there, being in the community -- not in the community, but in the grand canyon. it wouldn't have been so difficult, but i had cameras following me the whole way. you're huffing and puffing on cameras. but the point is if i can do it, anybody can do it. so that was the whole idea. but walking and enjoying, making health care fun. and people come when you ask them why they don't want, often times it's their feet hurt. so when looking to you to make sure you can help them with that and that not be the reason not to walk. or if you're walking poorly, encourage people to walk and you can do that with your patients for us. another thing is dance breaks. you certainly major feet to

dance. so it doesn't take a lot to just dance. raskin said that the radio stations to help us with what i am calling 30 to 62nd dance break. they play music and you stop what you're doing and dance in place. one day it may be rock 'n roll. another day country, but stop what you're doing and just dance. just move. he may not burn a lot of calories, but it's very good mental health. the idea is to have fun. before i stop, when i tell you one area and certainly interested in an every other surgeon general has been a major help with that, too. that is smoking. you know that smoking really affects the peripheral circulation. but we just released a surgeon general strip port in the spring on smoking and youth and young

adults. every single day, 1200 americans die from smoking. and each of those deaths has been replaced by two young smokers. recall that replacement smokers. 90% of all smokers start by the age -- they start by the age of 18. 99% by the age of 26. the surgeon general is a hundred pages, 136 scientists went into putting it together. everything i say about it has to be scientifically factual. over $1 million an hour is being marketed on tobacco and tobacco products. the $27 million a day. if we can just get our next generation not to take their first cigarette of the age of

26, we can me the next generation tobacco free. so it is more important that we look at our young kids, particularly college-age kids. they are the ones starting to pick it up. we've made wonderful strides in smoking, but this is an area we still have a ways to go. i hope you will follow me on twitter in our journey to joy. i want to particularly commend you for the port in health care services they provide to millions of americans every day. as america's doctor, i want to tell you though, we need you. and therefore we need you to take care of your own health. i'm going to be getting on a plane and a little bit in the flight attendant says, put on your round face mask before attempting to help others. we need to cheer face mask on. we need you to do your own exercise and take your flu shots, depicting.

we need to show examples. make sure you take care of yourself, exercise, eat right and get no sleep. and finally, i want to end with a quick story and that is a young girl who was jogging along the beach early one night -- early one morning. she was jogging along the beach early one morning and she was jogging. there's an older gentleman tossing fish in the water one at a time. as she was doing her run, he's tossing the starfish and the water. emma she finished her run, she couldn't take it anymore, so she would not to end this is what are you bothering to toss the starfish and the latter hundred a time. there's hundreds and hundreds along the beach. as soon as it comes up, they're going to dry out and die anyways. why would you bother. she reaches down, pick off the

starfish because it makes a difference to the starfish and he tossed it in the water. i hope that this next few days as you attend this conference and learn as much as you can, did you go back home and find your starfish and you continue to make a difference. thank you so much and congratulations on 100 years of podiatric advancement. [applause]

>> wishes more important, while her honor? it is not as set by the vic druce four years ago, the economy,. it is the kind of nation we are, whether we still possess the wit and determination to deal with questions including economic questions, but certainly not limited to them. all things do not flow from wealth or poverty. i know this firsthand in sodium. all things flow from doing what is right. >> look at what's happening. we have the lowest rate of unemployment and inflation in home mortgages in 28 years. [cheers and applause] look at what happened. 200 million jobs, 10 million

workers getting the praise they deserve with the minimum law. [cheers and applause] >> general keith alexander, head of the u.s. cybercommand spoke to seek an armed forces electronics conference. china alexander, is also the national security agency are an security service said the u.s. has to create an environment for government and industry to share information on malicious cyberspace operations. from the lan for us conference at the baltimore center, this is 45 minutes.

[inaudible conversations] >> please welcome to the stage, china generally tired, vice president, afcea international. >> ladies and gentlemen, we know it's a joint conference. bigger around for the marine corps and 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. for those of you who are here, your second night and others who mistakenly missed an opportunity to hear someone who is very coming very interested in the subject of this conference. and also, take care of men and women in uniform and those who

support them military and civilian. we had colonel chris ballard and major blackwood comment tag team, representing general hernandez today general hernandez at the chief staff of the army will be returning to be the luncheon speaker and thursday. the p&l you just heard under the two legend moderator chipped a few well of admiral dave simpson, great job, great panel. here as i told you, alexander focusing not just on the department of defense, not just ghs, but my spring -- let's bring commercial partners in this as everybody's everybody's fight if he will have an opportunity to share with the companies represented here today just represents some of the over 220 companies that are exhibiting here and others -- other degrees of sponsorship.

with that, what i want to do at this moment is to introduce our keynote afternoon speaker, john alexander commander's intent is pretty clear to me. we do go back a few years together. he said keep it short. let me put it this way, sealed artillerymen, hamilton and intelligence officers served in combat, served in europe has had staff assignments. and by the way in his spare time, for masters degrees having graduated from west point. with that, join me with a warm welcome for general keith alexander. [applause] >> general dubia, thank you for their short, sweet, i just noticed as an artillery. just kidding.

dan, bob, smith come i can't believe steve they let you in here. you know, it's an honor and privilege to be here to talk about a topic that i think anybody in this room knows more than i do. so i'm going to talk about quantum physics, even the playing field a little bit. superposition. now, i think that will be a topic 10 years from now. in between we got to get there. so what are the things? for me think about that, you talk about things like quantum computing and stuff like that. look at what's going on in our world today. you know, how many here have a connect? how many have an iphone? ipod, mobile device? look at this. i am a fairly 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 of them them can operate at ds, ipod, iphone. they're 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. maggie saw that new car by google, drive itself. used in the back seat. nobody to yell at. i wonder what my wife will do. last night okay, she's not in the audience. i was close. don't recurred that part. cut up her. you know, i got one of those sunday cars. you've got the smart cruise control on it. you put it on 72, go down the highway at an cars going 55. in the old days you just hit them. now, it slows down to 55. the speed to 62, stays right with them the whole way. they can go a 30,, it will

start. it's amazing. but all the great opportunities we have in this world. you know, one of the things has to look at that tremendous vulnerabilities, tremendous vulnerabilities. but in the to operate, our country leads the way in this area an and instrument is opportunities for the military, for industry, for academia for our kids, absolutely superb. we have led the way in building all this stuff. now look at other problems that that we've got. you know, there's some figures out there, so i'll give you figures and tell you where they come from. it's like the scores of the baseball game last night. two to four. there's a close one, three to four. understanding. i'm not going to do that. can you stay up with me here? too slow.

so maccabee talks about the global impact of cyberspace operations on industry, cleanup on all that is a trillion a year. botnet since 85 billion spam e-mails a day. that's about 294 e-mails globally. when you talk about the number of cyberattacks, there have rose for mobile systems some 44% last year in dhs reports the number of attacks on our critical infrastructure has risen from nine to be documented 2009 to 198 in 2011. when you talk to companies like google, verizon, at&t, they are tracking these mobile issues.

mobile, now where? you look at a mobile i found from a device like that, you've got two computers in there. one helps you communicate and one that rents are at. two sets the vulnerabilities. and the problem is the software that connects those two is not firmly secure. we put out a secure form of android operating system, nsa did, and only look at how to develop a more secure platform. what are the things we can and should be working on to secure this? in the meantime, but now we are google android grew more than 500% since july of 2011 in one year. look at the attacks going on. why does that causes concerns?

as you mechanic, if you go back and look at all the things going on in our area, the good games. the bad things is the attack surface is growing exponentially. all the adversary has to do is find a way and. finding those ways and are getting easier, not harder as we add more things. as we've got to work together to look at how we can close those gaps. that's one of the things i want to talk about today. so the first thing i'm going to do is ask a question here. so how many of you have heard of dark track? okay, pretty good. so backtrack is a course or something you get on the network that is a downloadable system of the next big system for penetration hacking and sand and

many of the folks i work with can i say kevin, you guys all get on backtrack. now why do i want people to get up on backtrack? let me tell you from my days. here is why i am learning it. i am convinced we don't train our people to a standard high enough. we don't. we say we're going to operate as a team, but each component of our team is trained differently. our signal community is trained to operate and defend. aren't intelligence exploitation team is trained included a different standard. and normally this information cannot be shared, top secret level information cannot be shared with folks at the secret level. and then we have an attack community and everybody is trained to different standards over here.

