i can tell if there is a truck on the other side. we knew there was no -- in the next 20-30 years, with alternate routes, there was no need to spend those extra dollars. >> fascinating hearing this. we thank you all for the perspectives you bring to us. thank you for joining us. map 21, wesed included a number of reforms to transportation to focus on things like safety, state of good repair, air quality. unfortunately, we did not make much progress on the issue of freight and good movement, as we might have hoped. we have a lot of freight that comes in and out of corridors.

even by ship. at ourake another look federal freight policy, what advice would you give us to develop projects? >> since we have approached planning from a regional in our area wed have to, we look at rail -- we have the northeast corridor. we have a number of spur lines. most of them come from one location. we have freight coming in primarily from cecil county, maryland, coming down into delaware, spreading back and forth between states. our rail networks are intertwined with our sister states. a regional approach is one way to look at this. we talk about the northeast corridor. the flexibility of funding is not tied to state lines. there are projects that are good for a number of states that it

is hard for everyone to contribute to in one state. one of the things we have seen is, if we could potentially spread the local funding around, some of the projects that are waiting on funding along the northeast corridor -- technically, they are amtrak projects. ther states could get projects moving, and they would not sit waiting for a large federal grant that may never come. compass, that a you draw circles with, and put the point of it on bloomington -- a 50 mile circle around that point, and you cover parts of maryland, parts of pennsylvania, parts of new jersey. you have a hugely busy northeast corridor. you have a passenger rail, freight rail. there is a lot going on.

i was pleased to hear what you said about maybe providing some flexibility for surface transportation flow. i would not demand that state and local governments use that. but give them more flexibility if they decide to do that. we used to have a great former mayor of indianapolis, who served as here in the u.s. senate for a number of years. i think another mayor came on to become governor. >> he was not. >> i think you wanted to be. being mayor is a great job, i think. especially when the economy is getting better. i have heard good things about your work. work to turn indianapolis into a truly

multimodal city, with good mass transit, sidewalks, and good passenger rail. i have always thought the regional transportation network would offer people lots of travel options, some of which can involve physical activity -- a chance to ride a bike, or you name it. can you tell us why you supported such a range of transportation? i want you to come back and do it again. project could better support those efforts. >> i appreciate the kudos to senator lugar, who i respect quite a bit. we are trying to create the kind of city that people want to live in. the young professionals, the young families, are looking for a certain type of city. the multiple transportation options are critical. when i became the mayor of indianapolis -- >> how long have you been mayor?

>> i am in my seventh year. >> mayor for life? >> my joke was, what does one line of i claims connect to? we have additional trails because of the transportation alternative. writingple can start and walking around the city in a way that -- they want to go outside the door. sports facilities, the entertainment options -- they want to be able to get to them in multiple ways. we believe that attracts talent to the city. are starting to get nationally and internationally -- that is pretty obvious. every walking national company is in the search for talent.

the cultural tale has gotten a lot of attention. they are putting their new office space right on it. multiuse 28 story building, primarily residential. it is going to be multiuse, right on it. that is very important to us. the transportation alternative money gives us an opportunity to did these young people options on ways to move. senior citizens use them quite a bit also. we have a lot more bicycles, a lot more people working on trails. it is a lot healthier than it used to be. it has been very important for us to have the money flow down in a particular way to us, so we can build the kind of city that attracts that type of talent. >> i wanted to build on the urban situation. >> you are from a big state, vermont. >> a big rural state.

these programs are essential for our communities. without the transportation alternative or grams, small communities of 1000 or less cannot afford this. we have a very competitive program. we have a statewide policy of focusing on development downtown. people are clamoring for bike paths, for sidewalks. all of the economic benefit that comes from when you have a vital community -- it is our rural states as well. it is dependent on these important funds. think you. >> when you live in a country where over half of the people are obese or on the way to being obese, the idea of having different options -- if you think about how much more we spend for health care costs than countries -- this is not a double-edged sword.

>> let me say this. >> one thing, besides the it brings credibility in the government process. it also brings voters who will vote to help us raise revenues. the cities are filled with people who like cycling and sidewalks. they are soft projects. let us bring them quickly, so we can build that confidence on behalf of the bigger scene. >> i hear you. cited the card and cochran languages. the money goes directly to where you want to get it. if it is nota is, a huge, significant project, give more flexibility, which we

will look at. i know it is delicate to ask this question. i want you to know this transportation alternative program was one of the hardest things i have ever done in my life. a huge problem here in getting it done. because we have made these reforms, because we now deliver the money where it should go, is there anyone on this panel that feels strongly that we should get rid of that program? panel?e anyone on the that is important for me to know. mayor ballard, you are such an eloquent voice for this alternative transportation program. if there is a way for you to get a few mayors on a letter, as many as possible, to me and to senator vitter, and i know you have just a few here who i think will sign it, it would mean a lot.

frankly, i do not want to see this thing go into another meltdown. that, could help us with it would be hugely important. i know there are some people in the audience who are going to be advising on it. know, this is a must-have for a lot of us. we want to make sure it happens. sure thatted to make you know -- i think you do. we took many steps to streamline the last though. i have them all listed. i will not go into all of them. states the to all previously enacted pilot program allowing states to assume the responsibilities of the secretary of transportation under the environmental review process.

