that risk and vulnerability, i agree we've got some progress to make there in terms of agreement on measurements and metrics to show that progress and show it in a way -- when the chairman comes back, his question was about how can the congress help. and here i think i might ask of the chairman and you, senator, is that we have a continued dialogue about the types of data that would enable you to have more confidence and the american people have more confidence that we are making that progress and that we are being effective stew ards of the taxpayer dollars. i agree we have made progress and have good examples but we would like to continue to work with you to get at the data and

mesherment that shows that in a more compelling way. >> each has a security plan, right? >> yes. >> has homeland security done an analysis of what the total cost would be to bring it up -- how much total for all of the tier one ports would we need to spend to bring them where they need to be. do we have that? do we know that? >> i'm not aware of that analysis. >> that's an important question because if you don't know what they need, i know you know where the weaknesses are. if the total bill for bringing our tier one ports is $2.5 billion, we're 12.5 years from

bringing that. by that time you'll have replacement needs so the question is don't we think it's important to know and here's the total cost to get us where we want you. which one of those top eight ports, which one has the greatest vulnerability and should we not be spending maybe $70 million at one port and $30 million at the other eight on the basis what the total need to to get them to the level where we feel confident. >> we'll take a close look at that. we have moved the entire suite of grant programs toward performance measurement against the core capabilities in the national preparedness goal, following up the directive aid on national preparedness. we find the performance measures for those. through the threat hazard identification and risk assessment process, we are

asking grantees to do a lot of what you're talking about in terms of identifying capabilities and using the investments to close the capability gaps so we are moving in that direction. but i'm not aware of a single analysis where we put a price tag on by port what it would take to close the gap in every port in one level. we'll look at that. >> i think that would be really important to know because you're going to have limited funds from here on out. it's not going to change. sending the dollars -- this is all risk bagsed, right? >> yes. >> acceptsending the dollars whe greatest risk is should be the priority. i don't know if the gao has any comments on that. >> if i might, we'll take a close look at that. i think the threat hazard identification risk assessment

process and the maritime security working groups at the local -- at the port level are getting at a lot of that. but i agree we can make even more progress. >> if i can just on two of your points, first had to do with, how do you account for risk bought down with previous grant money in determining the risk ranking for next -- we actually do that as part of the coast guard's maritime model that gao mentioned. if we've invested in a system that reduces the vulnerability or mitigates the consequences of an attack on a facility, it gets reflected in our model. that data is part of the risk formula dhs uses to determine the tiers for next year. so it is in there. the other piece that you ask about, have we defined what a secure port is? when will we know when we get there? that's an interesting question. what i can tell you, i've watched the initial focus be on

securing individual facilities, let's make sure we have fences and cameras and guards and rpms and facilities and then let us evolve to -- we need to really secure this port as a system as well. how do we link these fences together? we invested in things like communications systems that allow -- and surveillance systems focused on the common infrastructure not on the private. that's good but have we been able to address what we're going to do if we get attacked and need to recover? we've invested in trade resumption plan. i believe we're still in the evolution because we have emerging threats such as cyber. i think the next round of grants is putting money towards cyber vulnerability assessments so we can understand what it takes to secure the cyber infrastructure. i do see a very logical progression on how we focused our planning and our investment.

>> we have a diagnostic system for cyber within homeland security. is the system applicable to that system? >> let me take that one, sir. right now the way the system works, the contractor provides the enrollment equipment. then they connect to a system that eventually gets back to tsa. that system whether it's on the enrollment side up to the -- thech to go through certification and acreditation and go through auditing and testing. it's not monitored within the dhs system. it's monitored through the tsa operation center. so everything from the contractor's data center back -- >> you've answered my question. got it.

thank you. >> i'd like to go back. next question i'll ask all of you, what do we need to do? what is our to do list on this committee and this congress to make sure we're continuing to make progress? >> absolutely. i might ask of you and the committee is for a continued dialogue and i share this with ranking member coburn before he stepped out. a continued dialogue about the types of data and types of measures that would give you the competence and american people the competence that we are investing the grant dollars in a way that is most efficient and most effective and that we're all good stewards of these resources. i agree with admiral thomas. this is -- the threat is evolving so too have our

measurement of where we're headed next. i would appreciate a continued dialogue with you about how we define the measures of success that will give you the confidence that we're looking for. >> okay, thanks. >> mr. sadler, something for our to do list to help you to make progress sfl. >> i think it's continued support and helping us get from tsa point of view the readers out in the coast guard point of view, understanding that the coast guard is promulgating the rule but there was a lot of things that have to happen before they get to the point they can do that. when i say we need readers, we need readers. that's not insinuating there's a delay on the rule side. there's a lot of work that went into getting to this point. we would ask for continued support so we could put readers in place and buy down risk and capabilities of the card. i think to the admiral's point

before, it's critical we maintain mission focus. it's also critical we make risk based decisions to protect the right areas. then for our look at it it's data quality, identity verifications and reduction in fraud and ensuring that the right people get the card and the right people keep the card after it's first been issued. >> all right, thank you. >>. >> i'm going to do a combo answer, i'm still busy trying to answer the question i asked before and the last one. two for the agencies to do and one for the committee to do. and first off, is just kind of keeping the programs flexible, whether this coast guard is trying to make their infrastructure patrols and things like that not predictable. keep a little bit of deterrence out there. i like what i see at cbp when

they are doing their key side or dock side standing and ship comes in and they target a ship and won't be based on whether the containers are high risk or not. they'll be scanning every seventh one or tenth one or maybe they could be flexible is csi and footprint and whether they need to shift it to different countries if possible. i think cyber is the growing area that's an area where dhs and coastguard have been monitoring the situation we'll have a lot more details. something for this committee and starting too show up on the radar for agencies as well, for what we have, we do have to sustain it and you have investigation els and scanners and aircraft that have -- pretty important in this regime, in terms of the deterrence and just

the daily things like scanning containers. some of these are reaching the end of their life. i knew cbp is trying to extend the range of their scanners from ten years to 13 years. but at some point you'll have a lot of -- after you've filled the regime and things that go with it, it takes sustainability and translate into resources. >> the last three witnesses pretty much got into our last question, which was what is our to do list. i don't know mrs. mclean you and admiral thomas had a chance to do that. our to do list. >> i think i echo the points made earlier in moving forward, anything we do needs to take into consideration that dhs faces a multitude of threats.

