practical stage as they did indeed in 1945. but that would have been too late and in fact would have frustrated the allies efforts to win the war by conventional means. c-span: did hitler tried to build a nuclear bomb? >> guest: interestingly hitler didn't seem particularly interesting in one of the bizarre developments. the german nuclear scientist made one major mathematical mistake from what i can understand which seems to have been that they completely misinterpreted or misunderstood me did with a critical mass would need to be to create the bomb and as far as they could work out, even if they had the right uranium and all the rest of it the bomb would need to be almost the size of the house and

therefore would not be deliverable in any form. the american, british and other scientists working on the manhattan project and in fact it actually worked out that this was not necessary. john creedon is right of course, they had made the bomb and they had the delivery systems, you know, hitler i am sure would not have been at all adverse to destroying britain in the form of revenge particularly after the strategic bombing campaign on germany which has so angered and exasperated him. at stages he wanted to use gas, but his generals persuaded him against it. one of the things i remember is the prevailing wind in europe was westerly and of course it would have been blown back onto the german troops if they use against allied troops. c-span: we only have a minute or so. looking at germany today and i know a lot of germans came here and helped us build our weapons in the united states at looking

at them what do you see in germany today in the context of what is going on in europe? >> guest: i think i am in a way worried for germany because i think the germans have realized their economy has been taken hostage by the countries of the south and i think that you know the implications are simply terrifying in that particular way. germany i don't think even with its astonishingly powerful economy is in a position to basically bail out the whole of the rest of europe and to have one a lot after another which actually buys essentially no time at all is not achieving anything. c-span: the last question. antony. we have anthony and the united states. is it the same thing? >> guest: well it's the same name but certainly minus without an h. their different theories on the difference between one with and without but usually, i have

always -- c-span: is it pronounced anthony? >> guest: oh, yes. pronounced anthony. c-span: the next book? >> guest: the next book is going to be the winter of 1944 including the battle of the bulge. i'm fascinated by the german state of mind and the up session, a belief is somehow they might win something with that last desperate gamble. c-span: the name of this book is of course "the second world war" and our our guest has been antoy beevor. thank you very much. >> guest: thank you. for a dvd copy of this program call 1-877-662-7726. for free transcripts or to give a sure comments about this program, visit us at q&a.org.

q&a programs are also available at c-span podcasts. general keith alexander head of the u.s. cybercommand spoke this week in an armed forces electronics conference. general alexander was also at the national security agency

director and chief of the central security service and said the u.s. has to create an environment for government and industry to share information on malicious cyberspace operations. from the tech that land forces conference at the baltimore convention center, this is 45 minutes. >> please welcome to the stage lieutenant general retired, vice president and -- international. ♪ >> ladies and gentlemen, we know it's a joint conference i'm going to give you a big hurrah for the marine corps and again as we take a look at where we are today, we started off with the senator, senator barbara mikulski from the great state of

maryland. she gave a very powerful welcome to those of you for were here you would second that. and others who missed it you missed an opportunity to hear somebody who really is very interested in the subject of this conference and also to take care of the men and women in uniform and those who support them, military and civilian. we had colonel chris ballard the command major blackwood, a tag team representing general her net and is today as general hernandez who is with the chief of staff of the army and will be returning to be the luncheon speaker on thursday. the panel you just heard under the tutelage of moderator ship if you will of admiral dave simpson, great job, great panel. alexander focusing not just on the department of defense and not just on vhs but let's bring commercial partners into this.

it is everybody's fight if he will you will and an opportunity to share the companies represented here today that just represents some of the over 220 companies that are exhibiting here and others who are other degrees of sponsorship. with that, what i want to do at this moment is to introduce our keynote afternoon speaker. general alexander's commander is pretty clear to me. we do go back a few years together and he said keep it short. let me put it this way. field artillery men, intelligence officer, served in combat, served in europe, has had staff assignments and oh by the way in his spare time for masters degrees having graduated from west point. with that please join me in a warm welcome for general keith alexander.

>> general, thanks for that short, sweet -- i just found out i was an artillery. i'm just kidding. bob, general smith. i can't believe steve they let you in here still. it is an honor and privilege to be here to talk about a topic that i think everybody in this room knows more about than i do. so i'm going to talk about quantum -- i think that will be a topic 10 years from now. in between we have got to get there so what are the things? when you think about that you talk about things like quantum computing and stuff like that. look at what is going on in our world today. you know when you look out, how many here have a kinect? how many have an iphone, and

ipad, mobile devices? look at this. i am a fairly young guy. i have 14 grandchildren. i'm trying to help populate the country ourselves and the average age of these kids seems to be two or three and everyone every one of them can operate a ds, and ipad, an iphone and they are on them all the time. they know how to skype at the age of two or three. look at all the great things they can do. now you saw that new car by google drive itself. you sit in the backseat, nobody to yell at. i wonder what my wife will do. [laughter] okay, she is not in the audience. that was close. don't regard that part. cut that part. you know i have got one of those hyundai cars and you have the smart cruise control on it. he put it on 72 eniko down the highway going 55.

in the old days you just hit them and now it stops and slows down to 55. it will stay right within the whole way. they can go all the way to zero and it will stop. it's amazing. look at all the great opportunities we have in this world. and you know one of the things as you look at that, tremendous vulnerabilities, tremendous vulnerabilities. setting this stuff up to operate way in this area and it's a tremendous opportunity for the military, for industry, for academia and for our kids. we have let the way in building all of this stuff. now as you look out, look at all the problems that we have got. if you look at -- they are some figures out there so i'm going to give you some figures and tell you where they come from. like the scores in the baseball

game last night, 2-fork, there is a close one, 3-4. i am just kidding. can you stay up with me here? too slow, right? so mcafee talks about the global impact of cyberspace operations, industry cleanup and all of that is about 1 trillion a year. botnets send about 89.5 killian e-mails, spam e-mails a day. that is about 294 e-mails that are sent globally. when you talk about the number of cyberattacks, they have risen from mobile systems, some 44% last year and dhs reports the number of attacks on our critical infrastructure has risen from nine that we documented in 2009. 198 and 2011.

when you talk to companies like google, verizon and at&t, they are tracking these mobile issues. mobile malware. if you look at the mobile iphone, on your calms devices you have two computers in there. one that helps you communicate and one that runs your apps. two sets of vulnerabilities. and the problem is, the software that connects those two is not normally secure. we worked to put out good secure form of android operating system, nsa did and now we are looking at well how do you develop a more secure platform for the hardware we really trust? what are the things we can and should be working on to secure this? in the meantime, the malware against google android grew more

than 500% since july of 2011 in one year. look at the attacks that are going on. why does that cause us concern? as you look at it, if you go back and look at all the things that are going on in our area the good things. the bad things the attacks are growing exponentially. all the adversary has to do is find a way in. finding those ways and are getting easier, not harder as we add more things. we have got to work together. to look at how we can close those gaps and that is one of the things i want to talk about today. the first thing i'm going to do is ask a question here. how many of you have heard of backtrack? okay, pretty good, pretty good. backtrack is a course or

something you can get on the network and say downloadable system, linick system or penetration system and many the folks i work with say kevin you guys all get hit -- get on backtrack. why do i want people to get on backtrack? let me tell you from my perspective. here is why i am learning it. i am convinced that we don't train our people to standards high enough to defend our systems. we don't. we say we are going to operate as a team but each component of our team is trained different. our signal community is trained to operate and defend. our intelligence exploitation team is trained and cleared in a different standard and normally this information cannot he

shared top-secret level information cannot be shared with folks who are at the secret level. then we have an attacks community and everybody is trained to different standards over here. so, if you look at what is going on in these networks we often have the advantage and the harder part is -- but what we are doing we are doing is we are training the community not on the attack capabilities or the exploit capabilities that are out there but we are training them on how to operate and put up a network without really integrating in all the benefits that the exploit and the attacks community have. if you think about it you can go on line and there is a book. it's called the basics of penetration, testing and hacking by pat inge births in. it's a good book. i don't give a discount on this.

i actually got a note from my users. this is from dakota state university who has written a book on how do you do penetration tactics and i thought this was really useful for me as a cybercommand and the director of nsa to look at how we set the standards or how we are going to train as one team, not three teams. because it doesn't make sense to me that a defender only defense and exploiters only exploit and attackers only attack because it's one network. we would never have come up with that paradigm. you don't have infantry guys to defend your infantry. you are the recon infantry and you are the attack infantry. think of how ludicrous that is but that is what we have in our networks today. and dod is different than any

other department in our government. we have the responsibility to provide offense of capabilities to defend this nation so we have to train our folks different. and when you look at what the book teaches you on it, one of the things that it talks about, the first of this know your adversaries. this is like the sun tzu stuff. no your enemy. somebody might say what you ought to know yourself too. know your enemy. what do the series networks look like? how do you do recognizance and they teach you things from google to all the things you can do to look up and find the ip addresses. i am actually practicing this myself. i set it up on my system and i had to put two virtual systems on line so i don't get in trouble. rare for me i know. the generals wondering, how did that happen?

so practice scanning. you practiced recognizance, scanning the second step. in the actual software that you can download free off the internet, it's about 830 some exploits. you can get when does, service pack two. you can penetrate that system. it took me less than 10 minutes to do that. i was able to then drop a key logger down on it, grab the passwords off of it, send those passwords to a john the ripper program, break the password. i was lucky. i was actually racing in sbs so it depends on the value. via one. i just wanted to put that out there. theresa lost and that is why

people hate to write on the aircraft with us because it is biased towards my network. and all of that in about 20 minutes. and then it shows you how to maintain persistence. if you look at and you think about what we were just talking about there, how are we going to train for the future and how do we start bringing things together? so that is one thing i would like you to think about is, how we train our force. now one of the things that we jointly have worked out with 24th air force, our cyber, mars cyber, what are the five key things that we have to do as cybercommand, component commands? what does the defense department and the intelligence community have to do? we came up with five key things and i want to talk about those for the next two hours.

or until somebody passes out and falls out of their chair. first, build a defensible architecture. second, improved situational awareness. how do you see in cyberspace? third, build and train ready cyberforce. four, transformed the way we organize and operate and fifth, prepare ourselves with the right authorities. i want to start out at the beginning, start with the defensible architecture. when we talk about a defensible architecture and i look it the dod architectures today. we make this really hard. we have 15,000 enclaves. think about that. 15,000 enclaves each individually managed. if you work with cisco, you wouldn't operate your network like that. think about it.

if you were with google, ibm, microsoft, amazon, you wouldn't have 15,000 independent enclaves, but we do. the consequence of that is each one of those is patched and run like a separate system. those that are responsible for defending them can't see down beyond the firewalls and so situational awareness has engaged help and practically speaking situational awareness is nonexistent. the consequence of that is the adversary only has to find one person to make a mistake out of those 15,000. the probability that somebody is going to make a mistake is one. you can bet on it. so we have made some, i think, some significant errors in putting together the networks the way we have and we need to

change that. so from my perspective, thin virtual cloud, where you can update and patch instantaneously reduces that attack surface in a significant way and it's something that we ought to all push for. now the other part of that takes less people, is cheaper to operate and is more efficient, and he can take those people and make them a cyberforce that our nation needs. we are working with all the services and i.t. efficiencies to make that happen. the second part is a trained and ready force. trained to a standard. from my perspective, this means that if your signal, your cryptanalytic, your cyber attack, your computer scientist, we ought to all be trained to the same standards. to operate on that as one team.