in my state, there is no federal environmental process. is that right? it, and thens shows it to the feds and says, it is a -- an equivalent process. you could do it, and as long as it is done well, it should be ok. let me say to all of you, this has been so important. we have already heard from the very large states. the large states are very happy with the program. you did not talk about the program, i assume because it is more important to the larger cities and larger states. but would you be supportive if we looked at a program that was expanded to make it easier for rural and small communities to get the grants? if you do not know what it is, it is transportation infrastructure financing program. , for example, you pass a

local measure, and it is money coming in over 20 years, we can come up front, or give you that check right now, and you pay us back over that 20 years. raise your hand if you would be interested in working with us toward making that program -- adding a component that helps towns,ller cities and and rural -- i see everybody said yes. i also want to towns, and say how important -- exactly what you said. people want to be able to walk and ride. they want to be able to keep the cities, the young families. that is what they are looking for. in the old days, in california, bill said, -- people said, i want to live on a mountain top.

raising the kids in the hills -- it is a beautiful area. the trouble they found is that the kids wanted to be a little lower down, so they could walk to the store, walk to school, and did not have to count on mom and dad for everything. i think both of our mayors have , and are vermont -- everybody made the point that this is a lifestyle that is now developing out into the future. we need to bring all of this together. i just want to say how thrilled i am with this panel. i spoke for a lot of cities and towns -- >> i approve this message. >> very cute. >> it is important to have a wing man who trusts you so much. we stand adjourned. in april, we are marking up the bill, and i hope you will be happy with that.

and adjourned. [captions copyright national cable satellite corp. 2014] [captioning performed by national captioning institute]

>> and can the department of education and alone servicers function properly without this the? >> the key is a part of the structure that we have, and you're right, that is taken out of the load of other this toshiba to the students. in terms of what that would mean for me cost structure perspective, i don't believe

that it will have, we could still operate in we could still conduct alone program without that. in terms of other considerations, statutory and otherwise, i can't speak to that, but you're right, it is that he and the results, and a very small fee. but when aggregated together it's a meaningful amount. >> i appreciated hearing in your testimony that the department of education has worked with alone servicers to streamline the process for those needing to discharge their loans due to total and permanent disability. i understand that discharging loans due to total and permanent disability still remains cumbersome for many. i've been working for some time on a student borrowers bill of rights bill, and it includes the right to discharge the loan due

to total and permanent disability, as well as avoid current tax penalty that those who are able to discharge. i want to know if there are further steps that the department of education can take to make the process of loan discharge in the result of, in the event of total disability or death easier for students and families. and are there currently any incentives in place for the servicers to expeditiously serve those students and families, or could you create them? >> that's clearly a major concern and a big issue that we've been focused on. we have streamlined the process. before we have many different serverservices, now we have one service or. so there's ability to sort of quality control of brown fat

experience. we've now used, we now use fsa and veterans determination for disability. so the vagueness around what total and permanent disability is, that's been addressed. and so i think we've improved the process, but there's probably still work to be done. and it sounds like the issue around attacks at the end of the forgiveness, that's something that has been discussed a lot. and in a people are looking at that. that is, we can operationalize that pretty easy if that comes to fruition, but we have made some significant improvements. and were looking for additional ideas in terms of how we can further improve the total and permanent disability process. >> i don't want to get anyone off but i've just been informed we have three votes at noon. i think we'll have to call a halt to the string.

we have a whole nother panel of experts that we want to hear from soy just ask if you don't have any really, mr. runcie, i know you've answered a number of questions but i don't want to cut anyone off coaches like to read as long to we can get your next panel. >> i will hold my questions until the second panel. >> i appreciate that very much. senator murphy. >> i'll ask you one question around the subject. when an integer goes to buy a house, the bank was is both their credit worthiness and also the soundness of investment they're making. they will do an inspection, make sure it's a place worth investing in. for the programs you run, the assessment on the borrowers is different. it's not about credit worthiness. it's about need, but the institution in this case, the equivalent of the house, deserves to have the same kind of rigorous analysis applied to it. and today, we sort of have that

in all or nothing approach when we're looking at these institutions as to whether they are worthwhile investment for the federal tax dollar. i look at an institution like a place called corinthian college in california, a school that has revved up $1.7 billion, 83% of it comes from the programs that you run. and yet they have default rates in the neighborhood of 36%, a three-year default rate at 40%, prices are wild out of step with other competitors in the area. and when they ran afoul of the default rate rules, the way they got back in compliance was to call their borrowers on average 110 times a month, to convince them to just seek more deferments and forebears. actually do much about the price of the degree or about the

quality. they just convince students to push their obligations out for the. there are other models out there rather than the all or nothing approach which would involve much more of a risk sharing model in which schools that aren't performing, having higher than average default rates are low graduation rates, would share more of the burden of the outstanding loans rather than just saying that if you don't meet a certain threshold you don't, you aren't eligible for federal aid. i think we've only sanctioned eight schools. you think the current method by which we judge institutions capability to give students a quality degree of allow them to repay loans is working? what you think about some of these other models? >> i think some of those other models are promising. they have been discussed. and we would be ready to run compliance activities and put that in terms of our operations.

