influential but then they proceeded to create 80 departments, 40 cabinet officers from each of the two sides. that was one way of compromising. that was the immediate response. there is basic reform and how they can be implemented throughout the world beyond my expertise but it was always fun during my time to meet people -- i would be happy to answer questions but to ask as many questions as i answered. being able to step back after retirement and do some comparisons especially in the british system gives you some insight but it is a political decision in each country. the e.u. -- if you want to see how screwed up the e.u. is, the statement on -- as far as the

european parliament is concerned. >> on the other side of the capital i would be interested in your thoughts on filibuster reform in the senate. one of your former counterparts over there releasing a book this summer called defending of filibuster. >> when i start off talking about the nixon anecdote to me there is the legitimate constitutional argument you could do it by majority vote but to use the nuclear option to accomplish it would not work because both parties now have enough skeptics in the senate to reject the notion that it would require the chair or appeal the ruling of the chair to the effect that a majority vote is not allowable and instant majority of the senate by

overruling the chair. the senate has a tradition that any ruling of the chair that is the field and overrules becomes a firm president until later changed. that is the ultimate effects of a nuclear option. if just for starters with majority senator saying -- potentially in the minority and what they want to preserve not knowing who the president is going to be, that seems to be will be a constant -- robert byrd was a champion of the greatest deliberative body in the world that each senator should have a full range of options of every state and along comes a reconciliation which he helped write and had second thoughts and put in the byrd

rule about reconciliation. of the like to see the senate from a distance become majoritarian. if only to force senators and be more transparent in their holds. they have reached an accommodation to some extent with the gang of 14 and now confirmation that there would be no nuclear option. and now the recess appointments are to be made in the remainder of this term but as far as clearly the impact of the three fifth requirement is profound and the senate has taken stop-gap measures to short circuit that by combining what would otherwise be a series of three fifth vote getting unanimous consent. would only be a majority vote.

that takes unanimous consent and they don't have a rule in the committee that can do that. that is -- of all the reforms that is what they targeted most heavily in their book. i don't dispute that target. >> our time is up. [applause] >> thank you all for coming. [inaudible conversations] >> we were going to bring live coverage of the national gay and lesbian friends and gender bar association but that event is being recorded and will be shown later on the c-span network. attorney general eric holder

address the group yesterday and we're going to show that now. this is about 20 minutes. [applause] >> this is not starting out like one of my congressional hearings. [laughter] >> good evening. thank you for those kind words and thank you all for such a warm welcome. it is a pleasure to be here tonight and a privilege to join with each of you and with so many members of the national lgbt bar association in celebrating and renewing our shared commitment to advancing the cause of equality to lesbian legal day, bisexual and transgendered individuals. [applause] i would like to appreciate so sir -- the association's staff and

leadership team and thank them for all they have done to bring us together for this year's lavender law conference and career fair. for two decades this important annual event has brought together hundreds of legal practitioners and law students from across the country. this conference provides an opportunity to highlight the extraordinary work this organization members are meeting and participating in every day. it offers a chance to reflect on the progress especially over the past few years each of you has helped make possible and to reaffirm our determination, our determination to carry this essentials working to the future. because of your dedicated efforts you have made this year's gathering the largest minority recruiting event in the country. [applause] and the most successful lavender law conference yet with

over 260 employers in attendance including multiple representatives from the united states department of justice. [applause] in fact i am pleased to report tonight we're joined by a number of senior department leaders as well as five united states attorneys who are strong >> allies. melinda a. from the district of california. where are you? [applause] david picked in from the western district of pennsylvania. amanda marshall from the district of oregon. [applause] oregon is in the house. steven whittington from the southern district of illinois. [applause] michael more from the middle district of georgia. [applause]

and robert pittman from the western district of texas. [applause] through workshops sessions, career counseling and panel discussions this conference is providing a unique platform for mentoring engagement among the best attorneys in america on cutting edge legal issues. you are hoping to call attention to the obstacles and biases over and subtle that continue to affect too many >> -- lgbt americans everyday and you are encouraging collaboration and more effective advocacy to design and implement innovative strategies for confronting the most persistent challenges that too many americans face. as attorney general, i consider it a privilege to be part of this annual gathering and to

join such a diverse group of partners, colleagues and friends in working to strengthen our nation's legal community and legal system and as an american i am deeply proud to stand with you in celebrating the remarkable once unimaginable progress over the last three years your leadership -- [cheers and applause] -- the progress that your leadership and coordinated efforts have helped to bring about. we come together tonight at an exciting moment thanks to the work of tireless advocates and attorneys that nation has made great strides on the road to lgbt equality and the unfinished struggle to secure and protect the civil rights of all americans. for president obama, for me and

for our colleagues at every level of the obama administration this work has long been a top priority. it has resulted in meaningful, measurable and enduring change. we can be proud that today for the first time in history those who courageously serve their country in uniform need no longer hide their sexual orientation. [cheers and applause] as we approach the 1-year anniversary of the end of don't ask don't tell, it is worth celebrating the fact is sunni brave serve as men and women can

serve their country honestly and openly without fear of discharge. we can take pride in the fact that early last year president obama and i directed the it department attorneys not to defend the constant check finality of the defense of marriage act. [applause] since then we have seen an encouraging and increasing number of courts hold this provision to be unconstitutional including a federal district court in connecticut that found section iii fails to survive heightened constitutional scrutiny just last month. we can be encouraged by the robust efforts that our nation's department of justice is leading to ensure vigorous enforcement of civil rights protections in

order to safeguard >> -- lgbt individuals from the most brutal forms of bias, motivated violence. thanks to the outstanding leadership of my good friend tom perez and dedication of attorneys and law enforcement officials and support staffers within the department of civil rights division and throughout department and agencies today this work is stronger than ever before. [applause] our resolve to meet the evolving threats with renewed vigilance has never been more clear. the department issued its first-ever indictment for a crime based on sexual orientation and the them at you shepard and james byrd jr. hate crimes act. [applause] a landmark measure signed into

law by president obama in 2009 which many people in this room helped to move forward in relation to an alleged anti-gay crimes in kentucky. we have continued to review reported incidents that may fall under this legislation. under this law we are working to strengthen our ability to achieve justice on behalf of those who are victimized simply because of their sexual orientation or gender identity and we stand ready to vigorously pursue allegations of federal hate crimes wherever they arise to bring charges whenever they are warranted and support the efforts of our state and law-enforcement part is to enforce their role in hate crime laws of. this of rights division is taking the lead in bolstering our ability to educate and train federal, state, local and tribal law enforcement officials on sexual orientation and gender identity based discrimination in order to ensure that those who serve on the front lines are well equipped to prevent,

identify and stop it whenever it occurs. just last month the department followed a historic consent degree. the city of new orleans to address allegations of discrimination and harassment by local police including against >> -- against lgbt individuals in this agreement and border efforts to combat such actions we have demonstrated the importance and effectiveness of working closely with a.authorities to identify troubling practices, correct pattern of repeated violations and policies and procedures that insure the rights and freedoms of citizens that our law enforcement officers serve and protect. in recent years we've taken significant steps to raise awareness about the role community leaders, public officials and educators can play protecting a variety of vulnerable populations particularly the youngest members of our society and work to expand and extend these protections to make certain our children can feel safe in their

homes, on our street and especially in our schoolyards and classrooms. many of you know all too well every year bullying touches the lives of countless young people as we seem too clearly. it can have a devastating and potentially lifelong impact. in response the department has been collaborating with educators, administrators and school districts nationwide to investigate and address this troubling behavior with partners including federal allies and department of education and leadership of secretary arne duncan. four ways to stop harassment and bullying before it starts. in places like minnesota's school district where an investigation found some students face threats, physical violence, derogatory language and other forms of harassment on a daily basis, engage with school districts and advocates

to resolve harassment allegations and layout detailed blueprints for sustainable reform. as we move forward we will continue to promote safe, healthy learning environments, to support a student nondiscrimination act that will address harassment and bullying based on an individual's real or perceived sexual orientation for gender identity. to provide assistance to bullying victims and work closely with local leaders and educators and young people to make certain all of our students can feel safe and free to be themselves. the justice department continues to fight for legislative and policy reforms, a nondiscrimination act which would extend -- [applause] --

which would extend protection to lgbt individuals in all workplaces and an updated violence against women act. [applause] an updated violence against women act that would insure laws nondiscrimination provisions cover sexual orientation and gender identity. why this is something we are fighting about is beyond me. this is something that needs to happen. and it needs to happen now. [applause] even in the face of truly extraordinary budget challenges we remain determined to use every available resource to build necessary institutional and legal framework to end harassment, violence and discrimination and provide safeguards for lgbt americans,

my fellow citizens are long overdue. my colleagues and i are not merely content to educate and speak out for these changes. we understand the importance of leading by example and that is why the justice department and a wide range of agencies throughout this administration have taken decisive action to create a more inclusive work environment for our own employees. to strengthen our mission of serving all americans by recruiting and retaining highly qualified individuals like you who reflect our nation's rich diversity and make a sustained and concerted effort for opportunities and support and respect that every aspiring public servant needs to develop, to grow and to thrive personally and professionally. no one understands the importance of creating such an environment or advocated more passively on behalf of the lgbt community than my boss,

president obama. [applause] thanks to his leadership this administration has made historic strides in adopting inclusive policies and sending a clear message the federal government is open for everyone and it is an employer that accept and respect every potential employee. for instance within the justice department i want a new diversity management initiative in 2010 to expand and strengthen strategies and programs promoting fairness, he quality and opportunity for every member of the doj family that includes an increasing number of allegre or -- my good friend robert kidman as well as senior -- [applause] as well as senior department

leaders began and u.s. marshals, the keynote speaker at trans gender law institute. [applause] and three of the attorneys recently named to the national lgbt bar association's best lawyers under 40. [applause] and dedicated expanding membership of the wonderful organization known as doj fried. earlier this summer we held a department training workshop for matters across the country which was conducted by nationally recognized expert on diversity and workplace inclusion dr. richard friend who discussed lesbian, gay and trans gender inclusion is imperative for effectively recruiting new talent and fully engage in all individuals in the workplace. the bureau of prisons has announced every federal prison

will appoint lgbt representative to their affirmative employment program to help start a dialogue. [applause] to help start a dialogue about issues facing staff members who serve in 120 facilities nationwide. i believe these new actions and policies constitute promising steps in the right direction. like everyone each night i recognize that our journey as a nation and legal profession is far from over. i know that the progress we seek won't always come as quickly as we hope for is easily as we would like and that is why tonight i am not just here to thank you for all you have done to bring us to this point to highlight the administration's efforts and service of the same cause but to celebrate everything we have achieved together. i am also here to ask for your continued help to draw on your considerable passion and expertise and to reiterate the department's commitment and my

own to building on the momentum we have established and insuring the recent successes we have seen are just the beginning. as current and aspiring leaders of the bench and bar everyone here tonight understands what is at stake. you realize how important every hard-fought legal victory large and small really is. you are or soon will be uniquely situated to use the power of the law as well as your own gifts and knowledge to build a more fair and equal and more just society and you have not only the power, solemn responsibility to do precisely that, the feelings of everyone in this country to carry on the critical but unfinished work that lies ahead. this has never been and never will be easy but as i look around this room by can't help but feel optimistic about where your efforts will lead us and how far our collective commitment will take us in the