so, if you look at what's going on in the networks, the offense has the vantage of the harder part is defending them. for we are doing is training to defend community not on the attack capabilities or exploit capabilities out there, but we train them how to operate them put the network without integrating and all the benefits the exploits and attack community have. so if you think about it, go online there is a book called the basics of penetration testing and hacking. it's a good book. i don't get a discount on this. i actually got a note from them. this is one of the professors at dakota state university who has written a book on how do you do

testing? i thought this is really useful for me as a commander of cybercommand and director of nsa to look at how we set the standards for how we're going to train our forces one team, not three teams because it doesn't make sense to me that the defender only defends come exploiters on the exploit and attackers on the attack because it's one network. we would never have come up with that paradigm. you don't have them to treat guys who you are. further recon and fishery infantry endured the attack and wintry. think how ludicrous that is, but that is what we have in our networks today of the military. and dod is different than any other department or government. we have the responsibility to provide offense of capabilities to defend this nation. so we have to train our folks

different. when you look at what the book teaches you on it, one of the things that talks about is the first step is know your adversary. this is like the sun tzu stuff. know your enemy. somebody might say you like to know yourself. so what does the adversary's networks look like? how do you do reconnaissance? they teach you things from google to all the things you can do to look up and find the ip addresses. and i'm actually practicing this myself. i set it up in my system. i did that to virtual systems online so i don't get in trouble. rare for me. i know general dubia was wondering how that happened? so you practice gaming. you practice reconnaissance comiskey name the sectors that appeared in the actual software

that you can download free off the internet from others about these hundred 30 some exploits. you can get windows 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.on a come and grab passwords off of the comments on those passwords to a john the ripper program, break the password. i was lucky i was racing and ses, so it depends how you work. i won. just want to put that out there appeared to recent loss. and that's why people hate you right on aircraft with this because it's biased towards my network. in all of that in about 20

minutes. then it shows you how to maintain it. if you look at it and you think about what we're just talking about eric, how are we going to train for the future and how do we start bringing things together? that's one thing i'd like you think about is how we train our force. now one of the things we jointly have worked out with the 24th air force, fleetcenter, our cyber, what are the five key teams we have to do a cybercommand, component commands , what does the defense department and intelligence community have to do? we came up with five key things that i want to talk about those in the next two hours or until somebody passes out and falls out of their chair. first, build a defensible architecture.

second, improve situational awareness. how do you see in cyberspace? third, build and train rudy saber force. four, transform the way we organize and operate. and fifth, prepare ourselves with the right authorities. i want to start at the beginning. start with defensible architecture. when we talk about a defensible architecture and i look at the dod architectures today, we make this really hired. we have 15,000 enclaves. think about that. 15,000 enclaves each individually managed. if you are with cisco, you would not break your network like that. think about it. if you're with google, ibm, microsoft, amazon, you wouldn't have 15,000 independent enclaves, but we do. and the consequence of that is

each one of those is taxed and run like a separate system. those responsible for defending keith t. dan beyond the firewalls and so situational awareness, hbs helps, but practically speaking, situational awareness is nonexistent. a consequence of the busy adversarial may have to fight when person to make them safe 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 significant errors in putting together the network the way we have that we need to change that. so from my, thin, virtual cloud, where you update patches instantaneously, reduces the

attack surface in a significant way and do something we have to all for. now the other part of that takes less people, cheaper to operate and it's more efficient. and we can take those people and make them the cyberforce that our nation needs. we're working with all the services and i.t. efficiencies to make that happen. the second part is a trained and ready force. train to a standard. from my% is, this means that if your signal coming or cryptanalytic common cyberattack, computer scientist will react to all be trained to the same standard, to operate on that is one team so that there are secrets amongst the different enclaves, but everybody on that team knows what the other players are going to do.

when you go to the national training center come you go to a cyberflagger in a 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 that the other components of the team are doing because we have our defend and operate team separate from an exploit team, separate from our attack. so they've got to get that train, when training ready force. situational awareness. how do you see cyberspace? right now when you think about it, you ask anybody to try pictures and ask what the adversaries are coming in. how are you going to stop that? nobody has a real good way of trying to picture. as a consequence, if you can explain what's going to happen, how do explain how you're going to defend it?

we can't see it. we're trying to explain to our young folks how were going to stop it and they're looking at us like what's he talking about? i get this for my daughters all the time. that's a joke. i'm sorry, although slower. so how do you see what is going on in cyberspace? we've got to build that situational awareness. it's got to exist in network speed. it is got to take in of events and make them humanly digestible along with autonomous decision logic, but something we can see. and there's got to be a set of those activities that machines can operate on, that her policy driven. the members are serious of things that were going to use to maneuver our forces cyberspace.

in that picture is what it's got to bring us all together. so that is the third part. transforming the way we organize and operate are commanded control. from our perspective, i think the first big step on them for setting up cybercommand and subordinate command. and now it's how we reach out to the geographic combatant commands and their components. what are the elements will put out the then how do we do that? and the fifth area is authorities. what are the authorities we need to operate across that full spectrum? been dod's disco in the me tell you the hardest authority. when we look at cyberspace, everybody acknowledges that his duties responsibilities to defend the nation from attack.

okay good. let's say the attack wall street. when you see defend the nation from attack, as i've been dod's network or the nation? there's always a pause while they consider that and say that's a good question. not sure the answer. what do you think? while this is dod were to go. we can solve dod. this is like a missile coming in. if it's going to hit me, we're okay. we can block that. it is going to have baltimore, too bad. how to form the boundary bicker. going to have for brad? workpad. we've got them covered. fayetteville? too bad. and they could use some real work down there anyhow.

i'm just kidding. i do for her, sorry. so when you think about it, it is ludicrous to think we wouldn't have responsibility and authority to defend the nation. but now here comes the question. the attack wall street. not those of us in uniform say that's not a military think about them take them down. there goes all your money. they say he forgot where the military. we don't have any money. that makes them even again. ..

>> the second part is that you wanted to stop. this is like a muscle that is coming in. you have to have a great sense of humor in this. so a few years back, the

chairman calls me up and says, we are going to have a discussion about cyber. what is going to happen is that cyberattacks are going to go on and we want you to create a briefing, to tell us what options you have on that one. on day two, we will present the briefing he. on day three, we will take it to the white house for a decision. i am just thinking cyberspace. 47,000 commoners around here, that's roughly 133-point whatever milliseconds fred inside, we want to wrap and 34 milliseconds for generating briefing. thirty-three milliseconds for the first iteration, over to the white house, and another 33 seconds, you still have 34 seconds to spare and stop the action. i suspect that they had not

considered scheme of the scheme of the scope. i pointed that out. they don't have a sense of humor that we do. [laughter] but they did get the message. so we have to come up with a new paradigm. think about missiles coming in from russia and how our missile defense and air defense systems, norad, how all that works. the missiles are going out a lot slower speeds. you have 30 minutes. we are talking a cup of coffee. in cyberspace, you are talking at the speed of light. and you are talking about knocking down something before it can impact wall street. so we have to come up with a mechanism that gives us the standing rules of engagement. and i am not saying go now and let cybercommand beta on some

country that attacked us and tear them up and start something big. i am talking about defense of the nation. those are the kinds of authorities that we need, and one of the considerations that we have to put on the table is how you make a more sensible infrastructure for critical infrastructure? all of our networks right over commercial networks. and also the power grid. so all with all the lights go off in the networks go down, the defense department cannot communicate. the transportation command cannot flow. we have a problem. and we have to solve that problem and bring the team together. so i think that the most important point when you look at these is the what we talk about. so when i started off with the cybercommand dod team, the reality is that there is a

government team that is bigger than the defense department. that includes the department of homeland security, the fbi and others. but the key players, the homeland security, the fbi, nsa and cybercommand, they are the key players in cyberspace and they are the ones that we have to get out there with rules and responsibilities. we have to have a concept for industry and government to work together. the way of sharing information, especially on malicious software, in a way that doesn't give away some of our most important secrets. and we have to have a way to leverage industry's capability and what they see to defend the government networks.

if you look at the eastern seaboard, they're roughly 18 cables coming in. roughly 12 coming in from the united kingdom red free from france, two from denmark, one from spain. so if you want defense in depth, the united kingdom, france, denmark and spain, immediately they come to mind. that is where the partnership is so important here. when you bring that up to our partners in the united kingdom, they say that that goes both ways. my comment is, we didn't realize that. it goes both ways. you get our stuff and we get your stuff.

