you to lead, and hopefully we are going to. -- in virginia to leave and hopefully we are going to. >> does the legislation go far enough or is it a first step or an incremental steps to something else? last november, i was in a hospital bed trying to think about what we can do, you know, last november and i was in a hospital bed trying to think about what we could do and believe me i am not done but in terms of legislation i knew what we had to do was address the crisis intervention peace and that is just incremental because that is the part that clearly broke down in my situation.

we could find ways to address that and honestly they weren't all my ideas. george walker and barbara and others were involved in developing those ideas, democrats and republicans developing those ideas in virginia. because i believe there are bigger problems within our system and our system is not unique. i think there are problems in systems all over the country. that is why i pushed the study resolution. this was just an incremental change. we change an important piece of the mental health picture but the real work lies ahead. we have to reform the system and our work will be a failure unless we do. we have to use this opportunity of the study resolution to spend four years working very hard, very intensely at the virginia process. we have to see what works and what doesn't and we have to come back with real changes over the next four years. in virginia at least it's incremental to change that we

passed. did it go far enough? well i think we change what we could change this year. politics and government is about compromise and accomplishment of what you can. it's not about what you wish. it's about what you can do and we are going to do more down the road. what about next year? >> the study resolution calls for report in the next two years 25th teen or 2017 so we will have legislation basically in 2016 and 2018 but if good ideas spring up before then we will introduce those. my goal basically is to remake the system into a system that works for every part of virginia and we might already have it in place. i don't know and i won't now

until we conduct the study but the plan right now calls for legislation in 2016 and 2018. if there are good ideas i come up before then we will go forward. >> can you comment on the handling of the ig investigation given the concerns that were voiced last week by the author of that report? >> i met with -- the week after i got out of the hospital and i found him to be compassionate and knowledgeable and determined to get to the bottom of the situation. also once i found out about this 2012 report and i'm embarrassembarrass ed to say i didn't know that he had made a report in 2012 would have addressed many of the issues that were exposed in my incident. i looked at that report and i

talked after he resigned in late february after he met with the inspector general and he assured me that there were differences of opinion about some of the opinions. he told me all the recommendations would go forward the inspector general is a retired fbi guy and i kind of have to faith in the long enforcement community. i think his comments put in !-exclamation-mark after the inspector general's report and it makes clear that we have got big problems in our mental health system. i wish we had had the results of the inspector general's report prior to the passage of all the legislation because i think that would have been forced a lot of what we are trying to do and perhaps allowed us to a step or two further.

>> the investigator of course resigned in protest saying that the findings in that report were censored. are you concerned about the contents of the report or a u.k. with how it ended up? >> i'm okay with report but there were other investigations as well. the state police conducted a thorough investigation and i think the inspector general's report is consistent with the findings with the investigation. i think he would have taken it a step further but i'm not, i don't know that it's his findings. i don't know the inspector general's findings are inconsistent with the state police report. i think it's all out there and i'm not that concerned. >> one of the things the report recommends is decentralizing the virginia department of behavioral health into quote regional authorities.

do you think more authority on mental health treatment in virginia should move away from richmond? >> well i'm one of those guys that generally believes the government closest to the people is the best and the most responsive. i think that would certainly be an idea on the table before the study commission but we have not even started the work of the study commission yet so it's premature to say that any approach is going to be taken. >> now that you have seen the findings in the report do you blame any individuals or organizations for possible failures or do you think what happened is representative of the larger problem with mental health care in virginia or in the nation? >> there are some things i don't want to talk about. i think that what happened was a system failure.

that doesn't leave the individuals who are in a position to do something for any responsibility for their actions >> what was your opinion of virginia's mental health system prior to your involvement with your son? was the need for reform clear only once you got a close-up view or or was it something that you had paid attention to before that? >> that's a great question. as legislators my primary connection with the mental health system was folks from the csb coming to me and telling me they needed more money. they need more funding. i have visited with community service boards that i represented but it wasn't really something that i was at the top of my agenda.

my sons last three years of his life, three and a half years of his life are pretty typical and i was in constant contact release what he allowed me. when your children are over 18 you can't make them go to the doctor. you can't make them take their drugs or return phonecalls or keep appointments. so i was in constant contact with community service board folks and not necessarily the csb people but i was in contact with him. he wouldn't talk to me. i cannot tell you that the reform was on my mind before all of this occurred. the only iteration they came for me was that we need more money. i want to point out i think there are csb's in their state the function very well.

the ones that functions the best are the ones that received funding from the local government. we don't do a good job of funding the csb's in virginia but that doesn't excuse everything. that doesn't excuse what happened to my son. [applause] >> a couple of questions on patient privacy and family or parent access to information that you have preferred to a couple of times. what changes if any would you propose and confidentiality laws regarding mental health professionals communicating with families of the people they are serving? >> is very difficult for me to talk about it at the state level because we are guided by hipaa are federal law and there's little we can do at the state level to undercut hipaa. if i were king and changing things on a big scale i might reform hipaa and young people

with certain mental illnesses have occurred between the ages of 18 and 35. and perhaps parents need to be more involved in those years with young people. sometimes the only thing you know about it is the bill that comes in. you're welcome to pay the bill but not to know what's going on with your kid. your kid might be 25 or 30 or so but they are still your kid. that's very difficult. i would probably make major changes in hipaa if i were at the federal level but i'm not at the federal level and i have no desire to be. [applause] >> we have had campaign announcements made from this podium. [laughter] on that topic in addition to hipaa or besides hippo what would he the best thing the federal government could do to improve the nation's mental health system? >> i don't know that i'm prepared to answer a question like that.

i'm not encourage that too much productive work happens inside the city. [laughter] >> you talked about the practice of streeting or denying patients who are in need of care, a bed and care. should there be a zero tolerance policy for streeting people with mental issues who may pose a danger to themselves or others? >> in my view there should be and that is what we did in virginia this year. the point i try to make was that when a crisis occurs with a bank robber or a murderer running down the street you don't stop the guy and say let me see if i can find a jail cell for you. we put them in jail and there shouldn't be a difference between what we do in a mental

health crisis. the comment i made about washington and i don't want to be totally derogatory. let me tell you about marion. in 1964 and 65 when congress really did things that mattered in the voting rights act and the civil rights act there was one congressman in virginia that voted for him and he wasn't for for -- from their fox county. he wasn't from loudon. he wasn't from charlottesville or nor folk. he wasn't from richmond. he was even from roanoke. he was from mary in virginia. for those of you in southwest virginia marion is in another world probably. he was a congressman from rural virginia mls congressman i would suggest that took heroic votes to make a difference in this country.

pat jennings was his name. [applause] >> in addition to the problem of patients being denied care in the first place what do you have to say about hospitals discharging patients with this and -- serious mental illness when they still need care of? >> that's a big issue. my son was hospitalized twice and both times when he was first hospitalized he was under the 48-hour order and he said that this is where you need to be. i realize it now. there are getting my medicine straight and this is need to be. six months later we were in it different situation. he was released within the 48 hours and we have rovlin. by the time we had gone to the next hospital, and duss was one of the smartest people i had ever met, maybe the smartest and

he could figure things out. there was no psychologist he couldn't talk out of or into whatever you wanted to do. he knew what answers to give. so that was on recently changed 48 hours in virginia to 72 to get more people more time to do that hospital laysha and put in the long term i don't know. one problem we have got that we have to address in the study is we focus on crisis intervention what do we do long-term? how do we provide for people long-term? now with my son the plan was, and this broke my heart. i spent the last three years of my son's life worried that he would end up homeless or in prison. that's not such a bad option now but the plan was once he was committed to end up in a long-term place in the hospital.