months and years ahead. with the benefit of your partnership and the strength of your passion i know that we can and i am confident that we will continue the work that has become our shared priority and our common cause and i look forward to wall that we will truly accomplish together. thank you very much. [applause] >> republican presidential candidate mitt romney is joining his vice-presidential running mate paul ryan in michigan. they are going to a rally at the orchard farm and cider mill in commerce, michigan. you concede that live at 12:05 eastern on c-span. tonight on c-span2 the u.s. ambassador to canada and the canadian ambassador to the u.s. discuss the relationship between the two countries as well as border security and energy. that is at 8:00 eastern. and 9:15 eastern a former head

of the british intelligence service the clare's remarks on radical figures and how they are used in works of fiction. remington was the first woman to be director general of am i 5. >> this weekend on booktv beginning sunday at 4:00 eastern from his 2010 afterwards interview with juan williams mitt romney from his book no apology. >> the president was not going to be a strong defender of american values and american principles and human-rights and democracy, free trade and free enterprise. those words of apology in those statements have emboldened those who find us a weakened enemy. >> later in the book the real romney, water and boston globe investigative reporter michael kranick explores mitt romney after a year's in bloomfeels, michigan through his tenure at bain capital. part of booktv weekend on

c-span2. >> consumer financial protection bureau report says default on private student loans exceed $8 million. lending standards in the private sector grew increasingly lacks prior to the 2008 financial crisis. a senate banking subcommittee is looking at student loans through private lenders. this hearing is about an hour and 40 minutes.

>> the consumer protections come to order. thanks as always to senator corker for the work he does with the subcommittee. thank you for joining us. my staff particularly appreciates the working relationship with senator corker making these subcommittee hearings work much better as a result on june 29th of this year congress passed the transportation student loan package legally essential legislation that not only insured funding for our nation's infrastructure and highway system but included extension of the current student loan interest rate of 3.4% for stafford loans. an issue that senator reid worked hard on. the passage of this legislation was important for seven million undergraduate students nationwide. some, 382,000 of them living in ohio. without this extension the

average student would have faced an additional thousand dollars in student loan debt for subsidized stafford loan another -- spent a lot of time in community colleges and institutions in my state particularly in cleveland, dayton, talking about hearing stories from a number of students sharing with me there for years of graduating in a challenging economy with high levels even without this legislation, high level of student loan debt and otrs share the experience of family members and friends paying off their loans years after graduation from college. this isn't surprising. student loan debts as we have heard repeatedly outpaced credit card debt soaring to more than $1 trillion. problem that affects people of all generations. not just the students but family and grandparents. according to a report by the federal reserve bank of new york the average student loan debt burden for under age 30 has

risen 56% since 2005. borrowers in their 40s are likely to default. parent grandparent who cosigned for its own or granddaughter share the burden of the younger generation. more must be done to insure future generations are not saddled with high levels of student loan debts while helping borrowers of all ages payoff their student loans. that is why today's hearing which will focus on borrowers in the private student loan markets are so important. a small portion relatively of the overall student loan market american consumers of more than $150 million in outstanding private student loan debts and their numbers have increased 14% of undergraduates since 2000-2007 have taken a private loan from 5% in 2003-4 and continuing to increase. private student loan the the riskiest way to pay for college. often these loans come with a variable interest rates ranging

from 5% to 18% often with no limits on origination and other fees. additionally unlike federal student loans private student loans are less like to come with a portable payment plan or loan forgiveness or cancellation rates. given the risks and challenges and opportunities by private student loans i am proud to have fought for the inclusion of private student loan as part of the dodd-frank legislation. for the first time in history private student loan borrowers have a central place to file complaints and have an advocate inside the government for them. too many borrowers are not receiving assistance from lenders. last week the financial protection bureau which was also an active part of dodd-frank public report on consumers who use these loans. what was evident was many borrowers took out private student loans without understanding the terms. many of these borrowers are

saddled with thousands of dollars of debt with limited options. to further understand the challenges faced by these and other students. we can provide short-term options to get under the burden of high costs. private student loans and the longer term. i hope we can provide students and families with more transparency about private loan options and costs as well as predicted of the u.n. tried to work with their servicers. i will conclude with a story of teresa east of cleveland and struggles with private student loans. she graduated from college in 2009 and applied to the peace corps. she almost had to turn down this opportunity and unwillingness of her lender to be for her loans in the peace corps. she came to one of her constituents to ask for help. the work of my staff the lender finally agreed to they fer -- --defer alone. for she came home severe than

expected. sir private student loan challenges rename. she continues her career in public service beginning with the peace corps but struggles to make monthly student loan payments that top $400. one of the loans jumped from $22,000 to $30,000 without intervention the loans will continue to grow. we need to think about people like teresa as we make these decisions. >> thank you to the witnesses. and private student loan market but to me it is more important that we look at the entire picture. we have been reading in the news lately student borrowers have $1 trillion in outstanding student loan debt but we need to remember as the chairman mentioned only 7% of those loans are private student loans and the other 93% on loans that backed by the taxpayer. all of us know the real problem

we need to consider. rising cost of college tuition and the amount of federal student loans. i might add that on one hand federal government helps solve this problem and on the other hand continues to mandate the states like medicaid in our own state for every percentage that we spend more on medicaid we spend less on higher education and that is the real driver of why students are bar wing so much money in our state. federal government recently took over the federal loan program as many of us know. i am not convinced that change is benefiting students or taxpayers. there are income forgiveness programs on the federal loans side where borrowers don't have to pay back the full weight of the loans they borrow. sticking the taxpayer with the unpaid burden. it is important for us to understand the whole picture and not just a tiny fraction of the marketplace and i am pleased

sallie mae is here to talk about the progress they have made in encouraging students to borrow more responsibly and i look forward to the testimony of the witnesses today. >> thank you. senator akaka. >> thank you very much. mr. chairman, good afternoon. i am pleased congress is monitoring practices regarding student loans. quality education must include an understanding of economics and personal finance so the americans will be prepared to make sound financial decisions. i look forward to hearing an

update from the consumer protection bureau on the work they have done to improve the consumer financial marketplace. thank you for your testimony today and i hope your insights will help this committee work towards insuring that students have save options for obtaining financial support for their college educations. thank you very much, mr. chairman. >> one point i want to make . the reason this hearing is a little narrow were then you want is we don't have jurisdiction over federal loans like we do private student loans by willing to work with this whole issue of student loan debt. it is serious. i would like -- the office for students and consumer financial protection designated by secretary geithner.

prior to the opening of the agency where he par third with the treasury on the c f p d implementation team and told an m.b.a. from harvard and the university of pennsylvania. rohit chopra, welcome. >> members of the subcommittee, thank you for holding this hearing today. to prosper in today's global economy our workforce needs skills to innovate in a highly competitive environment but the rapid growth of student debt raises concerns that warrant attention to policymakers. student loan debt has crossed the $1 trillion market. college is still a great investment. graduate have lower unemployment rates and earn higher wages but there's another side to this the way. over the past decade real wages for college graduates have declined. growing college wage premium is explained by faster wages of non degree holders but the cost of

college has not been falling. rising faster than inflation, wage growth and health care costs. growing cost declining wages and job market uncertainty have led to more debt and more risk. stories of distressed borrowers reveal the impact of the financial crisis and the significant work of lies ahead. prior to the crisis private student lending rapidly increased like the mortgage industry lax lending practices are much less common today. loans are cosigned and often have significant disclosure requirements but like the mortgage market there are still opportunities to make improvements. private loans often lack repayment flexibility. in 2007 congress and president bush and act of the college cost-reduction and access act which allowed student loan borrowers to become current on a loan in the income based repayment program but this does not impact private student loans. private loan borrowers experience challenges when

attempting to restructure their loans due to capital market conditions and an unusual status in the bankruptcy code. even the most responsible borrowers have sought to better manage their debt burden. many feel stuck with high monthly payments because they cannot easily refinance. in march the cftc launched the student loan complaints system where many borrowers have sought and received help and swindlers have serve -- learned more about the experience. we were closed with the department of education on know before you owe financial aid shopping sheet released this morning and we have developed online tools used by tens of thousands of consumers on how to navigate their student loan repayment options, avoid default and honor their commitment. we have to continue to work with other agencies to facilitate

repayment flexibility and robust refinance market. student debt may not pose systemic risk like mortgages, growing indebtedness, a drag on economic recovery. consider borrowers facing high rates and payments that are beautifully meeting these obligations. without refinance option they struggled to reduce payments even though they have built a solid credit history. what is the consequence of this? take the housing market. first-time home buyers are an important source of demand and the data reveals adults in prime home buying ages working at home with their parents. and reductions in homeownership rates. in addition to home ownership data also revealed low participation in contribution rates to employer retirement plans among young graduates which can challenge their future retirement security. congress and federal agencies have taken steps to increase

liquidity and functioning of the credit markets in recent years but the current conditions in student loan markets may have a long-term impact on the economic vitality of many borrowers. many borrowers are unable to secure adequate credit accommodations to manage their debt burden. policymakers pay significant attention to conditions in the mortgage market but given the potential impact of student debt on the broader economy the situation demonstrates the need for attention. the cftc will continue to make the loan market place work better for borrowers, schools and honest lenders. we look forward to working with congress and policymakers to insure economic mobility is in reach with those who borrow to invest in an education. i look forward to your questions. >> i have a couple. in your student -- your private student loan report you note average interest rate for sample

of private student loans was 7.8%. we know with federal reserve monetary policy actions and interest rates in this country are pretty much at record lows. talk to me about that differential. why so much higher for student loans? students not being able to take advantage of low rates. what if anything can we do about it? >> one unique thing about student loans particularly private student loans is once someone takes on that alone when they are 18 or a freshman in college their credit profile can significantly change over time. and 18-year-old may be considered higher risk but by the time they are graduate and gainfully employed and paying for a few years they might be a lower credit risk. we seem not many financing opportunities to allocate price to risk. 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 would justify their risk profile. >> why are there not refinancing opportunities? >> it is not clear exactly but historically the market developed as a consolidation market so essentially multiple ones you could consolidate into a single payment. this had to do with the way the federal family education loan program was structured. partially it is due 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 a lack of knowledge on the borrowers's part to not think about issues of refinance? >> i think that is right. >> if they were more

knowledgeable are you suggesting there would not be the opportunity to refinance because there's not enough opportunity in the markets? >> you are right. many borrowers simply don't know that refinancing is an option. many of them are dutifully paying on time for months and years and unable to manage their debt better. currently there is not a large amount of marketing or offering refinance. generally it is marketed to people to reduce the number of loans they have into a single payment but not necessarily to compete down the price and a more competitive market among lenders would serve to benefit the entire marketplace. >> in your testimony you know federal in the student loan marketing recent years slating