so that there aren't secrets amongst the different enclaves that everybody on that team knows what the other players are going to do. when you go to the national training center and you go to any joint exercise, the biggest part of that is learning what all the members of the team are going to do. what we don't know today is what the other components of the team are doing because we have a defend and operate team separate from an exploit team, separate from our attack. so we have got to get that one trained and ready force. situational awareness. how do you see cyberspace? right now when you think about it, if you ask everybody to draw a picture and then show me where the adversaries are coming and how are you going to stop that,

nobody has a real good way of drawing that picture. and there is a consequence if you can explain what is going to happen. how do you explain how you are going to defend its? we can't see it. we are trying to explain to our young folks how they are going to stop it. and they are looking at us like, what is he talking about? i get this from my daughter's all the time. that is a joke, i'm sorry. so how do you see what's going on in cyberspace? we have got to build that situational awareness. it has got to exist at network speed. it's got to take in billions of events and make them humanly digestible along with a kind of decision logic is something that we can see. and there has got to be a set of those activities that machines

can operate on better policy driven and then there is a series of things that we are going to use to maneuver our forces in cyberspace. and that picture is what has got to bring us all together. so that is the third part. transforming the way we organize and operate on command and control. from our perspective, think the first big step on that is setting up cybercommand and the subordinate commands. and now it's how we reach out to the geographic combatant commands and their components? what are the elements we are going to put out there and how do we do that? and the fifth area is authorities. what are the authorities we need to operate across that full spectrum and from dod's perspective let me tell you the

hardest authority. when we look at cyberspace, everybody acknowledges that it is dod's responsibility to defend the nation from an attack. okay, good. let's say they attack wall street. are you saying that, when you say defend the nation from attack, is that dod's network or the nation? there is always a pause while they consider that and say, that is a good question. not sure if the answer. what do you think? if it is dod we are good to go. this is like a missile coming in. if a missile is going to hit fort meade, we are okay, we can block that. if it's going to hit baltimore, too bad. should have had the boundary bigger. if it's going to hit fort bragg, we are good.

we have got them covered. and they could use some road work down there anyhow. okay i'm just kidding. so when you think about it, it's ludicrous to think that we wouldn't have the responsibility and the authority to defend the nation but now here comes the question. they attack wall street. now those of us in uniform say okay that is not a military thing. there goes all your money. we are in the military, we don't have any money. it's not our money. it's your money. that makes us all even again. so we wouldn't say let them take down wall street. we have got to have a way to defend against it. you can't see wall street. i mean, in cyberspace. we have no sensors. and so part of the legislation push on both sides, both parties

is how do you share information so that we can see in somebody can call up and say hey they are attacking wall street. would you please make it stop? and we would consider that and say, i am thinking, which part of wall street? yeah of course we would. in fact the key is, they probably wouldn't call me anyhow knowing how indecisive i am. they would call somebody like george or somebody and they would do it right away. and so how do you get a tip from industry or the internet service provider that an attack is going on at network speed that we can react to? that is one of the things we need for legislation. so the authority has to be there. and then the second part is, we want it to stop.

so this is like a missile that is coming in. this actually happened and you have got to have a great sense of humor on this. so a few years back, the chairman calls me up and says, we are going to have a discussion about cyberand so what is going to happen is and if cyber attack is going to go on. we want you to create a briefing to tell us what options you have on day one. and day to copy will present the briefing and on day two copley will take that to the white house for decision. and i thought, i'm just thinking out loud here now. i'm just thinking cyberspace, the speed applied, 3.0 times 20 meters per second wrapped in 40,075-coulomb underscore round the earth. that is roughly 133-point milliseconds. that is your decision space. inside there we want to wrap in than 34 million is -- milliseconds for generating the

briefing, 33 milliseconds for the first iteration to the white white house and another 33 seconds, you still have 34 to spare and stop the action. i suspect that they had not considered the speed at which this goes. and so i pointed that out. they don't have the sense of humor we do. [laughter] but they did get the message, and so we have to come up with a new paradigm here. think about missiles coming in from russia and how our missile defense and air defense system, norad, how all that works. ..

for critical infrastructure because all of our networks ride over commercial networks, and the power grid, you know, if all the lights go off and the networks go down, the defense department can't communicate, transportation command cannot not flow forces. we have a problem. we have to solve that problem and bring the team together. so i think the most important point when you look at these

five is the team that we talk about. so i started out with the cybercommand dod t what we do. but the reality is there's a government team that is bigger than the defense department. it includes the department of homeland security, fbi and others but the key players, homelanded security, fbi, nfa and cybercommand they are the key players. they have to get out there the with rules and responsibility. that's the government team. they can have about 10%. industry is the big player in cyberspace. so we have to have a construct for industry and government to work together. a way of sharing information especially on malicious software in a way that doesn't giveaway some of our most important secrets. and we have to have a way to

leverage industries capability on what they see to defend government networks. we have to bring in academia and that is important to bring in our alis. and cyberspace if you look at the eastern sea board, there are roughly 18 cables coming into the eastern sea board today. you can have a map that lays out roughly 12 comes in from the united nations, three from france, two from denmark, from spain. if you want defense indepth, the united nations, france, denmark and spain immediately come to mind. that's where the partnership is so important here. and, you know, when you bring that up to our partners and in the u.k. they say good, but that pipe goes both ways. our comments, i didn't realize

that. we thought it only helped us. it goes both ways. you get our stuff. yes, they want us to clean our side. they clean our side. there is great opportunities how we can work together as a team. these are some of the things that we have to put on the table. these are some of the things that we have to resolve. i think within the defense department, secretary panetta made some great strides pushing us forward. that has built cybercommand and our component. i think what the nation now needs, we have to get some legislation on some point. we have to figure out the roles and responsibility for how we're going to share that information between government and industry, and how we help industry hardin without being overly burdensome and bureaucratic on how they do

that. here's a fact, and, you know, it's interesting is nobody wants rules put down about what you have to do. let's face it, we're at [inaudible] in fact, when i look at it the best run networks george and services but that's been learned over many years, there's a lot we can share here between government industry to hardin. most of the i.t. companies know the problems in cyberspace. critical infrastructure is learning. we have to bring that up and fix that. or we're going to suffer a huge failure in cyberspace and wonder why it happened. it's coming from my perspective. it's only a matter of time. if you go back and look by the book by path there are significant vulnerabilities out

there. you don't have to a brain surgeon to figure how to exploit the vol necialghts or damage them. you can pull it in off the internet. any one of you within 12 hours can pull that out. don't do it because you want to do it exactly right. do do anything illegal. if you went there you would find tremendous vol nebilities in a lot of systems. it's huge. we have to get out in front of it. i'm going to wrap it up there. i'm supposed to ask you a few questions or we can reverse that. open it up for questions on your part. if not, i'm out of here. >> sir, we have a number of questionings for you.

[laughter] >> that was quick. >> the first question, speaking of trained and ready forces, what are the steps being done within cyber come regarding the organization and training of personnel. are you satisfied with progress to bridge the gaps in training or does more need to be done? >> i'm never satisfied. more needs to be done. e-mail or text -- no i'm not supposed to read that. here's the issue when you think about training. i want to train everybody the same standards. to everybody understanding the full spectrum of cyberspace. the linguist does not have to have the same training as one on the operating networking as well as one doing intelligence networking reconnaissance. they have to be trained to a

series of perspectives that in my opinion brings our team up up here. step one, i think the first thing that we have to do, i'll give the nay industry create for it. it hurts me to do this, but i think the way the navy is bringing under the fleet and pulling together is what the services need look at as a model. what that means for the armies, for example, looking at the communications signal community are crypt an analytic community and the science bringing them together as a team and calling it cyber. we have to figure how we networking that between the crypt team and oni as the navy does. there's something in there that we have to address. because if we don't, what we're going to have happen is the --

communication environment is going to drop drastically. it happened in the past. the of course, the first thing people do is say i don't need that. if you think about radioteletypes. i used to have a company, i look where the rat rig operators. they are standing over here to my right, you don't see any neither do i. they are gone. and what you see is as we transform our communications environment, the requirement for that signal community is going and we're going to look brakelight cyber team is supposed to be and we're not going to have either. what we're have to do is transform that force through that training and we're talking about to make a moflgdz one team. -- model of one team. next question? >> sir, in reference to your point regarding authorities, i read articles advocating cyber come becoming a unified combat and command. do you think this is an important step toward having the right authorities to adequately

defend our nation? if so, how does this decision get made? >> that's a long, long process. it's not necessarily an authorities issue as much as it is looking at how we're going to operate the cyberspace. it's interesting, in 2007, we drafted the -- i don't do any work, one of the folks drafted a paper at the request of the commander at the time about establishing a cybercommand, and what he was interested in what do we do? a unified, sub unified or separate service or functional command? and so we sent some folks off to study that and came up with a paper in april, may, june time frame in 2007 saying we needed

the unified command. the problem to get to a unified command it's too big of a jump by pulling them together making them a unified command. the most logical is set it up to a sub unified and grow it to a unified. that a process we'll work our way through. it'll take time. it's important to note as the nfa districter, i report to the secretary of defense. i actually execute the authorities on match of the secretary. in cybercommand, i work those portions to general bob with stratcom who goes to the secretary. so half of me is reporting this way, and half me is reporting this way and not everybody knows what everybody is doing except for one of us. i'm not saying who. i suspect it's the secretary. and so i think what we'll look

is how do we streamline that process and their working their way through that. i'm sure it'll take some more time. next question? >> an important in growing issue is the use of mobile devices and cyberthreat associated with them. this brings couple realm of communication. there are now lots of networking forms entering the marketplace and being used by the military members. does cyber come see a roll for itself in integrated with electronic warfare efforts such as the integrated electronic, fair system? >> yes. are you -- you want me to enlarge on that? i do think as we go forward, ew is -- it's kind of interesting go back to 2006, where you had digital and analog communications that were flowing through the networks.

eventually it tipped over to completely digital and now as you look at the networking with they're essentially digital. and if you look at the electronic warfare, it's going to go through the same digital environment some form of communications to my perspective, there's great opportunities for bringing those together down the road. i think it will naturally happen. not something you have to push on. you can see what's we're doing in cyber talking to a system whether you're a mobile device, a radar miscommunications. it has ranging, unintentional [inaudible] you have have bandwidth scan all the different things going through the hundreds of ew characteristics. it's a radio. so when you think about it, the practical reality is it makes

sense to do that, when you think about how we're going operate especially in the military domain, what you're talking about is collecting, jamming, and preventing signals no matter which area you're in. it's talking about getting into yours or stopping them from getting into yours. both of those are going to go in both domains. i think you'll see them collapse together. i think it will help the ew community as it goes on. that's my personal thoughts. go ahead. >> any last question, sir is a fun one. in the recent speaking engagement, you challenged hackers to join the team of cyber forces personnel. in takers so far? >> yes, we actually have. now they're working clearances. i didn't bring up that part. [laughter] actually, that was a flip answer. the reality is, when you look

out at the hacker community, you know, from my perspective, 90% of the black hat deaf com community are folks that are penetration testers, hackers, they understand vulnerabilities, they understand how to look at the system and find out how to get into it. what we need, self-defense department, our government, government and industry is understanding how to work together to solve those, block those, mitigate those vulnerabilities. we do need them to work with us on it. if you took in the deaf a brief you took all the people in the room we gave them a set of problems over a two-day period. i'm convinced they can solve every one of them. that's that much technical talent. how do we get them to solve some

of the infrastructure problem our nations faces. those are kinds of the thing my feedback to the community and all of you here is how do we do that? so as you leave here, one of the things i ask you to think about is not just that question, but more especially because we're looking at this from the defense department in the government how do we train our people in the area? how are we going to train them in the future? and why don't we train everybody up to the same standards? the practical reality is we should. it's the most important thing we can do, and when you look at those folks who are really trained on systems and every one of you here knows when you think about that guy is good, he is really good. he can really get in that system, that's what we want all our people to be able to do. because if they're that the good they'll be able to defend,

exploit, attack, and that's what our nation needs. and the other part, for the industry players, help us develop the way that government and industry share information in a way that doesn't get liability for you, lawsuits, et. cetera, and meets the condition that we talk about in real time within milliseconds how do we share information so cyber commands can support this nation? perhaps most importantly and my final thought, as you think about all that, you needily understand we're not talking about reading people's e-mails. we're talking about intrusion, protection, and defense systems that can see malware and tip somebody that there's malware. has nothing to do with the content of an e-mail or phone call. it has everything to do with