to be cost effective and efficient, we need to always bear that in mind. i think the second point we made earlier big picture, security across all pathways to buy down risk, don't want to encourage a balloon effect where we put all of our security assets over here and adds verse sarry circumvents that. and then echoing mr. caldwell's point about the aging infrastructure and funding dhs in accordance with the president's budget. >> okay, thanks. >> admiral thomas, anything you have that we should be doing in the legislative side? >> thank you, chairman. i don't have much to add to what's been said. there may be very specific authorities and capabilities we identify as we continue to analyze the threat in the ports but i think we have the right access through the staff to get that information to you. i would say this type of

oversight and continued focus by this committee on this issue is really important to stave off the complacently i'm concerned about. >> thank you. >> four quick things echoing several things mr. caldwell mentioned, continued support for the program as we discussed today and csi interactively working on the recommendations that mr. caldwell mentioned and recap talization and sustainment of our critical technology and radiation detention and domestic nuclear detection office. we'll work with your team on those plans. three, what you articulated at the beginning, understanding the critical economic expeditious and facilitated movement of cargo aspect of our mission, that continues to be critical and needs to be understood. four, working with the secretary in the department on agreed path forward on scanning, keeping us honest on a good faith effort you identified and we discussed today and working together on the best framework for the

future. >> thanks. >> i question was asked and i he asked part of my question and i want to come back and say the second half of the question, i need to be someplace else, literally at this in eight minutes, so whoever -- i'm going to ask you to take a shot. >> absolutely. why not let ports decide for themself fz they would like to use one? >> we've considered that proposal and don't think it is in the best interest of the program. if the benefit we have derived by moving away from the

fiduciary and capabilities have grown in terms of oversight and management and monitoring. we've gotten a pretty good window into the project level data and the approach grantees are taking. we've lost that visibility as you might expect. there was a variety of performance across the fiduciary model. and the other thing with the management and administration fee that fiduciary agencies had access to, i know there's a range of opinions in the port community about the fiduciary agency model but we decided the best thing for the most efficient management of the system is to bring it in house

and not use fiduciary agent model. >> the last will be for ms. mclean and really short answers if you would. here's -- what effect has increased security along our land boshders had on maritime border security? what effect has increased security long along our land borders had on maritime? take 30 seconds. >> two quick points. i think the trusted program along the context how we deal with those in the maritime context and i go back to south florida in the '80s, how you need a risk based approach across all pathways to secure any single pathway. thank you. >> thank you. admiral? >> somewhat outside the realm of

port security, we have seen the balloon effect on particularly the southern part of the west coast and also in the caribbean as we secure or land borders for illegal drugs and contraband and other illegal activities that's have taken to the water. that's really the impact we've seen there. >> thank you. >> i agree with the admiral, we have not seen a significant impact in terms of changes of the threat among commercial flows, between ports of entry port out on the west coast as well as up through puerto rico. >> okay. the second half of the question, i don't have time to ask -- you may not have time to answer it. i'm going to wrap it up here. i'm glad that dr. coburn encouraged us to have the hearing. it is timely and fair amount of progress to be reported on and there's still plenty of work to do. i'm encouraged that the sense of

team is at play and that certainly helps. we're part of that team but thank you all for your preparation for coming and helping to make this a very good hearing. it's clear that one of the most important takea ways from today's hearing, it's critically important we strike the right balance. it is easy to say but hard to do, strike the right balance between security and make sure we do not unduly impede the flow of transportation and trade. as well all know, 95% of the trade moves on the water. but the port surge is vital to our nation's well being and conduit for a lot. and with that i'm going to call a halt to this. we will have -- my colleagues will have let's see here some questions to ask and we may have

some ourselves. may the 19th, it says until may 19th. probably should say june the 19th at 5:00 p.m. for the submission of statements and questions for the record and with that i say to the staff, thank you very much for your help of this and each of you for joining us today. i think one of your members, maybe you admiral, oversight is a good thing and we hear that a a lot. we won't disappoint. we're adjourned. thank you. thank you.

tonight at 8:00 on c-span, we'll have president obama's speech at omaha beach. and after that an international ceremony marking d-day with remarks from french president francois hollande and visit the world warl war ii memorial at the national mall. buck mckeeon issued a statement that says in part, standing on this shore with the men who risked their lives to take this ground, among the graves of those who have made the ultimate sacrifice, words fail me. and from house minority leader nancy pelosi part of congressional d-day delegation, her quote, neither our nation nor any nation that cherishes the blessings of lib erlt fought for and bled for and died for on d-day can ever forget its

memory. >> joseph smith was the founding prophet of jesus christ of latter day saints. >> the first occurs in a book he began writing in in 1832 and wrote a personal history about his life to this point. in this history he describes this vision he had 12 years earlier. joseph smith himself did not write a lot of things personally but had clerks writing for him, all together in printed form when we finished with our papers project, we'll have about two dozen printed volumes of about 500 pages a piece. >> this weekend learn about the rich history and literary life of salt lake city, utah on booktv and c-span3's american history tv. >> john podesta spoke at the

hearing hosted by the christian science monitor and one of the questions was the decision to trade five detainees for sergeant bowe bergdahl. >> the secretary of defense made the determination that the transfer was in the national security interest of the united states and that the threat posed by the detainees to the united states or u.s. persons would be substantially mitigated. and there were assurances given by the qataris. i can't get into that and there are also ways we have to monitor them beyond what qatar is doing. but i think that first and foremost, the president thought that we had a commitment and duty to leave no manor woman in uniform behind on the battlefield and he exercised that and spoke about it several

times this week. he thought it was the right thing to do and the secretary of defense who had to make those findings felt like first it was in the national security interest to move forward with this and second that the threat posed by the detainees, now the transf transferees could be substantially mitigated. and that's what the discussions in dialogue with the qataris was all about. >> as you probably know, we have a lot of ways of knowing what people are doing around the country and around the world. >> with live coverage of the u.s. house on c-span and the senate on c-span2. on c-span3 we show you the most relevant hearings and public affairs events and on weekends c-span3 is the home to american history tv that with programs that tell our nation's story,

the civil war's 150th anniversary visiting battle fields and key events and american artifacts and touring museums to discover what artifacts reveal about america's past. history book shelf with the best known american history writers and presidency looking at the nation's commanders in chief and lectures in history with top professors delving into america's past and real america, featuring archival government and educational films from the 1930s through the '70s. created by the cable industry and funded by your local cable or satellite provider. >> senator sherrod brown of ohio introduced legislation to allow borrowers to refinance student loans at lower interest rates and chaired aid senate banking subcommittee hearing on student debt. this is an hour and a half.

>> thank you all for joining us, thank you for coming become and being of assistance to us in a number of ways. about a decade ago we began to see the warning signs of problems in the housing market. a few years later we watched a combination of wall street greed and inattentive regulators helping to destroy our economy. this crisis, the topic of today's hearing, student loan service s are very much interconnected. we've seen far too many homeowners become victims of improper foreclosures when they're mortgage servicer could have assisted them to enroll in a loan modification program but chos not to. here we are again. outstanding student debt is $1.2 trillion more than credit card debt and auto loans and student debt second only to mortgage

debt as we all so painfully have heard. roughly 7 million borrowers are in default. when they lose, our economy loses. in may 2013, the consumer financial protection bureau released a report of heavy student loan burdens and growing group of regulators have described how student loans can interrupt the recovery and student debt can defehr or destroy the dreams of first time home buyers and entrepreneurship and limit the options of young graduates who might work as teachers or doctors in underserved areas. defaults will have long-term impacts on recovery. it's critical we ensure student loan servicers do their jobs properly to protect individual borrowers and economies as a whole. student loan companies asking about their efforts to modify loans for borrowers in trouble measuring success and enrolling

borrowers in affordable income based plan. no bank is enrolled more than 5% of borrowers in trouble. i'm concerned they care more about maximizing profits than giving proper customer service. among questions to consider is the complex and opaque repayment system set up to make borrowers fail and ensuring they fully understand the full range of repayment options including those most advantageous to borrowers experiencing hardship and better suited for contract lawyers than recent graduates. if we don't get graduates the tools to succeed we can't expect them to have a full shot at liveliho livelihood. best suited to their specific needs when written in legalese that only lawyers are made to understand. that's unrealistic at best. in the dodd frank act i proposed

