rates and all area, and the democrats wanting to build social welfare state, and 234 a sense, this period reflects a stalemate between the two parties. i mean, with the passage of aca, the democrats have come close to kind of rounding out a national welfare state, and through changes to marginal rates and expenditures lowered rate, and so there's only incremental changes for those -- if you take those and, you know, two of the parties, and so there is a potential, i think, a window for tax change based upon the idea that how much more can you really get if your goal is to lower marginal rate? how much more do you get if your goal is to build a national welfare state, and there's, you know, that might create an opportunity for the parties to say, let's do something big.

>> just one more word on the subject. you know, i'm sure, you know, as a fellow political scientist, you agree with the generalizations are true until they are not, and so one of the interesting things about the reagan tax reform, of course, is that it was not the first two yearings of the first term. it was the first two years the second term, making it all the more imprezzive, and i think this is one of many respects in which our current circumstances are really driving a sense of what's possible. i mean, based on the past two administrations, one is led to the first two year conclusion, but, of course, bill clinton achieved what is arguably the biggest domestic success in the second term. so i would not -- i think it would be really unfortunate if we came to the conclusion, you know, that sort of like waste

dna, the last six years of a president's term are wasted time; right? i hope we can govern ourselves in a higher proportion than that. >> you know, i agree. so large change, i think, well, large change in the party's drier direction. you know, in those situations you gave, those were compromised policies in which they were working across the aisle to get reform, and so, you know, a condition i see that could bring about tax reform is the election of a republican president, democrats control one chamber of congress, and then at some point during the republican president's term, the policy of the country turns liberal, which happens. there's two measurements of public opinion. one being individual and other aggregate, and that intends to go and counter cyclical ways to where policy's going, think about second term of the republican president with a democratic house, and public

opinion changing, and that could provide positions that are right for a tax exchange. >> doing the math. [laughter] >> one more question. eric? >> hang on, just a second. >> eric, one word i have not heard in this conversation about taxes and public opinion, i hear politicians use this all the time is "irs," and i was wounderring if clanging attitudes towards the irs and recent so-called scandals and anything like that, how -- have there been major changes in attitudes, and how has that affected the tax reform process? >> gym, in the public domain, no questions, only one since the scandal broke, and so we really don't know the answer. answers negative, answering questions during that period,

and i don't know -- they were not cengted to issues like tax reform that i remember or recall. >> i would just date the saliency, and people's attitudes in tax reforms, and there's a difficult link to meek. >> time for one more, i think. yes, sir? >> over there. >> i'm june taylor with get america working. thank you, for putting the proposal on the table other than i would make a change. it does not just have to be a carbon tax to be efficient, but there's a range of taxes because i don't think it's fair that american workers are aing in money to pay for the payroll taxes, but polluters are off

free. >> do you have a question? >> yes. the question is, can we please refrain the carbon taxes as reagan's economists said, i don't know if ill in climate change, but i know i believe in health damage, and so there is a reason to pay for what economists call extraalties, and 24 is a way to do it, and then there's the question of how much job growth we can get, and i hope that you guys pick up on the point about looking at other countries that have done this kind of tax shift, and you're from institutions that can do it. >> so, is there any sort of public support for taxes to reduce pollution? you know, ac, there's a big enough environmental problem, indeed, taxes are the solution? >> i think the environmental issue in the united states vary differently. i think once a society agrees on the ends of policy should serve, we want a clean environment, we

pay money for it. disend gauges from the means or subsequent discussions, and that's where public opinion is now, disengaged from the environmental debate in many ways. they think it's important, and -- but i just don't see it as an issue right now of top public concern. >> your research tell us anything about people's attitude, the environment, and whether taxes are solutions? >> well, i've seen public opinion research on environmental issues, and, again, you know, partisanship at play, you know, you have some folks who are self-identified conservatives who don't believe human activity contribute the to changes in climate, and so if you have that attitude, then, you know, you're going to -- you have differences also in the carbon tax. one related point, there's a great paper on path ways to tax reform, and what's been consistent in public opinion across time is that if you link tax changes, even tax increases

to popular programs that people's appetite for tax changes and tacked increases go up; right? an idea about linking a vat to funding medicare, medicaid, is something that, you know, given 40 years of public opinion would -- is something that you could sell because of the popularity of medicare and medicaid, so that's also another possibility. >> my impression based orphan on scattered knowledge of the public opinion, but looking at the way politicians behave, they clearly believe that is it is easier to sell the american people on a regulatory approach through the taxpayer approach.

