07.16.15

Keynote Speech to the American Enterprise Institute

Reauthorizing the Higher Education Act

Thank you, Andrew. It’s great to be here. It’s great to be at AEI, an organization for which I have lots of respect. I also have great respect for our institutions for higher education. As Dr. Kelly said, I was once president of the University of Tennessee. That’s harder than it looks. I remember on my first day on campus a faculty member came up to me, I was very enthusiastic that day, and she said, “You have so much enthusiasm, you’re reminding me of Clark Kerr.” And I said, “Well, thank you very much,” because Clark Kerr was a distinguished president of the University of California. And I said, “How is that?” She said, “You know, he arrived and left in the same way – fired with enthusiasm.” It’s a precarious existence, most college presidents will tell you.

I wrote an op-ed for the Wall Street Journal last week in which I urged fellow politicians and some pundits to stop telling students they cannot afford a college education. I noted that two years of community college are free or nearly free for low-income students, given that tuition and fees across the country average $3,300 and that the average Pell grant is about the same. Public 4-year colleges average about $9,000 in tuition and fees. I wrote that at the University of Tennessee, Knoxville, which is closer to $12,000, nearly every in-state freshman has a state Hope Scholarship, a third have Pell grants, and many have access to state aid. About 75 percent of all college students attend those public institutions.

Even many of the private elite colleges have programs to help families figure out what they can afford to borrow and then those institutions such as Georgetown University make up the difference. Many students borrow money for college, but the average 4-year graduate’s debt is about $27,000 – or roughly the same as the average new car loan. And for that investment, you get a college degree that the College Board still says will earn you $1 million dollars more over your lifetime than if you hadn’t earned that degree. The problem, I explained in my op-ed, is that we need to grow the percentage of Americans with college degrees over the next 5 years—otherwise we’re on track to fall short by 5 million workers with degrees. So politicians, in my view, should stop discouraging students from attending college—especially the low-income students who are likely to benefit most from federal aid, and may also be the most easily discouraged.

Well, on Tuesday, the Wall Street Journal ran letters to the editor in response to my op-ed. Here’s a sampling from one: “Lamar Alexander has been a politician so long that he no longer understands that money comes from working people who understand what is expensive, and four years of college plus living expenses is expensive.” From another, “The traditional system is unsustainable.” From another “Politicians should stop talking about a college ‘premium’ because the costs, even with all the subsidies, exceed the benefits for many.” And another: “It is counterintuitive to many politicians, but the more affordable they try to make higher education, the less affordable it will become.”

In other words—I hit a nerve.

 

But buried at the bottom of these letters published by the Wall Street Journal was this brief line from a woman in San Diego: “Years ago” she said, “there was a bumper sticker: ‘Think education is expensive? Try life without it!’” Still holds true and always will.

 

I’ve always said that it is never easy to pay for college. It’s just easier than most people think. And as we approach the reauthorization of the Higher Education Act in the Senate education Committee, I don’t pretend that our system is not in need of reforms. But let’s begin with the shared recognition that life without education is more expensive – and that the cost to our country will be great if we don’t increase the number of Americans with post-secondary education and degrees.

 

So let’s look at measures we can take as a federal government to encourage colleges to control their costs, operate more efficiently, help students graduate more quickly with less debt – and let’s be sure that all these measures do nothing to challenge the autonomy and independence that is at the heart of our education system – the autonomy and independence that have driven our colleges and universities to create the best system of higher education in the world.

 

So I’d like to focus today on four goals for the reauthorization that we’re working on: first: ending the overregulation of colleges and universities; second: ending the federal collection and dissemination of useless data; third: improving our accreditation system; and fourth: ensuring that institutions begin sharing in the risk of lending to students.

 

So let’s take the first one – ending the overregulation of colleges. Now I’m here today as a Republican speaking to a generally conservative audience about reducing regulations – not a new idea for most of us. But there’s an important distinction in this – we already have bipartisan support in the committee for reducing these regulations. Senator Mikulski, Senator Bennet, Senator Burr and I commissioned a report two years ago on higher education regulation by a task force of educators, and we asked for specific recommendations on how to reduce these regulations. We said, “We don’t want another sermon. Tell us exactly what we could do to reduce the regulatory burden.” And we got back 59 recommendations, with 10 listed as priorities. A dozen of them are things that the U.S. Secretary of Education himself could do and the rest would require some sort of congressional action. We are currently working on legislation that adopts and implements many of the report’s recommendations.

 

The report told us that the higher education system is entangled in, the report’s words, a “jungle of red tape” and that every workday, each one of our 6,000 higher education institutions gets a letter or a guidance or a new rule from the U.S. Department of Education, on average. Every workday, every one of our institutions, 6,000 of them, get a letter or a guidance or a new rule from the US Department of Education that presumably changes their procedures.