a student loan ombudsman and shaut shout out for the terrific work. troubling practices and servicers allocating payments in order to maximize late fees and activating military benefits on student loans and facing obstacles enrolling in loan modification programs. based on deferrals, at the found the largest servicers broke a series of laws. it's been ordered to pay fines and compensation more than $90 million. in february another major player in the private student loan market revealed it too was under investigation by cfpb for student loan practices. the reports have recommended that congress amend the reform to the credit card and mortgage servicing markets ones related

to payment processing and transfers in order to improve the student loan servicing market. i've sponsored a number of reforms such as the student loan borrower bill of rights which provides protections and provides workable repayment options for those at risk of default. require lenders to notify bor w borrowers about income based repayment plans for federal loans and protect borrowers from penalties due to errors in the part of the servicer. we know private student loans generally have significantly higher rates and offer limited payment options and no relief for the many graduates who don't make the amount of money they expect or have been laid off or even unable to find work. my refinance education funding to invest for future act adris this problem by authorizing treasury to make student loan market for efficient and allow

borrowers to refinance at no cost to taxpayers. i look forward to witness views on student loan servicing practices and the opportunities to ensure best quality customer service. senator warren? okay, thank you. let me introduce the four witnesses, we have votes at 11:00. we'll go as much past 11:00 as we can but we will obviously will -- i ask people to stay within their time limits if they can. nancy hoover, director of financial aid and nancy hoover is director of the program in grantville, ohio and past chair of the national direct student loan coalition that work to improve the federal direct loan program, 30 years working in financial offices, helping students afford secondary education. william hubbard, serves as vice president external affairs and considerable experience advocating on behalf of veterans and joined the marine corps at

17 currently adrilling reservist out of joint base anacostia. an educator in woodrow wilson senior high school. he has students with him here today. thank you for that. he serve pd as a student or grade level leader co-representative and co-faculty adviser for the gay straight alliance and washington teachers union. education policy at the heritage foundation, done extensive research around the federal government's role in education. welcome, ms. burke. ms. hoover, if you begin. >> chairman brown and members of the subcommittee, thank you for inviting me to testify at the hearing regarding the borrowers experience with student loans. my name is nancy hoover. i'm the director of financial aid at dennyson university.

a selective independent undergraduate liberal arts college with enrollment of approximately 2200 students. i have been the director of financial aid there since 1994 and administer the implement of the direct loan program in year two. the endo youment allows us to award annually financial aid to 97% of our student body. an average of 47% of our graduates borrow federal loans and 4% borrow private loans. the cumulative federal indebtedness for the class of 2014 was a little over $21,000. the william d ford federal direct loan program turns 20 years old this year. the direct loan delivery process for loan funds to students has continued to be efficient, reliable and easy for schools to administer, even after the 100% transition of all schools to the deal program. when the direct loan program was first implemented, all services

by a single contractor. all correspondence to borrowers was identified as the william d. federal direct program and made the servicing contractor for these loans invisible to the students. the department had to expand the number of services to accommodate the increased volume of loan sfgsing required for the purchase of federally backed loans in 2008 and the transition of all schools to the federal direct lending program. the department issued new dl servicing contracts to agents who had experienced servicing student loans in the ffel program and allowed but did not require the new servicers to co-brand all of the correspondence with the department's logo. since the servicers' logo appears larger than the department logo, borrowers are confused as to why they are receiving written or electronic correspondence from an unknown agency. servicers report a large

percentage of unopened e-mails from the borrowers because they believe it is junk mail or spam. the inherent flaw is that borrowers do not understand who is servicing their loans and at the greater risk of defaulting. currently there are 15 contractors servicing federally held loans. the current federal loan servicing environment needs to be simplified by a mandate that contractors be invisible agents of the federal government with identical processes and policies and the number of contractors be limited. congress made progress in this area with a bipartisan budget act of 2013 which eliminates the special treatment for non-profit student loan servicers. when the department of education has the opportunity to renew the servicer contracts, it should consult with all stake holders in student loan servicing and open the contract bidding process to other entities in financial sectors outside the previous ffel environment.

borrowers need their point of contact for all repayment activities to be a single web portal and one phone number for account access. the department of education has made significant process toward creating a single portal for students who borrow federal loans with the creation of student loans.gov. students with execute every required process for their federal loans september to initiate the repayment process. student loans.gov can be expanded so students can rebegin the payment process of federal loans at this site instead of going to a specific service or website. senator brown i'd like to thank you and other members of the committee for your support on student's emergency loan refinancing act and student loan borrower bill of rights. they assist with loans to refinance all of their loans to have a single servicer. and it also required servicers to notify delinquent borrowers

about income based options. however, with all of the good options of repayment from which the borrower can choose, it is extremely confusing for students to understand the intrick catcies of all of the repayment options. i encourage congress to reduce the current number of loan repayment plans to two. standard and income based from which students can choose. repaymentses should be collected through the payroll withholding. many borrowers are unaware the servicer has changed until they encounter a problem. many borrowers have filed complaints to correct errors related to the servicing contracts. student loan servicers need to provide notice to borrowers about a change in service like the mortgage servicers are required to do. thank you again, chairman brown for the opportunity to provide a financial aid administrator's perspective on student loan servicing and i'm happy to respond to any questions you or other members of the

subcommittee might have. >> thank you. mr. hubbard? >> chairman brown, ranking member toomey, thank you for inviting for us to lou us to testify. it is our privilege to share this on the ground perspective with you today. as veterans graduate across the country, we believe that the student debt burden will ultimately be one of the largest inhibiting factors to their long-term success. this in part stems from the lack of access to information at individual and institutional level. veterans consistently cite the following challenges, difficulty in obtaining accurate information on loans and convoluted pathways and unnecessary roadblocks put in place by servicers. despite avid efforts to increase protections against abusive practices, getting service members and veterans the right information about the

protections at the right time remains a challenge. service members and veterans have access to protections under the service member civil relief act. and access to many different repayment options. unfortunately this web of support does not function cohesively and programs often function independent of each other. we have seen that many service members enter the military with preservice student loan debt. this existing debt is also a major source of the overall debt owned by service members and veterans. existing debt is particularly harmful to a service member or veteran when servicers do not comply with protections afforded by sacra. there is a common misconception that they have a free ticket but we know this is simply not true. as an earn eed benefit, it may t cover the cost of a full education. this is especially true for

those attending private institutions or considered out of state residents. to prevent situations, we believe that institutions need to have access to a full range of financial data. this data is necessary for institutions to be able to effectively counsel their students about their financial futures. individuals should also have access to this data to achieve the highest level of consumer awareness. currently, there is no widely used system that would allow any individual with education debt to see all of their loans in a centralized place. meteor could be such a tool. the meteor program has the unique function of providing all private lender data and simply require the approval from the department of education to access direct loan data. to date, this is yet to happen. while we might not know the full effect of student debt for this generation of veterans, we are

beginning to see the first and second order effects today. service members and veterans with student debt are significantly less likely to build their own business and save for a home or save for their retirement. the effect of these issues will impact the economy for years to come and continue to distort economic behavior if not taken seriously. in light of issues we've identified, they have recommended various solutions. of the solutions we submitted to the record, we want to high lit one in particular. program coordination. many programs exist to support the repayment of student loans. though very few of the programs have coordinated inner program relationships. a major opportunity exists if current programs are coordinated and streamlined to function seemlessly. putting the pieces of puzzle together would be an important step forward. the investment that america has made in the gi bill and veterans