all things equal, of course, they are not equal, but the illusion is that a regulatory approach touches only the malefactors, but the reality is, of course, it creates facts that are widely spread, but less viz l in the broad base tax. it's like an opening point between the official extendtures on one hand o opposed to the other. it's a difference among other things among visibility and relative inviz the, and a lot of politicians face practice call problems, choose the course of inviz the even if it's third best. >> i think this is one area where it's support for targeted tax in time for good things. look add what happened in colorado where everyone departmented support for educational reform to pass, and it was overwhelmingly rejected, pay for educational reform, pre-k, and early childhood

education failedded overwhelmingly. look what's going on in the state. i'm just not sure this supports the taxation or as good as things once was. you have a skeptical public. >> the idea is payroll taxes to boost job creation. people say -- >> that's right. certainly, the section is what's difficult to make, and the public's worried because they see taxes going up, and they don't know that they like the outcome spp >> okay, we are about out of time. i thank all of you for attending, our viewers on c-span, and i was asked to mention on april 15th, there's an interesting event to talk about income inequality on a very interesting brand new book on income inequality, not just in the u.s., but around the world. we'll be here with dean baker and kevin and lance for what will be a very interesting discussion. that'll be here on appraisal 15th. thank you to karlyn bowman and

everyone for this very interesting discussion. thank you very much. [applause] no bed available.

>> our guest today is here because of a personal tragedy. son todeeds lost his suicide in november and was wounded himself in an attack. deedspened after senator try to get care for his son,

only to be denied by a system he tried to fix, and the system told him there were no beds available. since november senator eads has recovered from his physical theds and has led legislature to enact legislation, adding millions to prevent other families from experiencing a tragedy like his did. the amount of time a mentally ill person can be held is limited to eight hours. before making mental health his signature issue, the senator was a county prosecutors known for allowing access, and was elected to the virginia house of delegates in 1991 and left the house. he was a democratic nominee for governor in 2009. these help me give a warm

national press club welcome to virginia state senator creigh deeds. [applause] that generousor introduction. i want to invite my wife who gave this up for her birthday. i would like to recognize some of the people who have been 1991.ince they told me i could speak for 20 minutes. that might scare some of you. i will do the best i can.

thank you for allowing me to speak about an important and overlooked issue. despite the warning signs of a system failure and despite the fact that as many as one in four americans suffer from some form mental illness is set aside in our private conversations. when ice woke at -- when i spoke at the senate, i referenced radley as an analogy of how we deal with mental illness. in order to effect change we have to bring mental health out to the daylight and have an honest discussion about the successes and failures of our services. rehash whats not to happened on november 18. i will not talk about the events of those days any more than passing reference. the issue is bigger than any one individual's experience.

i will not answer any questions about those days. speak publicd to about mental illness and my tragedy, i had three goals. to do my partd to bring about equity in the treatment of mental health. second, i wanted to use the experience to change the law to make it less likely that others will undergo similar heartbreak. third, i wanted to make sure that my son is remembered more for her is living than his dying. for his living than his dying. i have organized this talk around the street points. my son was my hero. on mayds came to school 6, 1989. he was named creigh, but called gus. from the beginning gus was bright and a little small

for his age. he did not grow until average size until he was a senior. as he grew he would take volumes of the encyclopedia to bed to read. he amazed at church, reciting the lord's prayer from memory before starting school. in elementary school he excelled at everything. he holds the record for the most perfect standardized test sol scores in bath county. kit at through a drum age seven. he taught himself to play harmonica, nano, mandolin, and practically any other instrument. he wrote songs and performed throughout the area. any imagery hern mastered spanish and could explain the differences among the various latin american

dialects. he could lecture you on the element of languages. he was learning arabic and cantonese. he had an interest in gaelic history. soccer,thletic, played he started as a freshman for the bath county soccer team. he won numerous awards as a member of the high school band. he was valid current taurean that he was valedictorian of his class. he was witty. he had everything going for him. at an early age he knew how to bait a hook and build a fire. he loved the woods in the garden. he spent many summers in a nature camp in vesuvius, virginia. he helped at camp poppy. lifelongped friendships and a deep appreciation to the outdoors and our natural resources for these camps. at an early age he developed an intense religious interest.