there are some great opportunities for how we can work together as a team. and 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. within the defense department, the secretary, secretary panetta, has made some great strides pushing this forward following on what secretary gates has done. that has built our components and we have gone a long ways. i think that not what the nation now needs is that we have to get this legislation on at some point. we have to figure out the roles and responsibilities for how we are going to share that information between the government and industry. and also how we help industry harden without being overly burdensome and bureaucratic on how to do that. >> but here is a fact. it is interesting. nobody wants rules put down about what you have to do. but let's face it, we are all

getting hacked. in fact, when i look at it, the best run networks, that has been learned over many years, there is a lot that we can share here between government and industry to hardware. most of the i.t. companies know the problems in cyberspace. critical infrastructure. we have to bring that up. we have to fix that. or we are going to suffer a huge failure in cyberspace and wonder why it did not happen. it is coming from my perspective. it is only a matter of time. because if you go back and you look at the book and what you realize, there are significant vulnerabilities out there. and you don't have to be a brain surgeon to figure out how to exploit those one abilities or how to damage them. you can pull them in off the

internet. anyone of you, within 12 hours -- don't do it this -- don't do anything illegal, but hypothetically you would find tremendous vulnerabilities in the systems. it is huge, but we have to get out in front of it. the government can't do this alone. it has to be a government industry partnership, and for us, government industry and our allies. i am going to wrap it up there and i guess i am supposed to ask you a few questions. if we get any good answers. we can reverse that. we can open it up for questions on your part. if there are not, i am out of. >> sir, we have a number of questions for you. [laughter] what are the steps being done

within cybercons regarding the reorganization and training of personnel? are you satisfied with the progress to bridge the gaps in training? or does more need to be done? >> i am never satisfied. more needs to be done. e-mail or text -- oh, no -- i'm not sorcery that. here's the issue. when you think about training, i want to train everybody to the same standards so that the team, especially management, i'll understand the full spectrum of cyberspace. a linguist doesn't have to have the same training as a non-match analyst, one who's going to operate on the network, as one who is going to do digital networked intelligence, reconnaissance, but they all ought to be trained to a series of standards, that from my perspective, brings our team up. brings us up here. step one, i think the first thing that we have to do, and i

give the navy great credit for this, and it hurts me to do this. but i think that the way the navy is bringing together and pulling together is what i think all the services need to look at as a model. what that means for the army and for the air force, looking at our communications -- our analytic community and computer science community and bringing them together as a team and calling that cyber. and then we have to figure out how we can work that out between the cooking and the way the navy doesn't. there is something in there that we really have to address. because if we don't, what we are going to have happen is the communications environment is going to drop pretty drastically. this has happened in the past. the first thing that people say is i don't need that. so if you think about about

radio teletypes, used to have a company, right? now, where all those operators? they are all standing over here to my right. you don't see any and neither do i. they are gone. and what you see is as we transform our communications environment we are going to look over here where our cyberteam is supposed to be and we are not going to have either. so what we have to do is transform the force to that training that we are talking about. and we need to make them all into one team. the next question? >> in reference to your point regarding authority, i have read articles advocating cybercon becoming a unified combatant 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 it made? >> it's a long process.

it is not necessarily an authority issue as much as it is looking at how we are going to operate in cyberspace. it is interesting. in 2007, we drafted -- one of the folks trapped in a paper at the request of the commander of strack, at the time about it. do we do a unified or separate service or functional command? and so we send folks off to study and came up with the paper. in april, may, june, timeframe of 2007 and said we probably need a unified command. but the problem is to get to unified command, it is too big of a step than just making a

unified command. the most logical is to set it up as a sub unified and go to unified. it will take time. it is important to note that as the nsa director, a report to the secretary of defense. i actually execute the authorities on behalf of the secretary. i worked those portions through general bob taylor at stratcom, who then goes to the secretary. half of me is reporting this way and the other half is reporting that way. nobody knows what we're doing except for one of us. and i'm not saying who. i suspect it is the secretary. and so i think that what we will look at is how we streamline that process and they are working their way through that. i'm sure it will take some more time. the next question? >> an important and growing

issue is the use of mobile devices in the cyberthreat associated with them. this brings up the realm of communication. there are now lots of networking entering the marketplace of being used by military members. does cyber, feel it should integrate with electronic warfare efforts, such as the integrated electronic warfare is some? >> yes. would you like me to expand on that? i do think that as we go forward, come you know, it's kind of interesting. when you 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, they are essentially digital networks. if you look at the electronic warfare, it is going to go through that same digital

environment. the form of communications. from my perspective, there is great opportunities for bringing those together down the road. i think that will naturally happen and it's something that we have to push on. you can see that what we are doing in cyber, talking to a system whether you are a mobile device, a radar, communications -- it's got unintentional modulation all these different things. the ability to chirp and the different characteristics. word is a radio. when you think about it, the practical reality is that it makes sense to do that because when you think about how we are going to operate, especially in the military domain, what you are talking about is collecting

and preventing signals no matter what area you're in. it is talking about preventing them from getting into yours and yours and theirs. i think you'll see those class together. >> any recent speaking engagement at black cat, you challenged hackers to join our team of cyberforces personnel. are there any takers so far? >> yes, now they are working clearances. i didn't bring up that part. actually, that was a flip answer. when you look at the hacker community. you know, from my perspective. 90% of the black cat.com community of folks that can

penetrate testers, they can be hackers. but they don't understand vulnerabilities. they understand how to look at a system the system and find out how to get into it. what we need, the defense department and our government, the government and industry is understanding how to work together to solve those and mitigate those vulnerabilities. we do need them to work with us. in the room, we gave them a set of problems in today. yeah, i'm convinced they can solve every one of them. there is not much technical talent. the question is how do we get them to help us solve some of the infrastructure problems that our nation faces? those are the kind of things that my feedback to the community and all of you here is how do we do that.

as you leave here, one of the things that i would ask you to think about is not just that question but especially because we are looking at this from the defense department and government. the practical reality is we should trade him to the same standards. it is the most important thing we can do. and when you look at those folks that are really trained on systems everybody knows, when you think that guy is really good, he can really give them that system. that's what we want that is what we want our people to be able to do. because if they are that good, they will be able to defend and exploit what our nation needs. the other part of the industry players, they help us develop

how government and industry share information in way that does not get liability for you or lawsuits and etc. we need to defend this nation. most importantly in my final thought, as you think about all of that, you immediately understand we are not talking about reading people's e-mails. we are talking about intrusion protection and defense systems that can see now where and to have somebody that there's nowhere. it has nothing to do with the content of an e-mail or phone has everything to do wh now where do we see transiting those networks and the ability to broadcast that for the defense of all of us.

because they don't understand that, this becomes an emotional issue about all the wrong things. and we have to stop that. and you can help. with that, thank you for taking the time and thank you very much. [applause] >> cybersecurity legislation stalled in the senate. it failed to advance and just before they broke further august recess, what happened? >> two things happened. there was a dispute over the substance and also the process of how they would go about it. the substance complains are primarily from european members would think that the bill -- that people get too involved in businesses that -- the banking

system. the democrats say that they have actually watered down a lot of the provisions that the republicans are concerned about, but they were never that close in defining an agreement in those kind of subjects. that was an issue of the actual amendment process. some of those were not related to cybersecurities. abortion or obama's health care law, that kind of thing. they could never come to an agreement. it failed on those two fronts. >> there has been a lot of that on those legislations. for those windows would someone be looking for? >> the commons has been the biggest critic. what they are looking for is none of the pavilion theater relating to voluntary standards, security standard that would be created with the assistance of

industry. that any business see protection of lawsuits in the event of an attack. the other things they don't like it is that we would be in charge of all this. they are concerned about the provisions, whether the provisions that are related to information sharing between businesses and the government would provide them ample liability protection. on the other side, some of 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 federal government and how it would be used. but there were a handful of democrats, in particular, they were still concerned about whether there were sufficient privacy protections. some groups have been critical and those kinds of privacy

concerns. >> the possibility of executive action. why would the white house did not wait for a legislative process to go to the logical and? >> one of the executive actions would be to encourage congress. they have not been successful to actually do something on this. as such, they look at this as something that they will have to take matters into their own hands to identify member of their own things within this particular congress. so they haven't said exactly what they might want to do to take matters into their own hands, they talk about executive orders. they talk about the specifics of