malware that we see transiting those networks in the ability to broadcast that for the defense of all of us. most people don't understand that. because they don't understands that, this becomes a very emotional issue about all the wrong things. and we have to stop that. and you can help. so with that, thanks for taking the time. thank you very. [applause] >> jim starks congressional headquarterly cybersecurity legislation falsed in the senate. what happened? >> two things happened. there was a dispute over the substance of the cybersecurity bill and the process how they would go about getting it through. substance complaints are primarily from g.o.p. members who think that the bill gets --

the federal government too involved in businesses that own these very important computer networks. the electric grid or the banking system. the democrats say they have water down a lot of provisions the republicans are concerned about, but they would never that close to finding the agreement in the last week on those kind of subjects. there was an issue of the actual amendment process, republicans had an awful lot of amendment as did a number of democrats. so which were not related to cyber cybersecurity. like abortion or obama's health care law. the thing they could never come to an agreement on what amendments to allow. it bailed on those two fronts. substance and process. >> there's been a lot of outside discussion and interest groups weighing in on the cybersecurity legislation. who are some of the groups and what are they looking for? >> well, the u.s. chamber of

commerce has been the biggest crit of the particular big. what they're looking for is none profit visions that are in there related to voluntary standards that would be created with the systems of industry that any business that complies with the receive some measure of against lawsuits in the event an attack. that's one of the things they don't like. there are other things they don't like, who would be in charge of all of this? they're concerned about the provisions whether any provisions that were related to information -- information sharing between businesses and government would provide them ample or sufficient liability protection. on the other side, the privacy groups were largely placated by changes made to the bill specifically related to those information sharing provisions where u.s. persons data would get into the hand of the government and how it would be used. there were a handful of democrats in particular were who still concerned about whether

there was sufficient privacy protection. so. grips on the other side that have been critical have been the aclu and those kinds of privacy groups. >> you and other news reports have mentioned the possibility of executive action. the white house possibly taking executive action. why would they do that and not weight for a legislative process to go to the logical end? >> one of the executive actions would be to encourage congress to get going. they have been lobbying hard for the bill. they have not been successful in winning over congress to actually do something on this, and as such they look at this as something that where they might have to take matters into their and hands. they have done it in a number on things with the particular congress. they have critiqued as being not particularly effective as getting legislation passed. they haven't said exactly what they might want to do to take matters into their own hands. they talked about executive

orders, but they haven't gone into specifics what they would actually do. obviously, there already some powers in the federal government to protect computer nerpgs and the department of defense has a pilot program that some of this bill ice provisions are modeled after. but you know what will actually will happen with the administration what they can do is not clear. they were looking for more power from congress. >> some people were surprised that senator reid decided to take it up in the august recess. why do supporters say that cybersecurity legislation is needed now? >> well, if you look at the testimonies from some of the nonpart partisan kind of -- who served served in both administration. if you look at past administration and national security officials and national security experts in general, they say it is the big threat that has not, addressed sufficiently. you're talking about at the worst case scenario, the kinds

of attacks that would really, really, disrupt the entire economy or lead to massive loss of life. whether the threat has emerged fully yet. whether people have the capability to do that is a. the dire nature of the scenario is bad. >> tim starks of congressional carely with the update on cybersecurity legislation. thanks for joining ugh. on washington journal tomorrow morning we'll talk with time "time" magazine about the titled the new, new deal the hidden story of change in the obama era. former comp controller will take your question about the national debt. we'll look at childbearing and fertility rates with stefanie from the cbc national center for healthy statistics and adam thomas from georgetown university. washington journal is live on c-span every day at 7 a.m.

eastern. friday the aloins for house reform looks at ability of dental insurance coverage in the u.s. you can see it live starting at 12:15 eastern on c-span. [applause] which is more important? well, wealth or honor? >> it is not [inaudible] force years ago the economy. it's kind of nation we are. it's whether we possess wit and determination including economic questions but certainly not limited to them. automatic things do not flow from wealth or poverty. i know, this firsthand and so do you. all things flow from doing what is right! [cheering and applause.

] looked a what happened. we have lowest home mortgages in 28 years. [applause] 10 million jobs over half of them high wage new jobs. 10 million workers getting the money they serve. >> c-span aired every minute much every major convention. we're in the countdown to the convention for this year. you correct can watch live on c-span, c-span radio and streamed online at c-span.org. starting monday, august 27th. >> a consumer financial protection bureau report says the folks on private student loans compete $8 billion. representing more than 850 distinct loans. witnesses before a senate banking subcommittee including jack remondi chief operating

officer of sallie mae. this is an hour and forty minutes. [inaudible conversations] subcommittee of financial protections comes to order. thanks to senator for the good work he does with the subcommittee and senator reid and senator akaka thank you for joining us. my staff particularly

appreciates the relationship in making the subcommittee hearings work. june 29th of this year the congress passed the student loan package essential legislation that not only ensured funding for our nation's infrastructure and highway system, but also including extension of the current student loan interest rate of 3.4% for staff staff ford loans. the pass of the legislation was important for 7 million undergraduate students nationwide. some we figure 382,000 of them loving in ohio. without the extension the student would have faced an additional $1,000 in student loans. i spent a lot of time in community colleges and four year and private constitutions in my state in cleveland, cincinnati, and dayton. talking about hearing the number of stories from students sharing with me their fears of

graduating in a bad economy without the legislation at high levels of student loan debt. other share the experience of family members and friends who are paying off the loans years after graduation from college. this isn't surprising earlier this year student loan debt knows as we have heard repetedly student loan debt outpays credit card debt. it's a problem that effects people of all generations not just the student but the family sometimes even the grand part parents. according to a report released by the federal reserve bank of new york it has risen 58% since 2005. borrows in the 40st are the most likely to default. parents and grand parents who may have cosigned must share the burden of the younger generation. it's clear more must be done to ensure future generations are not saddled with high level of student loan death while helping borrows pay off their student

loans. that's why today's hearing which will focus on the challenges facing borrows in the private student loan market is so important. a small portion relatively of the overall student loan market american consumers owe more than $150 billion in outstanding private student loan debt. the numbers have increased 14 percent of undergraduates in 2007 have taken out a private loan up from 5% in 2003 and 2004 about and continues to increase. it is troubling private student loans it is the riskiest way to pay for college. they come with a variable interest rate ranging from 5 to 18% with no limits on origination and other fees. potentially unlike federal student loans, private loans are less likely to come with affordable payment loans or e loan forgiveness or deferment options or cancellation rights. i'm proud to have fought for the

inclusion of the private student loan as part of the dodd-frank legislation. for the first time in history private student loan borrows have a place to file complaints have aned ad a -- advocate inside the government. i'm concerned that too many bore rows are not receiving the system they need from the borrow, the consumer protection bureau published a report in the private loan market on the consumers who use the loan. what was ease many borrows took out private loans without fully understanding the terms. now many of these borrows are saddled with thousand of dollars of debt with limited option. hopefully the hearing will allow us to further i hep with.

! trying to work with their servicers. i conclude with a story a girl from ohio and the struggles struggles with private loans. he graduated from college in 2009. he applied to join the base corp. he almost had to turn down the once in a lifetime opportunity because of the unwillingness of the lender to defer her loans. she came to one of my constituents to ask for help for the work of the staff. the lender finally agreed to defer the loans. she was able to go abroad. it brought her home sooner than expected her loan concerns remain. he strug les to make the payments that top $400. the balance has jumped to $22 ,000 with $30,000. without intervention the loans will continue to grow. we need to think about her and

people like her as we make the decision. i'm hopeful the hearings will help move us closer. i'm glad we're here to talk about private student loan market. to me it's more important we look at the entire picture. we have been reading in the news lately student borrows have nearly $1 trillion in outstanding student loan debt. but we need to remember as chairman just mentioned 7% of the loans are private student loans. other 93% are loans that are back by the taxpayer. i think all of us know the real problem we need to consider the rising cost of college tuition and the amount of federal student loans students are borrows. i miewght add on one hand the federal government wants to help solve the problem and they

continue to mandate medicaid. for every percentage we spend on medicaid we spend less on legislation. education. that's the driver why students are spending so much. the federal government took over the loan program. i'm convinced it's not benefiting students. there are income forgiveness programs on the federal loan side borrows don't have to pay back the full freight. sticking the taxpayer with the unpaid burden. i think it's important for us to understand the whole picture not focus on a tiny fraction of the marketplace. i'm pleased that sallie mae is here to talk about the progress they have made to encourage to borrow more responsibly. i look toward to the testimony from witnesses. >> thank you. senator acabbing akaka. opening statement? >> thank you very much, mr.

chairman. good afternoon. panel lists thank you for being here today, all of you i'm pleased that congress is continuing to monitor leading practices regarding student loans. a quality education must include an understanding of economics and personal finance so that all americans will be prepared to make a sounded financial decision. i look farred to hearing an update from the consumer protection bureau on the work that we have done to improve consumer financial marketplace thank you for your testimony today. i hope your insight will help the committee work to ensuring students have safe options for

obtaining financial support for their college educations. thank you very much, mr. chairman. >> thank you senator akaka. one point i wanted to make that the reason the hearing perhaps senator narrows than you might want. we don't have the jurisdiction over federal loans the way we do private. i'm certainly willing to work with the whole issue of student loan debt. whenever it comes from. this is serious. i'd like to introduce the first witness. rohit chopra student loan ombudsman consumer financial protection bureau. immediately prior to the opening of the agency he worked at department of treasury on the implementation today. he hold a ba from harvard and university of pennsylvania. welcome. >> thank you. chairman, ranking members within thank you for holding the

hearing today. to prosper in the ghoabl economy our work force needed skills to innovate a highly gettive environment. the rapid growth of student debt raises concerns that warrant attention. student loan debt has crossed the $1 trillion mark. now college is still a greet investment. graduates have lower unemployment rates and earn higher wages. there is another side to the story. overt past decade, real wages for college graduates have declined. the growing college wage premium is largely explained by faster falling wages of nondegree holders. the cost of college has not been falling rising faster than inflation, wage growth, and health care cost. growing cost declining wages and job market uncertainty have lead to more diselt and risk. the story of distressed borrows reveal the impact of the financial crisis in the significance work that lies ahead. prior to the crisis private

student lending rapidly increased like the mortgage industry, lacks lending practices practices are much less common today. loans are cosigned and have significant disclosure requirements. it like the mortgage market there are stull opportunities to make improvements. private loans lack repayment flexibility. in 2007 congress and president bush enacted the college cost reduction and access loans which allowed borrows to remain current on the low in the income based repayment pam. it doesn't impact private student loans. private borrows experience challenges when attempting to restructure their loans. due to capital market conditions and unusual status in the bankruptcy code. even the most responsible borrows have sought to better manage their debt burden. we see them stuck with high monthly payments because they can't easily refinance. the in march the cfpb launched a

student loan complaint system. many borrows have sought and received help and lenders have learned more about the borrows experience. we work closely with the department of education on a know before you owe financial aid shopping sheet released this morning we developed online tools used by tens of thousands of consumers how to navigate their student loan repayment options, avoid default, and honor their commitment. the cfpb opens this continue our work with the other agencies that may play a critical role. while student debt might not suppose risk like mortgage, it would be imprudent to dismiss it can act as a drag on economic recovery. consider borrows facing high rates and high payments who are dutifully meeting these obligations. without a refinance option, they struggle to reduce the payments

even though they have build a solid credit history. what might be the consequences? take the mouses market. first time home buyers are the important source of demand and data reveals that adults in home buying age cohorts are living at home with their parents and seeing reduction in the home ownership rates. in addition to home ownership will da that reveals low participation in contribution rates to retirement plans which can challenge their future retirement security. congress and federal agencies have taken steps to increase liquid i did in the function of the market race. the current conditions may have a long-term impact on the economic vitality of borrows today. many are unable to secure adequate credit accommodation to manage their debt burden. policy makers have paid significant attention to conditions in the mortgage

market. but give the potential impact of student debt on the broader economy, the situation demonstrates the need for attention. they will continue the work to make the loan marketplace work better for borrows, schools, and honest lenders. we look forward to working with congress and policy makers to ensure that economic mobility is still within reach for those who borrowed to invest in an education. i look forward to your question. >> thank you, rohit chopra. a couple in your student loan report. you note the average interest rate. the private student loans of 7.8 percent. we know with the federal reserve monetary policy action that interest rates in the country are pretty much at record lows. talk to me about the differential. why so much higher for student loans? what does it mean in terms of students not being able to take advantage of those low rates.