 

Here are three examples of how that plays out in our colleges:

 

First, Vanderbilt University – because the chancellor of Vanderbilt was one of the co-chairs of our group making these recommendations and the other was the chancellor of the University of Maryland. So Vanderbilt hired the Boston Consulting Group to tell the university just how much it cost Vanderbilt to comply with Federal rules and regulations in one year, 2014, and the startling answer was $150 million – $11,000 per student. $11,000 is more than the average tuition in fees at public universities in the United States.

 

Second, here’s the FAFSA form that 20 million Americans fill out every year. Some of you have seen it. This is the form 20 million Americans fill out every year in order to get a grant or loan to attend college. Now most people fill it out online, some financial aid officers disparage my doing this because they say it’s not that hard to fill out. Maybe not for them, I mean they’ve been working on it for years. But I’ve talked to students who have literally burst into tears over the complexity of this thing. The president of a community college in Memphis told me he thinks he loses 1,500 students a semester because this is simply such an intimidating list of questions. We have testimony in our education committee that said those 108 questions could be reduced to two. One would be: what’s the size of your family, and two would be: what’s the size of your family income. That would answer 95 percent of the questions that the U.S. Department of Education needs to award federal student aid.

 

Third, the government hands out $24 billion in research dollars to colleges and universities through the National Institutes of Health. The National Academy of Sciences has a study group that’s twice done a survey and both times found that 42 percent of a principal investigator’s time with federally funded research is spent on administrative tasks. If we could reduce that 42 percent to 40 percent or 35 percent or 30 percent or 25 percent, we could free up hundreds of millions of dollars, maybe billions, for additional research. In other words, we can save time, energy, money, and encourage more college degrees if we reduce higher education regulations.

 

My second goal is ending the federal collection and dissemination of useless data.

 

We’ve had five hearings on higher education this year. Our third hearing was on consumer data. The federal government collects a lot of data from 6,000 institutions. At the hearing, I held up the data survey that each of our almost 1,000 public community colleges must fill out. It’s similar to the surveys that the other 5,000 colleges fill out.  This one was 426 pages of data requirements and reporting instructions, with 3,300 different necessary responses or inputs.

 

Then there are the federally mandated college consumer disclosures. Those require a 900-page binder to show what one university with two campuses is required to disclose to consumers. The law and regulations prescribe a dizzying variety of ways the different disclosures must be sent to current students and, upon request, the public items range from the useful and necessary – such as providing the terms and conditions of federal student aid to such things as informing students when Constitution Day is. Not only do I question what is really necessary – but more important, how much of this is useful to students making a college choice? Then, how might consumer information actually become useful for prospective students, and what better information may be needed? What requirements can we eliminate? And on a separate issue – once we’ve collected the right data, how good are we disseminating the data, at least in a way that you can understand it? The government has created tools –from the College Navigator to the College Scorecard – but the government is really not very good at doing this, and students aren’t really actually using those tools very much to choose among colleges.

 

My third goal is to improve our accreditation system. We held a hearing on accreditation in the committee last month. I learned a lot, but our accreditation system has to improve because there is really no decent alternative. Congress can’t monitor 6,000 colleges and universities. The Department of Education sure can’t. Accreditation has to work.

 

Here are a few of the areas that I think could see improvement, and there seems to be some consensus about these: 

 

Getting accreditors back to focusing on quality and not on all the other things Congress has asked accreditors to do over the years, such as reviewing fire codes and looking over an institution’s finances.

 

Changing the geographic nature of today’s accreditation system: There seems to be less validity today for having regional accreditation agencies exclusively. When I was president of the University of Tennessee I would look at the University of Illinois or the University of Michigan – the universities outside our region as peers.

 

Allowing accreditors to use more discretion in their oversight—in other words, using a lighter touch for some institutions. So accreditors can get more of their time and resources to institutions clearly in need of greater oversight and have a lighter touch on those that don’t.

 

My last goal is ensuring that institutions begin sharing in the risk of lending to students. We know that some students today are borrowing more than they should. According to the Department of Education, of the more than 41 million borrowers with outstanding student debt, about 7 million, or 17 percent, are currently in default– meaning they haven’t made a payment on their loans in at least 9 months. The total amount of loans currently in default is $108 billion or about 10 percent of the total outstanding balance of federal student loans. Although the Department says it eventually collects most of it.

 

One way to address over-borrowing is to ensure that colleges have some responsibility to, or vested interest in, encouraging students to borrow wisely, graduate on time, and be able to repay what they’ve been loaned. If colleges and universities have this incentive, it may not only help students make wiser decisions about how much to borrow, it could help reduce the cost of college— thereby reducing debt. For example, colleges might encourage students to complete their education more quickly. 

 

Today nearly half of college students take longer than 6 years to complete any degree or certificate or never finish one at all. Completion is important – nearly 70 percent of those borrowers who default on their federal student loan never finished their education.

 

At The University of Tennessee Knoxville they’re now saying to students, “You can take less than 15 hours if you want to, but you’re going to pay for 15 hours every semester whether you take it or not.” That’s three more than federal student aid requirements insist on. The chancellor told me not long ago that most students are taking 15 hours since they’re paying for it anyway, and the graduation rate is edging up.