unusual circumstances the federal reserve board of governors exercise its authority, and facilitate issuance of a wide range of private student loans. and providing relief, providing student loan borrowers? >> federal regulatory agencies particularly ones that monitor the capital markets have a role to play to make sure the market is liquid and well functioning. characterized in terms of increasing competition so pricing is more fair and more connected to risk. and create the conditions for responsibility mortgage borrowers to refinance. many responsible student loan borrowers see their credit

profile dramatically improve over time but the market may not be liquid enough to price their risk and allow them to have lower payments. and expertise to the federal reserve board of governors and others to monitor conditions. >> thank you, mr chairman and thank you for being here. you know well the relationship between the investment in higher education on the state level and how that has been diminishing and in most cases because the tremendous burden of investing in medicaid which we made happen in a big way at the federal level but that has a direct relationship with tuition levels are for students and the main drivers of why there's so much student debt. >> certainly true that the constrained state budgets starting in 2008 declining tax

revenues went down with other policy interventions and there has been cuts on a real basis to higher education. we have to not just address the underlying cost of higher education but also to make sure financing markets are working properly. >> here we are dealing with an issue that over the last several years we helped create and exacerbate and will continue to exacerbate overtime. york agency advocating that on the private side, students have the ability to discharge their loans for bankruptcy. is that correct? >> it is a little different. the report secretary of education presented to congress on friday analyzed five million records of data starting in 2001 and going forward and we expected that the 2005 changes

to the bankruptcy code would lead to lower prices and greater access but immediately following the legislative change we did not see a price decrease. we saw a price increase and larger capital market conditions largely explain volume and access to credit so the director of the bureau and secretary of education ask congress to take a second look given that borrowers for privates to loans may not be able to easily restructure their amortization schedule like in federal loans. >> so you have asked congress to take one of the first actions of the consumer bureau to ask congress to look at allowing students of private loans is, not public loans the private loans to file bankruptcy as a way of getting out from under the terms and conditions of private loans. is that correct? >> we have asked congress to take a second look and are happy

to provide more expertise. >> i understand what you're saying and we read the report and i find it fascinating that one of the first things you do as a consumer protection agency is get this to consider letting students only on the 7% private loans, not 93% public wants to file bankruptcy which is one of the most damaging things that a consumer can possibly do. i would like people to take note of that and you understand on the private side they do not have the flexibility you do on the public's eye because on the private side prudential lenders will not allow them to do many of the things that happen on the public side. >> in fact we have already been working closely with lenders to identify areas where certain prudential guidance -- point be win/win situation for borrowers

and lenders. lenders feel constrained by the guidance and we think there's opportunity for capital adequacy measures to be met while still allowing the marketplace to function. >> you can see why so many of us thought was a really terrible idea to have the consumer agency separate from the prudential lenders because they have a problem where basically you are giving guidance on one hand that is very contrary to what the safety and soundness regulators are saying on the other hand this exact conflict. it is fascinating to me that one of the first thing that of the consumer agency we see this conflict that on the private side credential regulators will not allow a private lenders to have the flexibility given flexibilities actually work through these issues. therefore they have contrary guidance and it is pretty fascinating that we are having this hearing and is fascinating that you are not advocating that

on the public side students be able to file bankruptcy and this speaks possibly to some of the political nature of the consumer agency that so many of us were concerned about in the beginning. >> on the federal loans side there actually is a chapter 13 like option for borrowers which avoids the damaging parts of going to court and hurting credit history. a borrower who is unable to make payments is able to elect the income base prepayment option which caps their payments as a percentage of their discretionary income so that is actually a great low-cost model for borrowers that we think is a way to weather the unique circumstances of a student loan product given labor market uncertainty. i would say that our relationship with the prudential regulators is extremely productive. we have been able to find

opportunities where we are identifying ways to promote innovation and the whole financial system can actually prosper and our work on private student loans with other prudential regulators is going to be seen by lenders as one that is win/win for the market place. >> i hope that is the case and i appreciate you being here and look forward to hearing sallie mae's testimony in a moment. >> the first thi want to do is commend you for connecting the dots. for not just this huge debt overhang but the effect on buying a house for the first time, being an entrepreneur and starting a business, starting early for retirement. this to me is one of the most daunting challenges we face going forward. we can have a whole generation that can't get started until they're in their mid 30s doing things we assume could and would

be done in the mid 20s. that is an important point. your responsibility given the nature of the organization is solely with respect to the private sector lenders, not public domain. >> our authority and rulemaking authority relates to private student loans on or origination. but nice to say the lot of the insights you have drawn could be applied to the public sector. >> it is very important for us to look at this holistically. in the recently released report the treasury office of financial research briefly discussed student debt burdens could significantly depress demand for mortgage credit and consumption. both of which may be critical

drivers for the recovery. looking at it holistically one of the first actions was working with the department of education to improve the financial aid information and student loan information people find so we were allowing school on a voluntary basis to present a simple 1-page financial aid shopping sheet which gives them alone options as well as what their estimated payments might be after graduation and already so many schools across the country have embraced this and we are happy to enter this for the record. >> one of the major issues is the escalating cost of college education and even though you focus on the private lending sector you have looked at public and private institutions. there is acceleration in private universities too. >> there has been costs increases and increase the

burdens for debt across institutional factors and they are not responsible for public programs like medicaid or anything else. private institutions to increase tuition dramatically. >> i am the wrong person to answer about specific economic of college costs. a bit more focused on financing. generally speaking we have seen over a period of many years escalating cost, access of inflation. and debt burdens are very high in the for profit college sector. and particularly high. >> that goes to a technical question. i don't know the answer. are there prepayment penalties. >> truth in lending act bans

prepayment penalties, would anticipate a robust refinancing market sins borrowers would not be penalized for trading one note, that has not bear fruit. >> the issue among -- let me pose this one. is there a correlation between the school and the number of private loans? one of the things you suggested, you have a format where everyone can check it out. lack of competition and some schools steering students to private loans and is there any relationship between the school and the private lender? >> in 2007 at the state level

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

reeducation. >> clarification again. you point out of there is a quasibankrupt the remedy under public lending which is to make it income based repayment. that does not exist on the private lending side. the issue here -- i am asking the question so correct me. the issue is not the someone can file bankruptcy but can't discharge the loan in bankruptcy. >> correct. private loans are treated differently compared to credit card debt and others. >> because of federal statutes. >> correct. 2005 changes. private lenders for have increasingly told us that they are looking for ways to offer more repayment flexibility and we think that is a great opportunity and we hopto engage with lenders and prudential regulators to find

win/win solutions for capital adequacy, student loan borrowers and lenders. >> senator akaka. >> thank you very much, mr. chairman. rohit chopra, the testimony and report you presented today suggests students have taken out too much get through student loans because of predatory lending practices. you have also noted that students should consider taking out additional student loans in order to avoid excess of credit card that -- debt. can you elaborate on the appropriate role of private student loans? >> sure. the total debt market has

reached over $1 trillion but it is important to note that education induced indebtedness is certainly far higher. many families utilize home equity lines of credit, credit cards and other products to ensure they pay for the cost of college and generally speaking a student loan is going to be a safer bet that a credit card which will have an immediate repayment requirement which might be challenging for a full-time student. there is certainly a role for private credit in this market. don't get us wrong. we do want people to make more of the will borrowing decisions over all and we think some of the steps to make the whole market more transparent like this shopping sheet is a good first step. >> thank you for that. i understand cfpb often hears from students who are struggling

to repay their student loans--student loan complaint system. private student loans were initially developed to support and supplement federal student loans. since the market contract in 2008 there have been fewer lenders offering private student loans and those that are offering the products often require cosigners. my question is how is cfpb helping students who are unable to access reasonable student loans? >> in the report we submitted, the director recommended that the role of the financial aid office and lending decisions be substantially enhanced. by having private student loans

the certified financial aid offices can be provided the opportunity to give the full range of financing options and many times financial aid offices are able to use professional judgment to adjust loan amounts so borrowers are able to meet tuition obligations while still bar with responsibility blues you are right that there is still ways to make sure the private loan market can meet the demand at a fair price. ..

of to the students its advertised it's a way for students to fill the gap in their tuition acephate exhausted federal loans or pell grant money and i think part of what i've heard you say in answer to an earlier question had to do with the 1910 rule that i will ask you to elaborate on that many of these institutional loans offered by the largest institutions have interest rates as high as 18% in addition to serving on this committee along the education committee and the department and the whole committee have looked at a number of these different for-profit schools, and one in particular has a student loan rate that's 15% but also a default rate at 80%.

another school has an interest rate these were in 20 tend these interest-rate numbers that 18% default rate of 55%. so, it looks like the for-profit are offering the student loans with high interest rates and a fellow expected repayment rate which i think speaks directly in some cases to the aggressive recruiting nature of some of the schools that they are really not that concerned because the default rate is so high as long as it means the student is in fact enrolled and federal dollars have been collected. does the csb have plans to study these loans further and are there any recommendations you can offer that would address the institutional loans made by the for-profit colleges and universities? >> in recent years there's been financial reforms that have

indicated a couple principles that might be worthwhile to mention. one is the concept of scan in the game, so the dodd-frank act actually requires that lenders repaying some interest, even if they were to sell them in just securitized pools of assets. another is considering a bill to repay. in the mortgage market lenders will be required to consider whether a mortgage borrower can actually repaid. >> that's a good idea. >> in general and an entity is able to come out ahead, even when they expect up front that the customer will likely fail that may be a sign that competitive market forces are not really working and incentives are distorted. i think the bureau has significant expertise in the area of institutional lending and the role that 1910 might play, so we would continue to

monitor that market closely, and as you have mentioned before, we have also looked in the sector at the recruitment of veterans and service members as it relates to compliance with 1910. and my colleague paul e. petraeus has been outspoken about this and we look forward to continue working with other agencies to monitor this. >> speaking of the 1910 rule that the g.i. bill has not included in the 90%, so in most of those cases the federal part is -- the federal loan position is much higher than the 90%. >> why you are saying is correct. we are currently experiencing a rapid increase in the number of veterans returning from a foreign conflicts who are enrolling in higher education.

so, i think it's in the interest of all of us to ensure that they can continue to be an economic engine as they were after world war ii, but also the they do not unnecessarily take on high-cost credit when they have benefits that they have burned. >> and especially when you look at the hialeah expected default rate needs to be taken into consideration. >> yes, all aspects of how the marketplace works are something that we closely monitor to ensure that the market is fully functioning and that there is compliance with consumer law. >> one of the recommendations made in the recent report states that congress should require the institutions of higher education work proactively to protect and inform the private student loan borrowers. but what this looks like? would it be like to go before you owe or the responsibility of the school to provide the borrower or should the lender take some responsibility to

ensure they have a clear and concise information regarding the student loan? >> everyone has of responsive devotee and they certainly need to take the responsibility for the commitment they take on and need a clear affirmation. but the point about the financial aid office is an important one. currently most lenders are requiring the loans to be certified by the school come to simply verify that the student is actually enrolled that they've not already borrowed. it was certainly not will observed in the years prior to the financial crisis where capital markets conditions created the incentives for the originators to make substantial fees without having the borrower have the ability to repay. >> thank you. >> thank you mr. chairman.