right now we look at cohort default rates, as you know, and to some extent depending on the utilization of forebears and difference, that can be manipulated somewhat. what forbearance and deferment, those are sort of entitlement under the program. so however the servicers are ultimately the ones that can put people in deferment or forbearance. so the schools may guide them but the service also has to have a conversation, work with him to see if that's the best option for the at that time versus income-based repayment or something like that. the other thing is we are going through the negotiated rulemaking process for gainful employment and i would also have an impact in terms of addressing some of the issues that you mentioned potentially with the proprietary schools. but in terms of a wholesale change in model and way to address those issues, you know, i'm open, we are open to

operationalizing those. >> i'm glad to do that. the idea we are sending in this particular institutions case $1.4 billion in taxpayer money, all for the benefit of getting a 40% default rate and graduation rates i think that are hovering under 10% at this institution is mind blowing. senator murray n. sanders myself have legislation that hope will take a look at it in the context of hda reauthorization will give you an the department of education some new tools with which you try to hold the schools accountable when we make decisions on how to allocate $142 a year. thank you, mr. chairman. >> thank you. senator franken. >> thank you, mr. chairman. i want to talk about a tool that students can use early on in the process of looking at colleges. the net price calculator. i'm going to introduce some

legit creation on that to prove it. that price calculator allows kids, before they are even decided whether to apply to a college, can see how much is actually going to cost. now, we have a free net price calculator available for colleges. some put their own. some are better than others. you know, i think about, a college board a recent survey. more than half of the students ruled out schools based on sticker price without considering the full effect of financial aid, and i think, and it said many of, chose to attend less selective colleges than they were qualified for because they incorrectly believed that are priced out of the other

schools. i was wondering if you had any thoughts about the net to calculator and what the department of education can do to incentivize colleges to make these calculations more user-friendly for students? >> we've been very focused on financial letters he and outreach and making sure that students -- literacy. to make good investment decisions. and there've a been a number of items we put out like the financial aid shopping sheet that makes students compare student loan packages and financial aid packages across institutions. but your point is even before that, you know, students make decisions about colleges because they see the price tag and they

don't have a sense of what the net price is. we do have calculus but think the promotion of those calculators is something that we could do better. we could put more into promoting the cat killers and would work with institutions potentially to make a calculators a little bit more user-friendly and more transparent. >> or just require -- i mean, for example, if you're filling out the fafsa, that can be completed until january 1 of the year in which -- can't be, the student seeks to roll in a school. by january 1 you've already done your application. you've already basically it's all over. this is an ability to see before, as you're considering, you can look at a school, and if you have the right to calculator there, it gives kids a real idea of what the real net cost of the

school is going to be. what the possible grants are, what the aid would cost, et cetera. and when i go around roundtable to talk about colleges affordability of the students, very often i hear, gee, i wish i'd applied to the school, or i didn't really realize how much this was going to cost. financial literacy is a tremendous part of, we need to have these students have their eyes wide open when they're doing this. and i don't want them foreclosing better options for themselves because they didn't realize that school, some schools will give a full ride to students and kids are not going to apply, you know, i'm not going to apply to harvard because i couldn't possibly, you know, pay for it so much.

and then they don't understand that harvard gives a full ride, or princeton does, other schools do this. so i would like to see that there is, i would love to work with you on this, to find a way to let kids know well beforehand, not let them know after they've already applied, after they've already been either admitted or not, let them know beforehand what the net cost of the college is going to be. >> and i would love to work with you and look at your ideas and see how we could make it better. >> thank you so much. thank you, mr. chairman. >> thank you to senator franken. mr. runcie, thank you very much for being here. thank you for your testimony. i'm sure we'll have some follow-ups or other senators were not today, but thank you. >> thank you, mr. chairman. thank you. >> now we'll turn to our second panel.

i'm going to have you do that. first we go from left to right and not just introduce you and then we'll start our testament but unlike introduce dr. michelle cooper, president of the institute for higher education policy, nor decision dedicated to promoting access to success for all students in higher education. most recently dr. cooper led the development of ihep's new policy agenda with a focus on increasing degree attainment and improving accountability and consumer awareness. she received her patches agree from a charleston, masters from cornell and doctorate from university of maryland at college park. i turn to senator warren for purpose of introducing our next witness. >> witness. >> i just want to say i'm pleased to introduce diana luna, director of the national consumer law center's student

loan borrower assistant project. at the national consumer law center, ms. loonin assist attorneys and teaches consumer law to legal services representatives, private consumer lawyers and other advocates. she is the author of several reports on student loan law and problems are there any federal student loan program. i worked with ms. loonin for many years before i made this cover your shift, and i just want to say her work is first rate spent more enthusiasm. thank you, senator warren. our next witness is roberta johnson from a truck of student financial aid at my alma mater, i was a university, a land grant institution. with a two decade history of student loan operation of the institutional level, ms. johnson significant firsthand experience in the administration of loans through both the federal family education loan program and the

federal direct loan program. in 2013 ms. johnson was appointed vice chair of the bicycling on student financial assistance which provides counsel to congress and the secretary of education on increasing college access for students from low and middle income families. she's a dual graduate of iowa state with a bunch of screwed in elementary education and home economics and a master's degree and counselor education. now i will turn to send alexander. >> thank you, mr. chairman. we welcome marian dill, director of financial aid at lee university in cleveland, tennessee. the only thing would've been better if you'd bought the lead singers with you. they did so well at the inauguration and i hope you'll give them our best wishes. she is membership chairman of the southern association of student financial aid administrators. she has an assistant director of financial aid at community college at tennessee wesleyan.