what, if any, can we do about it? >> one unique once someone takes on the credit profile can significantly change over time. while an 18-year-old might be considered higher risk, by the time they're a graduate and gainfully employed and theying for a few years, they might be a lower credit risk. and what we see is not many refinancing opportunities to best allocate price to risk. and when markets are not appropriately allocating prices and risk we do not see a well functioning market. so borrows may be paying higher rates than what justifies their risk profile. >> why are there not refinancing opportunity miss. >> it's not clear exactly, but historically the market developed as a consolidation

market, so essentially multiple loans you can consolidate into a single payment. it had to do with the way the federal family educational program was structured. but partially due to capital markets conditions, but we just simply do not see many lenders actively competing to find borrows who may be able to refinance. >> is there a lack of knowledge on the borrows' part to not think about the issues of refinance. >> yes, i think that's right. >> if they were, answer fa that's. if they were more knowledgeable -- are you suggesting there would not be the opportunities to refinance because there's not enough opportunities in the market? >> yes. it you're right, i think many borrows simply don't know that refinancing is an option. we do hear that many of them are dutifully paying on time for months and years and unable to

manage their debt better. currently there is not a large of amount of marketing or offering of refinance. it's generally marketed to people so they can reduce the number of loans they have to a single payment. not necessarily to compete down the price. a more competitive market amongst lenders would serve to benefit the entire marketplace. >> okay. let me shift for a moment. you know you in your testimony you know the federal agencies have interviewed in the private student loan market citing unusual circumstance. the federal board of governor exercises the authority to establish the term asset back security loan facilities which facility the issue of wide range of abs including those backed by private student loans. is there a role for federal student loan in providing

relief? >> i think all federal regulatory agencies particularly ones that monitory the capital markets have role to play to make sure that the market is liquid and well functions. i wouldn't necessarily characterize it in relief. but increasing and ticks so pricing is more fair and connected to risk. we have seen in the mortgage space the fhfa has sought to create the conditions for responsible mortgage borrows to refinance. as i said before, more responsible student loan borrows see their credit profile dramatically improve over time. but the market simply may not be liquid enough to appropriately price their risk and allow them to have lower payments. we look forward to providing any expertise to the federal reserve board of governors and others as they monitory conditions. >> thank you, rohit chopra. >> thank you.

thank you for being here. you know well the relationship between the investment and higher education at the state level and how that's been diminishing. but in many cases in most cases, actually, because of the tremendous burden of investing in medicaid, which, you know, we made happen in the big way at the federal level. that has a direct relationship on what tuition levels are for students. that's one of the main drivers of why so much student debt, is it not? >> it's certainly true that the constrains state budget which many of which were badly batteredded started? starting in 2008 as well as other policy interventions and there has been cuts on a real basis to state higher education. so we have to not just address the underlying cost of higher education, but also to make sure that financing market the are working properly. >> it's fascinating here. we are we are dealing with an

issue over the last several years we have help create and exacerbate and exacerbate over time. i want to point that out. indian that your agency a new agency is advocating that on the private side that students just have the ability to danger their loans through bankruptcy is that croarkt? >> no passenger's side actually -- actually a little bit different that that. presentedded to congress on friday analyzed about a million $5 million records of data starting from 2001 and going forward. we expect that the 2005 changes to the bankruptcy code would have lead to lower prices and greater access but immediately following the legislative change, we did not see a price decrees. we actually saw price increase. larger capital markets conditions we think largely explain volume and access to credit. so the director of the bureau about secretary of education ask

congress to take a second look given that borrows for private student loans may not be able to restructure their amortization schedule like in federal loans. >> so you have asked congress to take one of the first actions of the consumer bureau is to ask congress to look at allowing students of private loans, not the public loans only the private loans to file bankruptcy as a way of getting out from under the terms and condition of those private loan, is that correct? >> so -- yes, have asked congress to take a second look. we are happy to provide more expertize. >> i understand what you're saying. i think we have read the report. i find it fascinating one of the first things that you would do as a consumer protection agency is get us to consider letting students, again, only on the 7 percent private loans not the 23eu9 percent public loans be able to file bankruptcy which is

one of the most damaging things that a consumer can possibly do. i just would like for people to take note of that. i think you understand on the private side, they do not have the flex able you do on the public side. on the private side, through pry determine lenders will not allow them to do many of the things on the public side. >> yes. in fact we have been working closely with lenders to identify areas where certain guidance can be win-win situations for both borrows and lenders. >> yeah. >> lenders said they feel constrained by the guidance. we think there's opportunities for capital adequate sei measures to be met while still allowing the market place to function. >> i think you can see now why so many of us thought it was a terrible idea to have the consumer agency separate the lentders. we have the problem.

basically you're giving guidance that is very contrary to what the safety and soundness regulators are saying on the other. it's the exact conflict. it is fascinating to me in one of the first things that come out of consumer agency web see the conflict that on the private side, the regulators will not allow the private lenders to have at flexibility, give them the flexibility to work through the issues, and therefore they have contrary guidance. i just i think it's pretty fascinating we're having this hearing. i think it's fascinating that you're noted a vote caption that on the public side students be able to file bankruptcy, and i just i think this is speaks to possibly some of the political nature of the consumer agency that so many of us were concerned about in the beginning. >> on the federal loan side, there actually is a chapter 13-like option for borrows which

avoids the damaging partings of going to court and hurting your credit history. a borrows who is unable to make the payments is able to elect the income-based repayment option. caps their payment as a percentage of the discretionary income. that is a great, low-cost model for borrows we think is a way to whether the unique circumstances of a student loan product given labor market uncertainty. i would say that our relationship with the regulators is actually been extremely productive. we have actually been able to find opportunities where we're identifying ways to promote innovation and ways that the whole financial system can actually prosper. our work on private student loans with other regulators is going to be seen by lenders as one that is win-win for the whole marketplace. >> i hope that's the case. i appreciate very much you being here.

i look forward to hearing sallie mae's testimony in a moment. >> senator reid? >> thank thank you very much. first thing i want to do is commend you for connecting the dots. let me say for not just this huge debt overhang, but the effect it will have on buying a house for the first time being an entrepreneur and starting a business. reserving money for retirement inspect to me, is one of the most daunting challenges we have to face. we have a whole generation that can't get started until their maybe in their mid 30s and doing things that can or would assume would be 0 done in the mid 20s. that's a important point. second, your responsibility is give the nature of the organization is solely with respect to the private sector lenders now the public domain, is that clear? >> '. yeah our authority as the

rulemaking authority relates largely to private student loans on the origination side. >> right. it's notice to say that a lot of the insights so you drawn could be applied to the public sector? >> yeah. senator said it's important for us to look at this holistically. in the recently released report, the treasury's office of financial research briefly discussed that student debt burdens could significantly depress demand for mortgage credit and dampen consumption both may be political drivers for recover i are. look at it ho listically one of the first a, is working with the department of education to actually improve the financial aid information and student loan information people find. we are allowing schoolings on a voluntary basis to present a simple one-page financial age

shopping sheet which give the them their loan options as well as what they're estimated payment might be after graduation and already so many schools across the country have embraced this. we're happy to enter this for the record. >> one of the major issues, of course, is the escalading cost of the college education. even though you focus on the private lending sector you looked at public and private institutions. there is acceleration to private university to? >> yes, there has been cost increases in increase burdens for debt across institutional sectors, and they're not responsible for public programs like medicaid or anything else what is driving the private institutions to increase their tuition so dramatically? >> i'm the wrong person to answer about specific economics of college cost. we're a bit more focused on the

finances. generally speaking, we have seen over a period of many, many years escalating cost of college across sectors in access of inflation. in particularly, we have seen debt burdens be very high in the for-profit college sector utilizationization of private loans were particularly high. >> that goes to a quick technical question. i asked this because i don't know the answer. are there prepayment penalties included in the language of some of these private loans? >> the truth in lending actually bans prepayment penalty for private student loans. one would anticipate would help facility at a time a rather robust refinancing market borrows would not penalized for trading one note for a less expensive note. it has not beared true. >> thank you. that's a very helpful classification. the other issue among several

that i have, let me pose this one. is there a correlation between school and the number of private loans. one of the things that you have suggested you have now format everyone can check it out, but this lack of competition, this sort are essentially some schools steering students to these private loans and is there any kind of relationship between the school and the private lender? >> so in 2007, at the state level, state attorney general identified certain unsavory relationships between schools and private lenders, but the 2008 higher education opportunity act has largely changed that. we see a much better relationship between schools and lenders. in fact, we believe that involving schools more in the process by requiring servicer of

student loans of private student lones helps schools better counsel their students on their full range of options. the only marketplace that remains where there is a arrangement between private lenders and schools is that presents some risk that's worthy of attention is certain lend ago -- arrangements between the propry tear school sector that are helping with driven the come plins. >> if i may, just a clarification again, you point out that there is a quasi bankruptcy remedy under public lending which is to go in and make an income-based repayment. that does not exist on the private lending side, and the issue here is not, again, i'm asking the question so correct

me. the issue is not that someone can't file bankruptcy. they can't danger the loan in bankruptcy. is that the technical issue? >> correct. the private loans loans are treated differently compared to credit card debt and others. >> because it's federal statutes. >> correct. the 2005 changes. private lenders have increasingly told us they are looking for ways to offer more repayment flexibility. we think it's a great opportunity, and again, we hope engage with lenders and den rnl regulators to -- lenders themselves. >> thank you very much. thank you, mr. chairman. >> senator akaka. >> thank you very much, mr. chairman. mr. chopra, the report you presented today suggests that

the students have taken out too much debt through student loans because of predatory lending practices. you have also noted that students should consider takes out additional student loans in order to avoid excessive credit card debt. can you please elaborate on the appropriate role of private student loans? >> sure. the total debt market has reached over a trillion dollars. it's important to note that education induced indebtness is certainly far higher. many families utilize home equity lines of credit, credit cards and other products to ensure they can pay for the cost of college. and generally speaking, a student loan is going to be a

safer bet than let's say a credit card which is going to have an immediate repayment requirement which might be challenging for a full-time student. there's certainly a role for private credit in many market. don't get us wrong there. but we do want people to make more optimal borrows decisions over all. we think some of the steps to make the whole market more transparent with the shopping sheet is a good first step. >> thank you for that. i understand that cfpb often hears from students who are strugglings to repay the student loan complaint system. . .

the report that we submitted the director recommended that the role of the financial aid office in lending decisions be substantially enhanced and 51 having private student loans be certified, financial aid offices can be provided the opportunity to give the full range of financing options and many times financial aid officers are able to use professional judgment to adjust loan amounts so that our words are able to meet their

tuition obligations while still borrowing responsibly. and you are right that there is still ways to make sure that the private loan market can meet the demand at a fair price. >> i must commend you on your remarks that cfpb had then working together with the department of education. and i wish that more departments and agencies would be working together on common goals as well. so, thank you so much for what you are doing mr. chairman. >> thank you mr. chairman. senator hagan. >> thank you mr. sunday -- chairman and thank you mr. chopra. on these report that cfpb recently released on the issue of institutional bones may direct you by the for-profit

schools to the students, it is advertised as a way for students to fill the gap in their tuition at the david exhausted federal loans or pell grant money and then i think part of what i heard you say in answer to an earlier question had to do with the rule also which we might ask you to elaborate on. many of these institutional loans offered by some of the largest for-profit institutions have interest rates as high as 18% and in addition to serving on this committee i serve on the education committee and the department of ed and they help committee have looked at a number of these different for-profit schools and one in particular has an interest rate student loan that is 15% but they also have a default rate of 18%. another school has interest rates, and these were in 2009 in 2010, these interest-rate numbers, at 18% with a default rate of 55%.