mr. chopra, how are you? >> very good. >> very well. let me ask you, i heard your response to a question with reference to the borrowers that feel trapped in the current interest-rate and are not able to refinance it at a lower rate and and i think your question was that there was not enough competition. is that correct? >> it might not simply be that. there might also be issues in the servicing infrastructure where borrowers might not know they are able to make certain changes to the loan. so i think it is market conditions as well as financial education and the servicing. >> does the bureau have any ideas or suggestions as to how we create greater market competition or greater flows of individual city emphasize their

rights? >> i think we have a strong role to play in educating the of barbers about their ability to -- with their options are when they may not be able to meet their payments. and we have already released a number of web tools and other partnerships so the students know how to manage their debt better but one thing we do here is even if they want to refinance, there simply is not that much opportunity for them. it's something that many mortgage borrowers think about when they want to refinance, but the current market conditions often constrain them get the process he to do so can often be parallel at -- paralympic. storm ike of someone that has been a strong advocate it's a different context of being able to allow mortgage borrowers to refinance at historically low levels means that we should find the wherewithal to be a will to

achieve and have people continue to be responsible borrowers aníbal to relieve some of their debt load at the end of today. so maybe we can 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? how about the part of your report that noted that about 40% of the student loan borrowers had not exhausted their federal student loan permits? and in that respect, obviously before you go and borrow from the private sector wouldn't it be more desirable to maximize that which is available to you under federal student loan limits because those are at lower rates than generally in the marketplace? >> if you count people that don't even apply for federal loans, that number goes north of

50%. so yes, one of the key issues we put forth in the report is involving the financial aid office or in the process giving much clearer information. there has been an abundance of fine print of quite small font that has invaded still many of our credit card agreements, mortgage agreements and other things. there's a lot of work we try to do so simplified it is a lower-cost for the smaller financial institutions to provide a much more clear to the borrowers because you shouldn't need an attorney and a magnifying glass to your obligation 18. islamic is this a way to enhance and you mentioned in the website other opportunities we can get financial the department's to be

more closely engaged in a say in here is the ability of you qualify before you consider taking out a private sector and that can be more costly. >> in fact most lenders will agree federal loans can be looked at for many of them to communicate that to their borrowers, so giving the financial aid officers the opportunity to actually council debate co-counsel the student before the consummation of a private student loan and we actually heard the support from lenders from schools and consumers. finally, i listen to my distinguished friend and colleague senator corker expressed his concerns about the interface between the bureau and regulators, and i just wonder do you find that provincial regulators would be doing that type of consumer information and

efficacy of the bureau has been doing? >> they have a very explicit mission in financial the education and also to assist borrowers with a completion of financial aid application. the primary role is to ensure the capitol adequacy of the financial system and they do work with us that we've placed a major emphasis on that because we believe it can ensure a more robust marketplace of the consumer financial products. >> thank you. >> i have one more question and then we will move to the second panel. >> first of all, i want to -- you are obviously very intelligent person and it sounds like you have done a lot of good work and i want to thank you for that. i want to meet with students who are 27, 28-years-old and people who used to be students and have huge amounts of debt and to look at the amount of money they are making and just wonder when the

ever are going to have a real life because they're working two or three jobs to pay these loans. my frustration really is the hypocrisy of not all of this on one hand we hear during the election cycle talk about a student lending and student loans, and i assure you students have huge amounts of loans that may never be repaid for me to 20 years and we advocate policy to drive up to the tuition rates. on the private lenders are does senator hernandez was referring to, they are seeking flexibility but provincial regulators are having to give them the flexibility that you have on the public's eye. so, you know, there's the hypocrisy that goes with this whole testimony the difference when the consumer agencies and the provincial. and then we pass a law that the student rates are going to be at

3.4%. so those loans are to all comers regardless of any kind of status, no collateral, no payments made for four years. is there any way you, as an intelligent person, could possibly imagine that the federal government is going to come out on loans like that and not again demonstrating hypocrisy in what we are really doing is piling up debt down the road the same students are going to have to pay off. is there any way that when an agency is taking all comers there is no collateral being cut out, no payments being made the entire time they are in college, is there any way the federal government can possibly come out for the good on 3.4% loans? >> so, the rate set by congress or a bit outside our jurisdiction, but i will say

that the market for the global competitive market is very, very fierce, and across all indicators in a highly skilled work force has very real economic growth potential, and investing in a way that is strategic such that people may not have means can access education there's a significant upside to that. it's absolutely hard to underwrite that type of loan and in many cases how can you anticipate whether someone is doing to be able to repay five years in advance when perhaps if they entered in 2005 the entire global capital markets collapsed. so it's a difficult problem, but ensuring that the work force is built with skills is something that needs to be a daring as

well. as we have to balance these and we look forward to working with you. >> the answer is no financially, but there are other benefits. >> thank you. >> thank you, mr. chopra very much. i think senator corker there's plenty of hypocrisy to go around when i see with the state governments have done when we are in college and schools like ohio state for considered state universities and now we consider them state-supported or even state assisted and we can blame it on medicaid or we can talk about the tax structure in a whole bunch of other issues, but that can come later. the members of the panel are beginning to be seated. deanne loonin and the director of the student loan barbour assistance project where she provides low-income student loan

barbers. ms. loonin also represented low-income consumers and teacher consumer law, legal services private consumer attorneys and other advocates. ms. loonin received a b.a. from harvard, cliff kawlija and jd from university california. founding member and deputy the director of principles on the nonprofit non-partisan organization and represents the interest 18 to 34-year-olds and the policy research communications and outreach staff for the organization she served as a consumer advocacy of representatives and the department of education 2012 rulemaking on student loans. jack is the officer of sallie mae responsible for the company's loan servicing information technology credit and underwriting marketing communications divisions. prior to his current position, mr. remoni served as the chief

financial officer where he helped sallie mae devotee the financial challenges posed by the economic crisis received in the economics from connecticut college. ms. loonin if he would begin. thank you to all three of you for your service and public service. >> thank you, center. and thank all of you for inviting us to testify today. again, my name is deanne loonin coming and i am here on behalf of the low-income clients that we represent and work with. it's important just from the outset that when we talk about students that we work with, they aren't just young people going to additional cost, that actually the space of higher education is much more diverse these days and we have clients who are what are called nontraditional students meaning they are often older when they go back to school. the of their independence, they actually are independent themselves, they don't have

parents or families to fall back on. so, we actually have clients that are still suffering under the burden of student loan debt through their lives have been taken out loans and in some cases parents having cosigned for their children. most of our clients have federal student loans. so what we salles have been up through the credit crisis due was seeing a lot more for low-income borrowers coming into the market that is taking place prior to the crash was the kind that subprimal predatory market that unfortunately we saw in the other credit markets as well. we wrote a report in 2008 where we went through some of the parallels to the mortgage market the main point is that a lot of the lone star made up that time if we were destined to fail and they did it fail.

they were very highly rates and a lot of people who took out loans were never going to be able to pay back. office of the ones at that time from clients with interest rates up to 20%. on some of the same sort of rationale in the mortgage market we heard in the student loan market in these would have benefits for low-income borrowers, and actually instead what we have is a mistaken opportunity away from a lot of those borrowers for some of the reverse situation and the third parties of prime loans for most of our clients any more there's been a corruption because of the failure of the market and that's why it is such an important time right now for policymakers. there are too broad things i want to emphasize and there is

more detail in my testimony why this is such a critical time. the first is that the opportunity is now to shape the market that is going to re-emerge. there are more responsible lending practices going on now and we are 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 is a small private student loan market that's better for a lot of our clients if it means there are not going to be stuck with predatory loans and of affordable loans. the second thing in the testimony is that we need to figure out ways to provide relief for those that were harmed by the predatory practices of the past. the lenders as we have seen and we will hear more i'm sure from sallie mae but the borrowers have not been able to. the futures are shattered and a lot of cases.

my clients spoke with federal and private loans the difference that we find in the federal private loan side is that they are so little flexibility on the part of the lenders. we talked with the private lenders all the time and we tried to negotiate modifications come and come these repayments, things like that. and generally, the relief that is available is very short term. unfortunately its short term relief but long-term structural problems. we understand that there are some areas senator corker mengin for a simple the provincial regulators. that's what we hear. we don't know if that is what is really the problem of preventing the lender from offering brought relief come and if it is, then we want to hear more detail and hear what it is to be flexible about those. in some ways just like is happening in the mortgage market, and also sheeting some of the lessons we have from the mortgage in the market, but these have to be flexible,

affordable, modifications and also some principal reduction because that is going to make it less likely that the borrower will redefault. we also like to look the possibility of cancellations in extreme situations like death and disability. some offer this as a discussion with the idea is to have a more standardized transparent policy so that the borrowers can know what to expect in these extreme situations. again, i have more detail in my testimony, including a policy prescription, and i'm happy to take questions at the end. >> thank you very much ms. loonin. ms. mishory, thank you very much for joining us. >> thank you. chairman brown, ranking member quarter and other members of the subcommittee, thank you for having me here. my name is jennifer mishory and the deputy director. it is a non-profit and non-partisan organization that seeks to represent the interest of 18 to 34-year-olds making sure that our perspective is

heard on the decisions of the collective future being made. this spring we release a report detailing the experiences of high debt border wars with private loans. the report analyzed the onset of an online false selected survey of about 13,000 borrowers. additionally, young invisibles completed a bus tour talking to young people from all walks of life young people make it clear borrowers are struggling, students are confused and as a private loan market researchers, students need more guidance and protection. as was the tell already the problem of the market has shifted significantly in the past ten years. or predatory lending with a significant increase in the pre-recession private market. after the credit market drove out the market merged and consolidated. recently there have been signs of the market made beyond the rise. for example sallie mae is expecting growth in loans.