the computer networks and the pilot program, some of these provisions are modeled after them. but what actually will happen with the administration and what they can do is not clear because they were looking for more with congress. >> some people were surprised that senator reid decided to take this bill up in the last week for the august recess. why did his supporters say that cybersecurity legislation is needed now? >> well, if you look at the testimony from some of the partisan intelligence officials who are currently serving both administrations, if you look at past administrations and national security officials -- just national security experts in general, they say this is the big threat that has not been addressed sufficiently. you are talking about, as a worst-case scenario, the kinds of attacks that could really disrupt the entire economy would lead to massive loss of life. now, whether that threat has emerged, whether people have the

capability to do that is a secondary question. but the actual dire nature was pretty bad. >> tim starks with an update on cybersecurity legislation. thank you for joining us. >> on "washington journal" tomorrow morning, we will talk with time magazine correspondent michael grunwald about his book on the 2009 stimulus bill titled the new new deal. former comptroller will take your questions about the national debt and we will look at childbearing and fertility rates with stephanie ventura from the cdc national center for health statistics and adam thomas from georgetown university. "washington journal" is live on c-span every day at 7:00 a.m. eastern. >> all this week on c-span2, q&a on the u.s. military. friday, and interviewed with

mort carroll. a website that provides information and support to current and former service members and their families. he talked about military issues and the cause of the wars in iraq and afghanistan. that is at 7:00 p.m. eastern here on c-span2. this weekend on american history tv, 75 years and familiar ehrhardt failed attempt to circumnavigate the globe, former air flight surgeon and aircraft crash investigator died shares findings on life in disappearance. also this weekend, the contenders. our series looks at political figures that ran for president and lost and change political history. >> segregation now, segregation tomorrow, and segregation forever -- this sunday, former

alabama governor george wallace. american history tv this weekend on c-span3. >> a consumer financial protection bureau report says private student loans now have reached $8 billion. representing more than 850,000 distinct ones. witnesses before a senate jack romani. this is one hour and 40 minutes.

[inaudible conversations]thanks >> the subcommittee comes orderf things to the senator senator for the work he does with the subcommittee. thank you senator akaka for joining us.ng the my staff has a working relationship with senator corker in making the subcommittee urarings work much better as ats result. nati's on february 29 of ninth of this year, we passed a central curr legislation, not only insurance funding for our nation's infrastructure and highway system, but also current student loan interest rates of 3.4% the with passage of this legislation. some we figure 382,000 of them

living in ohio. loan without this extension from the average student, if they were td face an additional thousand dollars in student loan debt for subsidized stafford loans. my i spent a lot of time inand community colleges, andout hear particularly cleveland and talking about hearing the stories from a number of students, sharing with me youren fears of graduating even without this legislation, obviously, high levels of student loan yeat debt.u others share the experience with family members and friends years after graduating from college.yt this isn't surprising. earlier this year, student loan debt knows that as we have hears repeatedly, student loan debt soars more than one till yound dollars. people of all generations, obviously not just a student, but sometimes even theas grandparents. according to a report released

by the federal reserve bank in new york, the average student loan debt for borrowers under age 30 has.s risen 56% since 2. meanwhile, borrowers in their 40s are least likely to default. it's ts and grandparents may have cosigned for a son or atioe granddaughter must share the burden of the youngersa generation. de it is clear that more must be w done. high levels of student loan debt while helping dollars on 10 borrowers of all ages get theiro student loans. that is why today's hearing will focus on the challenges facing borrowers in the private student loan market and white is so important. it is a small portion of the overall student loan market. hae american consumers only than $150 million in outstandinge tat private student loan debt. increased 14%ve of undergraduates and 2007.it is up from 5% in 2003 and four andt continue to increase.ith this is a risky way to pay for o

college. often these loans come with ora bearable interest rate ranginge from 5% sometimes to 18% with ny limits of origination and other fees. additionally, unlike federal ons ort loans, private student loans are less likely to come with a portal payment plans for loan forgiveness or with deferment options for cancellation rates.vate given the risks and challenges, as well asnt the opportunities have aby private student loans, including the inclusion of f private student loans is part of the dodd-frank legislation.iled the first time in history, a borrowers have a central placen. to go file complaints and have an advocate inside they th government. bureau last week on the consumer financialrt protection bureau,er which is also as we know, an. active dodd-frank, help the ter. consumers who used these loans. many borrowers took out private

student loans without fully opto understanding the terms. now, many of these powers are settled with thousands of dollars of debt without any options. hopefully this will allow us to face the challenges faced by these and other students. in the short-term, we can explore ways. short-term options to get out from under the burden of high costs private student loans in the longer term. i hope we can provide more options about cost and predictability when they are trying to work with their services. i will conclude withs a story.hb she graduated from college in 2009 and she joined the peace corps.lender to she almost [inaudible]work she came to one of my stitch a with friends and asked for helpn the work of my staff will do for loans.

ann therese was able to goon abroad with domestic issues. .. 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 7 temperature of the loans were private, and the other 93% of

the loops were backed by the taxpayer. all of us know the real problems we need to consider in the rising cost of college tuition and the amount of student loans. on one hand the federal government seems to want to help solve the problem and on the other hand continues to mandate the states, things like medicaid in our own state, every percentage we spend more on medicaid, we spend less on higher education, and that's the driver of why students are borrowing so much money. i'm unconvinced that the change is in any way benefiting students or taxpayers. there are -- i'm pleased that

sallie mae is here to talk about the progress they have made and encouraging students to borrow more responsibly and i look forward to the testimony of the witnesses today. >> thank you, senator corker. senator reid. opening statement? >> thank you very much, mr. chairman. well, good afternoon. thank you for being here today. all of you -- i'm pleased congress is continuing to monitor leading practices regarding student loans. the quality must include an understanding of economics and personal finance so that all americans will be prepared to make sound financial decisions. i look forward to hearing an

update on the consumer protection bureau on the work they have done to include the consumer financial marketplace. thank you all of the panelist for your testimony today, and i hope that the insights from this committee work towards ensuring that students have safe options for obtaining financial support for their college education. thank you very much, mr. chairman. >> thank you, senator akaka. one point i wanted to make. the reason this hearing -- we don't have jurisdiction over federal loans the way we do student loans but the whole issue is one debt. ite like to introduce the first witness, rohit chopra, from the

consumer financial protection bureau, the student loan ombudsman. he worked at the department of treasurery and holds a ba from harvard, an mba from horton. mr. chopra, welcome. >> thank you. chairman brown, ranking member and members of the subcommittee, thank you for holding this -- student loan debt has now crossed the $1 trillion mark. now college is still a great investment. graduates have lower unemployment rates and earn higher wages but there is another side to the story. 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. uden leinghe crisis private the significant word that lies ahead like the mortgage industry, practices are much less common today. loans are co-seened and have significant disclosure requirements. but like the mortgage market there are still opportunities to make improvements. private loans often lack repayment flexibility. this allows student borrows to remain current. but this does not impact private student loans.

private loan borrowers experience challenges win attempting to restructure their loans due to capital mark conditions and an unusual status in the bankrupt court. even the most responsible borrowers feel stuck with high monthly payments because they not can easily refinance in march the cfpb launched the student loan complaint system where borrowers have received help and lenders learn more about the borrowerrers' experience weapon work closely with the department of education to start a "know before you owe" this morning, and how to navigate they're student loan repayment options and honor their commit. we happen to continue or work with other agencies that might play a critical role in

addressing road blocks. while student debt might not pose systemic risks like mortgages, it would be imprudent to dismiss the growing indebtedness can be a drag. without a refinance option, students struggle to reduce their payments even though they have built a solid credit history. so what might be the consequence? take he housing market. first-time home buyers are an important source of demand, and buying age are living with parents and in addition to home ownership, dat reveals low participation in contribution trites employer retirement plans among young graduates, which can challenge their future retirement security. congress and federal agencies

have taken steps to increase liquidity and the functioning of the credit markets in recent areas but the current conditions in student loan marks may have a long-term impact on the economic vitality of many barrio aressed to. many are unable to secured aity credit accommodations. -- paid significant attention to conditions the in the mortgage market but given the impact of student dead on the economy, this demonstrates the need for attention. -- work better for borrows and honest lender. we look forward to work with congress and policymakers to make sure economic mobility is still within reach of those who borrow. i look forward to your questions. >> thank you, m-chopra. in your private student loan report you note the average

interest rate in a sample of student loans was 7.8%. we now hoe with the federal reserve's monetary policy action, interest rates are at record lows. talk to me about that differential. why so much higher for student loans? what does that mean in terms of students not being able to taked a vong -- advantage of those low rates? >> one you effect thing about student loans, such as private loans, once someone takes on the loan, say they're 18 and appreciateman in college, they're credit profile can significantly change over time. so while an 18-year-old they might be considered higher risk but by the time they're a graduate and gainfully employed and paying for a few years they might be a much 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 borrowers may be paying higher rates than is justified. >> where are there not refinancing opportunities? >> it's not clear exactly but historically the market developed as a a consolidation market so essentially multiple loans you could consolidate into a singing payment. has to do with the way the federal education family loan program was struck tiered. partially do to capital market conditions but we simply do not see many lenders actively competing to find borrowers who may be able to refinance. >> is there large of knowledge on the borrowers part to not think about refinancing? >> yes. i think that is right. >> if they were -- answer that.