becomes an even clearer asset when those veterans are empowered with the right tools. by reducing the debt burden on service members and veterans, we can set them up for long-term success. we thank the chairman and ranking member and the subcommittee members for your time, attention and devotion to the cause of veterans in higher education. as always, we welcome your feedback and questions and look forward to continue our work with this subcommittee and senate committee on banking and housing and urban affairs and the congress. to ensure the success of all generations of veterans through higher education. thank you. >> thank you, mr. hubbard. >> mr. chairman, and the distinguished members of this committee, my name is robert engineer mee ya and i'm a social studies teacher at woodrow wilson high school in washington, d.c. i come as a member of the american federation of teachers and want to thank chairman brown for the opportunity to testify on my experiences with student

debt and loan repayment. i hope that sharing my experiences in the financial aid process makes it easier for students and their families to pay for higher education. growing up in rhode island in a family of teachers i always felt i could make a world a better place by helping kids. i graduated from rhode island college with a bachelor's degree having double majored in secondary education and history. my parents were able to cover my college tuition, i still had to pay for books and other expenses during night undergraduate years and started my teaching career with some credit card debt. at the urging of professors i sought to teach in an urban area. i was not fully prepared for the high cost of living in washington, d.c. on a starting teacher's salary. after several years of teaching, i knew i needed to further

develop my skills but didn't want to take time off and going to school for my master's degree at night would take energy from my students and their work. i was accepted into one of the most respected teaching programs in the nation and able to earn a masters degree in social studies education over three consecutive smer summers and the program was the right professional choice. in order to attend this highly regarded program i had to take over out several loans despite my full-time salary. i had to account for two apartments as i could not contractually sublet my apartment in d.c. in addition i had to pay for travel to new york and books and other typical living expenses. i would like to point out while the focus of college affordable is often on tuition, it was really those other expenses that drove up my borrowing. after three summers, i graduated with my masters degree and

approximately $37,000 of debt. while i received some grant money during my program and subsidized loans of over $25,000 for three years, i had to take an additional $11,000 in unsubsidized loans. i've been puzzled by several issues. first my loans switched providers twice and it's never been quite clear why the transfers were made. as a matter of fact, an additional amount has been debited from my checking amount for my monthly payment when the loans were transferred the last time. second, when i recently set up an online account for my loans. i found the information about my loan including payoff options and pay offdates was available. that information was never provided to me on my paper statements. i'm proud of my 12-year career here in the district of columbia as a highly effective teacher, earned that rating last year, yet my financial life has been put on hold because of the loans

i have taken to stay in the classroom. my loans have a current interest rate of over 6% and i will pay over $10,000 in interest on top of the principle. it is hard to see how i can save to buy a home with this debt burden, though i definitely could secure a mortgage at the interest rate of about 4% and have a car loan currently at 1.9% interest rate. there's nothing i can do to lower my student loan interest rate. with more and more students being forced to take on debt, i believe we must make it easier for them by having access to grants and lower interest rate loans. i made a decision to get an advanced degree to be able to further my career and benefit the students i am committed to serving. after about two years of payment, i learned i'm likely eligible for two programs that could lower my monthly payments and shorten the life of my loan. i believe many college students wosh more likely to pursue teaching and many of my colleagues more likely to pursue

advanced degrees if they were streamlined and better understood. i suggest congress find a way to preach out pro actively to teachers about these options. because the process was so convoluted for me, i worry about what will happen to my stuntsz, many of whom are graduating, as i testified to today and begin this whole process. many will be the first generation in their families to attend college and others worked hard and been admitted to top colleges and universities but unable to attend because of costs. i'm afraid they don't understand the ways high interest rates and basic living expenses will multiply their debt. when they graduate, i don't want them to be faced with the same lack of transparency and confusion. i hope congress can finds a way to ease the burden on students and families and make attending college and continuing education more affordable. i fear if we do not a generation like myself and my peers will be too saddled with debt to invest in housing and businesses or

make career choices based on anything other than earning potential. thank you, mr. chairman, distinguished member, i look forward to responding to questions. >> thank you. ms. burke. >> thank you, mr. chairman, distinguished members of the committee. my name is lindsay burke, education policy at the heritage foundation. the views i express in this testimony are my own and should not be con trued at representing any official position of the heritage foundation. for many earning a college degree is the way to climb the ladder of economic mobility. higher educational attain. is associated with greater earnings. median earnings for the highest degree was a high school diploma, totalled $30,000 compared to $45,000 for those earning a bachelor's degree. while a college degree isn't the only route to upward mobility,

for many it represents the most promising path for achieving their full earnings potential. value of earning a college degree is common strabl. the cost of earning that degree has been prohibitively expensive as college costs have risen. average institution for out of state student reached $22,500 and private universities over $30,000 annually. many students leave with a bachelor's degree in hand but burdened with ten and thousands of dollars in student loan debt. many students leave without graduating, burdened with debt and lacking the paper credential they hoped would put them on the path to middle class stability or better. well intentioned federal policies have failed to drive down college costs and easy flow of federal student aid has enabled students to take out sizable student loans with little if any credit check or consideration for their future

earnings potential. some have argued such policies enabled universities to raise tuition, creating a vicious cycle. federal higher education subsidies increased substantially over the past decade and now represent 71% of all student aid. according to the college board, during the 2012, year, 43% of student aid was in the form of federal student loans. over the past ten years the number of students borrowing through federal loans, increased from 5.9 students during 2002 to over 10 million today. approximately 60% of students who earned a bachelor's degree during the 2011-2012 academic year left $26,000 in debt. as the chairman mentioned total student loan debt exceeds $1 trillion which is more than credit card debt. increases in debt have been driven by increases in college

costs. in the last 30 years, inflation adjusted tuition and fees at private colleges increased by 153%, tuition and fees at public universities increased in real terms by 23 1%. that's and crease greater than increases in the cost of health care. increases in tuition and fees over the past 30 years suggest that growth in federal subsidies, such as loans and grants, have done little to mitigate the college cost problem. in order to make college more affordable, federal policy should do three things. stop the higher education spending spree, employ fair value accounting to understand true cost of federal student loans, and decouple federal finance from accreditation. if history is any guide, continuing to increase federal subsidies will fail to drive down college costs. in 2014, the $43 billion pell grant program provided grants to 9 million college students making it the largest share. congress grew the pell grant program in 2007 by expanding

eligibility in funding, resulting in a doubling of the number of pell recipients since 2008. in order to control higher education spending, pell grant funding should be targeted to the low-income students the grants were originally intended to help. in addition, as long as the federal government finances federal student loans, it should use fair value accounting practices to get an accurate measure of what those programs are costing taxpayers to ensure the loans use a nonsubsidizing interest rate. in a report released last month, cbo calculated the four largest student loan programs, subsidized stafford loans, unsubsidized stafford loans, plus loans and parent plus loans will cost taxpayers money. not result in a net gain and negative subsidy for the federal government as is often claimed. while the report states the four loan programs will yield a savings of about $135 billion from 2015 to 2024, cbo calculates in the same report that using fair value accounts measures the four loans would have a net cost of $88 billion over the next ten years.