as lenders have also began offering fixed-rate loan options. the student loan market expands and involved again stakeholders must assist struggling farmers and set up the next generation for better financial future. they have encountered an error rate of difficulties and it's the marketplace while students to have a responsibility to do their homework and sheer complexity of student loan terms and many students are making the first major financial decision that key institutions involved the aggressive steps to ensure that students are informed. unfortunately this doesn't happen enough right now. for example, about two-thirds of private loan borrowers in the survey said that they didn't understand the major differences between private and federal loan options. this is problematic given that federal loans often have better rates, better repayment terms based on income, give timber relieve relief when a borrower phases on employment and have more standardized payment requirements. current law requires disclosure

of options and about private terms, but these are often too little and too late. the same time, 80% of borrowers in the survey turned to their schools and sources of information on the loans. but they don't always have the answers and are not involved in them. the bus tour roundtable participants at the high school level also voiced similar problems. career and college counseling and i schools are understaffed and often under trained on these issues. we also hear frequently about significant problems after the loans into the payment and as the borrower is attempt to navigate the crises, customer service repayment and loan terms. for example, cleveland ohio has about $90,000 in private loans. when she was struggling, she said that sallie mae's knott profit request additional payments and choose to deny the deferment when her husband lost his job. repayment terms are nearly impossible for an experienced borrowers to anticipate on the front end or to fight on the

repayment. when another borrower bridget went to peace corps after graduation, she said she was able to defer her federal loans, but not $46,000 in private loans. her mother agreed to help make payments while she was gone. a few months before bridget's return in 2009, her grandfather passed away. the turn of events that ensued led to one miss payment and then one more. after the second missed payment, she was told that the loan was charged off and the full amount came due. she said she was told the only way to repay 60% of the balance up front, that's over $27,000. currently she said she pays $300 in monthly payments and that nothing has been put in writing. she hasn't gotten a bill, she's unable to check her balance online and continues to receive bullying calls. 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 credit score has plummeted. she tells us she has no hope of coming out prior to rebuild her financial future as none of her monthly payments count towards that lump-sum. in the wake of the great recession and as millions of borrowers struggle to deal with unemployment delinquencies to medieval and high debt and millions more attempt to navigate the recession private loan market, we must act. we have to rethink the way we treat private loans and bankruptcy. the department of education should use an e-mail system outreach to inform the borrowers about the new options in the complaints in this efp, which is a resource that we have sent many borrowers to already. we also take action to protect future borrowers as they make their choices. the should be required to obtain school certification before the private loans. marketing materials include clear explanations of payment terms and be available earlier. we need to ease the application process of merging independence

from parents so that the bar was receiving no help from their family can access a full set of federal loans. and stakeholders must ensure the borrowers flanders and the difference between private and federal loans. particularly with the options on the table, for example, as the future teacher getting a master's degree is resisting a competitive interest rate on fixed-rate private loan and 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 dever during times of unemployment. as the private loan market evolves and potentially three emerges, we must ensure that new borrowers are fully informed and have access to fair lending terms and current borrowers find relief and help. thank you very much. >> thank you very much, is mishory. mr. remoni, thank you for being with us. >> good afternoon, chairman brown, senator corker, members. my name is jack jen, president and chief operating officer of sallie mae, and i think you for the opportunity to testify today

on the private educational loan business. private education loans help families fill the gap between their own resources, financially, grant, and the total cost of the 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, how your education is a family commitment, which our private education loans are designed to support. last year over 90% of the private education loans have a cosigner typically the parent. malone's provide important features and protections that benefit the family including extensive disclosure comes interest rate in the repayment options, invited tuition insurance, and death and disability loan forgiveness. but the best protection inherent in any loan including private education or federal student loans, is quote the underwriting and thoughtful planning before

juan barrault's. our free education investment planner helps families know before they go. bye assisting them with the following important steps for turning absence into success take the right school, and most importantly, consider the 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 the costs down, and a graduate. student loans without a degree fema loan payments without the higher earnings to support them. during the application process, we disclosed monthly in the total payment information and present customers with a side-by-side choice of interest rate payment options available to them. customers receive multiple disclosures that quantify expected monthly payments and finance charges, highlight the availability of federal loan programs to encourage the applicant to shop for lower-cost options and outlined the right to cancel of the loan.

after that is% of customers receive monthly statements that detail the loan balance and accruing interest to customers that elect to defer the 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 help america pays for college study shows how effective these disclosures and reminders of our. the private education loans, credit to fusion loan borrowers, 98% filled out the fifsa, the first step in taking out a federal loan. on all of the border were surveyed, just 3% borrowed only private loans. ..

even in these tough times in these stories were today are certainly important to hear, but they are not the norm. 90% of our loans in repayment our current. charge-off rates have dropped from as high 6% to under 3% this year. still, we recognize the recession has posed real and significant challenges for many americans, including some of our customers, and because our success depends on our customers

success, we actively assist borrowers experiencing difficulty by understanding their individual circumstances. the customers who need help, we offer an mix of repayment products and counseling and collection programs that give them the best opportunity to manage their debt obligations. these options include reduced monthly payments, interest only payments, extend repayment terms, temporary interest rate reductions, and if appropriate, forbearance. all skill to the customers individual circumstances and ability. since 2009, we have modified $1.1 billion in private education funds to help our customers. nonetheless, loan modification and other efforts are sometimes insufficient. and for this reason sallie mae supports bankruptcy reform that would require a period of good faith payments that is perspective so as not to rewrite existing contracts for customers, and that applies to federal and nonfederal education loans alike. we would also be interested in

increasing options available to defaulted borrowers. specifically the federal rehabilitation program allows defaulted borrowers to secure their credit. if a customer makes an required payment is loans rehabilitated and the default is removed from their credit history. for all other consumer loans, however, the fair credit reporting act does not allow for a second chance. so there's no provision to rehabilitate my student loans. for sometimes we've been discussing the promise of providing the option it would certainly recommend that congress consider it. in sum, market forces and legislative changes, some of which were developed here in this committee, have combined to private education lending better understood by students and families, better underwritten, and more targeted to provide the needed financing that can help american families achieve their education dreams and create the opportunity for a brighter future. thank you, and be pleased to answer questions.

>> i want to interrupt this hearing for just a moment on the senate floor and on the house floor. by the kate austin mccarl and senator reid are marking the 14th anniversary of the murder of the two capitol police officers. on july 24 at 3:40, officer jacob and a detective or shot in the line of duty. if i get asked for a moment of silence from 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, predators have moved on, borrowers can not -- mr. chopra in the beginning comments on the first panel, spoke about the difficulty of refinancing, and it's partly students, potential students, borrowers

know enough about those refinancing opportunities and is also refinancing opportunities, if you will. do you see what types of release or refinancing opportunities are currently available to private student loan borrowers? i would like ms. lummis answer, but also the other to you if you would sort comment on your insight. and at the same time should introduce. elaborate on any sort of barriers or federal rules that may contend -- to provide those relief options to those borrowers. >> sure, thank you, senator. right now what we've been able to see, mostly worked with a client is that there are very few private loan refinancing options, even available. a lot of our clients are lower credit score, and so maybe because of that, but we also hear from borrowers through our website and others are looking, who are prime borrowers who are

having the same problems. so i was a there are very few products and opportunities out there. as far as barriers, just one point that it want to make especially the issue of the regulars have come up numerous times. i think it's very telling as mr. remondi mentioned, the number of options, sal from a -- sallie mae is often. so clearly it is optional to offer some of these options and i would like to more if it they're hearing from regulators that they can offer some things, just not too much. but one of the problems that we find is that there this haphazard nature, that some of the lenders will, for example, offer or say that have programs where they will offer cancellations forget over -- death or disability and sometimes will call our clients and they say they have them come and sometimes we'll call the same lender and they will say that they don't. so 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. >> ms. mishory, your comments? >> i would say similarly the borrowers have come to us have increasingly do express frustration at the inability work with their lender. to find better terms, and have not found other options in the marketplace. mr. chopra earlier mentioned education and borrowers as well. there are options and we also need to make sure that students and borrowers know about those, and so that's another issue as well. >> mr. remondi? >> i think as mr. chopra described in his comments, there's a couple of factors. one is these are principally in sallie mae's case family education loans. and the price that we charged or set on the interest rates to the borrower is based on the ice credit score of both the parent 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. second is that the loans are variable. most refinancing options we hear about are talking about fixed rate loans made in a higher interest rate environment in refinance into a lower interest rate environment. and very rarely do we see interest rate, or more loan products being refinance because the credit profile of the obligor has changed in such a dramatic way as 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 or refinancing activities. >> what can we do about it? >> as i said, i think in most cases those loans would be offered at the same terms and conditions there offered at today because they are based on the parent creditworthiness, and based on a variable interest rate. so as interest rates have come down since 2008, all of our interest, all the interest rates

on our student loans have been coming down with those, without fall into short-term interest rate market. >> what steps do we take, do you take and your individual responsible is, or should we take in congress to ensure students are aware of the differences between these loans and federal loans? not just the initial interest rate but other kinds of terms of repayment and are there problems that might arise during the repayment process? >> so, there are some changes in truth in lending, as you know, the disclosures are more extensive than they have been in the past. and there were some very positive changes there. but i think we hope that congress will take a look at the timing of some of the disclosures as well so that borrowers get the terms of their actual loans earlier in the process, not just a sample of what they made or maybe getting. because as we know the private

loan products really vary quite a lot. the certification process, as a number of people have alluded to here, and mr. chopra talk about in his testimony as well, we think is another opportunity to make that a mandatory program. some schools use that opportunity to counsel borrowers as well, and we think that that's an opportunity right thing to give a lot of information before the student is actually signing on the dotted line. >> ms. mishory, thoughts about that? >> i would also add in addition to the options that ms. loonin referenced, on the bus to were we talked to a lot of high school juniors and seniors trying to figure out their next step. 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 a college education. so i think a lot needs to be

done. college counseling offices, but we need to be teaching some of these financial literacy skills even earlier so that families can really prepare to finance their education. >> mr. remondi. >> well, i think as we heard in the cfpb report there is more disclosure today on private education loans and is on any other consumer lending product out there, period. and we do provide all of this information to the borrowers as they're going through the application process so they get an indicative great if credit -- credit is approved, they get their actual rate, they see their monthly rate. they have a 30 day term to accept the offer, and then also 30 days after the love has been funded to cancel the loan. each time in the process they are encouraged to consider lower cost federal loans, and to shop for lower cost option exciting and when and where provide an awful lot of good disclosure today. i think to the other participants comments here, one of the pieces that could improve

dramatically is 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 wit with a prospective army that they can gain from that career. and think about the full cost of education. the number one reason students default on student loans, and ad this is true whether it's federal loans or private education loan, is the kid 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 the more prepared before they go, we would have a better educated consumer, and i think better results in both the federal program as well. >> mr. chopra statement that you should need an attorney and a magnifying glass. >> he didn't -- he made that statement on all loans, not just to loans. but in our disclosures stay which are required to have a

certain size thought on every disclosures did and we certainly meet or exceed all of the standards. he was referring to the credit our statement that we get, when you get your new credit card and everyone throws away. >> are you talking 25 year old eyes or 55 year old eyes? >> i have my classes. >> thank you all for your testimony. i do appreciate that we have three folks with different backgrounds that are trying to solve the problem. and again i know all of us are concerned, we see people that are unable to make payments or paying for life for the education. let me ask, ms. mishory, what are some of the predatory lending instances, if you will, you are seeing out of the marketplace right now? >> i think as was discussed fortunately, a lot of those instances have improved over the last couple of years. we certainly saw over the