if they were more knowledgeable, are you suggesting there would not be the opportunities to refinance because there are not enough opportunities in the market? >> yes. you're right. i think many borrowers don't know that refinancing is an option, but we do hear that many of them-duty my paying on time for months and years and unable to manage their debt better. current through there's not a large amount of marketing or offering refinance. it's generally marketed to people so they can reduce the number of loans they have into a single payment but not necessarily to compete down the price. and a more competitive market amongst lenders would probably serve to benefit the entire marketplace. >> let me shift for a moment. you know that -- in your testimony you note that federal

agents -- citing unusual and exigent circumstances exercised authorities -- facilitate issue shoance of a wide range of abs, including those backed by private student roads. there is reel for the federal reserve and providing relief for private student loan barrioers. >> those that monitor the capital markets have role to play to make sure the market is liquid and well functioning. i wouldn't nextly characterize it as relief but characterize is in terms of increasing competition so that pricing is more fair and more connected to risk. we have seen in the mortgage space the fha has south to create the conditions for responsible mortgage borrowers to refinance, and many responsible student lone

borrowers see their credit profiles dramatically improve but the market may not be liquid enough to appropriately price their risk and allow them to have lower payments. so we look forward to providing any expertise the federal reserve board of governors and others as they monitor conditions. >> thank you. >> thank you, mr. chairman, and thank you again 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 we have made happen in a big way at the federal level, but that has a direct relationship on what tuition levels are for students and that's one of the main drivers of why theirs so much student debt, is it not? >> so, it's certainly true the constrained state budgets, many of which were badly battered in

2008 as declining tax revenues win down, as well as other policy intervention asks there has been cuts on a real basis to state higher occasion so we have to not just address the underlying costs of higher education but also to make sure that financing marks -- >> that's fascinating. dealing with an issue that over the last several years we have helped create and action sir bait and will continue to exacerbate over time. i just want to point that out. i understand your agency, new agency, is advocating that on the private side, just have the ability to discharge their loans through bankruptcy. is that correct? >> it's actually a little bit different. the report that the secretary of education, director of the bureau directed to congress on friday, analyzed five million records of data starting in 2001

and going forward, and we expected the 2005 changes to bankruptcy code would have led to lower prices and greater access. but immediately following the legislative change we did not see a price decrease. we actually saw price increase, and larger capital markets conditions we think largely explain volume and access to credit. so the director of the bureau and the secretary of education asked congress to take a second look, given that borrowers for private student loans play not be able to easily restructure they're amortize sayings schedules like in federal loans. >> so you asked congress to take one of the first actions of the consumer bureau is to ask congress to look at allowing students with private loans, not public loans, only the private loans -- to file bankruptcy as a way of getting out from under the terms and conditions of those private loans. is that correct? >> we have asked congress to

take a second look. we're happy to provide more expertise -- >> i understand what you're saying and i think we read the report. i find it fascinating that one of the first things you would do as a consumer protection agency is get to us consider letting students -- generally, only on the 7% private loans, not the 93% public loops -- be able to file bankruptcy, which i wound the most damaging things a consumer can possibly do. i just would like for people to take note of that, and i think you understand that on the private side, they do not have the flexibility that you do on the public side, because on the private side, the prudential lenders will not allow them to do many of the things that happened on the public side. you aware of that? >> yes of we have been working closely with lenders to identify areas where certain guidance -- there can be win-win situations

for both borrowers and lenders. lenders feel constrained by the guidance and we think there's opportunities for capital adequacy measures to be meet while still allowing the market place to function. >> i think you can see now why so many of us thought there was a really terrible idea to have he consumer agency separate from the prudential lenders. so we have this problem where basically your getting guidance on one hand that is very contrary to what the safety and soundness regulators are saying that and it's this exact conflict -- again, it's fast nateing to me that one of the very first things out of the the consumerring a -- we see this conflict that on the private side the prudential regulators will not allow the private lenders -- give them the flexibility actually work through the issues, and so therefore they have contrary -- i think it's fascinating we're having this hearing.

think it's fascinating you're not advocating 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 borrowers, which avoids the damaging parts of the going to court and hurting your credit history. so, a borrower who is unable to make their payments is able to elect the income-bailed repayment on, which casts their payments as a percentage of their desdiscretionary income. so that's a great low-cost model for borrowers we think is a way to weather the unique circumstances of a student loan product, given labor mark uncertainties. and i say that our relationship with the prudential regulator has actually been extremely productive. we have actually been able to

fine opportunities where we're identifying ways to promote innovation and ways that the whole financial system can actually prosper, and our work on private student loans with other regulators i think is going to be seen by lenders that is one that is win-win for the whole market place. >> hope that's the case, and i appreciate very much you being here and look forward to sallie mae's testimony in a moment. >> senator reed. >> thank you very much. first thing want to do is commend you for connecting the dots, as they say. for not just the huge debt overhang but the effect it will have on buying a house for the first time, of being an entrepreneur starting a business, reserving money for retirement. this is one of the most daunting challenges we have to face. we might have a whole generation that can't get start until they're maybe the their

mid-30s and doing things we assume could and would be done in their mid-20s. so that's the important point. jurisdictionally, your responsibilities, given the nature of the organization, is solely with respect to the private sector lenders, not the public domain. >> the ombudsman function and rulemake can relates largely to private student loans on the origination side. >> but suffice to say a lot of the insights you have drawn could be applied to the public sect you're. >> as senator corker said it's very important for us to look at this holistically. in a recently released report, the treasury's office discussed the student debt burdens could depress demand for mortgage

credit and dampen consumption, both of which may be critical drivers for the recovery. so, again, looking at it hoe lisicki, one of our first actions was working with the department of education to actually improve the financial aid information and student loan information people find. so we're allowing schools on a voluntary basis to present a simple one-page financial aid shopping sheet which gives them all their loan options and what they're estimate payment might be after graduation, and already so many schools across the country have embraced this and we're happy to enter this for the record. >> one of the costs of the -- escalating cost of the college education, and even though you focus on the private lending sector, you looked at both public and private institutions. there is a -- >> there has been cost increases

and increased burdens for debt across institutional sectors, and they're not responsible for public -- medicaid or anything else. what is driving the private institutions to increase their tuition so dramatically? >> i'm the wrong person to answer that specific economies of college costs. we're a bit more focused on the financing. generally speaking we have seen over a period of many, many years escalate costs of college across sectors in excess of inflation, and particularly we have seen debt burdens be very high in the classic conditioning sector where utilization of student loans war particularly high. >> that goes to a quick technical question. there are prepayment penalties included in the language? >> the truth in lending act

actually bans prepayment penalties for private student loans, which one would anticipate would help facilitate a rather robust refinancing market since borrowers would not be penalized for trading one note for a less expensive note, but that has not born fruit. >> actually, that's very helpful clarification. and then the other issue i think, or along with several i have -- is there a correlation between the school and the private loans? one thing that you have suggested you have now a format where everyone can check it out but this lack of competition, essentially some schools steering students to these private loans and there is any kind of relationship with the schools and the private lender? >> so, in 2007, at the state

level, state attorneys general, identified a certain unsavory relationship between schools and private lenders, but the 2008 higher education opportunity act has largely changed that, and we see a much better relationship between schools and lenders. in fact, we believe that involving schools more in the process, by requiring certification of student loans, of private student loans, actually help schools better counsel their students on their full range of options. the only market place that remains where is there arrangements between private lenders and schools is -- that presents and risk that is worthy of attention is certain lending arrangements between the proprietary school sector that perhaps are driven to help with compliance with the higher education acts.