in our state. and she is a first generation college student and recipient of title for aid, such as a broad view of the subject would talk about and we welcome her. >> thank you all for being here. your testimonies will be made a part of the record in their entirety. i'd like to ask we will start with dr. cooper input into one. if you could sum up your just one in five minutes or so we which are appreciate and we can get into our questions and answers. dr. cooper, welcome. please proceed. [inaudible] >> chairman harkin and ranking member alexander and other committee members, good morning faq for this opportunity. i'd like, i am michelle cooper and a prison of institute higher education policy, we still refer to as tonight. at ihep with focus on issues -- with the focus of emphasis on underserved student populations. today i speak to you in my role

as president of ihep which is the decades ago i was simply a kid from south carolina who had the opportunity to finance my college degrees with title for financial aid. so i can say with confidence that financial aid in the ability to access it made a difference in my life and i firmly believe that is to make a difference in the lives of today's students. with realities of today's students are very different than previous generation and earning a college degree or credential is much harder now. so in re-examining the title iv program i would encourage you to be mindful of today's context and also be mindful of the realities and the needs of today's students. and so we should recognize that one size fit all approach is probably won't work and neither will layering new policy ideas over old outdated ones. so in turn to the issue of student loans, our goal must be to help the millions of student loan borrowers who we currently have graduate with manageable debt levels that can be repaid

in an affordable, easy and timely manner. with this goal in mind we at ihep recommend that to be three types of improvements. improvements that will at least have more informed choices, that will lead to more sense like options, and improvements that will lead to better shared accountability. for informed choices where to recommendations, and one is about better information and the second is about better student loan counseling. when it comes to the issue of better data and better information, i'm sure you've yoe heard like i forgot to believe that there's more than enough information out there. there certainly is information out there with information is not always of high quality. information is not always present in way that allows students to use it in a consumer, and a productive consumer friendly way, and it is useless sometimes does not help them to make good sound informed choices. so i in our written comments we recommend some very detailed but straightforward fixes to

existing data in the national student loan system that would better help students gauge the quality and the outcomes that they can likely experience at some institutions. we suggest improvements to the information around college costs, around debt repayment and about student outcomes in particular. we also hope that these information could be made available for students from multiple years and multiple cohorts. we also believe that student loan counseling needs improved so i'm encouraged we've already had some good conversation about that and we would agree that there needs to be counseling on student loans and financial literacy that happens before students even get to college. we have some federal programs like the treo programs and day care programs we could easily incorporaincorpora te financial literacy and student loans into that structure. also we believe existing federal tools like a college scorecard and the net calculus and the financial aid shopping sheet should be made more applicable

and more accessible, in some cases even mandatory. thirdly, we believe that there is much that can be done to improve the college loan, student loan counseling but it should be more than just a checklist that we can make some improvements to the timing, the content and that they quincy of the counseling. should just happen at the beginning and end. we can do a lot more with students throughout their entire college career. our second strategy, second category of recommendations represent simple fight options for loan repayment. at present there are many options and we believe the number of repayment options can and should be reduced and we believe that there reduce they would minimize complexity and help to make the loan terms more transparent and accessible. and we suggest having a single standard repayment plan as well as offering a single income-based repayment plan. the final category of recommendations relate to shared

accountability. date a progressive decline in students have been taking on more debt to pay for college. as a result they have been staring an increasing proportion of that risk. while students should bear some responsibility, so should the institution. so in thinking about a shared accountability, we recommend investigating options that would lead to more meaningful accountability such as risk-sharing. while the specifics of an apartment risk-sharing model need to be tested and fed with institutional leaders, we don't believe we have to start from scratch as there are some models and proposals that already exists. so in closing happy talk more about these recommendations in greater detail but i do want to stress that if we want to have real, long-standing change and what to do more than simply tinker at the margin, i encourage you to remember that the student loan issue must he looked at within the broader issue of college costs which you've already begun to do.

because student loan and student that are simply symptoms of this bigger college cost problem. thank you. >> ms. loonin. >> thank you, chairman harkin, said alexander and other members of the panel. thank you for inviting me to testify today. i'm here today on behalf of my little -- loan compliance. very diverse group, representing a reflectinreflectin g the broad faces a student loan borrowers today and it's important to keep that in mind what we look at this issue because the idea of, concept of an 18 just going to college, finishing at age 21 is out to more of an anomaly now than what happens in the current environment where non-traditional students are actually the majority of students today. there's one constant threat, that's that they of all sincerely wanted to go to college to better themselves and to better the lives of their

family. may not have been the outcome but that was their sincere intent. the great advantage over this is the opportunity for all to get a college education. but it should be about investing in students most of all, not about government and private profit. under the current systems, schools may be profiting as tuition continues to increase. private servicers and collectors may be profiting due to the borrower distress and even the government seems to be profiting but it's on the back largely of students were asked to take on it all of the risk. we can do better for borrowers and we can do it within the structure of the direct loan program. the structure is not the problem. the problem is lax oversight, lax management and misaligned incentives. i believe we need a multifaceted approach and not assume there is just one solution to all of this. i just want to mention if you and have more details in my

testimony to the approach starts with school accountability as dr. cooper mentioned. the best way to prevent default is to help students succeed. we also want to look at simplifying the student loan system and focusing more on borrowers. with something which we've already talked quite a bit about, the focus now on private contractors, on profits plays out in a servicers too often steer borrowers to the easiest options. my clients much of the time don't even know about, don't know about the optimal options for them. i believe there are ways we can streamline servicing, perhaps with competition. some competition is likely healthy, but criticisms it's about putting borrowers first. at ensuring that private compass get every opportunity to promote their brands. i also discuss collection in greater detail in my testimony, but in a nutshell the government has given the private collection