at the age of 20 come on tripyan -- on a one-man across the country, he was worn again. that renewed his interest that his family came to accept. and oureturned, gus family embarked on a new journey. our family's experience with the manville -- with the mental health experience is a demonstration of the problems we as a society have in dealing with the issue. either his mother nor i wanted our sont the fact at was sick. in 2010, after we divorced, gus was living with his mother. she was concerned about his fixation on what he was making in the shed. mealked him into letting hold the knife for him. he worked at a park, but returned home.

we still do not know what happened out there. mom arrange for him to enter a crisis intervention center near charlottesville. he stateyed for a week or two. i cannot believe my son was talking this way. he was my child, but also an adult and i was not privy to any information about his diagnosis or medication. when he came home i helped him obtain a job. he spent the winter washing dishes. my brilliant son was a dishwasher, but he was happy. left the job gus and then came to live with me. his behavior was more erratic. he talked about suicide. i went to the magistrate and had him committed. later we went through the process again. fromtimes gus was released the hospital with medication and

put under the care of a psychiatrist. at no time was i ever able to talk with a psychiatrist or get an accounting or even and un-detailed accounting of what his problems were. a psychologist or social worker at the second hospital told me gus was bipolar, but not a classic case. he said the medication gus was on would be reduced. i kept hoping that gus would be all right. old self when he got out of the hospital the second time, but he seemed more stable while on medication. he kept appointment with a psychiatrist and made plans to return to william and mary. i began to relax. the summer of 2012 gus returned to the nature camp. he continued to abide by his appointments and go to the camp and he managed his medication. school in 2012 and made the dean's list. that fall he brought a friend

home because the boy had nowhere else to go during the break. christmas was uneventful. andwent back to william the mary in january. i went to a pharmacy, to refill his medication, and left him with a prescription card and trusted him to keep it filled. stoppede in 2013 gus taking his medicine. when he returned home, while his grades continue to be good, his behavior and attitude had changed. he went back to nature camp last summer, and even in his illness his heart was always evident. he was known at camp last summer for his kindness to homesick campers. he always had time for lonely strangers. he was the guy who would always give the people on the street looking for a time a dime. he was a good samaritan.

as parents we continue to believe we could get our son back. that illness which had never been fully explained, at least not to me, had not taken over and that gus would be able to lead a productive life. friends and family a short me he me hegrow -- assured would grow out of it. what about mental illness? longise, we as a society mature, find treatment for physical illnesses such as cancer or heart disease, alzheimer's, but we also look for cures and treatment, but what about mental illness? as a society we treat mental illness so differently than others. not only are we embarrassed by it, and we act as if the nervous system are not parts of the body. if my son had cancer or heart disease we would have known what to do and we would have known how to pay for it.

with mental illness there is no assurance. two generations ago we began the process of institutionalizing the mentally ill. we decided we could save money and protect civil rights by providing care in communities. some of our instincts were good. our implementation has been a failure. men and women with mental illness are still in jails and prisons. a never adequately funded system of treatment. the result is that the community service boards virginia have spent so much focus looking for money that the urgency for care is lost. not only is there a lack of equity in insurance payments, there is a desperate lack of services in some parts of the country. across the river from this building is one of the most affluent parts of virginia. there are many other regions where unemployment is high and people are poor. who finishudents school with hundreds of thousands of dollars in debt are

not likely to want to practice in those areas. they want to go where they can make enough money to live well, and who can blame them? those who complete the requirement for psychiatrists to not talk to world virginia. virginia. not only is it impossible to pay for psychiatric care, but in many places the care is not available. last november as i tried to put my arms around my new reality i began to wonder about the law and how to effect change, real change. i decided on a two-proneged approach. the crisisprove intervention process. we have a two-step process. if the love one is in crisis, you can't petition for an emergency order. law enforcement will detain the individual to obtain a mental health evaluation.