>> if i may -- you point out that there are quasi-bankruptcy, which is to make income-based on repayment. that does not exist on the private lending side, and the issue here is not -- the issue is not that someone can't file bumps it's that they can't discharge the loan in bankruptcy? >> correct. the private loans are treated differently compared to credit card debt. >> and that's a federal debt. >> correct. private lenders have increasingly told us they're looking for ways to offer more repayment flexibility, and we think that that's a great opportunity, and, again, we hope to engage with lenders and prudential regulators to find

win-win solutions for capital adequacy, student lone borrowers. >> senator akaka. >> thank you very much, mr. chairman. mr. chopra, the testimony and report you presented today suggests that the students have taken out too much debt through student loans because of predator lending practices. you have also noted that students should consider taking 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 but it's very important to note that education induced indebtedness is certainly far higher. many families utilize home i can witness lines of questioned. credit cards and other products 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 fulltime student. so, there's certainly a role for private credit in this mark. don't get us wrong there but we want people to make more optimal borrowing decisions and we think some of the steps to make the whole market more transparent, like with the shopping sheet, is a good first step. >> thank you for that. i understand that cfpb often hears from students who are

struggling to repay their student loans through the student loan complaint system. private student loans were initially developed to support and supplement federal student loans. since the market contracted in 2008, there have been fewer lenders, offering private student loans, and those that are offering the products, often require cosigners. my question to you is, how is cfpb helping students who are unable to access student loans. >> in the report the director recommended the role of the financial aid office inland decisions be substantially

enhanced and by, one, having private student loans be certified, financial aid offices can be able to provide the full range of financing options and many times use professional judgment to adjust loan amounts to borrowers are able to meet their tuition obligations and still borrow responsibly. you're right, there's still ways to make sure that the private loan market can meet the demand at a fair price. >> i must commend you on your marks at cfpb, have been 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're doing. mr. chairman. >> senator. >> thank you, mr. chairman, and mr. chop practice, thank you for being here today and what you do. on the report that cfpb recently released, on the issue of the institutional loans made directly by the for-profit schools to the students, it's advertised as a way for students to fill the gap in their tuition after they've exhausted federal loans or pel grant money, and i think part of what i heard you say in answer to your question,ed a to do with the 90/10 rule, which we might ask you to elaborate on. many of the loans have interest rates as highs a 18%, and in addition to serving on this committee i serve on the education committee, and the department of ed and the help committee have looked at a number of these different

for-profit schools, and one in particular has an interest rate student loan at 15% and also have a default rate at 80%. another school has an interest rate -- these were in 2009 and 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 rate which i think speaks directly to the aggressive recruiting nature of some of these schools, that they're really not that concerned because the default rate is so high, as long as it means the student is in fact enrolled and federal dollars have been collect. does the cfpb have plans to study these types of loans further and are there any recommendations you can offer that will address the institutional loans made be the for-profit colleges and

universities? >> in recent years, there's been financial reforms that have indicated a couple 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 sell them and to surety securitize. and in the mortgage market lenders have to consider whether the borrow are can repay. >> that's a good idea. >> in generalhen an entity is able to come out ahead even when they expect up front the customer will likely fail, that may be a sign that competitive market forces aren't really working and incentive are

dissers toed. the bureau will continue to monitor that market closely and as you have mentioned before, we have also looked in this sector at the recruitment of veterans and service members as it relates relates to compliance with 90/10, and my colleague, holly petraeus, has been quite outspoken about this and we look forward to continuing to work with other agencies. >> speaking of the 90/010 rule, the g.i. bill is not included in the 90%. so in most cases the federal loan assistance is much higher than then 90%. >> what you're saying is correct. we are currently experience a

rapid increase in the number of veteran returning from foreign conflicts who are enrolling in higher education. so, i think it's in the interests 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 do not unnecessarily take on high cost credit win they have benefits. >> when you look at the high expected default rate, needs to be taken into consideration. >> yes. all aspects of how the market place works are something we closely monitor to ensure that the market fully functioning and that there's compliance with consumer laws. >> one of the recommendations made in the recent report states that congress should require the institution office higher ed work pro-actively to protect and form the private student loan borrowers. it would be like know before you

owe or should it be soley the responsibility of the school to protect and inform the borrowers, or should the lenders take some responsible and ensuring their borrowers have clear, con signs, and accurate information? >> so everyone has responsibility and borrowers certainly need to take responsibility for the commitments they take on and need clear information. but the point about financial aid offices 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've not already overborrowed. very common-sense underwriting principle 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 able to

repay. >> thank you. >> thank you. >> mr. chairman, mr. chopra, how are you? >> good, how are you? >> veil well. i heard your response to a question with reference to borrowers who feel trapped in their present interest rate and not able to refinance in essence at lower rate, and i think your answer to the question was that there's not enough competition. is that correct? >> well, it might not simply be that there might also be issues in the servicing infrastructure where borrowers may not know they're able to make certain changes to their loans. so i think it's market conditions as well as financial education, and the servicing industry. >> does the bureau have any ideas or suggestions as to

either how we create greater market competition or greater in-flows of information for individuals so they can exercise their rights? >> sure. i 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 to make their payments. and we have already released a number of web tools and other partnerships so students know how to manage their debt bert. one thing we do here is even if they want to refinance, there's 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 constrain them and the processes to do so can be paralytic. >> as someone who has been an advocate to allow mortgage

borrowers to refinance at historically lower levels, it seems to me that we should find the where -- wherewithal to have responsible borrows relieve their debt load at the end of the day so we'd love to maybe pursue that a little bit more with you as well as how do we stimulate creating competition so that in fact the marketplace itself would find itself more robustly engaged in which way fall. how about the part of the report that noted 50% of private student loan borrowers had nod exhausted their federal student loan limits and in that respect, obviously before you go and borrow in the private sector, wouldn't it be more desirable to maximize that which is viable you under federal student loan limits because they're generally

lower plate. >> ism you count people who don't even apply for federal loans that number goes north of 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, and there's a lot of work we try to do so simplify disclosures and this is smaller cost for financial institutions to provide and much clearer to borrowers. you should not need an attorney and a mag any -- magnifying glass to understand your

responsibilities and obligations. >> are there other opportunities in which we can get financial aid departments to be more robustly engaged in saying, here's the ability if you qualify before you consider taking out a private sector loan that would be more costly, you should consider the federal loan limit? >> in fact most lenders will strongly agree that federal loans should be looked at first, and many of them communicate that to their borrowers. so giving financial aid officers the opportunity to actually counsel the student before the consummation of a private student loan help, and we heard brought support from lenders, consumerrer groups and schools for this. >> finally, i listened to my distinguished friend and colleague, senator corker, express his concerns about the interface between the bureau and

regulators. in the process of doing this work did you find the prudential regulators were doing the type of consumer information and advocacy that the bureau has been doing? >> we have a very explicit mission on financial education and also to assist borrowers with the completion of financial aid applications. their primary role is to ensure the cap cal adequacy of the system, and they do work with us on financial information work but we have placed a major emphasis on that because we believe it can ensure a more robust marketplace across all consumer financial products. >> thank you very much. >> thank you, senator men anyone des, senator cork, one more set of questions. >> you're obvious he a very intelligent person, 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 and you look at the amount of money they're making and you wonder when they're going to have a real life because they're working two and three jobs to pay the loans off. my frustration really is that the hip possesscracy around all of this. on one hand, we hear, specially during election cycle, talk about student lending and student loans, and i assure my my heart goes out to students with huge loans that it may never be repaid or may take 20 years. yet we advocate policies here that drive up tuition raise. on the private side, which senator menendez were referring to, they're seeking stability but the approve dental regulators don't give them the stability so does the hypocrisy that goes with this whole testimony dirk not you but the

difference between the consumer agencies and the prudential. then we pass a law that says that student rates are going to be at 3.4%, just pull it out of the air. so those loans are to all-coppers, regardless of any kind of credit status. no collateral. no payments made for four years. there is any way you as an intelligent person could possibly imagine the federal government is going to come out on loans like that and are we not again demon straight tremendous hypocrisy and we're really piling up debt down the road these same students have to pay off? there is any way when an agency is taking all copperrers mark collateral no underwriting to payments made while their in college, any way the federal government could possibly come