not including administrative costs. in other words, the four largest student loan programs represent an $88 billion taxpayer finance subsidy. cbo explains the utility of using fair value accounting to fully understand the cost of federal lending stating that the government is exposed to market risk when the economy is weak because borrowers default on their debt obligations more frequently and recoveries from borrowers are lower. fair value estimates take this market risk into account and as a result are more accurate reflection of the costs of federal student loans. congress should not expand the federal student loan program without requiring that fair value accounting be used to calculate the cost of these loans. any loan program should use a nonsubsidizing interest rate, e.g. the rate at which the program breaks even. absent fair value accounting it's impossible to tell the extent to which the student loan program is providing a subsidy to borrowers. specifically the department of education should be required to use fair value accounting estimates calculated by cbo and

adjust loan rates accordingly going forward. on an annual abyss sp. this would determine whether the programs are costing money for taxpayers and where to set interest rates. finally if federal policymakers want to drive down college costs and increase access to higher education for those historically underserved by the traditional four-year system, the single most important reform that can be made is to decouple federal financing from accreditation. continuing to simply increase federal subsidies for higher education will fail to solve the college cost problem. moreover, such subsidies shift responsibility of paying for college from the student who directly benefits from attending college to the taxpayer. transferring the burden of student loan financing from university graduates who will earn significantly more over the course of a lifetime than someone with a high school diploma, to the three-quarters of taxpayers who do not hold bachelor's degrees is

inequitab inequitable. in order to drive down college costs and increase accession to higher education policies, policymakers should stop the federal spending spree, employ fair value accounting practices and ultimately work to decouple federal financing from accreditation. thank you. >> thank you, miss burke. my apologies to mr. jeremy and miss burke. i've never left a committee i chaired. it's a call i had to take. i appreciate that. miss burke, sorry to you, too, at the beginning of your remarks. i'll start you. i appreciate your comments. your testimony and others on the panel point out obviously that financial futures of students depend on fair, responsible servicing practices but students aren't able to choose who will service their student loan. they're selected by lenders often paid by the number of loans they service rather than the quality of that servicing. talk about that structure. i know from your testimony you

don't consider that the right structure. explore with us the better way to do this, sort of an analysis of that structure the way it is now and the better way to do that. if you would explain your thoughts that way. >> thank you, senator brown. currently, the servicers contractors, the volume of loans assigned to the servicers based on metrics. there are three metrics that are based on satisfaction. school satisfaction, customer satisfaction -- borrower satisfaction, and satisfaction from fsa and some other federal agencies. the other two are the percentage of loan defaults and per sen tajs taj of dollars and defaults. each measured for their volume of loans. the loans are assigned to these servicers, the student does not know to whom the servicer, their loan has been serviced. the federal -- the department of education has done a good job of

trying not to have mixed borrowers. they're trying to have all the loans for a student with one servicer. however, there are some students who have loans that are still ffel loans that were not sold to the department, so there still are cases where students have more than one servicer. what i'm suggesting is that the servicers are contractors. they can still service the federal loans, but they need to be invisible to the students because when a student calls -- a student these to understand it's a federal loan they're repaying. they two go to studentloans.gov do everything. they do their counseling. they know everything about their loans there. they should just continue the trajectory of being able to start the repayment of their federal loan and when they go there, if they have an inquiry, there is technology today that would transfer that call to the contractors. the contractors can still be the servicers. just needs to be invisible to

the students because students are getting e-mails from the various servicers and they do that understand who these agencies are. they think it's spam mail or junk and they're ignoring it. that's my suggestion. >> mr. geremia, how is your experience, how could yours have been better and different? based on that structure in the way that you were treated and your interaction with the servicer? >> i think, i believe the best way would be a little bit more information about how much interest i would pay over time. i wasn't quite sure about the process even though i went through interviews, exit interviews. i wasn't sure of what the total debt would look like at the time i -- and so i wish i actually had a conversation with someone. of my servicers.

i think yesterday might have been the first time that i actually might have had a telephone call, a conversation. so definitely more in person conversations or phone interviews. >> mr. hubbard, you represent a group of people that have had some significant legal issues, if you will. if a servicer is found to repeatedly violate their federal contracts or federal laws, should there be consequences and what should they be for the servicer? >> thank you for the question, chairman. this is a critical question. right now, there are many bad actors out there. some of which are very obvious. others are more under the table. the recent sallie mae case. these issues will not be tolerated. $6 million paid out is a sign if you're going tyke advantage of

the system, abuse service members and their loans, it will not be tolerated. i think absolutely compliance is a critical step in that process. and ensuring service members are treated with the protections they're afforded. >> okay. miss hoover, the student loan ombudsman report said student loan services might consider providing notices prior to and following a change in servicer so the consumer can monitor the transition to ensure there are no servicing interruptions. many consumers were unaware of the servicing change until problems arose, unquote. talk about your views on borrowers' experiences with servers prior to and following transfer and the cost to borrowers from servicers' lack of or poor communications? >> i will have to say that the experiences that i've had with my students have been limited in

this respect because for the number of years, my students have been in the direct loan program and already had one contractor. i have not had students telling me of significant issues with their servicing of their loans and that's, again, because of my student body, but i do believe that the complaints have been registered with the consumer bureau are true and as we monitor, as our students begin to be more into this multiple servicer environment, i shall certainly be listening to it very carefully. but so far i have not heard that from my actual students as fw j graduates. >> anybody else want to comment on that? yeah, mr. hubbard? >> i think this brings up a very important point and that's just a level of opaqueness in the system. when you're a student and you have digit loans, you might not even know where those loans are. you don't even see them. if you go to log on to some dashboard to figure out what those loans are, how much you even owe, that can be a

challenge to fig wrure out sometimes. having an aggregated view of the loan data would be absolutely important. >> senator warren? >> thank you, mr. chairman. thank you for holding this hearing. we should be doing everything we can to help student loan borrowers repay their loans and part of that is improving loan servicing. but if we want to make sure people can repay their student loan debts, shouldn't we start by doing what we can to reduce the size of their debt loads? right now the federal government is collecting loans at 6%, at 8%, at 9%, at 10% and even higher. so what i'd like to do, i'd like to just ask a question about whether or not you could talk about the impact on people if we refinanced their student loans down to lower rates. and i think mr. geremia, you might start that. >> thank you, senator, thank you, mr. chairman.

it would be a wonderful opportunity for having the ability, opportunity to refinance my student loan. as i move into my 30s, i would like to begin a family and buy a home. i would like to be able to have that opportunity. >> yeah. and you talked about, mr. geremia, you said you have a home mortgage, did you say, at what interest rate? >> i do not have a home mortgage. >> i'm sorry. i thought you said -- you have a car loan? >> a car loan at 1.9%. many car loans are offered at 0%. >> yeah, you want to be careful about those. >> yeah. >> read closely. uh-huh. >> yeah. so it would make sense to me that maybe there are more options available to refinance at, perhaps, a lower rate. >> thank you. mr. hubbard, can you speak a

little bit about what the impact would be on people's lives if we brought down the interest rates on student loans? >> thank you for the question, senat senator. this is a huge problem right now. if you look at individuals who go into the service with existing debt to begin with and then they're in the service, they have deployments, they have loss of protections. they're taken advantage of and can't even do anything about it. when you're in a combat zone, are you really thinking about your student loans? probably not. that's a problem. on the back end, as you are potentially going for your education, you're say, a reservist, you night not have the g.i. bill so you're taking out large loans. you're taking out those loans with very little information at your disposal and might have just been coming off active duty where it was very difficult to have access to anyone who even knew anything about getting that right information. that makes it very complicated. you're not able to buy a house when you come out of your education. you're not able to invest in your retirement. that impact is when the g.i. bill, the investment of the g.i.

bill is completely lost when you're mirrored in student debt. when you can see what an individual can do without student debt when they take advantage of the g.i. bill, it's impressive, really is impressionive. 25-year-old to 30-year-olds buys houses for the first time. they're very young. they're investing in the future. the impact is on the larger economy. i'd actually like to point out something that is not often looked at. that's the issue of security. national security is a big problem with existing debt for veterans. and service members. a service member loses a clearance as a result of their high credit, their high student debts. that is a direct impact to the national security of the united states. so that's something i think is worth looking at. one thing that is an issue that would be great, refinance would be terrific for service members. unfortunately, the protections offered are lost when a student, a veteran goes to refinance their loans. and that's something that hasn't been addressed.