2005-2007 era a lot of director consumer working at a loss to the taken burdens that they didn't need to. so i think that we've seen a lot of improvements. i would say we still see marketing materials that are unclear for students. we need to make sure that marketing materials show terms and they show those terms in a way that students who don't have the ability or the experience of these products actually understand them. >> so it's more an issue just people understanding what they're getting into, and made it being explained and their language. it's not necessary that people, how they're purposely trying to take advantage of students. >> i would say that, again, a lot of panelists have discuss, the market has improved over the last couple of years. a that leads us to the problem of folks who already have all the debt they took 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 y'all make, i'm sure that has to be data that show that people who go to certain colleges are more likely to pay back their loans than others. are y'all able to look out across our country and see certain outliers were people go to particular institution and have more difficulty paying back their loans than others? >> sure. with over 7 million borrowing customers. the we have a wealth of data that really goes across both federal student loan programs and the private education loan marketplace, and the are absolutely differences in repayments, success rates. and the flipside of that, default rate, depending on -- >> when people are making loans to students who attended these institutions, are they taking this kind of things into account? >> well, i think what happened over the last couple of years is

that people weren't aware of some the changes that were coming personally, the economic environment. more recently i think people are trying, lenders are trying to take into consideration the overall success rate of students at a particular institution to we do not make private education loans to students at every school in the country. so we have an approved lender or approved school is that we use to determine whether or not the borrower is eligible to participate in our programs. >> on the federal side would are making loans to students at every institution regardless, is that correct? >> the federal government also as a cutoff and is based on the schools don't default rate, but that is a very high default rate standard tickets i believe 25% for a couple of years. it's only measuring the incidence of default in the first two years after repayment has begun. >> but the private lenders have to take things like that into account because unlike us, we

just can't make up the numbers and go ahead and kick the can down the road to future generations, is that correct? >> no one else is writing us a check when the borrower default. >> is there any way, is the possibly of them will nation fathomable, that the federal government to make loans at 3.4% to all comers? no collateral, no credit checks, no payments made for years. and come out and away at his net positive on the basis of the loan? is that even within the realm of -- and any institution, whether they actually have a lot of default rates or not, our students attend his institutions, is that fathomable? >> no. >> so i just want to say, i'm not just a little bit of an attitude here, the tremendous hypocrisy that the attitude is that i was, it is that us. and that is that, you know,

obviously ms. loonin, great has one and i appreciate your work in this regard, and your talking a little bit about how the private sector site has certain constraints, sometimes a prudent prudential regulator places them on. maybe some of them are not as tight as some of them. but on the private side the actual have to survive to the next year. i mean that actually have to make it in a solvency way on the public site, and in an election year we can just make things up. we can decide we want to try to get votes from students and young people by doing things that we know make is even more insolvent as a country. that we can just do that. so can you understand why that might be differences between what the private sector is doing it have to actually exist in the future, and the public side which we can just print money and borrow money from other people and do things that make us more insolvent during this

time of elections? can you understand why you have sort of different types of lending arrangements -- lending arrangements taking place? >> i can understand but i should say that the loans that i saw during the heyday of the predatory lending with the worst products i've ever seen, and i -- i don't think there's any caution put into those and those private lenders were making those. they wouldn't disclose their our talk about now but not with the bat out. it with any distance of the schools back then at rates that i've never seen before. also, and those are some of the loans that failed at the highest rates. so we're talking about it now because the market has changed because of the crash. so you're right about that, but that's actually still the problem in the private sector. >> for any entity that is out there doing things like you just mentioned, we've got to do everything we can to get you out of business. i could not agree more.

find religious talking about really us, not you guys. i thank you for what you do. i just continue to be appalled in our ability to be a responsible, and candidly as i listened to mr. remondi, it sounds like they are trying to be responsible. i don't know if y'all would take any issue with some of the things he just discuss regarding são tomé's policies. would you do that? >> i'm a, i could see this. i agree that they're trying to be responsible now. and i did a very good working relationships with the customer advocates officer, sallie mae being were very respectable. but, unfortunately, for a lot of our clients they are still able to offer anything. but i do think that a lot of the products they have created going forward do show much more responsible lending practices. >> i thank you for your help as advocates in making that happen.

just in closing, mr. remondi, on the institutions, i know there was an effort by the administration to make it so. and it might've been a good coliseum -- policy. if they were borrowing money that there had to be certain outcomes better, 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 may need to look at in that same way. would you agree or disagree? >> yesterday, there are good schools and our bad schools that are for-profit and not-for-profit. in terms of educational outcomes for the 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 and end up intending one of these schools there's really not equipping

them to perform an the 21st century, there is a consumer issue their also, is that correct? >> yes. >> do you know of the way we might deal with that? >> i think having information available to students so information about the schools, graduation rates, information about the default rates of students who attend the schools is a good step in that direction. i would go back to my earlier comment that says a lot that this is trying to address how to make a decision about the current semester. i've got to do wish and on the kitchen table, what do i do. and i think more students and families need to think about the total cost. how am i going to get from first year of college through to graduation so that i could get the economic benefit from the money i'm investing. >> and for the people that you are dealing with, it's very important to you as a lender that they sit down at the kitchen table and try to think through the entire process through graduation because otherwise it's going to end up

creating a loss or institution come is that correct? >> that is correct and that's why we offer our plan as a free website tool to customers and non-customers alike. >> are we doing that with a federal loan program, to your knowledge? >> no, we are not. >> so we have a lot of students that are borrowing money from the federal level and don't have this type of input at the federal level that don't have this kind of input on the front end. and we in essence again, us here, not you guys and not certainly any of the witnesses that are trying to overcome some of the predatory issues, we come here, have a policy that may be in fact harming people throughout their lifetime, is that correct? >> we are shortly not making the information available to those customers. and all of the disclosure examples that were provided today certainly do not exist in a federal student loan program either. >> do you know why that would be

the case? >> it's exempt from the truth in lending law. >> i think you can understand my frustration, given the hypocrisy in this institution. thank you spent i guess i share senator corker is, this is about hype hypocrisy by looking at these profit schools, the administration is trying to write some rules for and getting resistance from someone that. ..

>> thank you very much, mr. chairman. i want to tell the panel that i really appreciate your presence and your experience in the student loan program, and we have heard from you today information that includes expanding the role of colleges and universities and working with private lenders. however, since 2008, average tuition at private, not-for-profit schools has gone up almost 10% and tuition at the schools has gone up 15%. these increases are surely leading students to look for work takeout additional loans

for both determined tuitions and help students find ways to pay their tuition. i would like to hear from the panel what can be done to ensure students continue to provide advice with the best interest of their students in mind, and do you see the need for a neutral third party to offer advice for students? >> ms. loonin? >> the cost of college clearly has come as mr. chopra mentioned, gone across all sectors and that's a huge problem, and unfortunately there are a lot of students going to

schools who follow more because obviously the cost is more, and it's a complicated problem that is actually driving the cost. one thing that i think is important to look at is accountability, something senator corker was talking about, accountability across all sectors of higher education for the outcome, for completion, for job placement because the ability to repay the loan frankly even some of the higher cost institution is very much intended on the outcome is of the education and particularly in the federal program there's a lot of options it's good for the economy and all of that as well. as far as having the natural third-party adviser, i'm not sure what part of the process you are talking about specifically.

i think it's always important for borrowers to get natural at fais. i think the schools themselves sometimes to have conflicts of interest they want the students to come to the school they are selling their product of a lot of ways and it may be difficult in some schools to give natural at fais. on the other hand a lot of the financial aid officers to a very good job now was providing that kind of advice, something that ms. mishory mentioned it to get that information out to people before they get into the school doors and that could be in schools, with counselors, and that should be as neutral and as objectionable as possible. estimate i would agree the cost of college is a huge issue. we hear about it from all of the students we talked with. families are struggling to figure out how to afford to pay for college, and the issue of

student debt and what is impacting this debt. i do think there are larger issues we need to address like the example investment in the public institution. public institutions are no longer affordable like they used to be. someone from my mom's generation paid a third of what i paid to go to a public institution. we need schools to be accountable for the money they do receive and there is in that many ways we all schools accountable like we should come in and we need information, we need kids to be able to look and say kids on the street default kids to years out of 50% employment rate but we go across the city have an 80% employment rate i'm going to go. we don't have that information right now for students and they desperately need it.

>> i think the sticker price is sometimes a lot different than the consumer pays and we haven't seen the debt burden grow at a more rapid pace than the to vision level, so the average student is graduating with about $26,000 worth of debt which is about 2% more a year over the last ten years. i think one of the challenges they have is the economy coming out of school today it's very difficult for students to get a job either in their field or pay level they were expecting to do when they started and that is creating some of the issues. but again, going back to the concept of know before you go is students understand the dynamics, how much it is going to cost to complete their education, with the graduation rate is at that school, with the default rate is they can make

better more informed decisions on that process. >> let me ask a final question here. mr. remondi, has the recent scandal over libor had any effect on how sallie mae sets for lending rates and have you thought about the possibility of using a different measure for the rates? >> our interest rates are set using the libor index. we haven't seen any issues or problems with that. the allegations that have been made today is that they were set artificially low, which if that is true would have been to the benefit of the borrowers. >> thank you mr. chairman. >> thank you mr. remondi. a few additional comments you can submit those to the

committee and if you could get answers to us promptly. thank you for a much for your testimony and service, mr. chairman. >> mitt romney is joining his presidential running mate paul ryan today in michigan. they are going to a rally at the family orchard farm tampa florida has a very unique history, especially the

immigrant heritage in the early 1900's, late 1800's, right here in the city a part of tampa. young people came to work in the factory. they came from spain, they came from cuba, they came from italy and developed a very vibrant border and what is unique about the various immigrant society is they've all established their own clubs and mutual aid societies. we are here at one of the most vibrant and exciting clubs primarily the central taken from spain to cuba to work in factories. they had a lot of young men especially, but over time because of the culture, the games and the casino and the club's, the dances and the

health care, the hospital, they became a very integrated and unique community and if you listen to and oftentimes you can point that your grandfather or grandmother working at the cigar factories and was a member of the essential this torreano or the italian club or the cubin plot as well. >> this call upon the people of america to renew their dedication and their commitment to a government of, for and by the people. isn't it once again time to renew our contact of freedom? the pledge to each other? [applause] the pledge to each other destin our lives for the sake of this blessed land. together let us make this a new beginning.

let us make this a commitment to care for the needy, to the virtues handed down to us by our families, to head the courage to defend those values and virtues of the willingness to sacrifice for them. let us pledge to restore and our time the american spirit of voluntary service, of cooperation, as private and community initiatives, the spirit that flows like a deep and mighty river to the history of the nation. as your nominee i pledge to you to restore to the federal government the capacity to do the people's work without dominating more lives.

sandra day o'connor calls criticism of chief justice john roberts decision to uphold the health care law unfortunate. she said it shows a lack of understanding in the judiciary and she testifies before the senate judiciary committee on the importance of teaching succinct school. it's about an hour and a half.