that's a tough thing to think about so we are going to be looking at long-term care. we are going to be looking i hope that how we make sure people aren't released until they are ready to be released. but i don't know the answer right now. >> as questioners as we hear about the need for an improvement of health system and improved access to it that what is your message to people within the system, the mental health professioprofessio nals? what can they do to improve the system in which they were? >> stay focused on the patient. stay focused. every situation is a life-and-death situation. every system is life-and-death. my experience is that too often people are pretty cavalier about the situation they're in.

often they are not. there are lots of good people. do your job. i don't have an answer that probably is fit. speaking of an many mental health advocates want to play down the possibility of violence with people and mental illnesses are there any changes you think should be made in educating families about the possibility of violence? >> part of the problem with mental health as i indicated in my prepared remarks is for most of that sits out of sight and out of mind so we don't want to think about it. i think we as families, we need to think about mental illness in me to think think about what to look for in our young people. we need to think about how to deal with it. my son made a lot of knives but

there was never indication he was going to be violent. i never sensed violence on my son's part. i know my former wife was concerned about it but i never felt there was a threat of violence. i think before we can really begin to address the possibility of violence we need to be honest about mental illness. we need to understand that it's like cancer. it's either within your family are within your circle of friends. somebody you know is suffering whether it's addiction or depression or something more severe, something bipolar or schizophrenia. once we start to deal with it honestly and openly with mental health issues than we can think about violence. in my circumstance i never felt

afraid. i never felt afraid. i don't know how to answer that question. >> you talked about how the age of onset of mental emesis often in young adults. how do you think access to care can be improved for young people who are new to their mental illness and may not accept or recognize that they are ill? >> that's very difficult. that exact circumstance, my son was 20 years old. before there was ever a sign and the only thing i could do was go to a magistrate and have my son hospitalized. that's one thing we have to look at a bank in our study but candidly the bigger issue is what can we do under federal law? hipaa and what can you do with

someone who is unwilling to be treated? i don't know what the answer to that is either. see what advice do you have for parents who may fear their child is suffering from a mental illness? >> love your children. love your children and do whatever it takes to protect them even if that hurts you. nobody wants to believe that their precious children are sick. nobody wants to believe that you know i mean the victim of cancer is bad but think of the mental illness that might not need fixable is tough. all you can do is protect your children and love them. >> you talked about returning to the virginia statehouse after your tragedy and how hard that was.

tell us what were the best in worse things or colleague said to you and what advice in general would be give to others as you approach them who have been through a tragedy such as yours? >> everybody is different. everybody approaches things differently and you never know how to respond. with me you know people in richmond or at least my colleagues were fair and honest. they know that i kind of am quiet and pretty shy and i like to be left alone. that's under the best of circumstances. this time i really wanted to be alone. people that know me know. this is the 23rd year i've been in richmond and generally my door is open and anybody that wants to visit with me have a chance to visit with me. i see different people all day long all session but this year

my door were shot and i didn't visit with people. even good friends would come by and visit with me and text me and say are you kidding? i would say no, not kidding. some lobbyists continue to press me and found me and that bothered me. the people that didn't respect my privacy, that others may a lot. most people did. most people left me alone because that was where i wanted to be. i told people. somebody texted me about a local group of people that are represented, a group, some business group and i just texted back i'm here to do my job and that's all i can do. and frankly but zell miller wrote that he never met a psychiatrist to needed a

psychiatrist. i promised after all this happened that i would find somebody to talk to. work was the best therapy that i had. i couldn't imagine before. i was sweating and scared to death because i'd have to be in for the people but now i can do that. >> you told us about the on line line -- and its test phase. tell us more how that works and when's the next step of that registry come to fruition? >> we will see when it comes to fruition. it's been in the works since 2009 or 2010. the department behavioral health said their funding is being cut out and they weren't able to establish it. i have no doubt that their funding has been cut but with

everything that's on the internet these days it seems to me any of my kids could have set up a real-time registry. what they have got now is not real-time. we have looked at different things and it's updated every day right now i think. just go on line the first of the month. that will take a little time to develop something more real-time. the reality of this is right now when evaluated cosan they have hospitals they have to call through. this registry will not mean that they won't have to make those calls because they still will to make sure that is still available. the real-time might be 35 minutes ago. they will have to make calls to tell them which hospitals not to call because it will tell them which hospital don't have any beds. that will save time.

when you are dealing with an emergency of customer order whether it's four hours are eight andrew's -- eight hours under the lot still a limited. of time so you have these precious seconds ticking away. this real-time registry i'm convinced it's going to be helpful. >> you talked about lot about access to treatment. what about the treatment of self? have you talked at all with companies about developing new drugs to treat illnesses and is there anything you see that can be done to create in some tips for that development on a state-level? >> i'm all ears. if there are things we can do let's talk about them. my son i remember, he talked about how the drugs physically hurt him. i've heard that from other people too. i don't know enough about the

medication i don't know enough about the research in the development of pharmaceuticals but if there are things we can do at the state-level i'm all ears. i think it's going to take a bigger push. that's probably something that can't happen at the federal level. there need to be more tax incentives build them for pharmaceuticals. >> what about the insurance side of things,. the mental health parity act was passed some years ago and now with the obamacare is deadline do you think there's enough access to a parity for mental health treatment now? >> i don't think there's enough access to. mental health. one of the achievements of the affordable care act is there is parity. for instance if we pass a form of medicaid expansion in virginia lab would immediately open up $200 million a year for people that are mentally ill.

people that are in that phase would have better access to mental health care than a lot of other people that have health insurance. we don't have enough. that's probably the parity law and it hasn't brought about parity. that's what the affordable care act does so that significant. [applause] >> we have a couple questions so let's be sure to talk -- touch on those. we have had speakers talking about veterans needs for mental health care. is that something you think should be done as part of the router legislation efforts you are looking at in virginia is there anything specific you are look about in veterans with health care? >> it's not something specific i'm looking at but honestly when you think about it, i mean people have come home from war forever and they seat

unspeakable things and go through unspeakable events and thankfully most people don't have to endure. it's impossible not to be affected by that. a normal human being not to be affected by that so we have to focus on mental health care for veterans. that's not something specifically that is part of the study but it's certainly something we'll be looking at in terms of what we can do at the state level. >> we are almost out of time but before asking the final question i have a couple of housekeeping matters to take care of. first of all effects remind you of our upcoming speakers did on april 2 we have john koskinen the commissioner of the u.s. revenue service and louis baca comedian will discuss politics and social issues and on april april 23 general mark welsch chief of staff of the u.s. air force will be here.

