. The Department would pay 100 percent of lender default claims, compensate guaranty agencies through a set of fees related to the functions they perform, and recall Federal funds unnecessarily held in reserve by the agencies.
We recognize the importance of simplifying program delivery and have taken steps in this direction. In consultation with students, schools, lenders, guaranty agencies, and secondary markets, the Department is developing Project Easy Access for Students and Institutions (EASI), an electronic, student-centered delivery system through which students will be able to apply for aid, determine their eligibility, and have their aid delivered to the school of their choice rapidly. As envisioned, EASI would also enable borrowers to check on their loan balances 24 hours a day after leaving school, assist institutions in tracking enrollment and repayments as well as fulfilling reporting requirements, and help the Department with program management, reporting, and oversight in a real-time environment.
We are modernizing other aspects of the delivery system consistent with the EASI vision. Later this month, students and families will be able to complete the financial aid application via the Internet. We are also considering the use of multi-year promissory notes and imaging for both the Direct Loan and FFEL programs, which could greatly reduce administrative burden for the schools, lenders, and the Department.
Some in the postsecondary education community have advocated new organizational forms to modernize student aid. Recently proposed models include a mutual benefit corporation (MBC) -- which, as I understand it, is a non-governmental corporation operating under a charter and bylaws approved by an appropriate Federal agency that is set up to help run an industry -- and a performance-based organization (PBO) within a Federal agency under the policy supervision of the Secretary and the President. We are reviewing modifications that have been proposed for delivering student aid, and will communicate with the Committee if legislative change is needed to improve efficient and effective program management.
It has been my pleasure to share with you our higher education strategy and our approach to the reauthorization of the Higher Education Act. In proposing the HOPE Scholarship tax credit and other tax incentives to help families pay for college and life-long learning, major increases in funding for important postsecondary education programs in our FY 1998 budget, and a strong Higher Education Act, we are dedicated to strengthening the Federal commitment to postsecondary education. We look forward to working with you to craft a Higher Education Act that will allow us to meet the challenges of the next century. I am happy to respond to any questions you may have.