>> very powerful point. i appreciate it. what we are talking about here is how the impact of student loan debt on individuals and also as you rightly point out, the impact on the larger economy. we've got studies now showing that it's causing people not to be able to buy homes. they're not able to start small businesses. they're not able to start their economic futures and build something strong. this is why more than 30 senators have introduced the bank on students emergency loan refinancing bill. we want to lower interest rates so that more people have a fair shot at getting started in life. i want to pick up on the point you made, though, mr. hubbard. you know, in march, the consumer financial protection bureau put out a report analyzing complaints from veterans about financial products. and the report suggests that private student loan debt collectors may be making misleading or intimidating statements to coerce veterans into paying their debts.

including threatening to contact a service member's chain of command or repercussions under the military code of justice for failure to pay. and in march, the gao released a report report, the issue of oversight of contractors that collect on federal student loan debt. mr. hubbard, are you concerned the federal student loan debt collectors are also using military service members' service to pressure them to repay? >> it's a great question, senator. i'm not only concerned, i'm absolutely outraged. this is something that is unacceptable. the sallie mae case is a clear signal that this is not something accepted in our society. when an individual goes into service, that is not an opportunity for a servicer to take advantage and abuse those service members because they don't have the right information. if you have an individual who doesn't have access to clear information, and then somebody calls them offering what they

believe is information, taking advantage of them, that's simply unacceptable. >> well, thank you very much. i remain deeply concerned that debt collectors for the federal student loan program are breaking the rules and misleading borrowers. if a borrower fails to pay a loan, the federal government should be able to collect, but contractors must be following the law and should not take advantage of people. i think this is an issue that deserves very serious attention. thank you, mr. chairman. >> senator warren. senator reed? >> well, thank you very much, mr. chairman. thank you, senator warren, for your extraordinary leadership on this issue which is critical to not just individual progress but to our economy overall. i want to recognize everybody, particularly robert geremia. you're from rhode island, aren't you? >> yes, sir. originally. >> where in rhode island? >> yes, south kingstown, rhode island. >> are you related to kenny

geremia? >> no. >> okay. only in rhode island can you have this conversation. i played peewee football with him. he's your uncle, cousin. >> yes, distant cousin, sir. >> see, i knew it. >> yes. >> whether he is or not -- >> no, no, he is. you, after graduating college, which is a great school, went on to columbia and are teaching high school now in washington. but i have a question. federal law requires that the individual borrower be informed of his or her rights for repayment options before the end of the program and as they graduate. do you think you get effective sort of advice, information, counseling that you had the full range object repaymeabout repay public service? can you comment? >> thank you, senator. yes, i did receive counseling. i do not believe especially with

my graduate loan s it was particularly effective. it involved an exercise, going through the motions, clicking on boxes. there really isn't that do you have a question kind of that one-on-one interaction. at rhode island college during my undergraduate years, i felt like i had that opportunity. things were a little bit more clear, spelled out. of course, there was your parents, our parents were helping out. as we advance in our careers and our lives and sort of looking to fine tune teaching skills, yes, i read through it, it wasn't clear. it wasn't effective especially for someone like myself who is trying to pay rent, trying to teach 100 students, grade their essays, finish a master's thesis. yes. >> you know, one of the rhode island colleges, i was there for the graduation, the tuition is still roughly $8,000 a year, and

in fact, we have a federal limit on what you can borrow as an undergraduate. there's no limit at graduate school, so the counseling for graduates has to be more focused, more intense, more effective because they're really talking about big sums of money. there's no limit on that. i appreciate very much. mr. hubbard, thank you for your service, thank you for your testimony. under the service members relief act, there are lots of -- used to call it the soldier and sailors service relief act. now it's the service members. there are many rights that service members have but they have to, again, be aware of those rights. how good did the department of defense, or do you think they do about informing service members, particularly those who are about to leave the service about their rights under the, as veterans or their rights as service members? >> well, there's a couple pieces of that puzzle, and i think this is a great question, so thank you for that. >> yes, sir. >> senator. the department of defense is certainly responsible to some

degree for making sure that their people are taken care of. on the other end of things, if a servicer is giving them false information, simply lying to them, who's to say that the chain of command, you know, some captain is an expert on education loans? they're probably not. there's definitely individuals within the department of defense that are, but can they reach every single individual? i doubt it. unfortunately, servicers are reaching every single individual and they are giving them false information. for that member of the military to be able to reach out and find their own information with, say, through an aggregated dashboard or something similar, that would hopefully allow them to alert some red flags. those red flags would bring that person to two out and seek that information from the d.o.d. education expert and hopefully circumvent the process of those servicers simply lying to those service members. >> again, it's a rough historical analogy, but in the old days you used to be able to put places off limits because

they treated soldiers and sailors and marines and airmen badly, and i think we have to -- i would urge secretary hagel to think about this. maybe there has to be a consistent effort of identifying servicers who are consistently not just negligent but doing worse, and maybe that's what, you know, that dashboard or at least in the company or the battalion or the squadron you can have don't go there. so, i think that's important. miss hoover? can i ask a question? it goes right back to the services. we don't have all the -- we've i think become sometimes overreliant on major entities to do the servicing and that has an inherent failure. do you have advice on how we can provide better services to ones that don't sort of try to take advantage of students? just a general question. >> how we can do better with the

servicers? >> right. >> thank you, senator. as i indicated in my testimony, i still believe there needs to be one place of contact for all borrowers and that the contractors be invisible to the students. i think if the student -- if the servicers were mandated to be contractors with identical processes and policies, a lot of this confusion could be eliminated and that's where i keep coming back to one place, keep it simple, and therefore some of the -- when the contracts are renewed for servicing, maybe they could be offered to entities outside of ffel, because credit cards and mortgage servicers have some excellent technology and don't have the default rates that we have that are inherent today. >> thank you very much. thank you very much. >> thank you, senator reed. we will try to do a second round if we can before votes. question for all of you. federal student loans are seen

as safer than private loans because they offeree payment options, but we often here loans lack comprehensive and consistent servicing standards, so i'd like each of you, just yes or no question on this, do regulators, the cfpb, and department of education, do regulators need to establish standards so borrowers have more protections? miss hoover? >> yes. >> mr. hubbard? >> yes. >> mr. geremia? i'm sorry? >> no. >> thank you. let me talk for a moment about credit rating. student loan borrowers are typically young. not always. typically young, typically limited credit history. they enter this marketplace if the servicer doesn't serve them quite right, they end up -- if servicer makes mistakes, report loans, a repayment plan is delayed, borrowers can be penalized for irresponsibly managing their debt, if you will. mr. geremia, how do servicers