second i would like to present senator deeds with a traditional national press club coffee mug. [applause] and for the final question you told us a lot about gus but can you tell us one more untold story that you would like people to know about your son? >> he my son was just an ordinary kid except he had extraordinary abilities in many respects. when he was a little boy, this is probably 95, he was six years old. when he would travel with me his sisters and his mother -- he would travel with me on my legislative journeys. i chaired the blue ridge economic development provision. he sat for three hours one afternoon in a corner at the squire center in blacksburg

while we conducted our meeting. i was the chair. he sat there playing with trucks, cars and trucks in the many garage. a couple of years before that the whole family, we were at a ballgame at the southern legislative conference at a ballpark in norfolk. we were in the left field picnic area, family picnic area and gus gus -- that was 93 so he would have been about four. he was sitting across the table from me and we were eating hotdogs and hamburgers. he looked at these two little kids rolling around and fighting and he said that those boys are doing just what i like to do, they are fighting. i said yes,. [inaudible] i took another bite out of my hamburger and gus was gone. i looked over and he was right there. he was ordinary in every sense

of the word. until he was about 20 years old. we finished our gubernatorial campaign and he had some time on his hands and decided he was mentally ill. he didn't decide that he had this unbelievably sweet nature that was apparent and evidence up until the end. he was a great kid. [applause] [applause] >> thank you senator deeds and thank you to all of our audience

for coming today. i would also like to thank the national press club staff including our journalism institute and broadcast center for helping organize today's event. finally here's a reminder. you can find more information about the national press club on our web site and if you would like a copy of today's program you can find that there is well at www.press.org. thank you. we are adjourned. [applause] defense secretary jeff hagel will create a new agency to account for missing u.s. war dead. secretary hagel spoke to reporters about the new agencies in monday's defense department briefing. >> let me now turn to another matter for a take your questions. that is the finding and recovering and identifying the remains of americans missing from past conflicts. this effort is not just a top priority for the department of

defense. it's our responsibility and our obligation. in february i directed the defense for policy director to provide me with recommendations on how to reorganize the joint prisoner of war or missing in action accounting command otherwise known as jpac so dod could more effectively account for our missing personnel ensure their families receive timely and accurate information. based on his recommendations i have directed the department to undertake the following steps to reorganize this effort into a single accountable organization that is complete oversight of personnel, counting resources research first. we will establish a new defense agency that defines missing personnel office otherwise known as dp mo. the jpac office and the select

functions of the u.s. air force life sciences equipment laboratory. this agency will be overseen by the undersecretary of defense for policy. by consolidating functions we will resolve issues of duplication and inefficiency and build a stronger more transparent and more responsive organization. all committee patients with family members missing from past conflicts will be managed and organized by this new agency. second, to streamline the identification process and armed forces medical examiner working for the new agency will be the single dod identification authority. they will oversee the scientific operations of the central identification laboratory in hawaii and other laboratories in omaha and dayton. third, the centralized budgetary resources for this important mission we will work with

congress to realign its appropriations into a single budget. fourth, to improve the search, recovery and identification process the department will implement a centralized database and case management system containing all missing servicemembers information. fifth, i've directed the department to develop proposals for its standing public private partnerships and identifying our missing. the goal is to leverage the capabilities and the efforts of organizations outside of government to responsibly work to account for missing. these steps will help improve the accounting mission increase the number of identifications of our missing, provide greater transparency for their families and expand our case file system to include all missing personnel. we will continue to do everything we can to account for and bring as many of our missing and fall and service personnel as possible home here to the

united states. >> benda september town. you wouldn't know to look at it today. bend was september town to begin with. at the height of the timber industry so you for to drop into bend in 1928, you would have smelled the mills.

he would have smelled sawdust if you want to search in parts of town. you would get sawdust on your clothing. he would hear periodic whistles from the huge gigantic super mills on the banks of the river. it it would have permeated everythineverythin g. it would have been 10 minutes off from the downtown core where all the shops were and you would have seen the smoke from the smokestacks and the burners. he would have smelled it and heard the whistles and he would have known right away that you were in the middle of timber town usa. world bank president jim yong kim.

the federal government provides more than $150 billion in grants and loans to help students pay for college each year. in a moment student aid administrators testify before a federal loan program. the education labor and pensions community -- committee hearing is two hours. the senator was tom harkin of iowa.

>> good morning. the senate committee on labor and pensions will come to order. this morning is another in our series of airings preparing to reauthorize the higher education act and this hearing will take a look at the whole student loan program. as i said this is the eighth in our series of hearings on this. today our primary focus is strengthening our federal loan process to make sure they're working well for students families. since the passage of the national -- under which i borrowed money to go to college the federal government has played a role in helping students fund their college education through loans. and grants. we certainly have much to celebrate over the last half-century when it comes to expanding higher education access various challenges demand their immediate attention. in recent years several major changes have been made to the freckles didn't loan programs to

address structural issues of loan origination servicing and repayment options. in 2007 the income-based repayment was created specifically to help struggling borrowers repay their loans and avoid severe financial consequences of default and in 2010 congress made the historic switch from the federal family education loan program to the direct loan program a process that unfolded smoothly according to nearly all accounts. it's important to take a moment to restate the importance of that action in the real impact it's had on students and families. we achieve the goal of 100% direct lending eliminated more than $60 billion in subsidies to banks and directed the bulk of that money to students and their families. despite all the progress made however there is still much work to be done. aslan scully -- landscape illustrates our

aggregate student loan debt in this country is now over $1 billion. the average students have $29,000 in debt and there's a growing consensus we need to address the impediments to college affordability the key drivers of college costs. now we had a hearing on that previous to today. we have explored those issues but we need to examine one central question. how well is the student loan system from counseling to repayment working for students and families? i will say at the outset that i'm i am disappointed to report that all four of our title iv servicers the largest contractors were invited but chose not to take part in this hearing today which directly concerns the contracts they have with the department of education those servicers like sallie mae rely heavily in federal dollars for the business and yet they

could not find the time to put this hearing on the calendar. i hope we can all agree that students and taxpayers need to be prioritized. however i'm excited to take the opportunity to discuss the state of our federal loan program to the distinguished panel of experts. we'll take a hard look at what's working and what's not on what needs to be done. i'm sure the dream of an affordable higher education can be reached for millions of families who rely in student aid. at the out state and want to restate an economic statistics that believe that was given to me by the president of arizona state university and it is this. if you are a high income, low-performing student you have an 80% chance of going to college. if you are a low income, high-performing student for chances of going to college are

only 20%. that needs to be corrected. again as we look at the different choices for students ought to be able to choose between repayment options and decide which plan is best for them. i had an interesting conversation with a young professional is morning. she told me she went to a very good high school and was from an upper-middle-class family, went to a great college and went to a very good law school. she is professional. she had heard we were having this hearing today and she said the biggest problem is that i went to all these great schools and one not once did i have a course of personal finance. not once in high school did they teach me how to balance a checkbook for how to set up a budget for what our wing means. what are loan rates?