industry a dispute resolution and counseling role with the borrowers and instead in mike's brings working for many years with clients come to collection agencies routinely violate consumer protection laws and prioritize profits over borrower writes. it doesn't work for borrowers but it doesn't work for taxpayers and i think it's time to in the experiment with with a private collection agency. we been giving examples of these problems for years to government agencies but we haven't had much response. in fact, as has been mentioned at the department for the part has kept renewing contracts even for those servicers or collectors with there's been evidence of offenses. the problems are now more public and the gao an inspector general report report template we can fix this. the administration was able to mobilize enabled the transition to full direct lending a few years ago. now if they can do the same level commitment to fixing the servicing and collection system. and use all the resources

available for them, use the cfpb which is very much improved complaint systems, oversight over servicers and, of course, congressional oversight. ultimately it's about giving students the best chance to succeed, and recognizing that as with all investments, some don't work out the first time around. we need to give borrowers another chance. more than one chance of rehabilitation, more than one chance of consolidation the programs we now have to get out of default. instead, unlike businesses under current policy, we hammer student borrowers frankly until they die. we take earned income tax credit, take social security. we limit bankruptcy right. we basically eviscerate the safety net if we can do much better for borrowers. it's not just for borrowers, it's for society so that clients like mine who want to go back to school can go back to school,

succeed can repay their loans and enter the work force. i believe we can do better. >> thank you. ms. johnson, welcome back. >> thank you. chairman harkin, ranking member alexander, and members of the committee, thank you for inviting me here today to testify but as has been mentioned i've been at iowa state university for a number of years. i have had extremes with both programs. i was to university was a year when school in 1994 in the direct loan program and i have experience of the direct loan program prior to 100% and post that period of time. site and talk to both sides of that issue. to help you better understand the whole bar work experience, i want to start with the application process was said alexander showed. it's a 10 page process through the fafsa form and it cannot be completed until january 1 of the students senior year in high school. for many students, they are

already emotionally invested in the institution, and so because many institutions like ours is a deadline for making decisions about disbursement of campus-based and institutional dollars of march 1, students are often estimate in their information and getting the application in by march 1 then what ends up happening of course is they don't have their taxes filed until april 15. the information is incorrect, schools are going back and forth with them several times to try to rectify the situation. i would suggest that some of the recent studies on the prior prior year evaluation of tax or using the tax information would be something that bears consideration. primarily because it would allow that information to go to students in the fall semester of their senior year potentially so that it would have opportunities to think about saving.

they would know their costs, and they could potentially make other plans before they are so emotionally invested in your institution if it turns out that that institution is simply financially unfeasible for them. iowa state university is using the financial aid shopping sheet as the official award notification to students. i was very skeptical about using this initially, but the feedback we've received from our students and their families are that they're very appreciative of this information. it's clear to understand and to provide them with a definite picture of what their costs would be part of borrowing any loans. however, the shopping sheet does not work well for graduate and professional students because the metrics are all tied to undergraduate performance indicators. so we need to think about how we can change that. also there are a number of consumer information required

disclosures, college never taken the shopping sheet and the scorecard. we need to think about making these consistent and utilizing the same measurement points so that the there truly helping families to compare their school choices rather than adding to the confusion. wants a decision has been made to bar, the students are direct to the department of education's website loans.gov to complete the master promissory note and anti-catholic ago openly utilize the site for entrance counseling and they also go here to use the financial counseling tool which mr. runcie discussed. the financial awareness counseling tool is very robust to our institution is using it when working with students to develop their own budgets to explain repayment plans and to assist them in realizing what the repayment amounts will be once they complete the degree program. the up front processing of loans known as origination works very well be an electronic transmission of information. that goes to a contractor that

the department has working for them. this year we will be providing even additional information beyond just blowing. and grade level as we need to also provide program information so that when students have reached -- 180% of the program borrowing, that you will no longer be able to borrow to subsidize stafford loan. but it's after the loan is dispersed the things are now more challenging for the borrowers. when the direct loan program was first implement a single service or in all correspondence was branded as a federal direct student loan program. now the correspondence comes to borrowers is cobranded with the name of the service or on it, and oftentimes it is my experience that the name of the servicers appears in larger print than the department of education's information. so it is difficult for the borrower to note that this is coming from the direct loan program. i would suggest that also the

student loan.gov needs to be the single point of contact for borrowers to be able to log back into access their student loans. over the student has to go to the individual services website, sign up, get a signing login, and that is very confusing and i think leads to a lot of challenges with repayment because the students have to take extra steps but if we can streamline this and put into one stop first and i think it will help. i think because loan contracts are up this year, the department has a opportunity to think about how contracts need to be awarded, and to the loan servicers did you come from a previous environment or our their servicers that are working and other financial sector such as credit card agencies that may be just as good or if not a better job? i think the plethora of student loan repayment plans can be confusing, particularly all of the income-based plates for

students. we need to think about that, and finally, i would say in response to comments about the cost of loans, i think there is some substantial revenue that's been made in we need to look at things like the origination fee as will the capitalization of interest for our borrowers and see if there's some ways that we can streamline those processes. so in conclusion let me state that it works well but there are definitely areas that we can fine-tune. and find efficiencies to assist our borrowers. thank you. >> thank you very much. ms. dill, welcome. please proceed. >> thank you, chairman harkin, ranking member alexander, and members of the committee. thank you for inviting me to testify today. aye assistance at lee university, located in east tennessee with an enrollment of almost 5000 students. and 2013, 55% of our students participate in the federal direct loan program and average