as soon as the order is served it can be extended for another two hours. if the person is deemed to be a danger to himself or others the evaluator obtains a 48-hour detention order. several changes seemed obvious. the professional conducting the evaluation needs more time to make that evaluation. the evaluator needs better tools possibleifying placement rather than having to call each facility, and limited bed space should not result in a person in crisis being denied treatment. think about it. under existing law, the magistrate cannot issue a temporary detention order even if that person meets the criteria until a dead has been identified. that makes absolutely no sense. an emergency room cannot turn away a person in cardiac arrest because the er is full. a police officer does not wait to arrest a murders aspect --

suspect until jail space is identified. when a crisis emerges, our systems respond to protect individuals in the community. why should a mental health crisis be different? the changes we made to that process are simple him and i saw george barker here and he is part -- first, we added a requirement to law enforcement to notify the local mental health agency tasked with completing the evaluation, the community service boards upon execution of a custody order. --as result hours may pass before and evaluator -- that lack of notice is a tragic flaw in existing law allowing precious time in a life or death system to be lost. we mandated a real-time psychiatric bed thestreet be developed and -- bed registry be developed and be immediately

used. it will go forward now. an early version of the registry went online earlier this month. the registry will need to be updated to provide real-time information. the valuator will no longer waste time calling each facility looking for a bed. lengthened the evaluation time to eight hours, particularly in rural areas. we required revision of ace that -- of a state that cannot be identified at the end of eight hours, there is an additional four hours to find an appropriate facility. personl that means is a determined to be in the services will have a dead at the end of it 8 -- have a read at the end of eight hours -- have a bed at

the end of eight hours. every one of the situation is life and death in this critical change will save lives. among other changes we made we extended the temporary detention order to 72 hours. this will ensure there is time to properly begin treating and stabilizing the individual. after 72 hours, if additional treatment is needed, a hearing can be held and the person can be committed. these changes were described as modest, and i would agree, but they are significant changes to the front end of the crisis intervention process, and i'm convinced they will save lives. aced on myprong is belief -- is based that there are organic problems in virginia 's systems for delivery of mental health care services. fixes will not come quickly. in the past small legislative

victories diffused the pressure for change in the sense of urgency. even the degree of success, people lose focus despite the problems that remain. i hope that will not be the case this time. when i went to the general assembly this past january, it had been six weeks since the incident and the first time i was publicly visible. there were many people, some of whom are my friends, who were shocked and some even relieved by my appearance. -- nobody sight of lost sight of our needs in mental health. i promise you that i have not lost my focus or sense of urgency. now the real work begins. he had the easy things. we have addressed failures in the process that my situation exposed. i'm not saying my situation occurred because of flaws in the law. i believe what my family went

through in november and continues tendure could be prevented. we want to ensure that families with similar circumstances will not suffer as mine did. i know we prevented future tragedies, but we have so much more work to do. --ile the legislation a addressing intervention, the most significant legislation passed was aced that he resolution peer desk was a study resolution. government is also ridiculed for studying things to do. virginia at his leisure has avoided them -- the virginia legislature has avoided them in recent years. this year he made case that our mental health system has such problems that a comprehensive examination was needed to develop solutions, some of which will be difficult to reach and some which may be expensive. a senate resolution creates ace

that he legislative body to examine our mental health care delivery system. out of that process i am committed to making improvements to ensure the efficient delivery of services in every corner of the commonwealth to provide adequate funding. we can start by reviewing the reports prepared by our inspector general. one study exposed the system has a shortage in psychiatric bed because the hospitals are slow to release agents. the study will serve as a way to keep mental health policy at the forefront of our discussions in virginia him and i hope the end result can be a model for other states. in the beginning of this study, my mind is completely open. there are no sacred cows than the current system. everything is on the table. agree with the argument that we just need to spend money. nothing about my experience with the system in virginia inspires confidence. i am reminded of the biblical story of esther.

