Mr. Brett Lief, President National Council of Higher Education Loan Programs, Inc. (NCHELP)
- Public Hearing Home
- Access & Retention, Panel of Experts
- Quality & Accountability, Panel of Experts
- Public Testimony, Panels 1 - 3
- Public Testimony, Panels 4 - 6
- Public Testimony, Panels 7 - 8
Reauthorization of the Higher Education Act
Brett E. Lief
National Council of Higher Education Loan Programs, Inc.
U.S. Department of Education
Kansas City, MO
March 7, 2003
Good Afternoon and thank you for the invitation to provide testimony on the upcoming Reauthorization of the Higher Education Act (HEA).
I am Brett Lief, President of the National Council of Higher Education Loan Programs (NCHELP). My days in student financial aid go well beyond my seven years at NCHELP and began 30 years ago on campus as an assistant director of financial aid. Then followed a position as director of financial aid at a community college and 15 years of higher education and student assistance policy at the state level. Prior to joining NCHELP, I was responsible for student aid policy at the National Association of Independent Colleges and Universities.
Based in Washington, DC, NCHELP represents a nationwide network of guaranty agencies, secondary markets, lenders, loan servicers, collection agencies and other organizations involved in the administration of Federal Family Education Loan Program (FFELP). NCHELP members promote student access and choice for postsecondary education and training. The relationship between NCHELP members and the students and families they assist extends from early outreach and awareness efforts about available funds for higher education to counseling on loan repayment options and ways to avoid the harsh consequences of default years later.
In 1965, the HEA came on the heels of a "cold war", a "war on poverty", a struggling economy, a race into space and the ever-present need for American higher education to produce scientists, teachers and individuals to take the nation to the next level. Despite the political and economic uncertainty, in fact because of it, a policy decision was made at the federal and state level to invest in the nation's youth. This was clearly a "risk" model; it targeted the unproven and, in many instances, the poor and academically under-prepared. The nation's investment of that era produced scientific, technological and medical advances that fueled the robust economic cycle that ended a few years ago.
The foundation of the HEA was built upon the goals of access and choice. These goals were funded with grants to enable access to most educational institutions, and with loans for choice, allowing students to attend higher cost institutions. It is unfortunate that in the last 10 years, there has been little discussion of choice. Today, we are focused on affordability. Loans are no longer a convenience or a choice vehicle, they are a critical method for providing access.
In its notice announcing the submission of comments for this Reauthorization, the Department recognized a substantial reliance on student loans. The notice stated: "The period since the last reauthorization of the HEA has been a period of constant change and rapid growth for the Federal student loan programs. Education loans have become a valuable source of postsecondary student aid for many students and parents. The total amount borrowed annually, including consolidation loans, under the two major loans programs has increased more than 50 percent from $36 billion in fiscal year 1998 to an estimated $55 billion in fiscal year 2002."
As a result of the current world unrest, homeland security priorities and an economy that, while perhaps awakening, is still stagnant, some of my friends and colleagues are beginning to write this reauthorization off and have set their sights to the "next" one. The purpose of my remarks today is to encourage bold thinking -- like in 1965. This can be a foundational Reauthorization of the Higher Education Act.
And the foundation of the federal commitment to access in higher education is the Pell Grant. Not only must the maximum level be increased but there must be a mechanism to ensure funding at the higher levels. These funds can make the difference for qualified and economically disadvantaged students in pursuing postsecondary education. A student who is denied or receives an insufficient Pell Grant is most likely not going receive a state scholarship or grant -- not because they do not need it -- but because they will probably not be pursuing their goals. If we agree that education, particularly postsecondary education, should be used as an equalizer in this society and can provide the type of skilled and capable workers our economy demands, we must put the funds behind this goal. I recognize this is something that requires a commitment from the both the authorizing and appropriations committees.
Second, we need to ensure that all students are academically prepared for postsecondary work and that they and their families understand that postsecondary education and training are attainable goals. A commitment to increasing outreach and awareness efforts is needed. Surveys continually find that the public has a misperception about the cost of college and the funds available. Several programs have been created to educate students and families, including TRIO, GEAR UP and LEAP, and they need to be supported and expanded.
In addition to increased outreach about the availability of funds for postsecondary education, we strongly support efforts that improve financial literacy and increase the effectiveness of borrower counseling and borrower communication. These efforts include the use of technology to provide a better flow of information and information exchange throughout the higher education community.
States are choosing to make cuts to higher education because they believe colleges can offset the reductions with increased tuition and fees. This trend coupled with lagging federal and State grants and scholarships has led to an increased reliance on borrowing by students. The amount students can borrow under the federal loan programs to pay for college has not increased since 1992 and has not kept pace with college costs. NCHELP advocates an increase in loan limits and believes this is preferable to a reliance on alternatives such as financing higher education with private loans or credit cards.
Since the trend of increased borrowing will inevitably continue, more needs to be done within the Stafford program to increase options in repayment plans to ensure that monthly payments are manageable for borrowers. Since the HEA was enacted, most borrowers have been required to repay their student loans within the standard 10-year repayment term. While borrowers should be encouraged to repay their loans as quickly as possible, higher loan balances and a troubled economy indicate that the length of the repayment or graduated terms should be reconsidered.
Additionally, as borrowing for higher education increases, so must our efforts to help borrowers prevent default. With the exception of a slight increase this past year, default rates continue to drop, a trend for which many in the higher education community - borrowers, financial aid officers, the Department of Education, and the FFELP community - are responsible and should take pride in. Our guaranty and collection agency members play an integral role in helping reduce the default rate of our borrowers. However, they need your help to continue their successes in delinquency and default prevention. One way to help is to allow the use of the National Directory of New Hires (NDNH) to help locate borrowers who may need assistance in avoiding delinquency and default, as opposed to using this information solely after borrowers have defaulted on their loans. A recent report by the General Accounting Office found that use of the NDNH resulted in collections of $260 million on defaulted loans in one year. Use of this tool should be expanded to include preclaim efforts.
I would like to congratulate the Department on receiving an unqualified audit. We understand the efforts that went into achieving this result and the high value on accountability the Department holds for itself and its partners. As your partner, we want to work with you to remove the student financial assistance programs from the General Accounting Office's "High Risk" list.
We look forward to working with you and members of Congress in the upcoming Reauthorization and we pledge to do everything we can to help ensure that FFELP remains accountable to students, borrowers, institutions, the Department of Education, Congress and taxpayers. We all can work together to make postsecondary education more accessible and more affordable to all students. Top