 

I have also encouraged colleges and universities to explore a three year degree. The more rapidly you move through the system, the less expense you have, and the quicker you get into an earning capacity.

 

I recently spoke at a graduation ceremony at Walters State Community College in Tennessee where one of the graduates was also graduating from high school that week. Getting both degrees, and also entering Purdue University as a second semester sophomore, saving that student an estimated $65,000. At another community college in Tennessee, 30 percent of the students at that community college are also in high school. There’s a growing practice of what we call “dual enrollment,” and that permits students to spend less time and spend less money on college.

 

The President of George Washington University once told me, “You could run two complete colleges here [at his campus] with two complete faculties, in the facilities now used half the year for one.  That’s without cutting the length of students’ vacations, increasing class sizes or requiring faculty to teach more.” One of the biggest wastes in higher education is the waste in the use of facilities. Dartmouth, for example, saves $10 to $15 million per year, it estimates, by requiring one mandatory summer session for its students. Southern New Hampshire University’s College for America just began offering a $10,000 bachelor’s degree.

 

So we are working on a way to give colleges some skin in the game. Senator Reed of Rhode Island has a proposal. He wants to make colleges and universities responsible for a portion of defaulted loans of students. That’s a framework worth considering. Others may have different ideas.

 

For me, what is clear is that as a matter of principle and fairness, all institutions – whether public, private or for-profit –should participate in this. I don’t believe any institution should be exempt from those requirements that we may add to discourage over-borrowing and reduce college costs. But it might be appropriate to consider establishing multiple models of risk-sharing so that institutions with differing missions and student populations have different ways of complying. And we have to be very careful with risk-sharing. We’re talking about lots of money. We’re talking about loaning more than $100 billion a year. We’re talking about $33 or $34 billion dollars a year to Pell Grants that you don’t have to pay back. So if we, on the loaning of $100 billion dollars a year, take some step, it will have a big effect on the thousands institutions and millions of students across the country. We want to be sure that we think about what the unintended consequences might be.

 

Today, when I’m done, I’m going back to the floor of the Senate, where we are to complete work on our bill to fix No Child Left Behind, which I’ve worked on with Senator Patty Murray from Washington state, who is the senior Democrat on the committee. That bill expired 7 years ago. Congress has failed to fix it since then. I believe we’re going to be successful this year. The House has passed its version. We will either pass our version today or early next week, and then we’ll put it together with the House and send it to the president in a form that hopefully he can sign. This year we’re going to fix it. Then we’re going to turn our attention to a bipartisan Higher Education Act.

 

I’m going to work on it with Senator Murray the same way we worked on No Child Left Behind, which is that she and I will first write a proposal and submit it to our very diverse committee, which has 22 senators – Bernie Sanders and Elizabeth Warren on one end, Rand Paul and Tim Scott on the other end – so it’s an interesting discussion we have every time we get together. Every single one voted to report our No Child Left Behind bill out of committee, which is a huge success.

 

But we’ve already got a bipartisan head start on the Higher Education Act in two or three ways. Senator Michael Bennett and I, and several senators of both parties have introduced what we call the FAST Act to make a number of changes to make it easier and simpler to apply for student aid. One of those “common sense” ideas in addition to simplifying the number of questions is to allow students to fill the form out in their junior year of high school. This form requires you to tell what your tax returns are before you file your tax returns, so it throws 20 million families into confusion. If you let people fill that out in their junior year of high school, then they can use tax forms from a prior year, and then they can have a full year to look at colleges and universities, knowing in advance how much in grants or loans they’re eligible for.

 

So that FAST Act has been introduced and examined carefully. It has bipartisan support. We’re planning to introduce legislation with as many of the recommendations of the Zeppos-Kirwan report on higher education on how to simplify regulations. That would be a bipartisan start.

 

Senator Burr, Senator Angus King, and a group of bipartisan senators have introduced legislation on simplifying the repayment form of student loans. There are 9 different ways of repaying your student loans. Actually, it’s a very generous system. You can pay it off over ten years or by paying no more than 10 percent of your disposable income, and if that doesn’t pay it off over twenty years, it’s forgiven. But the process is so complicated that most students don’t take advantage of it.

 

So there are three steps already that we’ve taken. And we have taken maybe the most important step of all, as we’ve worked together this year in the great bipartisan way on our committee to work on elementary and secondary education. There’s no reason we can’t continue with higher education.

 

I hope that Senator Murray and I can present our bill to the full committee in September. As we’ve done with No Child Left Behind, it will be a suggestion of how the committee can work. And shortly thereafter, I hope that we will report it to the floor. Senator McConnell is very pleased with the debate on the Elementary and Secondary Education Act – the fact that we’re working on something so important in a bipartisan way and want to get a result that’s good for the country. He told me last night that he’s very interested in our Higher Education Act and that he’ll work to find floor time for it. So I’m very optimistic about that and look forward to it.

 

Thank you very much.

 

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