when she was faced with a moral dilemma that would require her to put her life at risk he saved her people, the jewish people. she acted in response rate question -- who knows but that you have come to your position for a time such as this? i'm not suggesting my situation is as grave, but through the loss of my son, i was faced to face with -- face to face with deficiencies that our legislators created. i could either be lost in my grief or i could act. i chose to act. one of the most heartrending responses to my tragedy have been the letters and e-mails and facebook messages from people all over the country who have gone through similar tragedies. i remember the state legislature, and my name might not be the easiest name, but i am well known. this could happen to me and my

family, going under significant amount of media attention, the reality is that people die and are hurt frequently in similar circumstances. some of the worst strategies we have seen in this country have been because of people with mental... have not received proper treatment. i survived. i hope the result of my survival is that my son is remembered for his living and not for his dying. that we improve our laws and prevent teacher tragedies and we finally destigmatize mental lists. virginia has the opportunity to lead. we cannot afford to pass up this chance. we have a lot of work and over to the memories of my son and other parents, siblings, and friends to be successful. thank you.

>> thank you, senator. about how this is not something that is a one-time issue that can be solved with one action or one piece of legislation. what can be done to keep mental health issues at the forefront of lawmakers' minds in subsequent years and in the general public? >> as i said, this past session there were some people who did

not think i was going to show up. these guys had supported me all these years, they knew i would show up, but there were people who thought i would show not show up. every day, redp eye, red face, that kept the people in the forefront, but we got the study commissions created, and we have a strong commission that will be for four years and it has bipartisan support. my scars are not going away. i can tell you that as long as i am there -- and there are others that are going to make sure it stays there, at least in virginia -- it is just amazing the number of requests i get to speak all over the place. this is an issue not just in virginia, but all over the country. a lot of people are going to the watching what we do in virginia. when i was trying to get this passed, the problem with

passing study resolutions has been the majority in the house of delegates. i went to the speaker and the chairman of the appropriations committee, both of whom i have known for a long time, and i looked them in the eye, and i was getting nos. we arere behind what doing. they understand we might be doing something very achy in virginia and we might do to spend a lot of money to fix the situation. it takes tell you that determination. we have an opportunity in virgin 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, and believe me, i am not done. knewrms of legislation, i what we had to do was addressed the crisis intervention piece. 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 were not all my ideas. george barker and others were involved in developing those ideas, democrats and republicans. -- i believe there are bigger problems than our system, and our system is not unique. error problems in systems all over the country. that is why i pushed the study resolution. this was an incremental change. we changed an important piece of the mental health care picture in virginia, but the real work lies ahead. we have to reform the system,

and we will be a failure unless review. you have to use this opportunity of the study resolution to spend four years looking very hard, very intensely at the virginia process. yet to see what works and what does not and we have to come back with no changes over the next years. in virginia at least it is incremental, the change we have passed. does it go far enough? i think we changed what we could change this year. politics -- government is a compromise and it is about accomplishment of what you can. it is not about we are going to do more down the road. [applause] >> what about next year? are you planning to wait for the result of the commissions work or do you plan on more legislation on this topic next year? >> the resolution calls for a

report at the end of the two years -- i guess in 2015 and 2017. we will have legislation in 2016 and 2018. if good ideas spring up before then, we will introduce it. remake the system into a system that works for every part of virginia. we might already have it in place. i don't know, but i won't know until we conduct a study. the plan right now calls for legislation in 2016 and 2018. if good ideas come up 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? him the week after i got out of the hospital.

i found him to be compassionate, knowledgeable, and determined to get to the bottom of the situation. also, once i found out about this 2012 report -- i am embarrassed to say i didn't know he made a report in 2012 that would've addressed many of the issues that were exposed in my incident. i have looked at that report. after he resigned in early march or late february. i met with the inspector general and he sure to me that the only differences of opinion about some of the opinions is that he was only changing adjectives. he told me all the recommendations would go forward. the inspector general is a retired fbi guy. i have faith in law-enforcement. i think his comments but an

exclamation mark after the inspector general's report and makes clear we have big problems in our mental health system. i wish we had the results of the inspector general's report prior to the passage of all the legislation because that would've enforced a lot of what we were trying to do and perhaps allow us to go a step or two for further -- two further. resigned intigator protest saying the findings of that report wore censored -- were censored. were you concerned with the contents of that report? >> i am ok with it. there were other investigations as well. the state police conducted a pretty thorough investigation. i think the inspector general's report is consistent with the findings.