per bar with indebtedness for graduates was just over $29,000. today i want to give you practical insights for my experience and i will divide my comments into two parts. first focusing on student success strategy and second, focus on simple petition and reduction of non-potential admission of burdens. students success strategies. currently the federal government, regulations prohibit schools from acquiring additional counseling for students appear to be over borrowing or two by statistical indicators appear most at risk for defaulting. statistical indicators may include marginal academic performance or borrowing beyond direct cost to also schools are not permitted to limit part-time students from borrowing at full-time rates. based upon the research and discussion with my fellow administers i spent the following recommendations. number one, institutions should be allowed to acquire additional counseling for students beating those berries identified risk

factors before any loan disbursement, not just the first. currently schools can offer additional loan counseling but we can't require it. additional counting would reinforce key bar with responsibility of educating the borrowers while they're still in school is key to successful repayment. institutions need the authority to require such training in order to promote student success and to reduce default rates. a for example, those tunes were enrolled part-time and still able to borrow the annual loan amount. in doing so they can exhaust their aggregate limits prior to complete even half of their academic program. as an aid administrator this is alarming. yet we have no authority over borrowing, thus no practical tools to stop this from occurring. this over borrowing pattern can have severe consequences for the

student, the institution, and the federal program. number three, parent plus loan should be held to a more restrictive underwriting standard. currently approvals of a solely on credit worthiness and are blind to the building to repay. in moving to direct lending, i'd observe a drastic increase in plus loan approval. i recall one conversation with a single mom living solely on price forms of public assistance. she was approved. she didn't have bad credit. she just had no credit. and was approved. she said to me, what are they thinking? i cannot pay this back. number four, income-based repayment should be considered the automatic repayment plan for borrowers. this would provide a simplified process and ensure that no borrowers repayment amount whatever exceeded their ability to repay and, therefore, reduce the probability of default.

next, i believe are some practical administrative shift that would've strengthened the loan program and reduce the unnecessary administrative burden. number one, congress should mandate the creation of a single web portal for institutions and students can go and easily access information about all the federal, private and institutional loans. the nonprofit organization, national student learning house, carter provides a free service which has the capacity to meet this objective to the departments directive is needed to achieve reporting of all student loan information. number two, the department should overall existing entrance and exit comes to provide clear, concise information which meets the legislative requirements. this generation is depend on social media and is accustomed to sound bites and youtube videos. the financial aid awareness council int and will facts is well-designed and student friendly. but it doesn't satisfy the

legislative requirement. this resource needs to be enhanced to meet those standards. number three, the primary sponsor the of default management should shift back to the federal services or the former guarantee agencies. this responsibility shifted to the schools in the transition from ffelp to director leni. schools are now faced with the need to hire additional staff to oversee the process, higher costly third party services or risk the penalties of rising cohort default rates. we do not have the resources to conduct skip tracing, robocall or other means formally employed by the ffelp lending community. finally, i hope that my this book provides insight into how our current student loan policies could be enhanced to better serve our students. thank you for your time and i'm happy to answer your questions. >> thank you all very much. you of all touched on all the elements of what we are trying to grapple with you on student

loans, every aspect of it. we will start with five minutes of questioning. we have to do virgins here. dr. cooper, you said that -- we have to do virgins here. payment options b to give rickmn also that maintaining the standard repayments and offering a single income-based plan which allow borrowers to benefit if the expense extend financial hardship. you going to note quote the single income-based plan should aim at targets protections to borrowers in most in need. i think ms. dill is saying that the income-based system ought to be basically everybody. am i wrong in that? speakers onto jessie the him come base be automatic by the students are assigned to, but that the students still be allowed to opt into the standard repayment plan spent you said that we should maintain the standard. >> we do. >> why would you disagree with

this? >> so the issue about making the income-based repayment plan automatic or universal sometimes terms used interchangeably, i think it's an interesting concept and it's a concept we at ihep have recently studied in depth with five other organizations, and from the conclusion of our work with those other organizations we as an organization came out of a believing that why we should study it and it might be viable, there are just two things about the right now that don't make it ready yet. for example, some of the problems are that some students may end up actually borrowing more over time. that's not something that we want. we don't want them -- we don't want that. they actually, some will pay longer than they would pay under the standard repayment plan. we don't want that either. and the third thing is without the proper institutional reforms in place, we might be incentivizing bad actors to really take advantage of the

most vulnerable students. so while i definitely believe that there is some promise and this may be down the road, and to work out and find these that could open heard students more, i'm not ready to say full scale that we should make it automatic just yet. >> ms. dill, i don't know if you want to respond bucks i said, i just in from a testament 70% of the students at elite are in the standard repayment plan. >> yes, sir speed seems like you don't have any kind of exorbitant -- exorbitant default rate. right in place with everybody else. it appears that both of those borrowers are repairing -- most are we paying their loans. so if that's the case why would we -- that's the current default system right now. why would want to change it was i'm just trying to figure this out. i don't have a dog in this fight one way or the other. spin my goal is to student success. not just in the classroom but

once they graduate from the question. and by allowing the income-based repayment to be the initial, the automatic repayment plan, it ensures that no student would have a loan repayment that would exceeded their ability to repay. therefore, reducing the default rate. it simplifies the process and it makes it more usable pashtun user-friendly for the borrower and it assures their ability to repay. >> this is something i think will have to take more of a look at. i agree, i like income-based repayment, but should it be the default or should be just one in an arsenal of different things that they have -- i have with it is that sometimes people take the easiest course of which means they lower their payments even though they get paid more, they stretch it and what they did what to do? they wind up paying more in interest charges rather than on the principle. that's the only problem i