so it looks like the for-profits are offering the student loans with high interest rates and yet a low expected repayment rates, which i think speaks directly in some cases to the aggressive recruiting nature of some of the schools, that they are really not that concerned because the default rate is so high as long as it means that student is in fact enrolled and federal dollars have been collected. does the cfpb have plans to study these types of loans further and are there any recommendations that you can offer that will address the institutional loans made by the for-profit colleges and universities? >> in recent years, there has been financial reforms that have indicated a couple of principles that might be worthwhile here to mention. one is the concept of skin in the game so the dodd-frank act actually requires that lenders

retain some interest even if they were to tell them to securitize pools of assets. another is considering the ability to repay. in the mortgage market lenders will be required to consider whether a mortgage borrower can actually repay. >> that's a good idea. >> in general when an entity is able to come out ahead, even when they expect upfront that the customer will likely fail, that may be a sign that the competitive market forces aren't really working and that incentives are distorted. i think that there'll has significant expertise in the area of institutional lending and the role that 9010 might play so we will continue to monitor that market closely and as you have mentioned before, we have also looked in this set your at the recruitment of veterans and servicemembers as

it relates to compliance with 9010 and then my colleague has probably petraeus has been quite outspoken about this and we continue to work with other agencies to monitor this. >> speaking of the 9010 ruled the g.i. bill does not include the 90% so in most of those cases, the federal part, the federal bone position assistance is much higher than the 90%. >> what you are saying is correct. we are currently experiencing a rapid increase in the number of veterans returning from foreign conflicts who are enrolling in higher education, so i think it's in the interest of all of us to ensure that they can continue to be an economic engine as they were after world war ii but also that they did

not unnecessarily take on high-cost credit when they have in enough is that they have earned. >> and especially when you look at the high expected default rate needs to be taken into consideration. >> yes, all aspects of how the marketplace works or something that we closely monitor to ensure that the market is fully functioning and that there is compliance with consumers. >> one of the recommendations made in a recent report states that congress should require the institutions of higher ed work proactively to protect and inform the private student loan borrowers. would it be like no before you all or should it be up to the school to protect and inform the borrowers or should the lenders take some responsibility in ensuring that the borrowers have a clear concise and accurate information regarding their student loans? >> so everyone has a responsibility and borrower certainly need to take the

responsibility for the commitments they take on. but the point about the financial aid office is an important one. currently, most lenders are requiring loans to be certified by the school. to simply verify that the student is actually enrolled, that they have not already over borrowed. very common sense underwriting principles, which was certainly not well observed in the years prior to the financial crisis, where capital markets conditions created the incentives for originators to make substantial fees without really having the borrower having the ability to repay. >> thank you. >> thank you mr. chairman. mr. chopra, how are you? >> very good. >> very well. let me ask you, i heard your response to a question with reference to borrowers who field

trapped in their present interest rate and are not able to refinance at a lower rate and i think your answer to the question was there was not enough competition. is that correct? >> if might not simply be that. there might also be issues in the service infrastructure where borrowers may not know that they are able to make certain changes to their loans. so i think it is market conditions as well as financial education and the servicing. >> do we have -- does the bureau have any ideas or suggestions as to either how we create greater market competition or greater inflows of information for individuals so that they can exercise their rights? >> sure, think we have a strong role to play in educating borrowers about their ability to -- what their options are when they

may not be able tonight their payments and we have already released a number of web tools and other partnerships so that students know how to manage their debt better, but one thing we do here is that even if they want to refinance, there simply is not that much opportunity for them. it's something that many mortgage borrowers think about when they want to refinance, but the current market conditions often constrained them and the processes that do so can be paralytic. >> as someone who has been a strong advocate in a different context in being able to allow mortgage borrowers to refinance at historically lower levels, it seems to me that we should find the wherewithal to be able to achieve this, and continued to have people be responsible borrowers to be able to meet some of their debt load at the end of the day.

we would like to maybe pursue that a little bit more with you as well as how do we stimulate creating competition so in fact the marketplace itself will find itself more robustly engaged when rates fall. how about the part of your report that noted that about 40% of private student loan borrowers had not exhausted their federal student loans and in that respect obviously before you go and rov from the private sector wouldn't it be more desirable to maximize that which is available to you on your federal student loans limits because those are at lower rates than generally in the private marketplace? >> infected to count people who even apply for federal loans that number goes north 50% i believe so yes one of the key issues is that we put forth in the report is involving the financial aid office more in the process and giving much clearer

information. there has been an abundance of fine print in quite small font that has invaded so many of our credit card agreements, mortgage agreements and all other things. there is a lot of work that we try and do to simplify disclosures. we find that this actually is lower costs for smaller financial institutions to provide and much more clear to borrowers because you should not need an attorney and a magnifying glass to understand your obligations at age 18. >> so the question is, is there a way to enhance -- i mean you mention some of the web sites. are there other fraternities in which we can get you no financial aid departments to be more robustly engaged in saying here is the ability if you qualify before you consider taking out a private sector loan that will be more costly.

you should consider the federal loan. >> in fact most lenders will strongly agree that federal loans should be looked at first and many of them communicate that to their borrowers of getting financial aid officers the opportunity to actually counsel the student before the student loan would help. we actually heard reports from lenders, schools and groups about that. >> finally i listen to my distinguished friend and colleague, senator corker, expressed his concerns about the interface between the bureau and regulators and i wonder in the process of doing this work to just find prudential regulators were doing the type of consumer information and advocacy that the bureau has been doing in this particular regard? >> we have a very explicit mission on financial education and also to assist borrowers

with the completion of financial aid applications. their primary role of courses to ensure the capital adequacy of the financial system and they do work with us on financial education work but we have placed a major emphasis on that because we believe they can ensure a more robust marketplace across all consumer financial products. >> thank you. >> thank you senator menendez. senator corker one more question and then we will move to the next panel. >> first of all you are obviously a very intelligent person and it sounds like you have done a lot of good work and i want to thank you for that. i meet with students who are 27, 28 years old, people who used to be students and have huge amounts of debt if you look at the amount of money they're making and you just wonder when they are ever going to have a real life because they are working two or three jobs to pay these loans off. i frustration really is that the hypocrisy around all of this.

on one hand, we hear especially during the election cycle, talk about student lending and student loans and i assure you there are students that have huge amounts of loans that never may be repaid or may take 20 years and we advocate policies that drive up tuition rates. on the privacy side that senator menendez was referring to they are seeking flexibility but the prudential regulators are hesitant to give them the flexibility's that you have on the public side so you know there is the hypocrisy that goes with his whole testimony today. not you, but the difference between the consumer agency in the prudential. then we have the law that says that student rates are going to be up 3.4%, just pull it out of the air. so those loans are all comers, regardless of any kind of credit

status. no collateral, no payments made for four years. is there any way you as an intelligent person could possibly imagine that the federal government is going to come out on loans like that and are we not again to demonstrate tremendous hypocrisy and that what we are really doing is piling up debt down the road to the same students to have to pay off? is there anyway that when an agency is taking all comers, there is no collateral being put up, no underwriting taking place, no payments being made the entire time they are in college. is there any way think federal government could possibly come out to the good on 3.4% loans? >> the rates set by congress are a bit outside our jurisdiction but i will say that the market for the global competitive market is very very fierce and

across all indicators, having a highly-skilled workforce has very real economic growth potential and investing in a way that is strategic such that people who may not have the means can access education, there is a significant upside to that. it is absolutely hard to underwrite that type of loan and in many cases, you see that, how can you anticipate whether someone is going to be able to repay five years in advance when perhaps if they entered in 2005 the entire global capital markets collapse. so it's a difficult problem but insuring that the workforce is built with skills is something that needs to be a priority as well. so we have to balance all of these and we look forward to working with the. >> i think your answer is no financially but there are other benefits. >> no, it's in i don't know.

>> thank you. >> thank you mr. chopra very much. i will call the second panel forward. i think senator corker there is plenty of hypocrisy to go around when i see what state governments have done when we are in college and schools like ohio state were considered state universities and now we consider them state-supported or even state assisted and we can blame it on medicaid or we can talk about a attack structure or a whole bunch of other issues but that can come later. i will introduce the three members the panel if they are beginning to be seated. deanne loonin staff attorney with the national consumer law student and director vince elc borrowers system project where she provides direct representation to low-income student loan borrowers. in her role ms. loonin says attorneys represent low income consumers and teaches consumer law to legal services private consumer attorneys and other advocates. ms. loonin received her b.a.

from harvard radcliffe college and her j.d. j.d. from the university of california at her glee. jen mishory is a founding member and deputy director of a nonprofit nonpartisan organization that represents the interests of 18 to 34-year-olds is deputy director. she directs the our east that for the organization. she serves as a consumer advocacy represented at the department of education's 2012 night issued rulemaking on student loans. ms. mishory holds a b.a. from -- and a j.d. from georgetown. jack remondi is chief operating officer of sallie mae and is responsible for the company's loan servicing information technology credit and underwriting and marketing and communications divisions. prior to his current position he served as vice chair and chief financial officer where he create -- helped sally make -- he received his bachelor of arts degree at connecticut college.

thank you all three for joining us and for your public service. 's been thank you senator and thanks to all of you for inviting me to testify today. again my name is deanne loonin and i'm here on behalf of the length -- income clients we we k and represent. it is important from the outset and we talk about student who we work with -- they aren't just young people going to traditional colleges. is a very important population but actually the state of higher education is much more diverse and we have clients who are what are really called nontraditional students meaning that they are older when they go back to school. in many cases they have their own dependence and they actually are independent themselves and don't have parents or families to fall back on. so we actually have clients who are still suffering under the burden of student loan debt throughout their lives have been taken out the loans later on in

lives or in some cases parents cosigning for their children. must avert lions have federal student loans. but what we saw happen up to the credit crisis was that we were seeing a lot more for low income borrowers with private student loans. the market really that was sort of taking place prior to the credit crash essentially was the kind of sub-prime predatory market that unfortunately we saw in other another credit markets as well. we wrote a report in 2008 where we went through some of the parallels to the mortgage market and i won't repeat all of those here that the main point was that a lot of the loans that were made at that time were unfortunately really destined to fail and they did fail. a lot of people who took out loans, they were never going to be a lot to pay back. i saw bonds at that time for my clients with interest rates

upwards of 20%, 25%. these were variable rate loans with very high original -- original rates as well. some the same rationales for making those loans in the mortgage market we heard that these would have benefits for low income borrowers. and actually instead what we have was it was taking opportunity away from a lot of those are worse. fortunately the market has changed. we don't see those third-party sub-prime loans from most of our clients anymore. there has been a correction because the failure really of the market and that is why it's such an important time right now for policymakers. fair to broad themes that i want to emphasize and there is more detail in my testimony about why this is such a critical time. the first is that the opportunity is now to shape the market that is going to emerge.