i think he probably would've taken it a step further but i am that hisdon't know signings -- i don't know that the inspector general's findings are inconsistent with this the police report. i think it is all out there. i am not that concerned. >> one of the things the report recommends is a decentralizing through virginia department of behavior health into a regional authority. authoritynk that more on mental health treatment in virginia should move away from richmond? >> i am one of those guys that believes the government closest to the people is the best, the most responsive. i think that would be an idea that some would say before the study commission. we have not even started the work of the study commission so it is premature to say that any approach is going to be taken. that you have seen in the

findings in the report, do you blame any individuals or organizations for possible failures or do you think what happened is representative of a larger problem with mental health care in virginia or in the nation? some things i'm just not going to talk about. i think what happened was a system failure. it is both people at fault, organizations that fault, but it is representative but it is representative of what can happen anywhere else. and what does happen in other places. individuals aeave position to do something for their actions. >> what would your opinion of virginia's mental health system prior to your involvement with it with your son was the need to reform clear only once you got a

close up view? or was it something you paid attention to before that? >> that is a great question. my primaryors, connection to the mental health system was folks from the csb who came to me that they needed more money and funding. i visited with the community service board. i have gotten many functions for various areas that are represented. --wasn't something that i was at the top of my agenda. my son, for the last three years of his life, were pretty difficult. i was in constant contact your children are over 18, you can make them go to the doctor. you can't make them take their drugs. you can make the return phone calls or keep appointments. i was in constant contact with with -- ilks or

was in contact with him. that reforml you was on my mind before all of this occurred. the only issue that only came to me was that we need more money from the csb. i want to point out -- i think there are csbs interstate that function very well. the ones a function the best are the ones that get a lot of funding from the local government. we don't do a good job of funding csbs in virginia but that doesn't excuse everything, what happened to my son. [applause] >> a couple of questions on patient privacy and family

access to information that you referred to a couple of times -- what changes would you propose in confidentiality laws regarding mental health professionals communicating with families of the people they are serving? >> it is very difficult for me to talk about that at the state level because we are guided by the federal law. there is very little we can do at the state level to undercut it. if i were the came and changing things on a big scale, i might reform hipa. young people with certain mental betweens have a curve the ages of 18 and 35. perhaps parents need to be more involved in those years. sometimes the only thing you know about it is the bill that be paid.that have to you are welcome to pay the bill but not know what's going on with your kid. your kid might be 25 or 35 years old but they are still your

kid. that is very difficult. i would probably make major changes at the federal level but i am not at the federal level and i have no desire to be. [laughter] >> we have had campaign announcements made at the podium before. on that topic, in addition to hipa, what will be the best thing the federal government would do to improve the nation's mental health system? know that i am prepared to answer a question like that. too not really encouraged much productive work occurs. [laughter] >> you talked about the practice of denying patients who are in need of care and that in care. -- a bed or care.

should there be a zero-tolerance policy for those that may pose a danger to themselves or other? >> this should be -- there should be. that is what we did in virginia this year. the point i was trying to make was that when a crisis occurs with a bank robber or him or her running down the street, you don't stop the guy and say, let me see if i could find a jail cell for you. we put them in jail. this shouldn't be a difference between what you do in a mental health crisis. the comments i made about washington -- i don't want to be derogatory. let me tell you about marianne. and 1965, when congress really did things that mattered, the voting rights act and the silver rights act, there was one congressman in virginia that voted for those. he wasn't from fairfax county or arlington. oun,asn't allowed in -- loud

norfolk, richmond. he was from merriam virginia -- marion, virginia. marion is in another world probably. it is southwest virginia. who was the congressman was the last congressman -- i would suggest that it took heroic votes to make a difference in this country. he paid for it. pat jennings was his name. [applause] >> in addition to the problem of patients being denied care in the first place, what you have to say about hospitals dragging patients with a serious mental illness when they still need care? that -- that is a big issue. my son was hospitalized twice

and both times -- when he was first hospitalized, i visited him and he was under the 48 hour order. he said this is where he needed to be in i realize it now. about six weeks later, we were back in the same situation. he was released within the 48 hours and we had a problem. we took -- by the time we went to the next hospital. he was one of the smartest people i met him he could figure things out. there was no psychiatrist or psychologist he couldn't talk out of or into what other -- whatever he wanted to do. answers to give -- he knew what answers to give. that was one of the reasons we changed 48 hours in virginia, to give people more time. in the long term, i don't know, i think one problem that we have