personally see with it. ms. johnson, sorry, ms. loonin. could you respond a little bit on the issue of common and you mentioned in your testimony, on collection agencies and how they operate. and i think you are very provocative, he said something that doing away with them or something? >> yes. spent how can you do that? >> well, i don't know if i met do away with them complete in the world. physically, specifically on student loan issues but it isn't the case that all government agencies use third party private collectors to collect debt. the irs, for example, tried it for a while and change their minds and went back to using other internal collections. so what i'm saying is that from my experience having don't direct with the collection agencies myself on behalf of clients for years, it's not a

typical collection model. it's not just about collection. it's about higher education act, and they don't think it's worked. >> i've seen where collection agency writes one letter and they get to keep 18-20% for doing almost nothing. i know that's a trial lawyer and we got into earlier today but seems to me that is an outlandish kind of thing. plus the hounding that goes on from these collection agencies, i think we need to look at that. my time is right now. senator alexander. >> thanks, mr. chairman. i won't bring it up again. just an observation, and this was a debate we had 2013 when we come by 81-18 past the law which put a new market-based interest rate formula on the student loan program. our goal there was for taxpayers, neither students to

profit off of each other. and so we asked congressional budget office to tell us how can we get as close to zero as we could. and those of us who voted for that felt we did not change what was already happening according to the congressional budget office. it's true that if you take the way the law says, you count whether students are profiting our students are paying, that over 10 years it is $185 billion based upon what we were already doing it on the other hand, if you do what congressional budget office says we should do, which is called fair market accounting which is the way we did in t.a.r.p., troubled relief asset program, then the students would pay 85 billion more. in other words, the students are profiting off the taxpayers. that's a debate we are likely to have this year between two different ways of accounting,

but our goal there was not have one profit over the other. when we impose that new rate on loans that cut in half the undergraduate rate to about three-point 86%. i thank you for your testimony today and your specific suggestions. ms. johnson, your comments about early notification of enough money you could borrow we heard before and were taken into account did with fast and trying to simplify it to all of you suggested ways to simplify you could count eight different options, count forbearance and other things. available to a student in terms of repaying loans. so i would like to specifically ask you, which we asked our early what this is about application form. a few good, although some of you have done in your testimony, if you like to give us very specific suggestions in a letter about how you would rewrite this

five page, these five pages, which is very small type, that would be very helpful to me and i suspect the others here. this is not an ideological inquiry. this is just a simplification inquiry, and they think dr. cooper, use the words layering new over old. we don't want to layer new over old. we reauthorize the higher education act eight times and that happens will we do that. if you were starting from scratch and saying, you mention the single standard repayment plan from the single income-based repayment plan. what would you include on this five page form if you were starting from scratch? heu, that would be very, very helpful to me, and i suspect to others. finally, i'd like to ask you, dr. cooper, or anyone else, you mentioned skin in the game. one of the problems with over borrowing which is not really the subject of this hearing, but several of you have commented about, you, did, ms. bill

comment on things we could do like shouldn't be able to borrow -- ms. dill, as if you're a full-time student if you're a part-time student, that's one suggestion. second, there may be some, we may and we could change law and regulations that prohibit institutions from counseling students in some cases, or limiting the amount of money that could be borrowed. or a third id is the skin in the game idea, that an institution, or some institutions at some point, if they lend more money to a student would have some responsibility for repaying debt. what do you mean by skin in the game, and have you got recommendations about that? >> so in terms of addressing issue of skin in the game we believe that skin in the game, when it comes to higher education and the cost of it and how to pay for it as a shared responsibility it's one that goes to the state, the

institution and the government. as will the students. we believe that everyone should be involved in that particular endeavor. when it comes to issues of over borrowing specifically, i think -- >> how would you skin in the game? giving an example. what would you say to university of tennessee? how with the university of tennessee put skin in the game on barbara? >> one of the proposals we recommend is a risk-sharing model your there are some risk-sharing models that are already out there. for example, guarantee agencies have used them. aegis has proposed some. we participated -- >> can you give me an example? i'm just very interested. >> what we did is we could have the institutions pay into a fund, a proportion that is configured to a proportion of, that's equivalent to their cohorts default rate for example, to do it their default rate is about 20% and they can't themselves put 20% into that fund and -- >> 20% of the amount -- >> of students who were in

default, or who are in repayment. and it's really a way of trying to better protect students from institutions that have a history of causing this issue of over borrowing. and nudges over borrowing with the sake of over borrowing. over borrowing and in students at getting a high quality degree at the end with a gig and get a job to repay it back. >> thank you. my time is a. if you do it like is responding but i would appreciate that. mr. chairman, i think one of the things we should examine is how do we get the institution more involved, either to have some say in how much money they loaned, or some responsibility for paying it back. >> i agree with that. i have some thoughts on that. i'm going to recognize senator murray since senator murray didn't have a chance as last time. >> thank you, mr. chairman. it's such an important hearing that you're having a really appreciate all of the thoughts

from the panelists, discussion on this. just so telling when we have so may people in our country today who are spending all of their extra income came back -- pingback is to own and do not paying -- and it is really prohibiting young people from even thinking about the future and college. i think this is a port and appreciate all of our panelists for being here. one of my priorities during the negotiations last went on a bipartisan budget act was to maintain our investments in student aid and not ask for students to contribute even more toward deficit reduction. unfortunately, as you know, congressman ryan and i were able to work together and provide some relief to struggling borrowers to we've reduced the collection fees that guarantee agencies charged on defaults of loves. ms. loonin, i'm glad you here and i wanted you to talk a