what our fees? whether repayments? how do you calculate those? not in high school, not in college and not even in high school. she said so many kids, i remember when i went to college i got inundated by people wanting to loan me money. it all sounds very good and it all sounds very cheap and then she said i must have had four or five credit card sent to me just free credit cards and of course when you're young like that you don't know what all that means. void that's an easy to use credit card. you can get yourself in a lot of trouble. i just want to say maybe this is also part of the too that we are not doing a good enough job in our secondary schools and we are not doing enough that i know some of the witnesses testimonies talk about the need for counseling, financial counseling many go to college. i know my alma mater iowa state

is started doing that and i assume there are others but i wonder if that shouldn't be an integral part of the loan process for students when they are going to college. so again this to me is one of the most important aspects of local need to address in the reauthorization of the higher education act. how we write, more equity in terms of high-performing low-income students to go to college, how we make sure students know their rights and responsibilities when they borrow money to make sure they have adequate counseling. another aspect that i really believe there's looking into is the issue of collection agencies and how much money collection agencies are taking out of the system every year. i am told it's been over a billion dollars just from collection agencies and i have heard a lot of stories. some i know are true.

i don't know of all of them are about how these collection operations operate and how they they -- what they do to collect the money so i think this bears looking into also. with that i think are witnesses and before we get to that i will turn to senator alexander for his opening statement. >> thanks mr. chairman. i want to thank senator harkin and his staff for coming up with some terrific hearings on the higher education act. i want the witnesses to know we have paid a lot of attention to what you said in your ideas. there is a risk we will actually do what you say so we are looking forward to your testimony. this has been very good so far. i was trying to remember the last person who ever said to me it's pretty easy to pay for college. i don't think i have run into anyone who said that. my experience is like most of the people, have no money so i had to scholarships and five

jobs and make my way through. i think this subject today is what can we do i think to simplify the various ways and i think there are eight of them that the government has come up with to help students pay back their student loans, $100 billion in new loans we make every year but putting the loans into perspective accurately i think is helpful. let me use rather than my words the words of one of our witnesses judith scott clayton assistant professor of economics at columbia university in new york. she talked about a lot of misconceptions about student debt when she was here. she said quote most people think college is much more expensive than it typically is. they see stories in the news media about elite private colleges charging $50,000 for tuition and unemployment graduates with outstanding amounts of debt that most people in fact pay much less. dr. clayton, scott clayton said

the average net price the amount that the students will pay after subtracting scholarships and grants that the student receives and doesn't have to pay that the average net price to public for your institution is about $3000 per year. at the typical community college student who receives a pub rantn students who do every year is likely to pay nothing at all. in fact is likely to receive money back for books, supplies and other living expenses. those were her words. i took a look at those facts. three out of four of our college students attend a public two or four year college and university let's see. this includes of those about two

out of five law students attend community colleges where the average tuition and fees are $133. though students receive an average 48 dollars and 50 cents and grants and scholarships of the average community college student is receiving $1500 more in and grants and scholarships than what it costs in tuition and fees to attend college 37% of all of our college students attend public four-year universities. the average in-state tuition fees are about 8900. those students receive an average of 50 attended grants and scholarships. we are not talking loans. they have to pay $3100 on average in tuition and fees. then we have students who attend four-year colleges that are private. that's about 15%. their average tuition and fees are 30,000 with scholarships and grants taking that to 12,500 the for-profit colleges and

universities the cost is about $15,000. according to the new york federal reserve at the end of last year or 201240% of student loan borrowers had a debt of less than $10,000. 70% have a debt of less than $25,000 in less than 4% have a debt load of over $100,000 and the college board says they earned more than $1 million over a lifetime with a college degree more than if you didn't have one. while this hearing is about making it easier to repay loans i think it's easy first -- important for students know is they think about going to college that it can be affordable and most students don't have to borrow too much money because they won't are wisely. i think mr. chairman as we move into other hearings we should look at the problem of over our wing which you had mentioned

before "the wall street journal" had an article march 2 which i would like to add to the record which talks about the inspector general's report for the department of education warning that some students borrow excessively for personal expenses not related to their education. that's a growing phenomena. over bar we may be partly the result of government policy. i think we should in the future hearings talk about areas ways that have been suggested to limit the over borrowing that settle some students with too much debt such as current practice allowing students who enroll halftime to take out as much in federal loans as the full-time students or perhaps we should provide colleges with the authority to set some borrowing limits. these are things we will have to discuss and of course in all this we are reminded that we do have a grant program. that is the pell grant,

$33 billion a year and we are talking about loans which should he pay back. now in conclusion what we found in our earlier hearing when we talked about the application process and i don't know if we have that application are not, for loans we found 100 questions this one here. we found the application for the loan mr. chairman was 10 pages and 100 questions. every student hates to be presented with this but the application for making it easier to pay back your loan is five pages of intimidated questions. we are working on finding ways to simplify the application for grants and loans of which there are 20 million of those every year and maybe as a result of suggestions we hear today you can think of a way to simplify the various ways we have come up with to make it easier for students to pay back their loans. i look forward to this and i

hope as we discuss it be keep a balanced view. and we don't suggest to american students that you can afford to go to college when in fact for most students you can and you are borrowing too much and for most students there is no need to do that. that i know goes against the popular misconception but i think it's important that we keep that in balance. thank you mr. chairman. >> thank you senator alexander. first i want to recognize senator warren for purposes of introducing some testimony. >> thank you very much mr. chairman and senator reid and senator durbin are not members of the health committee so they are not with us here today that they have been working hard on student debt issues. so i would ask unanimous consent to submit their statements on the record about student debt. without objection, so ordered. thank you all very much. first let me introduce our first

panelist mr. james runcie. mr. runcie serves at the department of education and the chief operating officer for student student aid a performance-based organization created to modernize the delivery of student financial systems. mr. runcie advises the secretary of education on matters in the departments operation of student financial assistance programs under title for three before turning to depart mr. runcie service company head of equity corporate finance of ubs investment bank held numerous executive positions of american securities corp. and the xerox corporation. mr. runcie is a graduate of the college of holy cross the bashur's degree in mathematics earned his masters in business of administration with distinction from harvard school of this is. mr. runcie welcome. your statement will be part of the record in its entirety and if you could sum it up in five minutes or thereabouts i would appreciate it very much.

>> thank you. chairman harkin ranking member alexander and distinguidistingui shed members of the committee thank you for the opportunity to discuss the federal student loan program. fsa is responsible for administrative and overseeing the federal students a national assistance program. these programs represent the largest source of student aid in the united states. last year at the assay process more than 21 million applications. we also delivered more than $137 billion in aid to 14 million borrowers. today our loan portfolio is valued at more than $1 trillion to 40 million recipients. fsa does not work alone in these efforts. our worst of over 1300 employees is supported by over 10,000 private-sector employees working for more than 150 private companies in 35 states. as you are aware until recently there were two primary that will student loan programs.

in 2007 the program share of annual disbursements piqued at 20% of student loan volume. around that time the decline of the national market affected student lending by restricting the availability of capital to private lenders. many schools began moving from that program to the deal program. in addition purchased felt loans in 2010 the origination of new loans in the program. fsa successfully implemented the transition of full direct lending and since that time every eligible student and parent who applied for a loan was able to receive one. but me just repeat that. every eligible student was able to receive him. i stress that point because since moving to 100% direct lending fsa has disbursed over $350 billion in loans.