effect credit cards -- credit scores, excuse me. scores and inability to access credit later in their lives? >> well, i would imagine that if there were issues repaying or there was a default payment, that would effect credit scores down the line and, therefore, would inhibit ability to make home purchases, car purchase even, even apply for jobs or government jobs. thank you. >> mr. hubbard, you talked about a soldier in combat. you talked about veterans, soldiers and sailors and airmen and women coming home and facing student loan -- various kinds of student loan problems and just how it's much more difficult to launch their economic lives as senator warren said. talk to me about what a credit score means to current and

former military personnel who may have to pass credit checks in order -- in terms of security clearance and getting their economic lives in order. both, if you would. >> thank you for the question, senator. there's two sides of this coin. there's the security issue and there's the economic issue. on the security side, if an individual has a bad credit score, they're not going to get a good clearance. they're not going to get a clearance. that might be critical to their future in the military or even their personal future on the private side. >> give me some examples of that. >> yes, absolutely. >> okay. >> and then alternative, the economic issue is huge. the investment that america has made in service member is ultimately crippled when these individuals cannot invest in themselves and then further on in the economy. when they can't buy a home, that money is lost, it is lost to servicesers and taken out of the economy and not reinvested. >> you see in terms of government investment, you see a

soldier who is for whatever reason now has a lower credit score. sometimes reasons not beyond his or her control. you see the government, you see that soldier eligible for promotion, eligible, perhaps, the military is looking to provide to give them security clearance for this new position. this new rank. and they're denied because of the credit score and the government investment then goes to waste in that sense. >> it does. it goes to waste, and if this comes to a question of common sense. we have good individuals who are strong soldiers, sailors, airmen, marines. they to well but they have a bad credit score. what it looks like is they're not responsible. when if you take it back and look at the context, a servicer might have taken advantage of this individual, flat-out lied to them and allowed this person to take out more loans than they were capable of or completely

inflated the rate on them. they go deploy, they've got $50,000 in loans, they come back, it's $75,000. that is a big problem. >> and there's no reel for the soldier looking to get security clearance for her new position. there's no real appeal on this i assume. the military, my credit score is loader because of x, y, and z i had nothing to do with. >> there are deals, but once seeded it's very difficult to scrub. >> thank you. senator warren? >> thank you. so we've talked a lot today about how federal investigators have uncovered serious problems with student loans. servicers and collectors. recently the gao raised questions about debt collectors who are breaking the rules and have cited sallie mae by overcharging service members on their student loans.

when loan servicers break the rules, they push borrowers to things that are good for the bottom line of the servicer but not good for the borrower. and ultimately, if students are not able to repay, then it's the taxpayers who will pick up the bill here. part of the problem as you've pointed out is the rules are complex and it makes it hard for borrowers to know what they should expect from their servicesers. but i want to ask the question from a little different angle. and that is, when a borrower thinks that something is wrong, thinks they haven't been told the truth or that someone has broken the law, where do they turn? where do they go now? miss hoover, how about if i start with you? >> most of the time the students now are going back to their financial aid office. because they are so confused about where else to go. the tragedy is sometimes

students don't do anything. >> fair enough. >> but in a small school like mine, we do due diligence and we continue corresponding with our students who are delinquent so they do come back to us. but, again, i'm a small school and that is not realistic for large schools. >> and the further people get out of school, i'm sure the less likely it is they're going back to their old financial aid offices to be able to get any help. so basically what you're telling me is they don't have much of any place to turn, or at least don't know of much of any place to turn. >> until we have the consumer bureau protection agency, but, again, the students are not aware of that and it's, again, just the lack of not understanding of where to go. >> mr. hubbard, how about for vets? >> i'd like to point out one senator you, if i can, senator. there is a service member cited by the cfpb after they solicited comment on this very particular topic, and this individual went to lower their loans to 6%.

the servicer looked at their loans, everything that was below 6% was raised. >> oh. >> that 6% did not get lowered. this individual made a call and in the end had all of their loans raised as a result. that's a prime example of what happens. this particular issue was found out by the cfpb which is the primary route for individuals to make that complaint. since the consumer bureau has come out and been soliciting this information, these stories have come out in droves. and stories like that, they make me sick. >> as they very well should. you know, borrowers shouldn't bear the responsibility for keeping services in line. federal contracts should include accountability and oversight protections that require servicers to perform to a high standard. but at the very least, if borrowers have questions or they

believe they've been mistreated, it should be clear where they can turn for some kind of relief. i want to ask about one other issue, if i can. and that is, you may know that sallie mae has been touting its is status with the lowest defuel rates. in february i wrote a letter asking for data about the company's default prevention strategies. i asked for these data not -- because not all strategies to reduce defaults are going to provide a path to successful repayment. and some may even leave borrowers deeper in debt. sallie mae responded to my letter but cited limited pieces of information about its direct loan portfolio. it did not provide the data needed to evaluate their default prevention program. and as a result, i've asked department of education to provide default prevention data

for sallie mae and other federal loan servicers. so far, no answer. i want to try this from another direction. mr. hubbard, do you believe that borrowers are getting sound advice from servicers like sallie mae about what to do when they get behind on their payments? >> thank you for the question, senator. off the bat, the lowest default rate is pure nonsense. because you have low default rate doesn't mean individuals are not mered in debt. i won't default, but i will be paying forever. i will never get a house, i will never have the money to start a family, never have the money to start a business. i will never be able to put back into the economy what the american economy has given to me. that's a huge problem. in addition to that, just because an individual goes out of their way to find out information doesn't mean on the back end it's not being treated properly. we found issue after issue with

sallie mae in particular with tons of complaints coming to the cfpb. they were the number one complaint servicer of any servicer by a long shot. just because they have a low default rate? congratulations. you have a ton of debt for student veterans dealing with that debt and it's impacting them in their daily liveses >> well, well put, mr. hubbard. you know, about a quarter of sallie mae's loan portfolio is in deferment or forbearance. and these borrowers are trying to get their heads above water by deferring their payments. but as you point out, the interest continues to accumulate. this is going to add to their debt burden and ultimately may drown them. we need real data to tell us what strategies work as a life preserver and which work as an anchor for borrowers. also, better data can help drive stronger accountability for sallie mae and other loan

providers. i hope we continue to push for that. mr. chairman, thank you, and thank you all for being here today and sharing your stories. >> thank you. >> thank senator warren and do the witnesses, thank you all for joining us. there's a vote call. thank you, mr. geremia, mr. hubbard, miss burke. there may be written questions from members who were here or not here and please answer them within a week if you can. thank you.

toid the bureau of u.s. statistics announced the u.s. economy added 217,000 jobs last month with the unemployment rate remaining at 6.3%. senate majority leader harry reid made a statement saying in part "today's job numbers reflect the 51st straight month of private sector job growth.