little bit more about how these guarantee agencies collect fees on student loans. and give any estimates on how may struggling students will save because of all the changes we put in place of? >> yeah, thank you. it was very sensible idea among many to save money. and i believe the new america estimate is that particular reduction in amount of guarantee agency collection fees as well as both the mouth goes to the government would say somewhere about $2.5 billion, and specifically on the point of reducing the 18.5% that is frankly automatically, the guarantee agencies automatically put that onto the loan balance. so it is capitalize. dilly bar were coming out of rehabilitation actually has a very much high balance which makes it harder for them to repay the loan. and as was mentioned earlier,

it's not tied at all to what sort of amount of time our work the collection agency actually put into that account. so i actually, we have a client right now, for example, i can't get the collection agency to call me back. i've been working for the last couple of weeks. eventually i'm going to be most of the work to get this done, this borrower really wants to work and she had a stroke and she's doing her best. that collection agency will automatically put 18.5% onto about a $40,000 balance. >> describes we all understand how these guarantee agencies actually collect these fees on student loans. >> most of them use third party collection agencies, and that's, just like the department of education does as well. and then if these are actually charged to the borrower as payments are made. so it's on the commission system essentially whether a borrower makes a voluntary payment or as

in this case it is post-debilitation. [inaudible] spent again, it's the third party debt collectors and it's not tied to how much work was actually done for borrower. >> thank you very much. mr. chairman, the other issue that i'm extremely interested in is this issue of financial literacy, something i've talked and worked a lot about and offered legislation to wrap up some financial and economic education efforts for students beginning a lot younger than when they get to college, but i think the more you know the more you can make reasonable decisions. and we just do a very bad job in this country of doing financial letter said. but several of the panelists have talked about strengthening loan counseling. and i want some of you to comment on how much loan counseling is done right now. is it done by colleges or duty servicing agents do it? how do most students get information about the interest

rates that they obtain or how long they will have to pay it off, or what office may mean for them? anybody? >> so what are institution does for a variety of mechanisms, and primarily we started this because the average indebtedness has hovered near $30,000 is a large public institution. i am continually questioning why is your debt as high as it is. there are variety of reasons, but we implemented some counseling -- the first primary mechanism for counseling is the entrance loan counseling that borrowers can do prior to completing the promissory note. they are required to do it. and so if they haven't intentions counseling we speak is this a university requirement? >> no, a federal requirement. so they can do the master

promissory note and then to the entrance counseling all as one process on student loans.gov. we put a hold on any disbursement of funds until the entrance counseling has occurred. the challenge with the entrance counseling is that, like many of the things that are internet-based, its text heavy and you can just come you know, scroll through, click, click, click and it doesn't take a very long to do all the clicks and get through the process. without really reading it. anecdotally we've also heard that their appearance they're doing this on behalf of other children that make us shudder. because the borrower is not getting that information. we are utilizing a financial awareness counseling tool on our campus for our private loan borrowers. we are mandating that they come in and visit with us in person before the borrower to a private loan program and using that tool to assist them to make sure that they understand things like interest rate.

we've been very successful in reducing or even averting some of the private loan borrowing that has occurred. one of the pieces that we're most pleased with is the fight is ago, 71% of our students who graduate with debt were undergraduate students, were graduating with debt. we drop that to about 61%. we have over a five year period of time in 10% fewer students are leaving are institution with a debt. they are still living, those their borrowing are still borrowing the same amount of debt but there are fewer of them that are borrowing. so we're making some progress we think. we also, exit counseling is mandatory for borrowers. so prior to their departure from our institution, they must go to the exit counseling. but you don't have a lot of teeth in data because if a student does not do the exit counseling, you don't withhold their diploma or put a hold on their transcript for getting a

job. so we tell them it's a requirement but they may not do it. spent i think this is really important area. again, thank you, thank you to you and senator alexander spent i think if there's one thing that definitely cuts across party lines here, and we all agree on, there has to be better loan counseling. send alexander the great even going into high school and getting it at that level that i agree with. so i think the central thesis of god, that we need to have better, both counseling, there may be some differences on the edges but i think that's sort of a common thing -- common theme that runs through all of this. senator warren. >> thank you, mr. chairman. you result of a report -- wrote a report by sallie mae that's doing both servicing under the direct student loan program and, of course, still has outstanding old federally guaranteed loans. sallie mae touts its status as the loan service or with the

lowest default rates. so i recently sent a letter to sallie mae asking for more information about its default prevention strategy. because i think it's important to understand the default version program that borrowers are using them whether it's a deferment, forbearance, income-based repayment, or something else. and i asked for data on all its federal loans including both federally guaranteed and the direct loan program. sallie mae recently responded to my letter, but it did not respond to the extensive data request. instead, sallie mae said three pieces of data all related only to the direct loan program. its default become its forbearance rate and its income-based repayment rate. so ms. loonin, i wanted to ask, are these data sufficient to give us an accurate picture of são tomé's default prevention strategies? >> -- sallie mae's default prevention strategies? >> thank you.

i am sorry that they're not here today. it's excellent that they revealed some information because we do want to have more data but that's very incomplete. first of all, by not not includg the information, it does not give a complete picture, and surely sallie mae has control over, no worries about any kind of instructions from the department of education not to release that information, so that would be extremely useful information. ..