to address in the study group is while we are focused on crisis intervention, what do we do long-term? how do we provide for people long-term? was -- son, the plan this broke our hearts. i have spent the last three years of my sons life worried that he would end up homeless or in prison. that is not such a bad option now. once he got committed was to end up with a long-term place in a state hospital. that is a tough thing to think about. we are going to be looking at long-term care. we are going to be looking at people are sure that not released until they are ready to be released. i don't know the answers right now. we hear a lot about the need for improved mental health system and improve access to it. what is your message for people within that system?

what can they do as individuals to improve the system in which they work? >> stay focused on the patients. stay focused on -- every situation is a life or death situation. the public system of mental health, every system is life or death. that tooence has been often people are pretty cavalier about the situations they are in. oftentimes, they are not. do your job. i don't have an answer. that is fit for c-span. [laughter] >> given that many advocates want to play down the possibility of violence with people and mental illnesses, what other changes should be

made in educating families about the possibility of violence? >> part of the problem with mental health, as i indicated, for most of us, it is out of sight and out of mind. i think we need to think about mental illness. we need to think about what to look for in our young people. we need to think about how to deal with it. my son had this thing with knives. he made a lot of knives, but there was never any indication that he was going to be violent. i never sent the violence on my son's part. i know that my former wife was concerned about it. felt there was a threat of violence with gus. -- for we can really begin to would dress up the possibility of violence, we

need to be honest about mental illness. we need to understand it is like cancer. it is in every family. it is either within your family or within your circle of friends. somebody know is suffering, whether it is addiction or depression or something more severe. once we start to deal with honestly and openly with mental health issues then we can think about violence. in my circumstance, there was never -- i never felt afraid. i never felt afraid. i don't know how to answer that question properly. the agealked about how of onset is usually on young adults. how do you think access to care could be improved for young people who are new to their mental illness and it will not accept or even recognize that

they are ill? >> that is very difficult. that is the exact circumstance i was in. my son was 20 years old. before the recep are a sign -- before there was ever a sign. the only thing i could do was go to a magistrate and have my son hospitalized. that is one thing we have to look at in our study. the bigger issue is what can we do under federal law? what can you do with someone who was unwilling to be treated? that -- i don't know what the answer to that is either. >> what advice do half her parents who may fear their child is suffering of 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 children, their precious children are sick. --one wants to believe that to think of cancer or physical illness, that is bad but to think of a mental illness that might not be 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 with the best and worst things your colleagues did or said to you and what advice would you give to others and how to approach someone who has been through a tragedy such as years? -- yours? >> everybody is different. everybody approaches these things differently and you never know how to respond. richmond, orle in at least my colleagues were fair and honest.

they know me. they know i am kind of quiet and pretty shy and i like to be left alone. that is under the best of circumstances. this time, i really wanted to be alone. -- the 23rdknow me year i have been in richmond and generally, my doors open and anybody that wants to visit with me have a chance to visit with me. i see constituents or different people all day long all session. this year my door was shut. i didn't visit with people. even good friends would come by and visit with me and say, are you kidding? i would say no. there were some lobbyist that continue to press me and continue to hound me. that bothered me. people didn't -- people that that respect my privacy, that bothered me a lot.

most people did. most people just kind of left me alone because that is where i wanted to be. i told people -- somebody texted without i haven't visited a local group of people that are present -- that i represent. i'm here tod back, do my job, that is all i can do. frankly, what zell miller wrote, he never needed a psychiatrist. after thisshavon happened that i would find somebody to talk to. the work was the best therapy i had. before -- imagine was sweating and scared to death to go back because that would have to be in front of people but now i can do that.