>> [inaudible conversations] [inaudible conversations]

ho before we get started -- before we get started, i should -- and delighted that justice o'connor is here and senator grassley was doing a conference call on education and i'm just wondering, all of you who are students in this room, would you please stand up just so that justice can see -- [applause] not bad. in the past we have had justice o'connor -- i was telling her earlier that justice breyer and

justice scalia were here coming and we have had so many schools around the country and we now have a dvd of that hearing, and in the state of vermont i had people stop me on the street who have seen the tv, and it is the chance to learn -- it is a learning experience, and we try to do that periodically here. of course justice o'connor was appointed the supreme court by president ronald reagan in 1981 and she serves on the court during her retirement in 2006i recall we talked about this and barry goldwater from arizona came to see me as he did others to praise justice o'connor and

say she would make a great justice and she's absolutely right. she is the leading voice for the improvement of civics education, currently serves as the chart of the board of directors for an organization which promotes some education in our nation's schools. justice, you're pleased to see a number of students were here. >> i think it would be very instructive for young people to have a chance to do that. >> you are bringing a lot of students to washington this debate when we are striving on our judiciary website, and i

think that discussion of the democracy's public officials will of all americans to be transparent about what we do in our official capacities. we need trust by demonstrating how the government works to hold our common values and how we are guided by the current institution and now the constitution served over the years to make a great nation more inclusive and our effort to be a more perfect union the phone call before we can hear and we had a number of students in here that recognize quite a number. we have three practices of government in the constitution, which -- but only two of them are political and intended to be

political. the third branches the judiciary and dependent by design. both of the political come together in the judicial confirmation process to equip that branch for the men and women necessary to carry out the role in our democracy. i have had a chance to vote on every justice for the last 37 years and the judiciary independence and with the judges and democracy has been a subject of the two previous hearings of the supreme court justices, justice kennedy, justice scalia, justice breyer in the wake of the recent rhetoric about the sitting chief justice conversation is all the more relevant. i am concerned about some of the rhetoric about the chief justice

who has been called everything from a trader to president george w. bush. i think these types of attacks we feel the misguided notion that the justices and judges osama legions to the president who appoint them to the political party. i've served on this committee for three decades. more than that. every supreme court justice serving on the high court today in the confirmation hearings i voted to confirm justices nominated by both republican and democratic presidents as they did in voting for chief justice roberts. i do not vote to confirm individuals and i agree with all of their decisions. every justice and the decisions i disagree with by a lot of the decisions i agree with.

miami standard is whether to be fair and independent judge. i see this because nobody should demand allegiance from any judge nominated by a democrat or republican. as many justices have noted it is completely appropriate to criticize we have that right including the supreme court for example the chief justice which i disagree i find justice ginsberg compelling under the commerce clause but reveals a complete misunderstanding of the system to attack the she justice saying that he has not found political party or shown allegiance so it is a teachable moment. justice o'connor dedicated her life to public service.

she's been elected to the state government and served on both the state bench and on the highest court. the last justice from what i called the judicial monastery. she's traveled the world to teach emerging democracies about the importance of the rule of law and i know those have been teachable moments. she's directed the importance of civics education as her own democracy and continues to be protected and justice o'connor i plan to senator grassley but as i then told you privately, barry goldwater was such a good friend, and at his request i moved into his old office and he would blush to hear all the good

things he said about you. some of the language i will not repeat, that you know very. >> senator grassley? >> senator grassley. >> thank you, mr. chairman, for holding this hearing. i remember one we had last year was very valuable. it's valuable to have you here as well. i tried to greet you for coming. you were not only the first woman to serve on the supreme court, you were the first supreme court justice i ever had a chance to vote for in my first vote for confirming somebody and i can say this, that looking back after all of your years of service, your performance justified the confidence the senate placed in you. we would like to believe that our judges whose independence is guaranteed by the constitution,

rules based only on the constitution and not on their policy preferences, judicial independence was established to meet the court's independence of the other branches and independent of popular view is not designed to make judges independent of the constitution so that they can impose the policy preferences. we hear that if only our citizens properly understood the role of the courts on the unprecedented tax on the judicial rulings advantage this is a view that i believe is at odds with the current reality in the history of the country. in fact, the leading her reason for the so-called attack on the judicial independence is often judges themselves. last week "the new york times" reported that only a few the weeks before the courts of your decision, the supreme court decision public approval of the court performance was 44 to 36.

but the article reported that after the ruling as many americans disapproved of the supreme court has approved of its performance that the decision which some have speculated was issued at least in part to reduce political opposition of the court appears to have accomplished exactly the opposite result if you want to go back. the article states that most americans believe the decision was based mainly on the justice's personal or political views only 40% of the americans say that the decision was mainly on the legal analysis. for myself, i respect the decision even if i am disappointed by that decision and i questioned no one's voting, but i do not think that the results would be different if only the public had a better understanding of the court. in fact i think it reflects the

public does have reason to suspect that politics enters into some justice decisions. if they accept the decisions any way as shown by the polling on the major cases presented in that article. two-thirds of which were on a popular when they were decided. although unfortunate, this perception shouldn't be a cause for alarm so long as it doesn't lead to threats of violence and threats to in prison judges for the ruling. much more serious threat to the judicial the independents have occurred regularly in our history when they were convinced the court presented as law by the supreme court opinion on the constitutionality of the bank of the united states.

there were quote on quote erroneous and refuse to accept it as a president because it reflected, quote, apparent political bias, or when theodore roosevelt ran the most successful third-party candidates in the country's history on a platform of, quote, restriction of the power of the courts so as to lead to the people the ultimate authority to determine fundamental questions of social welfare and public policy and of quote to overturn constitutional rulings of state cards or when franklin roosevelt tried to practice the importance because of its rulings striking down the new deal legislation. so, let us keep everything in perspective. it's not a violation of judicial independence for a senator to criticize the court rulings he or she believes are incorrect

and it's not a violation of independence for the senator to conduct legitimate oversight of the judiciary. those are appropriate ways of ensuring accountability. that is all within the constitutional concept of checks and balances. but judicial independence could be jeopardized when a president of the united states and the the state of the union speech misstates the holdings of the supreme court case in front of justices when they cannot respond. a judicial independence can be threatened when after a pending case is free for argued the president publicly misstates the process of the judicial review and claims that the court's legitimacy and a particular justice legacy will be tainted unless the court decides the case the way the president once the case decided and judicial independence is certainly weekend if justices didn't to those attacks if and even appear to do so.

finally i appreciate justice o'connor's work in advancing civic education. all i believe that all citizens in a democracy benefit from the participant and inform active citizens. i think the sites or a good one although i wish they told students that citizens can chop the law on constitutional as well as federal court should also say that a trial held for violation of the state criminal law claimed to violate the federal constitution could be held in state and not federal court and although i've supported federal efforts to support the understanding of the constitutional system, i do not believe the federal government should develop and mandate six standards and i do not believe the framers of the constitution of thought they had given authority to impose such

standards. justice o'connor, i will look forward to listening to your views. >> thank you. >> we talk about six, and as i look at this call on the front it looks like a grandson of mine. all five of your grandchildren get a chance to be involved, but please, justice o'connor, we welcome you here and the floor is yours. >> thank you very much, senator leahy. i will welcome questions that you and senator grassley want to ask to direct the conversation. you brought the subject of six. it is a website that relies on games to teach young people how the government works. we have had a wonderful group of

skilled teachers of middle and high school levels who have helped advisers on the topics we should cover on the next game and so forth. they have helped us through the process of developing web sites, so we have attempted to develop the games that enhance the ability of teachers to teach young people how our government works. i went to school a long time ago. i went to school in el paso texas. my parents lived on a ranch that was remote from any school, and so i lived with grandparents in el paso during the school term and went to school there, and i will remember having a lot of civics class is mostly based on texas history, and i got pretty

sick and tired of it to tell you the truth. i thought i was miserable. as i am hoping today's civics teachers will be able to make it more interesting than i found it in those days. that is one of the reasons for developing in the six website a series of games that young people can play that illustrate legal principles we are hoping to teach and the system has worked very effectively. recently baylor university in texas asked to do a study through their education department to see the effectiveness if it is effective of the program of the students and the study produced really exceedingly encouraging results. i was thrilled to get the report about what they found from the

use by students of the website and the games in that so i am encouraged and shows me that young people need to know how our government works and how they are part of it hood. it isn't self-evident, and in schools today i don't think it is widely taught, and young people want to know how to be effective. they want to know their role as citizens and how to make things happen apple local level, at the state level and the national level to develop their own proposals and programs and learn in the process more about how the government works. i think that the effort is being effective and appreciated. i have shared people now in all 50 states including in vermont,

and it's doing well i think coming and i welcome feedback from you and others come in your constituents on how they think we can approve what we are doing and we have kept the program free so schools can use it at no charge and that's important in today's circumstances where money is often available for schools to develop new programs. but i hope that your constituents will report back to you occasionally and keep you informed, and i welcome your suggestions as you have them when we go forward and senator grassley the same. thank you very much.

i will check from vermont. >> absolutely. the town where my ancestors settles after the revolution. the northeast king come a very special people come for that prior to the state including my wife of nearly 50 years you've often commented about all the attacks on judges can be a threat to the judicial independence. we follow the final days of the supreme court session last month a member of the court was labeled a trader accused of somehow be trying the president nominated to the supreme court allows though the political dirt

action from the president. >> it is unfortunate because i think the comments like that demonstrate only too well the lack of understanding as some of our citizens have about the role of the judicial branch and i think the framers of our federal constitution did a great job in understanding themselves but the judicial branch needed to be able to make independent decisions on the legitimacy, lawfulness of actions that the state and federal level when they are properly raised in court and the framers did a really good job in that regard. it's not every state has followed the federal model under the federal model judges are not elected, they are nominated by the president and confirmed by

the senate in many states that is the process but not all that many stick to a popular election judges for the election campaigns. it's disappointing to see if many states as there are that still use judicial elections on the judicial appointments. many of the states that have these have a process have a process however of collection to the collection or public input and that's fine and the federal model has been a state.