in 2013 alone we disbursed over 100 million -- billion to 10 million borrowers an increase of almost 700% in five years. today at the site contracts with 11 additional servicers. the competitive structure of the compact design by fsa to ensure that borrowers receive the highest quality service and the lowest possible cost to the taxpayer. to accomplish this the department analyzes customer satisfaction and prevention statistics. edition it provides greater compensation for every borrower in the current repayment status. he continues to supplement the work of our services by providing innovative repayment options tools and resources to help far worse manage financial obligations. for example we launched the financial when is counseling tool. this is an interactive on line counseling tool that divides students with information about managing their student loan debt

since inception nearly 1 million students have used this tool. since 2012 we have created new tools. we introduced the pay-as-you-earn repayment plan which helps borrowers manage their debt by limiting monthly payments to 10% of income. today over 22% of all active repayment status bar in repayment plans. we launched our payment estimator in the past four months alone over 1 million borrowers have access the tool to research repayment options. we also updated our exit counseling for borrowers with the module. the borrowers provide information on a repayment plan eligibility and estimated repayment amounts. to date over 1.6 million borrowers have utilized the tool. we worked with their loans servicers enhance lung

counseling from a. and members to increase awareness of benefits such as public service loan forgiveness. we mandated all services to proactively identify and contact the pool of military servicemembers to ensure they receive the benefits they were entitled to. in november of 2013 the department conducted a targeted outreach campaign to over 3 million borrowers in forming them at different repayment options. almost 150,000 applications with income driven plans have been filled as a result of the outreach campaign. the department launched an innovative public-private partnership with the department of treasury and into it to raise awareness about income driven plans to the 18 million users of turbotax on line. separately treasury included a message on the back of templates containing this year's tax refund checks to raise awareness of the federal student loan repayment option. approximately 25 million of these envelopes will be mailed

to tax filers in the 2014 tax season. finally earlier this year we hosted to will on line loan applications. this application makes it easier for borrowers to consolidate their loans. these borrowers can choose to upload their income information directly from the irs ended only a few months over 100,000 borrowers have used it the system to apply for loan consolidation. we continue to do all we can to ensure borrowers have the best possible borrowing experience and we are being good stewards of the taxpayer money. i appreciate the opportunity to discuss the federal student loan programs and welcome any questions you may have for me. ..

>> how do you plan on improving this? >> yes, you know, one of the things that we use for a metric is we have a customer survey and it also looks at the statistics and there is also school service as well. so there's a number of different things that we look at where the

services. because of this performance-based structure, they compete with each other for future allocations and we have noticed that the customer satisfaction forecast all increase over the life of the contract so far. so in addition the default metrics have also done the same. so while that is not saying that there are instances where we can prove the oversight or the customer service operations, we think that the performance-based contracts have been helpful in dictating behavior with the services. >> can you briefly tell me what you looked at in terms of your contracts with the servicers? and how they subcontract with collection agencies? so what those collections

agencies do and how they perform and how much money they are making. do you look at that as well? >> yes, we do. we have a number of private collection agencies and those contracts are independent of the servicing contracts. very useful for performance as well. we recently increased our monitoring of the private collection the and we have monitored them four times the quarter. we listen to dozens of calls and we have special monitoring for the loan rehabilitation programs. so we have been providing some mythic levels of oversight with respect to the collection agencies. the collection agencies, there are some services that the

contracts are independent. >> so my question is what is the department of education doing to ensure that they all of the law? but they are not overcharging borrowers and what fees they collect. let's say that the agency has one of these defaulted loans, they write a letter to the person who borrows the money. the person realizes the they should pay. how much does the collection agency get to keep? >> you know, it's a percentage based upon circumstances. but it could be 18%. it could be as much as 80%. >> it could be as much as 20%. >> so therefore if they wrote one letter and the debt was paid, they get 18%? >> yes. but i think when you look at the

names of this they are going to have instances where there's a tremendous amount of work to get some of that back into rehab and get them to be making payments. >> i understand. but it's my understanding that they should still get a high percentage if they are doing anything but writing one letter. >> it's based on access. >> that's right. >> does that seem fair? >> i think if you look at collection agencies and practices across all industries, i would think that our collection compensation is a minor better with that within the industry. so i think part of it is because there are variability is familiar are some that require more work and some that require less. so yes, you're right. it's just one letter and they make a payment, then there's a lot more profit potential in terms of that particular

instance. >> as i pointed out in my opening statement, it was about a billion dollars per year is what they're making. but we can take it as a further look with that. >> thank you, mr. chairman. with all due respect, the questioning that you are using sound like a line of questioning of a trial lawyer who might try a lot of lawsuits and might win one to get 30 or 40% of the award area served, secretary duncan, if i remember correctly, he testified a few years ago before the and appropriations committee. that the federal government, if they took over all the student loans, then it wouldn't increase the cost of administering the loans. get the statistics that i have

show that it is the cost of administering the student loan program that has increased. it has nearly doubled since 2009 by about nearly $700 million. so why has the administrative costs of the program doubled since 2009 when secretary duncan bad that it would not reign. >> that may have to do with the substantial amount of violence that occurred since 2007. i mentioned in testimony the transition and the overall part of it has increased substantially. but if you look at our premium costs or applications for loan disbursement, all of us have actually decreased. >> so none of the $700 per unit cost are less safe today than they were years ago? >> the per unit cost for

dispersing and servicing alone come all of those cost have decreased. now, we have had more in terms of security and compliance, their other activities and the the actual transactions have actually gone down. >> so overall the cost of administrating the student loan program has doubled since the government took him all over. and you mentioned in your testimony that you campaigned to identify 3 million borrowers who need help with their lawns and that 150,000 of them responded. that's not a very high percentage. why do you suppose that more borrowers didn't respond to your offer to help them figure out the various options for repayment of the loan amount. >> i think that 150,000 based

upon the industry standards through that mechanism is a very high number. but obviously we are looking to make sure that we match my the response for the number of people that take up the plans. but the income or payment plans are very beneficial as a tool that people can use to address issues around handling. but those might not be for everyone because the plans may actually pay more over the life of the loan. so really has to do with circumstance. >> i have one other question. >> okay. >> i think that might have something to do with the complexity of how you sort through this and the various ways to help. i have one other question,

according to figures that i have asked, two out of five college students go to community college or two-year schools. and the average tuition and fees under $3300. the students received average grants and scholarships and the average student is receiving about $1500 more in grants and scholarships that it cost them in tuition and fees and they have extra money. the college itself is free for the average community college student and the governor of tennessee is working to advertise that so that he can encourage more people to go to college. but are you concerned that some of the students may be borrowing the money and taking out the low cost loans simply to get the

money and not for education but for other purposes, and that many of them have little intentions of getting a degree and that that might be one of the reasons we have many students say that they are over borrowing more than they should have. is that a concern of yours? >> yes, it is. and i think that we have been over the course of the last couple of years, looking at ways to make sure that we verify the intent and actions of people who received grants and loans until we have increased our verification to feel out the situations where there might be fraud or abuse of the loan and grant programs. so we will continue to look at ways to mitigate the situations like that. so in terms of the limits, those are his cacciatore. and a function ends up being more compliant than trying to maintain the integrity of the

program versus any structure on the limits. >> thank you very much. >> thank you. >> i might just say that if i had been the one taken to the tax to prepare for a trial lawyer, i would just like to say and i will make this observation, that the amount has gone up 700% and the cost is doubled and that is 500% increase. it means that it actually has come down. so the number has gone up 100%, which we have put out. and the cost has doubled and honestly the cost of the loan. so we have senator baldwin and senator warren. >> thank you, mr. chairman. so in january, the government accountability office released a report on the student loan