>> you told us about the online, real-time registry and is -- it is in a test phase. tell us about how that works and when does the next step of that registry come to fruition? >> we will see. it has been in the works since about 2009 or 2010. the department of behavioral health says they were cut out from under them. they were able to establish it. i have no doubt that funding has been cut. with everything that is on the internet these days, it seems to me that a kid -- my kids could've set up a real-time registry. what they got now is not real-time. we have looked a different things. it is updated every day or updated every day right now, i think. it just when i -- it is when a line in the first of the month.

it will take a little more time to develop. now, when a-- right worker or evaluator goes in, they have to call through to the hospitals. this registry will not mean that they have to make those calls because they still will to make sure the bed is still available. the real-time might be 35 minutes ago. it will tell them which hospital is not -- which hospital's not the cult because it will tell them what hospitals do not have beds. that will save time. when you are dealing with the emergency custody order. whether it is four hours or eight hours under the new law, it is still a limited amount of time. you got those precious seconds ticking away. this real-time registry, i am convinced will be very helpful. >> you talked a lot about access . what about the treatment itself?

have you talked to pharmaceutical companies about new drugs? is there anything you see that could be done to create incentives at the state level? >> i am all ears. if there are things we can do, but talk about it. my son, i remember he talked about how the drugs heard him, physically hurt him. i heard that from other people , too. i don't know enough about the medications and i don't know enough about the research. if there are things we can do at the state level, i am all ears. i think it is going to take a bigger push. that is probably something that could happen at the federal level. there could be more incentives built in for the development of pharmaceuticals. >> what about the insurance side of things?

the mental health parity act was passed a few years ago and now today is the obamacare sign-up deadline. do you think there is enough access to parity for mental health treatment and -- in earn certain system now -- in our insurance system now? >> i don't think so. one of the afford -- achievement of the affordable care act is there is parity. a form of medicaid expansion in virginia, that would immediately open up about $200 million a year for people that are mentally ill. people that are in that stage of medicaid expansion would have better access to mental health care. we don't have enough equity. the problem with the parity law is that it has not brought about parity. the affordable care act does so that is significant. [applause]

>> we have a couple of questions about veterans. we've had some speakers here at the press club talk about veterans need primitive of care. -- need for mental health care. do you think that is something that should be done in the efforts you're working on in virginia or is there anything specific you are looking at for veterans? >> it is not something specific i am looking at. honestly, when you think about -- people have come home from war for forever. they see unspeakable things. they go through unspeakable events that thankfully most people don't have to endure. it is impossible not to be affected by that. a normal human being, not to be affected by that. we have to focus on mental health care for veterans. that is not something specifically that is part of the study, but that is certainly something we will be looking at

in terms of what we can do at the state level. >> we are almost out of time before i ask you the final question, i have a couple of housekeeping matters to take care of. i would like to remind you about our upcoming speakers on april 2. we have the commissioner of the u.s. internal revenue service. on april 14, lewis black, the comedian, with discussed politics and social issues. welshil 23, general mark will be here. second, i would like to present senator deeds with a traditional coffee mug. [applause] and for the final question, you told us a lot about gus. can you tell us one more untold story that you would like people to know about your son? kidy son was as an ordinary

except he had extraordinary ability in many respects. when he was a little boy, this 1995 --bly about well, he was six years old and he would travel with me. his sisters and his mother would call it that he would take one for the team. he would travel with me on my journeys and i shared this thing called the blue ridge economic development commission. he sat for three hours one afternoon in a corner at the squire center at virginia tech while we conducted our meeting. i was chair and he sat there playing with trucks and a little mini garage. a couple years before that, the whole family was at a ballgame in norfolk. the ballpark had just been built and we were out in left field

and gus was about -- that was 93 so he was about four. he was sitting across the picnic table with me -- from me and he looked at these two little kids rolling around fighting. he said, dad, those boys are doing what i would like to do -- they are fighting. i said, yes, gus. i took another bite of my hamburger and he was gone. [laughter] he was ordinary in every sense until he was about 20 years old. we finished our google tutorial -- gubernatorial campaign and he had some time on his hands and decided to be mentally ill. that was a joke. he didn't decide. he had this unbelievably sweet nature that was apparent and evident up until the end.

he was a great kid. [applause] >> thank you, senator deeds. thank you to her audience for coming today. also like to thank our national press club staff including our journalism into two for helping organize today's event. here is a reminder. you can find more information on our website. if you would like a copy of today's program, you can find it there as well at www. press.org.

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