there are more responsible lending practices and we are very heartened to see that but i want to make sure that the same things that happen happened before don't happen again. even if that means it's a small private loan market. that is better for a lot of our clients if it means that there aren't going to be stuck with these predatory loans were these unaffordable loans. the second theme that we have spent a lot of detail on in our testimony is that we need to figure out ways to provide the relief for those that were harmed by the predatory practices of the past. the lenders as we will hear more from sallie mae have moved on for the most part but the borrowers haven't been able to. their futures are shattered in a lot of cases both with federal and private lands but the difference we find on the private loan side is that there is so little flexibility on the part of the lenders. we talked with the private

lenders all the time and we try to negotiate modifications, income-based repayment, things like that and generally the relief that is available is very short-term relief. unfortunately its short-term relief that these are long-term structural problems. we understand that there are some barriers. senator corker mentioned for example that there are problems with the prudential regulator's. that is what we hear. we don't know if that is really the problem that is preventing the lenders from offering broader relief and if it is, we want to find out ways to be more flexible about those. in some ways just like it's happening in the mortgage market and also heating some of the lessons we have learned from the modification programs in the mortgage market that these have to be flexible, affordable modifications and also some principle reduction because that is going to make it less likely that the borrowers world reader

fault. we also would like to look at the possibility of canceling in extreme situations such as death and disability. the ideas to have a more standardized transparent policy so borrowers can know what to expect in extreme situations. again i have more detail in my testimony including policy prescriptions and i'm happy to take questions at the end about this. >> thank you very much miss loonin. ms. mishory thank you for joining us. >> chairman brown, ranking member corker and other members of the subcommittee thank you for having me here. my name is jennifer mishory and i am the deputy director. young invisibles is a nonprofit organization that seeks to represent the interest of 18 to 34-year-olds making sure that her perspective is heard in our decisions about a collective future of being made. this spring we released a report detailing the experiences of high debt or worse with private

student loans. the report analyzes subset of an on line survey of about 13,000 borrowers. additionally young individuals completed a 40 city national -- our interaction with young people make it clear. borrowers are struggling, students are confused and as a private loan market rate emerges students need more guidance and protection. as as been detailed already away to the pipeline market has shifted significantly in the past 10 years. more predatory lending led to significant increases in in the prerecession private market. after the credit market dried up the lending standards tightened in the market merged and consolidated. recently there've been signs the private student loan market may be on the rise. for example sallie mae is expecting growth in new loans for the second consecutive year. private lenders have begun offering new fixed-rate loan options. as the student loan market expands and evolves again stakeholders must assist borrowers and set up a the next generation of cartilage grow

or -- goers for the next future. borrowers have encountered an array of typical lease amidst the parcplace pergola students have responsibly to responsibly to do their homework the sheer complexity of student loan terms and the fact that many young students are making their first major financial decision necessitates the key institutions involved take aggressive steps to ensure that students are informed. unfortunately this is not happening enough right now. for example about two-thirds a private loan borrowers in our survey said they did not understand the major differences between private and federal loan options. this is problematic given that federal loans often have better rates, better repayment terms based on income, give temporary relief when the borrower faces unemployment, have more standard iced payment requirement. current love requires disclosures providing provide better providing federal options and some private terms that these are often too little and too late. at the same time 80% of our worse in the survey turned to their schools as trusted sources

of information on these loans. at those options are the right answers and they are not involved enough. roundtable participants at the high school level also voiced similar problems. career and college counseling in high schools are understaffed and often undertrained on these issues. we also hear frequently about significant problems after loans into repayment as borrowers attempt to -- repayment and loan terms. for example the sender in cleveland ohio has about $90,000 in private loans. when she was struggling she said sallie mae did not process a request to make payments and she was denied a deferment when her husband lost his job. repayment terms are nearly impossible for an experienced borrowers to anticipate on the front end or tooth bite in while in repayment. one another borrower richer went to the peace corps after graduation she said he was able to do for her federal loan but

not $46,000 in private loans. her mother agreed to help make payments while she was gone. a few months before bridges returned in 2000 or grandfather passed away. the turn of events that ensued led to one missed payment in my more. after that second missed payment she was told that the loan was charged off in the full amount came do. she said useful the only way to move it back into regular repayment would be to pay 60% of the balance upfront. that's over $27,000. currently she said she pays $300 in monthly payments and that nothing has been put in writing. she did not get villages unable to check or balance on line and she continues to receive calls from that thing. after three years of these monthly payments she told us that all five separate loans still show up as delinquent every single month so her sober credit score has predictably plummeted. she tells us she has no hope of coming up with a lump sum required to rebuild her financial future as none for monthly payments count towards

that lump some. in the wake of the great recession in the minds of borrower started to do with unemployment link with these defaults in high debt and millions more attempt to navigate the private loan market we must act. the department of education uses an on line hours to inform struggling borrowers about the new options which is a resource that we have sent many borrowers to already. we also must take aggressive action to effect future borrowers as estimate as the maker choices but the lender should be required to obtain certification before private lands. marking the tears shampoo clear explanations of the payment terms and be available earlier. we need to ease the application process improving independence from parents of the borrowers receiving no help from the family can access the fuller said of federal loans and fully understand the difference between private and federal

loans. particularly with the new options on the table. for example as a future teacher getting a masters degree on a fixed-rate private loan he or she will often be better served taking out a federal loan due to other terms such as flexible repayment or the ability to defer during times of unemployment. as a private loan market evolves impotently reemerges they must ensure the new borrowers are fully informed and have access to fair lending terms and current are worse -- thank you very much. >> thank you very much. mr. remondi thank you for being with us. >> good afternoon chairman brown, senator corcoran members of the subcommittee. my name is jack remondi i'm the chief operating officer sallie mae and i thank you for the opportunity to testify today on the educational loan. private education loans help families fill the gap between their own resources financial aid grants and the total cost of

their college or university of their choice. they are not for everyone. they were never intended to replace federal aid and in fact they were originally called supplemental loans indicating their stated purpose. in most cases higher education as a family commitment which are private education loans are designed to support. last year over 90% of our private education loans had a cosigner tip of his apparent. are loans provide important protections that benefit the family including extensive disclosure, just rate in repayment options, embedded tuition insurance and disability loan forgiveness. but the best protections inherent in any loan including private education or federal student loans his quality underwriting and planning before one borrows. or free agent vacation planner helps families know before they go. by assisting them with the

following important steps for turning access into success. pick the right school and most importantly consider lower-cost options, create a financial plan that covers the entire cost of completing a college degree not just one semester. make loan payments to keep borrowing costs down and student loans without a degree in mean loan payments without the higher earnings to support them. during the application process we disclose monthly in total payment information and present customers with a side-by-side choice of interest rate and payment options available to them. customers receive multiple disclosures that quantified expected monthly payments in finance charges highlight the availability of federal loan programs encourage the applicant to shop for lower-cost options and outline the right to cancel the loan. after disbursements our customers receive monthly statements that to detail their loan balance and accruing interest. customers elect stupid differed payment while in school are

reminded of the positive impact that in school payments would have on the total loan costs. the most recent findings of our how america pays for college study shows how effective these disclosures and reminders are. private education loan, private education loan borrowers 90% filled out the fafsa the first up to picking out a student loan. among all education loan borrowers are pages 3% borrowed only private loans. and two-thirds of our customers and making payments while the student is in school allowing them to save thousands of dollars in interest charges over the life of the loan. sallie mae has pioneered new products and procedures designed to help families make informed decisions. for example we advocate school certification as an important safeguard. we will not disburse alone until the school certifies it. and until recently nearly all borrowers deferred loan payments while in school.

in 2009 sallie mae became the first lender to encourage school payment because they saved the bar were thousands of dollars in interest charges over the life of the loan. are in school customers who opt for either interest payments are a fixed payment of $25 a month can save an estimated 30 to 50% in and total interest costs. the results are encouraging. even in these tough times and the stories we heard today are certainly important to hear but they are nt the norm. 90% of our loans in repayment our current. and still we recognize that the recession has supposed real and significant challenges for many americans including some of our customers and because our success depends on our customer success we actively assist borrowers experiencing difficulty by understanding their individual circumstances. to customers who need help we offer a mix of repayment products in counseling and

collection programs that give them the best opportunity to manage their debt obligations. these options include reduce monthly payments, interest only payments, extended repayment terms, temporary interest rate reduction and if appropriate, forbearance. all scale to the customer's individual circumstances and ability. since 2000 we have modified $1.1 million in private education loans to help our customers. nonetheless loan modifications and other efforts are sometimes insufficient and for this recent reason sallie mae supports bankruptcy reform that would require period of good payments that his perspective so as not to rewrite existing contracts with customers and that applies to federal and nonfederal education loans alike. we would also be interested in increasing the options available to default to borrowers specifically federal rehabilitation program allows them to cure the default and repair their credit.

if a customer makes the required -- the default is removed from their credit history. for all of the consumer loans however the fair credit reporting act does not allow students a second chance. so there is no provision to rehabilitate private student loans. for some time we have been discussing the promise of providing this option to private education loan borrowers and would certainly recommend that congress consider it. in sum, market forces and legislative changes some of which were developed here on this committee have combined to make private education lending better understood by students and families, better underwritten and more targeted to provide needed financing that can help america's families achieve their education dreams and create the opportunity for a brighter future. thank you. >> i want to interrupt this hearing just for a moment on the senate floor and on the house floor and by the gate of the capital senator mcconnell and senator reader marking the 14th anniversary of the murder

of the two capitol hill police officers on july 24 at 3:40. officer jacob chestnut and detective john gibson were shoving line of duty and if i could ask for a moment of silence in the room. thank you all. thanks to all three of you for your testimony. i want to start with ms. loonin. you made a rather telling statement. mr. chopra in the beginning comments on the first panel spoke about the difficulty in refinancing and potentially students are our worst know enough about this refinancing opportunities and refinancing opportunities if you will. what types of relief or free financing opportunities are

currently available to private student loan borrowers and i would like to hear ms. loonin's answer and also the other two briefly if you would comment and then at the same time elaborate on any sort of barriers or federal rules that may impinge lenders ability to provide those relief options to those borrowers. >> thank you senator. right now what we have been able to see working with our clients is there are very few private loan refinancing options even available. a lot of our clients are lower credit score may be because of that but we also hear from borrowers through our web site our web site and others who are looking, prime borrowers who are having same problem so i would say there are very few products and opportunities out there. as far as barriers, one point that i wanted to make especially on the issue of the regulators have come up numerous times.

i think it's very telling the number of options that sallie mae for example is offering so clearly it is possible to offer some of these options and i was like -- if they are hearing from regulators that they can offer something but one of the problems that we find is that there is this haphazard nature to the option, that some of the lenders will for example offer or they have programs where they will offer cancellations for death or disability in some time we will call a clients and they say they will have them in the same lender will say that they don't. in terms of barriers it's a little bit harder for us to know exactly what those problems are because we all want to work together to figure those out. >> and ms. mishory or comets? >> similarly the borrowers who have come to us have

increasingly to express frustration at the inability to work with their lender to find better terms and have not found other options in the marketplace. mr. chopra earlier mentioned education of our worst as well. if their options we also need to make sure that students and borrowers know about those in so that is another issue as well. >> i think as rohit chopra described there a couple of factors here. these are principally in sallie mae's case family education loans in the and the price we charge for this based on the highest credit score of both apparent and the student so to some extent they are already gaining the benefit of the parental cosigning on that account based on the interest-rate at the time. the second is that the loans are variable. the most finance -- fixed-rate

loans made in a higher interest rate environment being refinancing to a lower interest rate environment. very rarely do we see interest rates or loan products being refinanced because a credit profile has changed in such a dramatic way to change the overall interest rate structure and i think because of those two reasons you see a very limited marketplace for private education loan consolidation refinance activities. see what can we do about it? >> as i said i think it most cases those loans will be offered at the same terms and conditions as they are offered at today because they are based on the parents creditworthiness and based on the variable into straight so as interest rates have come down since 2008 all the interest rates on our student loans have been coming down with the a fall in the short-term interest-rate. >> interest rate. >> what steps can we take do you

take an individual responsibilities are sure we take in congress to make sure that students are aware of the differences between these loans and federal loans, not just the initial interest rates but other kinds of terms of repayment and other problems that might arise during the repayment process? why don't you start again. >> so there are changes in truth in lending as you know to the disclosures. they are more extensive than they have been in the past and there were some very positive changes their but we hope that congress will take a look at the timing of some of the disclosures as well so the borrowers can get the terms of their actual loans earlier in the process and not just the a sample of what they may be getting. as we know the private loan products and vary quite a lot. the certification process as a number of people have alluded to here and mr. chopra talks about

in his testimony as well, we think is another opportunities to make that mandatory program. some schools use that opportunity to counsel borrowers as well and they think the think that is an opportunity right and to give a lot of information before the student is actually signing on the dotted line. >> ms. mishory your response on that? >> i would also add in addition to the options that ms. loonin listed, on the bus tour we talked to a lot of juniors and seniors trying to figure out their next steps and they were confused and they didn't have clear options on where to go. school counselors often are not prepared to talk about differences in loans and how to finance their college education so i think a lot needs to be done in college counseling offices but we need to be teaching some of these financial literacy skills even earlier so families can prepare their education.