out into the go on 3.4% loans? >> the rates set by congress of a bit outside our jurisdiction but i will say that the market for -- the global competitive mark is very, very fierce, and across all indicators, having a highly skilled work force has very real economic growing potential, and investing in a way that is strategic such that people who may not have means can access education, there's significant upside to that it's absolutely hard to underwrite that type of loan, and many cases you see that, how can you anticipate whether someone can 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 ensuring that the work force

is built with skills is something that needs to be a priority as well. so we have to balance these and it's a carol one and we look forward to working with it. >> i think your answer is no financially but there are other benefits -- >> no. it's an, i don't know. >> thank you. >> thank you, mr. hope practice, very much. i'll call the second panel forward. i think, senator corker, that's plenty of hypocrisy going union when i see what governments have done when we were in college and schools like ohio university were consider the standard universities or we can blame it on medicate or tax structure or other issue bud that can come later. 'll introduce the three members of the panel. deanna kline, the director of

the borrower assistant project and provides direct represent television to low-income student loan borrowers, and teaches consumer laws to private consumer attorneys and other advocates. she received her ba from harvard, radcliffe college, and her jd from the university of california at berkeley. jennifer mishory, a nonpartisan organization that represents the interests of 18-30 years. directs the outreach staff for the organization. served as the consumer advocacy representative in the 2012 negotiated roll -- rulemaking on student loans, holds a -- >> jack remondi is part of the

communications division. he served as vice chair and chief financial officer for he helped sallie mae navigate financial challenge posed by the economic crisis and searched e received his ba from connecticut college. miss loonin, if you would begin. >> thank you, senator, and thanks to all of you for inviting me to testify tonight. my name is deann loan-in, and home here on behalf of the low income client wes represent and work with. it's important from the outset when we talk about students who we work with, they aren't just young people going to traditional colleges. it's a very important polys. but actually the face of higher education is much more diverse these days, and we have clients who are what are really called nontraditional students. mean are they're often older

when they go back to school. in many cases they are independents. thes and don't have parentses and families to fall back on. so we have clines who are still suffering under the burden of student loan debt throughout their life, and in in some cases parents having cosigned most of our clines have federal student loans but when we saw happen up to the credit crisis was that we were seeing a lot more low-income borrowers with private student loans and the market that was sort of taking place prior to the credit crash, essentially, were the kind of subprime predatory market that unfortunately we saw in other credit markets as well. and 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, but the main point was that a lot of the loan that

were made at that time were unfortunately really destined to fail and they did fail. very high writeoff rates and a lot of people who took out loans, they were never going to be able to pay back. i saw loans at that time for my clients with interest rates upwards of 20%, 25%, and these were variable rate loans and very high origination fees as well. some of the same sort of rationales for making the loans in the mortgage market, that's would have benefits for low-income borroweres, and actually instead what we had was taking opportunity away from a lot of those borrowers. a reverse red-lighting situation in a push market. fortunately the mark has changed. we don't see those third-party subprime loans for most of our clients anymore. there's been a correction because of the failure, really, of the market, and that's why

it's such an important time right now for policymakers. there's just two broad theme is want to emphasize and there's more detail in my testimony why this is such critical time. the first theme is that the opportunity is now to shape the market that's going to reemerge. there are more responsible lehning practices going on now, and we're all very heartened to see that. but we want to make sure that the same things that happened before don't happen again, even if that means it's a small private student loan market, that's better for our client if it means they aren't going to be stuck with predator loans and unaffordable loans. the second theme that we have spent a lot of detail nonour tim, is we need figure out ways to provide relief for those who were harmed by the predator practices of the paste. the lenders, as we have seen and will hear i'm sure more from sallie mae -- have moved on but

the borrowers haven't been able to the futures are shattered. these are my clients -- both with federal and private loans. the difference we find on the private loan side is that there's so little flexibility on the part of the lenderes. we talk with the private lenders all the time, try to negotiate modifications, income-baked repayment, things like that, and the relief available is very short-term relief. unfortunately it's short-term relief bought these are long-term structural problems. understand there's barriers. senator corker mentioned there's problems with the prudential regulatessors. that's what we hear. we don't know if that's really the problem that's prevending lenders from offering broodser relief, and if it is we want to find out ways ways to be flexibe about those in some ways what is

happening in the mortgage market and also heeding the lessons we learn from the modification programs in the mortgage market that these have to be flexibility, affordable, modifications and also some principle production because that's going to make its less likely the borrowers will redefault. we also would like to look at the possible of cancellations in extreme situations like death and disable. some lenders offer this at their discretion but the idea is to have a more standardized transparent policy so borrowers can know what to expect in these extreme situations. again, i have more detail in my testimony, including policy prescriptions and happy to take questions at the end about those. >> thank you for joining us. >> chairman brown, ranking member corker and other members of the subcommittee, thank you for having me, i'm jennifer mischory, and i'm the deputy

ticketoff or young invisible. we seek to represent the interests of 18-34 years, making sure our perspective is heard when decisions of our future are being made this. spring we released a report detailing the experiences of high debt borrow are's if private student loans. it an lead i a self-selected survey of 13,000 borrowers, and just completed a 40-state bus tour, talking to young people from all walks of life. our reaction of young people make it clear. borrowers are struggling, students are confused and as the private loan market reemerges future students need more guidance and protection, as has been detailed, the private loan market has shifted in the past ten years. leading to more predatory lehning, led to significant inning crease in prerecession market. then the market merged and consolidated. recently there have been finds

that the student loan market by on the rise. sallie mae is expecting growing in new lienors second consecutive area. as a student loan market expands and evolve again, stakeholders must assist struggling borrowers and set up the next generation of college-goers for a better financial future. borrowers encountered an array of difficulties. the complexity of terms and it's -- students are not informed enough right now. for example, two-thirds of private loan borrowerness the survey said they did not understand the major differences between private and federal loan options. this is a problem given that federal loans often have better rates, better repayment terms,

gives terror relief when a borrower faces unemployment and has more standardized payment fee requirements. >> at the at the same same timef borrows town to their schools but the offices don't always have the right answers and they're not involved enough. ... dtable 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 not 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] thankou 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? ..

unfortunately there are a lot of students going to school who borrow more because obviously that caused his heart. it's a complicated problem driving the costs. one thing i think is important to look at this accountability come to something corporal campout, across all outcomes for completion, job placement because the ability to repay the loan frankly at higher cost in institutions is more on the education to if you succeed inee federal programs that there is d flexibility in option, mostrogrt likely it's going to be a situation that the borrower will come out ahead and it's good foe the economy and all of that as borrower well. as far as having 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. a

>> i started as a copy boy at "the new york times." as in a training program after the army for "the wall street journal." they built a facility to japan, which is about 40 people. if you spent $4 million on an elementary school, at that someone would raise questions. >> the u.s. surgeon general, surgeon general, regina benjamin spoke about the national prevention strategy and the importance of care in treating

diabetes. her remarks are 25 minutes. >> caporusso era [applause] thank you. thank you ramage. welcome to the 2012th annual scientific meeting. what a great meeting, no? [applause] this meeting will be unlike any other apma event you've ever attended. not only is there sainted her from the most medically advanced it's ever been in their exhibit hall completely sold out, but as you just saw on the video crew were celebrating a 100 year anniversary of podiatric medicine. [applause] in july 1912, 225 members gathered to recognize the

nationalists is you should dedicated to practicing such a rapid pace. what they started to become the premier association for more than 12,000 diatribes and the physicians commiseration and specialists of the foot and ankle. we are today's podiatrists and will continue as long and proud history podiatric medicine. i am honored to serve as apma president. i especially welcome you to the national, today in our nations capital. i hope the next few days are both educational and celebratory for you of. we started the 100th year anniversary celebration with a very special guest. i am honored to introduce to your regina m. benjamin

committee team surgeon general of the united states. [applause] as our opening session speaker today, as america's stature, she provides the public with the best scientific information available on how to improve their health and the health of our nation. dr. benjamin also receive via ration of command and 6500 uniformed public health officials who served in locations around the world to promote and protect the health of the american people. dr. benjamin is the founder of a rural health clinic in alabama. when she kept in operation despite damage and destruction inflicted by two hurricane, georges and katrina and a devastating fire in 2006. today knishes later in the world by defenseman of health care.