program. and they calculated that the break even interest rate on student loans, that is the interest rate necessary to cover the cost of the program without making a profit for the upcoming student loans, it would be about 2.5%. but instead we will be charging students early twice that amount and about 2.5 to three times that amount for graduate loans and for plus loans. the gl has acknowledged that the is an estimate. but that's the best estimate that we have. the least twice as much, we will be charging at least twice as much to cover the cost of the loan. so when we set the interest rate higher than we need to cover the cost, that generates revenue for the government. and my question is do those get

refunded back to students who paid more than what was necessary, or are they just use for funds in general? >> used to fund the government generally, but they did not come back specifically into the program. >> okay. that is the key point that i wanted to mate. we are charging more interest than what we need to. so there is no mechanism to the students and it seems to me that we are taxing students for the privilege of borrowing money to try to get an education. i think that's that that scene. i don't think that the student loan program should be designed so it's making profits for the federal government. and as a first step we should refinance those loans and i also want to ask about the

relationship with sallie mae. the department of education is outstanding with them. they have repeatedly broken the rules and violated this. i will give you a few example. in 2000 and they had a multimillion dollar settlement with new york attorney general on trade related to improper marketing of student loans. the treasury department and the department of education has cited sallie mae for failure to abide by the terms of the federal contract. they are currently under investigation and let's make a list. this includes consumer financial protection bureau and yet they continue to make millions on its federal contract between 2009

and it made almost $100 million on just servicing the federal student loans even while they broke the rules. so my question is, i understand that the department of education has already notified sallie mae that they will be removed. why do they decide to do this when it clearly violates the rules so repeatedly. >> so it was a part of extending the contracts and extending the contract, the contracting officer looks at a number of different things. >> and they have broken the rules repeatedly and they are under investigation. have you done something

different to ensure rater accountability and i just don't expect it. >> we are very open to start seeing those additional terms under the contract. so there may be some instances where they are at to remedy certain situations, whether they provide the wrong information, but in terms of a wholesale breach of contract that has not been determined as far as i know. so again i am speaking about the direct loan servicing contract and not about private loans or laws that they might be breaking. so based upon our current estimate of all the servicers,

we felt that based upon their performance under the terms of the contract, and we also filled in terms of this to the borrowers, because we would have to transfer this if they didn't extend the terms of the contract. so there are a number of things that we look at in terms of extending the contract. of course, we do not want us to be in violation of anything with the law, and if it was we would address that by taking whatever appropriate action that we need to. >> i just want to suggest that we know that there are problems with sallie mae and the actions we are taking in exercising has not allowed us to correct the problem and i'm very concerned about this update of a multimillion dollar contract with sallie me, which has

demonstrated time and time again that it is not falling rules. >> thank you. it sounds like the answer is too big to fail. senator baldwin? >> thank you, mr. chairman. thank you, ranking member. as you have reminded us in the testimony about the history, in 2000 and we work cut out the middleman and our student loans by making the transition from the federal family education loan program to direct lending. i was a member of the house of representatives at the time of that vote and that resulted in cutting out over $60 million of extra weight. i think it wasn't one step the remains, as we have just heard. recently in a meeting with student financial aid administrators from ice bay, wisconsin, they shared an on

origination fee that for many reasons seems like it should be a relic from the days of the federal family education loan program. it is usually a fee paid from the loan amount resulting in a slightly reduced loan for student and additionally it places a burden on financial aid administrators to have to explain why there is this the in the first place. and it seems that the government is making a lot of money off of these loans. some of the federal government is in the business of this morning, is this necessary and can the department of education and loan services function properly without this takes? >> wiki is a part of the structure that we have. you are right, that is taken out of the loan amount that is attributed to the dunes. in terms of what that would mean from a cost structure perspective, i do not -- you

know, i don't believe in we could still operate and conduct a loan program with other considerations statutory and otherwise. i can't speak to that, right there it is a result new aggregated it is meaningful to that. >> i appreciate hearing in her testimony that the department of education has worked with loan services to streamline the process is for those discharging the process due to total and permanent disability. i understand that this still remains cumbersome for many. i've been working for some time on a student borrowers will rights bill. and it includes the right to discharge alone due to total and

permanent disability as well as the current tax penalties, 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 in the event of total disability easier for students and families. and are there currently any incentives in place for the services to expeditiously serve those students and families, or could we create them? >> that is clearly a major concern in a big issue that we have been focused on. we have streamlined the process and the florida we had many different services. now we have one service. so we need to have quality control around that it's rants.

we now use the veteran's determination for disability and total and permanent disability has an address. so i think that we have improved the process and there is probably still work to be done to and it sounds like the issue around the tax is something that has been discussed and i know people are looking at that status and there are some significant improvements looking or additional ideas in terms of how we can further improve the total and permanent disability process area. >> i don't want to cut anyone off. but i do know that we have three at noon.

we're going to have to call a halt. we have other experts that we are going to want to hear from. so i just ask, i don't want to cut anyone off. but i would like to just great as long as we can get to the next panel demand i will put my question. >> i appreciate that very much. >> thank you very much, mr. chairman. i will just ask one question around the subject area when an individual goes to buy this, they are going to do an inspection of the house and make sure that worth investing in. for the programs you run the assessment on the borrower and it's not really about creditworthiness but about need for it so the institution and the case, the oakland of the house deserves to have the same kind of rigorous analysis applied to it. and today we sort of have an all

or nothing approach when we are looking at institutions as to whether they are worthwhile and basements and one look to it plays in california, a school that has revenue of $1.7 billion, 83% comes from the programs that you run. and yet they have the full rate in the neighborhood of 36% and prices that are wildly out of step with other competitors in the area. so when they ran afoul of the default rate rulescome in the way that they got back in compliance with to call their borrowers on average 110 times per month to convince them to seek more deferments and forbearance and actually didn't do much about the degree or the

quality and they just convinced students to push their obligations out further. there are other models out there, which involve more of a risk sharing module. having higher than average default rates and low graduation rates, it would share more of a burden of the outstanding loans rather than just hanging if you don't meet a certain threshold you aren't eligible for federal aid. so do you think that the current method by which we charge institutions capabilities, giving students a quality degree, if you think it's working and what you think about these other models imax remapped i think that some of the other models are promising, as we have the rest. and we would be ready to run compliance and can put that in terms of our operation.

right now we look at default rates, as you know. as to some extent there is a utilization of forbearance that can be manipulated somewhat. but the forbearance and affirm and under the program entitlements, however, the services are ultimately the ones that can put people in deferment or forbearance. so they also have to have a conversation work with them to get that is the best option for them at that time versus income-based repayment or something like that. so the other thing is we are making progress with unemployment and i will also have an impact with the proprietary schools. in terms of a wholesale way to address those issues, we are open to operating modes.