>> mr. remondi? >> i think as we heard in the cfpb report there is more disclosure today on private education loans and there is on any other consumer lending product out there period. we do provide all of this information to the borrowers as they are going for the application process so they get a rate and their credit is approved and they get their actual rate. they have a 30-day term to accept the offer without any changes that we would make and then they also have 30 days after the loan has been funded to cancel the loan. each time in a process they are encouraged to consider lower-cost federal loans and to shop for lower-cost options. i think i'm the one hand we are providing enough a lot of good disclosure today. i think to the other participants comments here one of the pieces that could improve dramatically as helping students and families know before they go. figure out what they can afford to spend on a college education, pick the right school that

matches the financial abilities of the family along with the prospective earnings that they can gain from that career and pick up off the full cost of education. the number one reason students default in student loans and this is true whether it is federal loans education loans is the kit does not graduate from school. they have the debt burden but they don't have the economic benefit of the education. if we can help families plan better through that process and be more prepared before they go we would have a better educated consumer and i think better results from the federal program as well. >> you agree with mr. chopra's statement that we shouldn't need an attorney and a magnifying glass? >> he made that statement on all loans, not just to gloss but in our disclosure you are required to have a certain size of print font -- he was referring to the credit card statement that we get when you get your new credit card.

[inaudible] >> thank you offer your testimony and i do appreciate that we have three folks in different backgrounds that are trying to solve the problem and again and now officer concerned. we see people that are unable to make payments or are paying a life for their education. ms. mishory what are some of the predatory lending instances if you will that you are seeing out in the marketplace right now? >> i think as was discussed fortunately a lot of them have improved over the last couple years. we certainly saw over the 2005 to 2007 era of lots of direct consumer marketing and a lot of students taking on burdens that they did not need to.

so i think that we have seen a lot of improvement. i would say we still see marketing materials that are unclear to students. in each picture that marketing materials show the terms and they show the terms in a way that students who don't have the ability or the experience actually understand them. >> so it's more an issue of just people understanding what they are getting into and maybe it being explained in clear language. it's not necessarily that people are out there purposely trying to take advantage of students. >> i would say that again is a lot of panels discussed the market certainly is improved over the last couple of years but that leads to the problem of folks at already have flown to today to go on and also ensuring that going forward as the market changes we make sure that students know what they're getting. >> mr. remondi with all the loans that you will make i am sure there has to be data that

shows people who go to certain colleges are more likely to pay back their loans than others. regarding while april 2 look across our country and see certain outliers where people go to a particular institution and they have more difficulty paying back their loans in others'? >> we have over 7 million borrowing customers that we have the wealth of data that goes across federal student loan programs in the federal marketplace and they are absolutely our differences in repayment success rates and therefore the flipside of that -- >> when people are making loans to students who attend these institutions are they taking those kinds of things into account? >> yes think what happened over the last couple of years is that people weren't aware of some of the changes that were coming in the economic environment. more recently people, lenders are trying to take into

consideration the overall success rate of students at a particular institution. we cannot make private education loans to students at every school in the country so we have an approved lender or approve school list that we used to determine whether not the borrower is eligible to participate in our program's. >> on the federal side we are making loans to students. >> the federal program also as a cutoff based on the cohort default waiter cdr but that is a very high default rate standard and i believe it's 25% for a couple of years and it's only measuring the incidence of defaults in the first two years after repayment. >> office with the private lenders have to think like that because unlike us we just can't make up the numbers and go ahead and kick you can down the road for future generations. [inaudible]

>> you let me ask you this question. is it possibly fathom mobile been an institution can make loans at 3.4% to all commerce, no collateral, no credit checks, no payments made for years and come out and away that is net positive on the basis of the loan? is that even within the realm and to an institution whether they actually have a lot of students attending those institutions? is that fathom a global -- fathomable. i know i've demonstrated an attitude here but obviously mrs. loonin great testimony and i appreciate your work in this regard and you are talking a little bit about how the private

sector side has certain constraints, sometimes prudential regulator's place them in some of them are not as tight as some of them abdicate as you mentioned earlier. but on the private side they actually have to survive to the next year. they actually have to make it an insolvency way on the public side and in an election year we can just make things up and they can decide that we want to try to get votes from students and young people by doing things that we know make this even more insolvent as a country that we can just do that. can you understand why there might be differences between what the private sector is doing that has to exist into the future and the public side which we can just print money and borrowed money from other people and do things that make us more insolvent during the time of elections. can you understand why you have different types of lending arrangements taking place? >> i can understand and i should

say save say the loans that i saw during the heyday of the predatory lending where the worst products i have ever seen and i don't think there was any caution put into those when those -- they were landing to students and schools back then at rates that i've never seen before also and those were some of the loans had failed at the highest rates. so we are talking about it now because the market has changed a cousin of the crash so you are right about that. that is actually still frankly problem. >> and for any entity doing out there -- out there doing things you just mentioned we ought to do a thing we can to put them out of business, i cannot agree more. i'm really just talking about us, and not you guys. i thank you for what you do. i continued to be appalled at their ability to be

irresponsible and candidly as i listened to mr. remondi it sounded like they are trying to be responsible. i don't know if you all would take any issue with some of the things that he just discussed regarding sallie mae's policies. would you do that? >> i can say this. i agree that they are trying to be responsible now and i do have good working relationships with their customer advocate office at sallie mae. a very respectful relationship and unfortunately but unfortunately for a lot of our clients they are still mod able to offer anything but i do think a lot of the projects they have created going forward to show much more responsible lending practices. >> thank you for your help as advocates in making that happened and just in closing, mr. remondi only institutions and i know there was an effort by the administration to make it so and it might've been a good

policy, so that you know if they private entity had students that were attending and they were borrowing money that there had to be certain outcomes they are or they could no longer participate in certain governmental programs. it sounds like there may be a number of public institutions around the country that we made me to look at in that same way. would you agree or disagree? >> yes, mean there are good schools and their bad schools and they're a for-profit and not-for-profit. in terms of educational outcomes for their students. >> and i guess as far as consumers go equally bad outcomes for students if they borrow money in a responsible way from a responsible entity whether it's public or private. they could end up attending one of the schools that is not equipping them to perform the 21st century. there is a issue there also. >> an awful way we might deal with that? >> i think that having information available to

students so information about the school's graduation rates, information about the default rates of students who attend those schools is a good step in that direction. i would go back though to my earlier comment that says a lot of this is trying to address how to make a decision about the current semester. i have the tuition bill on the kitchen table. what do i do? i think more students and families need to think about the total cost. how my going to get from the first year of college student graduation so actually get the economic benefit of the money i am investing. >> for the people that you are dealing with, it's very important to you as a lender that they sit down at that kitchen table and try to think through the entire process through graduation because otherwise it's going to end up creating a loss for your institution. is that correct? >> that's correct and that is why we offer our investment planners of free web sites tool to customers and noncustomers

alike. >> are we doing that with the federal loan program to your knowledge? >> no, we are not. >> so we have a lot of students that borrow money from the federal level and don't have this type of input, the federal level that don't have this input on the front end and the innocents again us here, not you guys and certainly not not any of the witnesses trying to overcome some of the predatory issues, we here have a policy that may be in fact be harming people throughout their lifetime. is that correct? >> we are certainly not making information available to those customers in all of the disclosure examples that were provided today certainly do not exist in the federal student loan program. >> do you know why that would be the case? >> it is exempt from the truth in lending laws. >> yeah echo i think you can understand my frustration with the hypocrisy in this institution. >> i guess i share senator

corkers -- views about the hypocrisy. when we should know more about the student and you suggested mr. remondi someone coming for a student love should know more about what of the are the graduation rates of the school of for-profit or not for-profit schools, two-year five-year or public or private and should also know what kind of placement rates, all kinds of placement, job placement counselors and job placement offices they have that these for-profit or not-for-profit schools and with the rate of getting a job, the rates of job placement are. i think all of that should be in this picture so there's plenty to go around. senator akaka. >> thank you very much mr. chairman. i want to tell the panel that i really appreciate your presence

in the sharing of your experiences in the student loan programs. we have heard from you today information that includes expanding the role of colleges and universities in working with private lenders. however, since 2008, average tuition at private, not-for-profit schools has gone up almost 10% and tuition at public four-year schools has gone up 15%. these increases are surely leading students to take out additional loans. schools both determine tuition and help students find ways to pay their tuition.

i would like to hear from the panel, what can be done to ensure that schools continue to provide advice with the best interest of their students in mind, and do you see a need for a mutual third-party to offer advice to students? ..

the outcome of the education. if you succeed and particularly in federal programs with a lot of flexibility and a lot of options, most likely it's going to be a situation where the borrower is going to come out ahead it is good for the economy and all that as well. as far as having a neutral third party adviser, i'm not sure at what point of the process that you're talking about specifically. i think it's always important for borrowers to get neutral advice. i think the schools themselves sometimes you have conflicts of interest where they want the

student to come to the school. they're selling their products in a lot of ways and may be difficult in some schools to give mutual advice. on the other hand, a lot of financial aid officers do a very good job now of providing a kind of good faith, something that ms. mishory mentioned this to get that information out before they get into the school doors in that it gives schools with counselors and that should be as neutral and objective as possible. >> ms. mishory. >> yeah, i would absolutely agree the cost of college is a huge issue. we hear about it from other students we talk with. you know, families are struggling to figure out how to afford to pay for college and the sloan -- the issue of student a dad is related in the cost of college is what his impact this debt.

i do think there are larger issues we need to look at, public institutions are no longer affordable like they used to be. as someone for mom's generation paid a third of what i pay to go to a public institution. we need schools to be accountable for their money did you receive and there is not that many ways in which we should. we need reformation and the kids to look inside the school down the street, you know, a lot of students default to his only, you know, kids two years out at a 50% employment rate. if i go across the city, kids having 80% employment rate. go to school across the city. we don't have that and they desperately needed. >> mr. remondi. >> i would agree the cost of college has risen dramatically. i think the sticker price is a

lot different than what the consumer pays then we have the team debt burdens grow at a more rapid pace than the tuition level. so the average student is graduating with about $26,000 at the back of which is 2% more for the year over the last 10 years. one of the challenges they face is the economy coming out of school at today's difficult for students to get a job either in their field or the pay level they were except dean when they started and that is creating some of the issues. but again, going back to the concept of know before you go, if students understand the dynamics, how much is going to cost to complete their education while at the graduation rate is at its core, what the default rate is, they can make better, more informed decisions in that process. >> will ask a final question here. mr. remondi, as the recent

scandal over libor had any effect on how sallie mae sets lending rates? and have you thought about the possibility of using a different measure for rates that name? >> our interest rates are set using the libor index. we have not seen any issues or problems with that. the allegations made to date have said that libor was set artificially low, which as i was sure would've been to the benefit of the barbers. >> thank you very much, mr. chairman. >> thank you, mr. akaka. want to thank you, ms. mishory and mr. remondi. if you have additional comments you can submit to the committee and the next seven days and committee members may also be a question if you get the answers promptly. thank you for her testimony in

service. we adjourn. >> the republican national committee has released the schedule for this month's convention starting monday, august 27 in tampa. this year, the keynote speaker will be governor chris christie of new jersey and senator marco rubio of florida will deliver the introduction for

presidential candidate, mitt romney, who speaks on thursday. gavel to gavel coverage of the republican and democratic national conventions live on c-span. >> i draw the line in the past and that, before the field of tyranny and i say segregation now, segregation tomorrow and segregation forever.