>> that is a model that we follow. and it's worked very well and it's taken politics completely. >> following her name was recommended from a bipartisan screening board i recommend her name to the president she the first nominated to to the st. cord by the republican governor, someone who once ran against me i don't have the foggiest idea where the politics are and i don't care. but i'd like is we actually have

from vermont. >> while the judge might be appreciative as you should be president ronald reagan's nomination your allegiances to the law it's to the constitution of the united states and the laws that are adopted by the congress and that allegiance to resolve the cases that come to them and rely on president. we follow the british model of years ago, in which case resolved by the nation's highest courts the principles established will be followed by the lower courts in the future

when the courts change the model for the rules. we have a good federal court system overall in my opinion. >> with me ask you about that because during the primaries earlier this year there were a couple candidates who said that those of us in the political office should be more involved in the court's one even suggested totally e eliminating whether the second courts of appeal because he disagreed with one of the opinions. we've heard others say that because we have the power of the

courts to set the jurisdiction we have a disagreement we move that. i remember the standing side-by-side and look forward to fight the effort by one senator even though the case wanted to strip the jurisdiction of the court was one where senator coburn and i disagreed with the conclusion. would you agree with that? >> i certainly do. i think our system is a good one. sometimes a court, a federal court for example will result some legal issues in a way that not everyone likes in a body like the united states senate complies with republicans and

democrats and occasionally independence you are going to have some disagreement among the members of this jury body of a particularly of a federal court is correct for the best ruling the court could have their brand differences of opinion. but under our system, an issue that is divisive sometimes well, again through the courts in a different posture you will have related issues, and over time of the courts themselves will have a chance to review the president's and the effect of earlier decisions and the courts can make changes over time in the applicable legal principles if they think that's indicated and the system is working quite well i think.

what about the diversity in the court and you were the first woman to serve on the supreme court and i praise president reagan. diversity is more than just that. you've been elected in the office and have a lot of other experience. we should be pushing for more diversity? >> i think that over the nation's history we've had a very diverse curve of judges on the court, and in the first 100 years let's say we have justices

nominated on the very diverse backgrounds that doesn't happen as often today as you point out to have to be people that have served on the district courts, federal courts of appeal and then considered for the scourge that is not a requirement, and the president with a vacancy to fill the course is free to choose people with very different backgrounds in fact the president, there was no requirement that the person appointed be a lawyer i think they have a pretty good time if they hadn't had a legal refraining so i hope it isn't abandoned in the process. but there is no requirement as you know in the selection of justice, and in the first 100 years i think we had a lot more diversity on the court. good morning. >> thank you very much.

senator grassley. >> this isn't one of the questions i was going to start out with, but you did bring up about the election of state justice. what you said is leaning more towards the federal system than the state's, does that apply to the attention of the elections? >> many states that still have appointments, some appointment systems for state judges include a system whereby after so many years on the bench the judge goes on the ballot in the state for the voters to decide whether to repave the judge. that's the system we actually have in arizona and that is a system that i helped develop in my prior years in arizona and then the voters have a chance to look at the record and saidy want to keep this judge? yes or no?

not many are turned out of office in that system, but if you have been for a variety of reasons. and i think it is a perfectly valid system for the state to adopt. the federal system doesn't have that. you don't have a system whereby after a few years on the supreme court the voters in america can have a chance to say whether it justice should beat retained or not, and i think the federal system has worked very well. i'm not proposing a change, but the states that use retention he elections have had pretty good luck with them. very few people are turned out. >> i want to refer to an article from 2008 that you wrote every university law review, "on a regret that threats to the judicial independence seem to be occurring with frequency members of congress fall to the court for their decisions on various

issues in the vote, and i don't find any fault with what you wrote but i would like to explore some situations to see whether you think they could pose threats to judicial independence. could the judicial independence be threatened if the president at a state of the union address and justices who were not in the position respond mischaracterized and criticized supreme court decisions? >> i don't know that it threatens judicial independence. it's just not what one expects a citizen to hear it president in the state of the union message get specific about justices individual actions and say the president disagrees. it's certainly possible for a president to do, but it is unusual. it's not have the time is usually spent by presidents. >> another question, could judicial independence be

jeopardized if the president while a case has been briefed and argued is waiting to miss did the doctor of the judicial review claim that a particular ruling would harm the court's legitimacy and claimed that a particular justice's legacy will be gained unless he decides the case in a manner that the president presumably wants? >> if there is a pending decision in the supreme court and the president or to express views along those lines would be surprising. it's unusual. i think that we have not tended in this country to speak out in some higher political level even at the state level or the national level about a decision in a pending case. i guess it could happen but it's not what we expect and it's not ideal. >> last, could judicial

independence be jeopardized if a justice decides the case in a different way than his original view if he does so deutsch of the presidential pressure or out of concern that the court would sustain political damage of wisecracks >> well, i'm sure that many things go through the minds of a justice in a pending case where tough issue has to be decided and the justice made before the decision is made learn things that cause the justice to shift the tentative outcome in some fashion or the justice. you signed on to some decision, and i wouldn't preclude that. that is always possible, but it's not often that it occurs. >> what would you think are the most important elements of the

court system that students should learn? >> the system needs to give the public some assurance of the independence of the judge making the decisions. the notion the judge should base the decision on the law and understanding of the law requiring the constitution and bill law passed by congress to wait and to do so independently. that is the concept and that's what i think the average citizen should be able to understand is the concept and trust that that is what is going to happen. >> i'm going to make a comment. i don't know where you are on this and i don't want you to spoil something i'm trying to do, but the chairman and by promoting judges and cameras in the courtroom, and we do it because we think that there's a

lot of mystery about the judicial branch of government and the education of the people by having more people having access to the courtroom would be a very good thing to do and so i'm taking my last minute to advocate for cameras in the courtroom including the supreme court. >> i better keep my mouth shut. [laughter] >> justice o'connor, i have to tell you you and i have known each other for a long time. it is refreshing having you here. i would respect your view anyway. >> one of the value of members of this committee, senator klobuchar also a former prosecutor i have a soft spot in my heart for the prosecutors as

you know. senator klobuchar? >> thank you very much, for being here. >> thank you for being here. truly appreciate it, and you should know that when we have a confirmation hearing for elena kagan and sonya sotomayor but before the age of 14 you were able to use a rifle, heard cattle and ride a horse. as i grew up on a very remote bridge and everybody had to do anything as soon as they were old enough to do it. simic exactly and i would assume some of your interest in the civics education was grounded in the fact that you came from such humble beginnings and you were able to achieve so much in this country. and i wanted to start with that where use of these specific education where do you think the reason is that we are seeing such as the decline and the civic education, how do we improve it coming and

specifically -- >> part of that is because we have learned to our dismay that our american students when tested on math and science are not doing as well as students of an equivalent age from many other countries and i think our country has been pretty advanced in math and science and we don't want to see our students lagged behind and that has promoted an effort to increase education efforts in those areas and it has resulted in the dropping of six courses. there are only so many hours in the day and schools have to concentrate on something, and they have tended to do more math and science and less on civics and i would just like to be sure that we continue to teach six to students as they go through.

my concentration has been at the middle school level because by then the brain as for me and the young people are eager to learn they're receptive and they can get. students want to know how the government works, how the city works in the counties and states and the program teaches by way of gains in many cases we have it in use in all 50 states. students using that can learn how to take a project and get it for some city in some board level or even a state legislative level and it's great when they do because the earlier

you learn, how the government works and how you can be part of it the better it is. >> i would agree. my daughter is 17 so she has been through this and my favorite project she interviewed senator murkowski for an hour and wrote this and think it is about a 50 page powerpoint presentation for her class. >> it's fabulous to estimate the more research that she has seen. >> when they get a specific project and run it through somewhere and get something changed its great. >> it's very good and i come from a state we have the highest voter turnout we were number two for the census last time, and it's just such a value in the state getting involved and people are increasing the distance from the government and the court. as a former prosecutor we would find out that wasn't always the result in the case that matters to people a lot but it's how they are treated in the system. if they understand what is going

on that makes them trust the system and we did surveys about this the understand the case would fall apart if you are not filling them and on what happened and they had no understanding they would completely mistreated by the system. >> i appreciate your emphasis and look forward to working with you on this. i've just had some other questions. one is about our supreme court nomination court hearing that came in and senator grassley it will be important for the public to see a supreme court nominee answer questions. from the standpoint of the public it's perhaps the only chance the public will have to see if a state nominee and have some appreciation of their style

and their manner and how well the answer the question or how poorly it really does matter to the public the system in that regard worked fairly well. >> what do you think about the nominee answering questions is a key but then afterwards there is this part where both sides those that favor the nominee to me honestly that seems i know people want to have a chance but it seems just so political in terms of it. >> it is but that is the nature of the political house and senate. you are the political branch of government here. >> my favorite one was one of the people that came on for a think it was just a sudden my art, she had known her when he was 12 and then went on.

she was very judicious. and regions that part of the process because it is pro and con. i know you've been an advocate of the problems with a judicial election. >> we have seen a stay pending judicial elections in recent years and are there any reforms you can think of that would be made short? >> biggar really important. i think the federal model of appointment of louis election of the federal judges is the best model and some states have followed it but not all. some states still have a totally

elected process for selecting judges. i think that is very unfortunate because it means raising money for campaigns and there is no way to be comfortable with that in the judicial scheme of things. it's not good to have judges you know have to take campaign contributions from certain interests and it's a worry. so i hope that more and more states will follow the federal model of not having judicial elections. many states including my own have for a period of years the judge's name goes on the ballot, and if the voters can vote whether to keep the judge or not. they are not running against anyone that doesn't require massive input or funds, and that seems to work fairly well. not many judges are free move in that process.

but, it is one way of having the voters involved to some degree. and it seems to have worked to some extent. >> very good. thank you so much for being here today. >> i look forward to working with you. >> thank you. >> thank you very much, senator lead. >> thank you for joining us. so i didn't see you come in. i'm sorry. >> i am easy to forget. [laughter] it is a pleasure to have you with us. i have many fond memories from my childhood watching my dad argue cases in the supreme court before you but asking questions from behind the bench. i don't think i ever imagined as a 10-year-old there would come a time i would be sitting behind a different bench and asking questions to you. >> you're father was marvelous by the way. he was such a good lawyer. he really did a great job, and we miss him. >> thank you. >> i agree. >> she was fabulous. >> we miss him. he was a proud arizonan. >> yes, he was. and i used to see him when i was in the state senate and in

committee hearings as you are sitting here. and he would come in and present material on various issues affecting the state, and he was effective enough regard as well. he really was an amazing man. >> that's good to know. thank you very much. i wanted to follow-up with you about a comment you made about intentional elections in the state judicial provision. you indicated the impact, the tendency to politicize the state judicial systems those retention elections might have is limited for the reason they tend not to result in the removal of the judicial officer in very many occasions. is there a possibility do you think that they might nonetheless have some politicized affect of the retention election is there a chance that might affect the judge's decision making process?

>> well, i guess there is always a chance. i prefer a system that doesn't involve elections and all, but many states to have the retention elections, and at a minimum it gives the voters an opportunity at some point down the line to say yes, i am satisfied, and a vote to rename the judge or the reverse. and not many are removed by retention. >> won a critical difference between the retention election and other type is that it is not contested. >> that's right. there's not a lot of campaign contributions being raised to treat skin again some cases not any. >> right. in most cases i think not any. but in possible. >> it typically requires something of a super majority vote. >> it depends on the state. >> what about the judicial

nominating commissions within the state's? i believe you have been kind of an advocate of what is sometimes referred to as the missouri approach whereby state judicial nominating commissions meet and will give advice to the governor and advise the governor to appoint. do you support that model? >> i do. it's a model i helped support in my home state of arizona that we had experience with now over many years, and it's worked well. so i think it is a pretty decent model. >> is there an argument to be made that commissions like that might have a tendency to insulate the appointed governor from the political process in a way that is not helpful and in a way that might make the appointing governor less accountable to the voters rather than more? >> i haven't seen it that way because the governor has to make the appointment and say yes, i'm going to consider these names and here is why pick. i think it's worked all right.

>> i suppose in my state if the governor had the option of rejecting the entire slate -- >> that's true in my state, too. if the governor feels i didn't get a good here i'm going to reject the whole batch and you give me more. >> i think i heard you say a minute ago the federal system is the best model. the best model just for the federal government or do you think the best model for the states would also be the federal system whereby the governor would have appointment -- >> that is up to each state to decide what do you feel in your state is the level of voter participation you need to have to make the system work for your state and some mixed model such as most states seem to have today where voters have a retention election where they can weigh in we don't have that the federal level. but