>> i'm glad. the idea that we are spending in this institution's institutions case, $1.4 billion in taxpayer money, offering the benefit of getting a 40% default rate and graduation rate covering under 10% of this institution, it is mind blowing and we have legislation that i hope to take a look at in the context of the reauthorization that will give us some new tools with which to hold these accountable when they are making decisions on how to allenby is each year. >> thank you, mr. chairman. i want to talk about a tool that students can use early on in the process of looking at colleges

and i am going to introduce some legislation on not to prove it. .net price calculator allows us before they are even deciding upon whether to apply to college, how much it is actually going to cost. now, we have a free net price calculator available. some are better than others. you know. i think about a recent survey in more than half of students get stuck on sticker price without considering the full effect of unventilated. and many of them chose to attend other colleges that they were qualified for. because they incorrectly believed that they were priced out of the other schools.

some wondering if you have any loss of bowel that, then that calculator and for the department of education can view to incentivize colleges to make these calculators more user-friendly for students. >> we have been very just on financial literacy to make sure that students are in a position to make good investment decisions. and there have been a number of items that we have put out this includes those across institutions and students make decisions and they don't have a

sense of what the crisis. and it's something that we could do better and we could work with institutions to make the calculators a little bit more user-friendly and transparent. >> i can't be completed until january 1 in which the student seeks to enroll in the school. by january 1 you basically all over. as you are considering. you can look at this if you have the right calculator there and it has a real idea what the real

not cost of this is going to be. but the aid would cost and etc. when i go around the roundtables and talk about affordability to student, very often i hear that i wish i would've applied to the school or that school or i didn't fully realize how much this was going to cost. so financial literacy is a tremendous part that we need to have eyes wide open when they are doing it. and i don't want them foreclosing better options for themselves because they didn't realize that some schools will give a full ride to students and other kids will say i don't want to apply to harvard because i couldn't possibly pay for it so

much and to find a way to let kids know well beforehand, after they have already applied, after they have been admitted or not, to let them know what the next cost will be. >> we would love to work with you and look at how we can make it better. >> thank you. >> thank you, senator. thank you very much for being here today and thank you for your testimony. i am sure that we will have some follow-ups. >> thank you, chairman. >> turning to our second panel.

>> him and how you do thisãand . so first we will go from left to right and what is introduce you and then we will start our test money today. i would like to introduce michelle cooper. of the higher education policy. promoting access for students in all educations. most recently leaving the development of the new policy agenda enhancing affordability and accountability in consumer awareness. she received her bachelor's degree from cornell and the university of maryland.

>> at the national consumer board, we teach them legal services and private consumer lawyers and other advocates and the problems with the program are addressed. i have worked with these women for many years but what i made this career shift. and i just want to say that her work is first-rate. >> thank you. >> or next witness is roberta johnson. iowa state university, a land grant judiciary. with a two decade history, she has significant firsthand experience in the administration of loans to both the federal

family education loan program and the federal drug loan program. in 2013 she was appointed vice chair of the advisory committee on student financial assist in, which provides counsel for college access for students of lower to middle income families. she has a bachelor's degree in education and a master's degree in counselor education. >> thank you, mr. chairman. we welcome maryann malone. director of financial aid in cleveland, tennessee. the only thing that would've been better is if he would've brought the lead singers with you. i hope that you will give them our best wishes. she is membership chairman of the southern association of student financial aid administrators. she has been assistant director for financial aid at tennessee

wesleyan and she's a first-generation college student and a recipient of title iv, so she has a broad view of the subject we are talking about. >> thank you all for being here. your testimony will be made a part of the record and i would like to start with doctor cooper. if you could just am of your testimony in five minutes, we will certainly appreciate its we can get it to russians and answers. >> welcome and please proceed. >> chairman harkin, ranking member out and are, good morning and thank you for this opportunity. like you have heard, i am the president of the institute for higher education policy and at our organization we focus on issues surrounding populations of students.

as president of ihep, just a few decades ago i was just a kid from south carolina had the opportunity to finance my college degree. so i can save that financial aid and the ability to access it made a difference in my life and i firmly believe that it still can make a difference in the lives of today's students. but the reality is of today's students are different than those of other generations and earning a college degree or credentials much harder now. when we examine it, i encourage you to be mindful of the realities of today's students. we should recognize that a one-size-fits-all approach probably will not work and neither will layering policy ideas over old outdated once. so when turning to the issue of student loans, oracle must be to help the millions of student loan borrowers that we currently have managed the debt levels and

affordable and easy manner. we have recommended that there are three types of improvement. improvements that will result in more informed choices and more simplified options and improvements that will lead to better accountability. we have to recommendations and one is about information and the other is about student loan counseling. when it comes to the issue of better data information, i'm sure you've heard that people believe that there is more than enough information out there. but there certainly is information out there but it's not always of type all of you. and it doesn't always allow students to use it in a productive consumer friendly way. it is usually not always helping them to make good informed choices. in our written comments we recommend some detail but straightforward existing data with the national student own

data system that would better help students gauge the quality and the outcome that they could likely experience at other institutions. we suggest improvements to the information around debt repayment and about student outcomes in particular. we also hope that this information can be made available for students for multiple years and multiple cohorts. we also believe that student loan counseling needs improvement. so i am assured that we have good conversation about that. and we agree that there needs to be counseling on student loans and financial literacy and we have some federal programs where we can easily incorporate financial literacy and student loans into that structure. also we believe that existing scores and the net price cut to later and financial aid should be made to be more applicable and more accessible and in some

cases even mandatory. certainly believe there is much that can be done to improve the college loan student loan counseling. it should be more than a checklist and we can make some improvements to the timing and content and frequency of the content. and we can't include a lot more throughout the students career. our second category represents options for loan repayment. at present there are many options that we have outlined and we believe that the number of options of payment should be reduced and we believe that they would minimize complexity and help to make this more transparent and accessible. and we suggest having a single repayment plan as well as its angle income-based or planet tan and the final category of recommendation is shared

accountability. the state appropriations decline has been taking on more debt and as a result they have an increasing proportion of that. there are some responsibilities with the institution. so when thinking about this we recommend options that would lead to more meaningful accountability, such as risksharing. while the specifics of this model need to be tested with institutional leaders, we would not have to start from scratch as there are proposals that already exist. so in closing i'm happy to talk more about these recommendations in greater detail, but i do want press do we really want to have real long-standing change we want to do more than just tinker at the margins and i encourage you to remember that the student loan issue must be looked at was in the broader issue of costs, which we have are even begun to

do. including how this is symptoms of a bigger college cost problem. >> thank you very much. >> thank you, chairman and other members of the panel. thank you for inviting me to testify here today. i'm here today of loan compliance. we reflect the broad situation and it's important to keep this in mind. because the idea of an 18-year-old finishing at age 21 is actually more of an anomaly now what happens in the current environment where nontraditional students divide today. but they all sincerely wanted to go to college to better the

lives of themselves and their families. it may not have been the outcome, but that is their hope. and the great advantage of our system is the opportunity for us all to get a college education. but it should be about investing in students most of all, not about government and private coffers. schools may be poverty and tradition with private services and collectors and even the government appears to be profiting. but it is on the back of students to take on all of the rest. we can do better than we can do it within the structure of the direct loan program. the structure is not a problem. the problem lax management and misaligned incentives. and i believe that we need a multifaceted approach and not just one solution to all of us. and i just want to mention a few and i have more details in my