>> the u.s. surgeon general, regina benjamin spoke at the meeting about the national prevention strategy and the importance of foot care in treating diabetes. her remarks are 25 minutes. >> -- caporusso. [applause] >> thank you. thank you for much. welcome to the 2012 annual scientific meeting. what a great meeting. no? [applause] this meeting will be unlike any other apma event you've been never attended. not only is our scientific program the most medically advanced it's ever been at her exhibit hall completely sold out, but as you just saw in the videos, we are celebrating a 100 year anniversary of podiatric medicine.

[applause] in july, 1912, 225 members gather to organize the national association dedicated to the needs of shirai for days. today what they started has become the premier association for more than 12,000 podiatrists, physicians, surgeons and specialists of the foot and ankle. we are today's podiatrists and will continue this long and proud history of podiatric medicine. i am honored to serve as a apma president during this horror story time. i officially welcome you to the national, today in our nations capital. i hope the next few days are both educational and celebratory for you all.

we start this 100 year anniversary celebration with a very special gas. i am honored to introduce dr. regina m. benjamin from the teen surgeon general of the united states. [applause] as our opening session speaker today. as america's doctor, she provides the public with the best scientific information available to how to improve their health and the health of our nation. dr. benjamin also receives the operational command the 6500 uniformed public health officials who serves in locations around the world to promote and protect the health of the american people. dr. benjamin, the founder of the rural health clinic in alabama. when she kept in operation despite damage and destruction inflicted by two hurricanes,

georgia and katrina and the devastating fire in 2006. today she's a leader and preventive health care. dr. benjamin is forged a career that is a recognized by a broad spectrum of organizations and publications. dr. benjamin has a bs in chemistry from xavier universe piano island, an m.d. from university of alabama in irving and an mba from tulane university. she attended morehouse school of medicine and completed residency in macon, georgia. dr. benjamin holtz 18 honorary degrees. please help me welcome your surgeon general, regina benjamin. [applause] [applause]

>> wow, good morning. the lights are kind of bright, so it's hard to see you back there, but i can see a lot of people. lots of people. thank you, dr. caporusso. it's really wonderful to be here with you at the largest gathering of podiatrists in the world. that says a lot. i have one job i have to do before i start talking to you. and that is the spirit on behalf of president obama in the entire administration, congratulations on the 100th year of the profession of podiatric medicine. [applause] you really do have a lot to be proud of. the api has been committed to maintaining the integrity and equality of the extent of the education and training that

podiatrists received and this has led to the success of the their profession of podiatric medicine and you really do have a lot to be proud of. i was talking with some of the board members earlier and i realize i wanted to share how i got involved because many of you here are here for the same reasons. when i was an intern, i attended the medical association of the meeting and one of the intense issues list that transmitted diseases needed to be taught in medical school. i set up in a room of 15 people or so and i said i'd never seen certain diseases except in a textbook. the resolution passed in the georgia delegation voted the resolution to the american medical association. they sent me to the ama to speak to the resolution and it also passed.

and within six months, every medical school in this country was encouraged to include transmitted diseases. and learned whether it's a practice i learned i can make a difference in medical practice when the core set me. it's a pretty place, but is a poorer place. i found a community working poor. to afford medical care but too rich to qualify for medicaid. i like the people, like the community and i want to practice medicine there. i quickly learned practicing medicine dosage is filling up the sharp price. i had to do with the land sharks, the red type, paper. but i also learned my description pad less than that by patience at problems that went beyond that. for example, i had a patient, donna, who had seizures.

and for a long time, her seizures were under control, but she came in and said i started having seizures again. i asked her, did you miss your medicines or what? she said no, but she took out a piece of paper and drew for me. i asked patients to write down things for me. she said jim our pharmacists used to give her these pills that were a solid and one was a stripe. now she gets to stripes. and i realized that donna, who is intertwining is, could not read. no matter what i did, i had to find some sort of services to help her read. it was just as important as keeping her blood pressure under control. and another patient, ms. smith, that is her hipaa name, by the

way. [laughter] she called me and said that her benjamin, my back is really, really hurting. i went to the specialist he sent me to and he told me i need to lose weight and i'm trying. i'm really trying, but i'm back is really hurting and the ibuprofen is not strong enough. can you call me in something stronger? and i said sure. i could hear the pain in her voice. but i said ms. smith community can see me monday or tuesday. i'll call your prescription, that you need to come see me. she said sure. i'll be there. so sure enough on tuesday a walk-in and there she was, leaning over the exam table, and so much pain that she couldn't sit down. i said ms. smith, you know, did the medicine i call you and help at all? she said well, dr. benjamin, i didn't get it. what you mean you didn't get it?

she said i didn't have the money. i said that you have insurance. the work of the school system. in the janitorial department. you have insurance. she said yes, but i did not the co-pay. but i get paid on friday i promise you i'll get it. and so i stepped out of the room and went to my nurse male and had her go across the street to get her medicine. and when i came back and one in the room, i said ms. smith, you know, shoes or medicine. i can see a really hurting and i want you to start taking your medicine. at that moment her eyes welled up with tears and she says dr. benjamin, i'm so embarrassed. i did and what to have to do that. and i realized at that moment i had taken her dignity. and also realized that, by the way, i didn't tell you she's like five-foot four,

african-american lady, really sweet lady about that tall. i realized at that moment though that the fact that i've taken her dignity from her, that cultural competency has nothing to do with the color of your skin. it has to do with allowing people to keep their dignity. so i had to tell her the fact that we had few people with sending us donations or because of their medication fun for people like her an issue wanted to pay back what she got paid on friday she could come but they shouldn't have to and she was okay with that. and so as i was leaving the room, she says by the way, and her by the way wes, can i get a work excuse? i said sure you can get a work excuse. today is tuesday, start taking

your medicine and go back and thursday or friday? she says no, we have to strip the? off the floors tonight. i have to go back tonight. here is a woman who is in so much pain she can't even sit down in the exam room, but she's going to strip the? off the floors so our kids can go to school in a clean environment. so it is for people like her that i was going to come and take this job so i could be a voice for her. he was so gratifying for me when the affordable care act passed and prevents health services are now required by insurance companies and also required with no co-pay. so i call that my mrs. smith. [applause] you know, one of the most

important aspects of foot care that you do as a podiatrist and that you divide is to dose of diabetes, including today's podiatrist in the diabetic management is fired at the team is the vital step in preventing ulcers and amputations. i've been a lifetime champion of the power of prevention is the foundation of my work as surgeon general. you know, health does not occur in the doctor's office in hospitals alone. help also occurs where we live, where we learn, where we work on the wii play, we pray. i believe prevention offers the greatest opportunity to improve the health of america's family now for decades to come. i believe prevention is the key to that in a stronger and more sustainable health care system and prevention is not new to the national dialogue.

however in recent years it's become more vital and relevant than ever before. it is becoming imperative. that is largely due to the change of dynamics and demographics is more american families struggle to deal with chronic illnesses such as diabetes and hypertension and cardiovascular disease. impacting people of all ages, ethnicities and economic strata. in the case for focusing more of the nation's attention and research and prevention is more than a theory. it's a reality that's grounded in science and experience. we know with better health children attend school more regularly entered the dollar able to learn. we know what better health titles are better productive at work. and with better health, seniors can better maintain their independence. on the other hand, we note the lack of prevention takes a

devastating toll on patients, families, communities and the work place. it is interesting that much of the illness in the early death was related to chronic diseases that cause pages for modifiable risk behaviors. the lack of physical activity, poor nutrition, tobacco use and excessive alcohol consumption. almost 50% of adults have at least one chronic condition. this year in 2012, more than 800,000 americans will die from heart disease. in the overall costs resulted from cardiovascular disease is estimated to be $444 billion each year. diabetes is a major cause of heart disease and stroke. 26 million americans have diabetes than 7 million of them don't even know they have it. diabetes is the leading cause of kidney failure, not dramatic

lower than amputations. type-2 diabetes is an emerging health problem in youth, particularly minority you being driven by our obesity epidemic. i've got similar statistics for you. according to cdc, if current trends continue, as many and one in three q. s. adults could have diabetes by the year 2050. up to 25% of those with diabetes could develop foot ulcer and more than half of all foot ulcers will become dead, require hospitalization and one in five will require amputation. and also, people with a history of diabetic foot ulcer or 40% more likely to die in 10 years and people who would diabetes alone. so what is so important at

quality, podiatric care must continue to advance. by preventing amputations and hospitalizations, podiatry is not only save lives and limbs and health care dollars, they also help patients preserve dignity and quality of life. we have to make prevention part of our everyday lives and empower people to make better health choices. and please the obama administration has a bright agenda help americans get healthy, live longer, stay well and thrive. as surgeon general had the privilege of sharing the national convention health promotion of public health council was established by the affordable health care act, also known as health reform. this council is composed of 17 have no bubble heads of federal agencies such as department of transportation, agriculture, labor, environmental protection agency, hide, department of

defense, also detained around the table to talk about prevention. last year, the accounts are released the first-ever national prevention strategy. let's see, now, next slide if you guys subsides for me. so the national prevention released last year and our vision is to move our health care system from a focus on sickness and disease to a focus on wellness and prevention. if we truly want to reform health carolyn's country that is prevent people from getting sick in the first place, to stop the disease and illness before it ever starts. so in addition to the state-of-the-art medicine, we need a new approach to promote prevention niceties can to sustain health aide defends another fact is like housing and transportation, education, availability, quality of his co-workplace environment. we want to change the way we

think about health in this country and that cause to take a more holistic and integrated approach to community health. something you party then doing. we need to do that as a nation. everything from safe highways and worksite wellness program to healthy foods and good schools, good rooms. now i have to figure out how to work sides. rico. so the goal of the national prevention strategies to increase the number of americans healthy at every stage of life. with either two or 92, when she be healthy. one of my patients that i want to get old, but i want to be a prey. we have four pillars, healthy and safe communities, clinical and community preventive services, empowered people and

the elimination of health disparities. i know you've been working on all of these things and we just need to put them altogether. if republican i commend nations and we have several for white-collar priority areas around there, but if we follow recommendations of the national prevention strategy, we can prevent or significantly reduce the five leading causes of death. we've been working with partners like you as well as partners and industry and philanthropy, local and state and tribal government to bring this national prevention strategy to life. you know, we need to have a northstar, a place to follow in the strategy that cassette together. it gives us a direction to go and it's available to you at our website, surgeon general dr. if you want to look at it. they will, cheer community and

talk to a lot more about it. but the biggest challenge we see has been in the lifestyle changes. the lifestyle changes that can make the biggest difference. as leaders, we can make being healthy fun. we can make health behavior joyful. we have to put the joy back into health. you know come you don't see the joy for the individual spirit health professionals don't have the joy. we have to find our own joy. you can't underestimate how important it is to have joy in health care. you have to find your own joy. what brings me joy and health care may be different from your joy. maybe one person wants to run a marathon. for whatever reason they want to run a marathon. another person's joy might be to get an old pair of jeans. another once maybe to set up long enough to play with the grandkids that evening.

whatever your health care joy is, we particularly in government want to help you get there. once you identify what it is, our role is to make it easier and affordable to get there. we have to start telling people what they can't do, what they can't have them tell them they can do it. i call this my surgeon general's jumping for joy. we started doing things whenever we do talk, i do some watson that cavities and bob are something i think he knows little bit about. we want to make sure you promote walking. actually want to walk at this conference afterwards, but i have to catch a flight, so you get out of it this time, but not next time. so we walk the distance of north carolina. back in north carolina had a meeting on anyone who wants to walk with us, show up tonight after the meeting about 5:00. it was a later a later time and

it was at night, it is a really nice trail. read a couple hundred people from the community came in watford tesco at babies and kids in strollers and dogs and it's a lot of fun. we also do zoom by. any kind of activity. dance, walk, whatever. what do they walk in boston, white coats and white sneakers with physicians the area. so where can i do that with you, so we will do it next time. zero, and your community if you invite us. but basically have fun, enjoy doing what you're doing. they get on with the family, everyone. i did another one, which i don't really call a walk. i don't know what i call it, but it is the grand canyon. it was 26.2 miles. 3000 feet now at 3000 feet back a. and there is a