dr. benjamin has forged a career recognized by a prospect john of organizations and publications. dr. benjamin has the s. in chemistry from xavier university in new orleans, and b. from of alabama in the ring him and from tulane. she completed in making church. dr. benjamin holds 18 honorary degrees. please help me welcome your surgeon general, regina benjamin appeared [applause] >> well, good morning. the lights are kind of break on

so it's hard to see it, but i can see lots of people. thank you, dr. caporusso. it's really wonderful to be here with you today that 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 this. on behalf of president obama in the entire administration, congratulations on the 100th year on the profession of podiatric medicine. [applause] you really do have a lot to be proud of. the apma is committed to maintaining integrity and quality of the education and training that atrios receive and this has led to the success of the profession of podiatric medicine. he really do have a lot to be

proud of. i was talking with some of the board members earlier than i realized i wanted to share with you just how got involved because many of you here or here for the same reason. when i was an intern i attended the medical association of churches annual meeting in one of the intense issues debated with a transmitted diseases need to be tied in medical school. they sit up and are worth maybe 15 people are so instead i've never seen the diseases except in textbooks. the resolution passed in the church georgia delegation warranted that resolution of the american medical association. they sent me to the ama to speak to the resolution. and it also passed. within six months, every medical school in the country was encouraged to include transmitted diseases is hard at the core curriculum. i learned that one person can

make a difference whether it's in medical policy or medical practice. hibernate can make a difference in medical is. it's a pretty place, but it's a poor place. i found a community of working poor, too poor to afford medical care, but too rich to qualify for medicaid. i like the people in the community and i wanted to practice medicine they appeared to click later learned practicing medicine wasn't just filling up the sharp ice. i had to regulate the reviewers have read tape, paper and things to go through. i also learned my prescription pad wasn't enough. my patience had problems that went beyond that. for example i education who had seizures and for a long time to render control come to she came in and said i'm starting to have seizures again. i asked her come in via

mr. medicines are likewise she said no, but to cut a piece of paper and drew because i asked patients to rate things for me. she said gmr pharmacist is to give of her this post i were a solid and when the sister. now she gets to stripes. then i realized that donna was in her 20s could not read. no matter what i did, i had to find some sort of service to help her read. it is just as important as keeper blood pressure under control. another patient, ms. smith. she called me on a saturday. she said dr. benjamin, payback is really really, really

hurting. he told me i needed to lose weight and i'm really trying, but my back is really hurting in the ibuprofen is not strong enough. can you call me in something stronger? i said sure. i give you the pain in her voice. he said you need to come see me on monday or day. i call your prescription, but come see me. she said sure, i'll be there. sure enough unto his day i walk in the exam room and there she was leaning over the exam table in so much pain that she couldn't sit down. i said to the medicine i call you and help you at all? she said well, i didn't get it. what do you mean? she said i didn't have the money. i said that you have insurance. you work at the school system.

in the janitorial department. you have insurance. she said yes, but i didn't have the co-pay. i get p.m. friday and i promise you'll get it. so i stepped out of the room and went to go across the gym to get menacing. when i came back and went into the room and i said here is your medicine. i can see a really hurting and i want you to start taking medicine. at that ball at her eyes followed up with tears. she said dr. benjamin, i'm so embarrassed. i didn't want you to have to do that. and i realized at that moment i had taken her dignity. and i also realized -- by the way i didn't tell you, she's like i felt for african-american lady had a really sweet lady about that tall. i realized at that moment of

that the fact that they'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. i had to figure out how to get out of that. i told her the fact that we had a few people to send us a small amount of money, donations, call it a vindication fun for people like her and if she wanted to pay back when she got paid on friday she could and they shouldn't have to and she was okay with that. so as i was leaving the room, she says by the way. in her by the way wes can make it work excuse? i said sure, today is tuesday, and start taking a medicine, human to go back thursday or friday? she said no, we have to strip the? of the floors tonight. i have to go back tonight.

here is a woman who was in so much pain she can't even sit down in the exam room, viciously destruct the? out the floors so our kids can go to school in a clean environment. so it was people like her of his plan to come and take this job so i could be a voice for her. it was so gratifying for me with the affordable care act passed in preventive health services are now required by insurance companies and also required with no co-pay. so i call that my mrs. smith story. [applause] you know, one of the most important aspects that you do as a tie-dye traced his visit

diabetes, including those in diabetic management is a vital step in preventing amputation. i have been a long-time champion of the power of prevention and if the foundation of my work as surgeon general. you know, hope does not occur in a doctor's office in hospitals alone. help also occurs where we live, where we've learned, where we work, where we play, where we pray. i believe that prevention offers the greatest opportunity to improve the health of america's families now and decades to come. i also believe prevention is the key to building a stronger and more sustainable health care system and prevention is not new to the national dialogue. however in recent years has become more vital and relevant than ever before. it's become an imperative. that is largely due to the

changing dynamics of demographics is more american families struggle to deal with chronic illnesses such as diabetes and hypertension and cardiovascular disease, impacting people of all ages, ethnicity and economic stress. in the case for focusing more of the nation's attention and resources on prevention is more than a theory. it's a reality and is grounded in science and experience. we note that her health children are better able to learn. we know it but a-alpha dulcimer more productive at work and they work more days in the wider health, seniors can better maintain their independence. on the other hand, we know the lack of prevention takes a devastating toll on patients, families, communities and the work place. it's interesting that should be on this and early death is related to chronic disease

caused by china's for modifiable risk behaviors. 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 and the overall cost resulting 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 and several million of them don't even know they have it. diabetes is the leading cause of kidney failure, not germanic lower limb amputation and new case of blindness among adults. type-2 diabetes is an emerging

health problem in use, particularly minority is being driven higher obesity epidemic. and i've got more statistics for you according to cdc that the current trends continue, as many as one in three u.s. adult could have diabetes by the year 2050. after 25% of those with diabetes develop foot ulcers. more than half of all foot ulcers will become infected, requiring hospitalization and one in five will require amputation. also, people with a history of diabetic foot ulcer or 40% more likely to die in 10 years than people who have diabetes alone. it is so important that quality, podiatric care must continue and must continue to advance by preventing amputations and hospitalization, podiatrists not only save lives and in an health

care dollars, they also help haitians preserve dignity and quality of life. we have to make prevention part of our everyday life and empower people to make better health choices. i am pleased that the obama administration has flashed a broad agenda to get healthy, with live longer, stay well and thrive. as surgeon general, i've achieved by sharing for health promotion and public health council that was established by the affordable health care act, also known as health reform. this council is composed of 17 cabinet level had a federal agencies such as department of transportation, agriculture, labor, environmental protection agency, hyatt, department of defense, all 17 to check about prevention. last-in accounts to cancer released the first-ever national

preventions chatterjee. let's see, i think there's -- next to slide it to fasten size for me. so the national prevention strategy was released last year and our vision is to move our health care and from a focus on thick ascendancy to focus on wellness and prevention. if we truly want to reform health care this country, we need to prevent people from getting sick in the first place, to stop the disease and illness before it starts. in addition to state-of-the-art medicine, we need a new approach to promote convention in our community. staying healthy depends on other factors that influence how the casting of transportation, education, and availability of affordable food, work place environment. we want to change the way we think about health in this country and a a cause for the nations take a more holistic and integrated approach to community

health. something you've are even doing. we need steve addison nation. everything from safe highways and worksite wellness programs to healthy food and good schools, good roads. now i have to figure out how to work the sides. there we go. so the goal of the national prevention strategies to increase the number of americans healthy at every stage of life, whether you are two or 92, one should be healthy. pick one that my patient that i want to get old, but i want to be a great. we have four pillars. healthy instate communities, clinical and community preventive services, empower people in the elimination disparities. i know you've been working all of these things that we just need to put them altogether. if we follow the recommendation

that we have several of what we call priority areas around their eyes you can read them, but if we follow recommendations of the national prevention of strategy, we can prevent or significantly reduce the five leading causes of death. so we've been working with partners like you as well as partners in industry and corporations, education and philanthropy in local and state and tribal governments to bring this prevention strategy to life. we need to have a northstar, a place following in the strategy of put this together. it gives us a direction to go in this available to you at our website, surgeon general.go if you want to look at it. we will come onto your community intact you a lot more about it. the biggest challenge we've seen has been in lifestyle change