testimony. as doctor cooper mentioned, the best way to prevent this is to help the students succeed. and we also want to look at simplifying the student loan system and focusing more on borrowers. the servicing, which we have are to talk about, focuses more on private contractors with the easiest options and my clients much of the time don't know about the optimal options for them. and there are ways to include streamlined servicing. perhaps some competition is healthy. but we need to put borrowers first, not ensuring that private companies can promote their brand. i also discussed questions in my testimony, but in a nutshell the

government has given the private collection industry a dispute resolution and in my experience the collection agency is extremely violating the protection laws of borrower rights. it doesn't work for borrowers and taxpayers, and i ain't it is time to end this with a private collection agency. we have been giving examples for years to government agencies, but we haven't had much response. and if he mentioned the department keeps renewing contracts even for those services or collectors where there has been evidence and the problems are now more public and i believe that we can fix them. the administration was able to implement this to full direct lending and now they can put the same levels in the collection system and use all the resources available to them, which very

much includes a complete system, and congressional oversight as well. also giving students the best chance to succeed in recognizing that some to work out the first time around. we need to give borrowers another chance. more than one chance at rehabilitation and consolidation in the programs that we now have to get out of default. instead under current policies we hammer some borrowers until they die. it takes earned income tax credits and we have basically eviscerated this as we do much better for borrowers. it's not just for borrowers before society so that clients like mine who want to go back to school can go back to school and

repay their loans and enter the workforce. i believe that we can do better. >> thank you. ms. johnson, welcome back. >> thank you. chairman harkin, ranking members, thank you for inviting me to testify. as has been mentioned, i attended i was at university for a number of years. i have had experience with many programs at iowa state university, it was a number one school in the direct loan program and i have had the experience of it prior to 100% and post that timeframe. so i can talk with both sides of that issue. to help you better understand that experience, i want to start with the applications process, which senator alexander talked about. it cannot be completed until january 1 of your senior year in high school.

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

would know their costs and they could potentially make other plans before they are emotionally invested in that institution is sometimes financially unfeasible for them. i was state university is using this as their official award to students. i was very skeptical about using this initially, but the feedback that we have viewed from a men's and their families is that they are appreciative of this information. it's clear to understand this provides them with a definite picture of what the costs will be prior to borrowing money loans. however, it 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 wire

disclosures, college navigators and a scorecard, we need to think about utilizing the same measurement points so that they are truly helping families to compare their school choices rather than adding to their confusion. once a decision has been made, the students are directed to the department of education's website, student loan stock up, to complete the promised her a note and they will ultimately utilize the site for entrance counseling and they all go go through financial awareness counseling which was discussed. the financial awareness counseling tool is very robust red our institution uses it to help students explain the repayment plans and understand what the repayment amounts will be once they complete the degree program. the upfront processing of loans known as origination works very well with electronic transmission of information that goes through as the department

works for them. and this year we will be providing additional information beyond grade levels as we need to also provide program information so that when students have received 150% of their programs that they will no longer be able to borrow under a subsidized stafford loan. after the loan is dispersed, things are now more challenging for the borrowers. when the program was first implemented there was a single service or and all were branded as the federal direct student loan program. now they are cobranded with the name of the service or an oftentimes it is my experience that the name of the service or as part of the department of education's information. so it's difficult this is coming from the direct loan program. and i would suggest that student

loan knock out needs to be the single point of contact for borrowers to be able to log back in to access your student loans. currently has to go to that individual servicers went right and suicide in which is very confusing and can lead to a lot of challenges with containment because students have to take the extra step. so if we can streamline the, i think it will help. i think because of this the department has the opportunity to think about how contracts need to be awarded and do they need to come from a previous environment or are there servicers that are working in other financial sectors are just credit card agencies that may do just as good if not a better job. the student loan repayment plans can be confusing and we need to

think about that. finally, i would say in response to comments about the cost of loans that there is some substantial revenue and we need to look at things like origination fees as well as the capitalization of interest to see if we can streamline those processes. so in conclusion it works well, but there are definitely areas that we need to fine tune and find efficiencies on. thank you. >> thank you very much, ms. johnson. we now welcome the next best to thank you. chairman, ranking member, members of the committee. thank you for inviting me to testify today. currently we are located in tennessee with an enrollment of almost 5000 student. in 201365% of our students anticipated in the federal direct loan program and the

average indebtedness was just over $29,000. today i let you view capital insight for my experience traveled by my comments into two parts. first, focusing on student success strategies and second focusing on simplification of nonessential in the strait of loans. student success strategies. currently the federal government prohibits schools from requiring additional loan counseling by statistical indicators appear it risk for defaulting. physical indicators may include academic performance or borrowing beyond direct costs. also limiting part-time students are borrowing a full-time rate. based upon the research i submit the following recommendations. number one is institutions should be allowed to require counseling for students to

identify the risk factors before anytime, not just at the first. an additional counseling would reinforce key responsibility. educating this borrower while they are still in school is key to success. institutions need the authority to wire such training to come of this success and to reduce default rate. number two is institutions should be allowed to limit borrowing based upon broad categories of students. for example those that are enrolled part-time but can still file the annual loan amount. in doing so, they can exhaust their aggregate limit prior to completing half of their academic program. as an aid administrator, the is alarming. yet we have no authority over borrowing and no practical tools stop us from occurring. this over borrowing pattern can have severe consequences for the

students in the institution and federal programs. number three is parent plus loans. currently approvals are based solely upon creditworthiness and are blind to the ability to be repaid. odds are the drastic increase can be a part of it. i recall this on various forms of public assistance. the mother was approved. she didn't have bad credit. she just had no credit. and 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 will provide a simple by process and ensure that no borrowers would ever exceed their ability to repay and reduce the probability of

default. next, i believe that there are contractual twist that would reduce the unnecessary administrative burden. number one, congress should mandate this were institutions and students can go with all federal private and institutional loans. the nonprofit organization clearing house currently provides this with the capacity to meet the objectives. the department wants to achieve reporting of all student loans. number two is the department overhaul to provide clear and concise information need for legislative requirements. this is dependent upon social media and the counseling tool fact is well-designed and students from it. but it doesn't satisfy

legislative arm. this resource needs to be enhanced to meet that. number three is the primary responsibility that should shift back to the federal services. this responsibility includes direct lending schools are now faced with the need to hire additional third-party services or risk the penalties of the rising default rate. we do not have the resources to conduct this with the community. finally, i hope that my testimony provides insight into how the current student loan policies can be enhanced to better serve our students. thank you for your time. i'm happy to answer questions. >> thank you all very much. you have touched all the elements of what we are trying to grapple with your on student

loans. every aspect of it. so we have two things here. doctor cooper, you have said that discussed the need to streamline current repayment options and the recommended also to maintain this which allows borrowers to benefit if they experience extended financial hardship. and you go on to note that the single plan extended protection of them in need. i think that the income-based system is basically everyone in on this. am i wrong? >> i am suggesting that the students be allowed to opt into this repayment plan. >> he said that we should maintain the standard. >> we do. >> so why would you disagree

with this? >> so the issue about making this automatically is sometimes used interchangeably and it's an interesting concept that we have actually recently studied in depth with other organizations and so in the conclusion of this, we came out of a believing that while we should study at but it might be viable, there's too many things about it but don't make it ready yet. so some of the problems are that students can borrow more and we don't want that. some will pay longer than they would under the rendered repayment plan we don't want that either. and the third thing is about the proper institutional reforms in place. ..