with businesses now adding over a million jobs so far this year, these numbers suggest that we are on the road to recovery." and from house speaker john boehner, "some in washington may pretend this report is cause for celebration, but the fact of the matter is our economy can and should be doing a lot better and we have a long way to go before getting beyond this new normal of slow growth." c-span's new book "sundays at eight" include gretchen morgenson. >> what role should the government play in houses finance? if you want to subsidize housing in this country and we want to talk about it and the populous agrees it's something we should subsidize, then put it on the balance sheet. and make it clear and make it evident and make everybody aware of how much it's costing. but when you deliberate through these third-party enterprises, fannie mae and freddie mac, when you deliver the subsidy through

a public company with private shareholders and executives who can extract a lot of that subsidy for themselves, that is not a very good way of subsidizing home ownership. >> read more of our conversation with gretchen morgenson and other featured interviews from book notes and q&a programs, "sundays at eight." from public affairs book. now available as a father's day gift from your favorite book seller. this weekend on "newsmakers" an interview with wyoming senator john barrasso. he answers questions about the environmental protection agency's plan to cut carbon emissions by 30%. the release of army sergeant bowe bergdahl. and how the republicans will run the senate if they win the majority. "newsmakers" sunday at 10:00 a.m. and 6:00 p.m. eastern. according to the consumer financial protection bureau, the total student loan debt in the

united states is more than $1 trillion. the bureau's ombudsman for student loans testified earlier this week before the senate budget committee. we'll also hear from a recent graduate struggling with her college debt. senator patty murray of washington state chairs the budget committee. >> this hearing will come how order. i want to thank senator johnson who is filling in today for my ranking member senator sessions. welcome to you and all of our colleagues who are joining us today. as well as a roomful. welcome to all of you on a really important topic today. we are going to be talking about a challenge that 40 million people around our country face today. and for many americans who want to further their education and build their skills, taking out student loans has become a college prerequisite.

but that debt can have lasting consequences for borrowers and weaken their chances of getting ahead. ensuring more americans get a fair shot is something many of us here in the senate are very focused on. and a bill that is coming to the floor very soon which will allow borrowers to refinance their school loans is an important part of that fair shot agenda. i'll be discussing that legislation a bit more later, but first i want to thank our witnesses who are here with us today. who will help shed some light on the challenges that mounting student debt can pose for borrowers and for our economy. today we're going to be hearing from rohit chopra, he is the student loan ombudsman for the consumer financial protection bureau, and i'm very pleased to welcome brittany jones today. she is a recent graduate and the former president of the student virginia education association. we're also going to be hearing from richard vitter, distingu h

distinguished professor of economics at ohio university. a college degree is a worthwhile investment and for many can be a ticket to the middle class. we know that on average, college graduates earn more and many lower unemployment rates than less educated peers. a highly educated workforce is also good for our country. it strengthens our middle class, it strengthens the workforce we'll need to compete in the 21st century global economy. more and more jobs of the future will require post-secondary credentials or degrees, and in fact, in the coming years, as many as 2/3 of all jobs will require at least some college education according to the center on education and workforce. but to afford college, many people have to turn to student loans to help finance their education. just a few moments you're going to hear from brittany jones. she's going to talk about how taking out student loans made it possible for her to get a college degree.

brittany, i look forward to hearing more about your experiences. you now work, started a teaching career, and the same time paying down the student loan that got you through college. of course, brittany isn't alone. dealing with overbearing student debt has become a reality for a growing number of americans. the statistics are staggering. today, the average college graduate will have to pay back around $30,000 in student loans and a record number of young households owe student debt. back in 1989, 16% of young households had student debt. by 2010, that figure had more than doubled according to the pew research center. more young people than ever before are dealing with more student debt than ever before and that can have lasting consequences. americans who took out school loans find it difficult to save and accumulate wealth. a recent study found that college graduates without student debt had accumulated seven times more wealth than those who were paying back school loans.

crushing student debt isn't just hurting borrowers. there's mounting evidence that student debt is holding back our economy. historically, young americans have been a source of economic activity as they set up their households and start their own careers, but today many are finding it difficult to save even for a down payment on a home and the high monthly bills to pay back student loans can disqualify many people from even getting a mortgage. when first-time home buyers aren't able to get a mortgage, it can adversely effect the housing industry as a whole. that's why groups like the national association of realtors and home builders association have expressed concern about the overbearing financial weight of student loans. student debt can stifle entrepreneurship. young people who dream of starting up their own business aren't able to take the risks. and the business loans that are usually needed when they launch a startup. paying off student loans can prevent young people from saving for retirement. or making the kinds of purchases that help further our economic

recovery. mr. chopra, i know these economic consequences are what you and others at the consumer financial protection bureau have called the domino effect. i'm looking forward to hearing more details in your testimony about those negative economic impacts. to address these challenges as the starting point, we need to ensure that student loan servicers, those are the companies who handle billing and track borrowers' payments, are treating those borrowers fairly and responsibly. unfortunately, there have been alarming reports of student loan servicers mistreating borrowers. some people have discovered their student loan servicer hasn't properly processed payments. there have also been complaints that private student lenders have put borrowers into default if a co-signer dies. despite the borrower being current on their loan payments. i was very troubled to hear recent reports that sallie mae was overcharging military members on their student loans. sallie mae has agreed to pay

nearly $100 million many fines after charging military members higher interest rates. and i've asked secretary arne duncan to investigate to make sure other student loan servicing companies are not doing the same. but we can do more to help borrowers. the bank on student emergency loan refinancing act is a bill from senator elizabeth warren that i've co-sponsored along with several of our democratic colleagues. that will bill allow borrowers to refinance their student debt. estimates that this bill would let borrowers save $4,000 on average. passing that legislation would put more money in borrowers' pockets so they can make ends meet. make down payments on homes. or start new businesses and help grow our economy. right now, people can refinance their home loans or their business loans when interest rates drop. this bill will let borrowers with federal student debt do the same. and this should be a bipartisan issue.

just like year, for example, republicans and democrats came together to pass the bipartisan student loan certainty act. that bill allowed new borrowers to take advantage of lower interest rates established by the free market. this refinancing legislation would use those same free market principles to help those with existing student loans. at a time when higher education is more important than ever to our nation's long-term competitiveness, a college degree shouldn't drown borrowers in debt. now, and in the future, we need to make sure that people who choose to further their education and build their skills are better able to afford college and manage their student debt. it is an economic imperative. to strengthen our middle class, strengthen our workforce and help spark economic growth, congress needs to address these challenges. so i'm very delighted to have this hearing today. and i would like, before i turn over to our panel of witnesses, we'd like to hear from senator johnson. >> thank you, madam chair. i think this is an extremely

important issue. i think it's a strategy that we enticed our children to incur now $1.2 trillion in student loan debt collectively. i had a finance professor in college before we statalked abo cost, spent a day talking about personal finance. the reason you call a debt instrument a bond, when you go into debt, you put yourself into bondage and you want to avoid that. i took that to heart. i went to school in the '70s when college was a lot cheaper. worked full time. rather than leaving college with close to $30,000 in debt, i left college with $7,000 in the bank. so i wish that were more possible. i'd like to start with a chart that i've prepared and i've actually been using this in my powerpoint presentations as i travel around the state of wisconsin. just laying out some facts and little food for thought here. what this chart shows is that in

1963, the total cost of a four-year undergraduate degree in a public college was about $929 per year. that's room, board, and tuition. now, by 1988, the actual cost had risen to $4,678, 20% higher than had it just grown with rate of inflation. but you can see as of 2012, the cost of college outstripped the rate of inflation by almost 2 1/2 times. so rather than costing you about $7,000 which is what it would have been if it would have grown by the rate of inflation, one year of college is now about -- in 2012 was $17,474. 2 1/2 times rate inflation. i guess the question i'm asking is, why? what is so different about what colleges and universities spend their money on that their costs would outstrip the rate of inflation by 2.5%? by the way, two of the components, room and board, you

know, food and shelter in the rest of the economy, not necessarily on college campuses. in the rest of the economy, those have actually grown at a lower rate than inflation because we've become so much more productive in those sectors of our economy. obviously productivity is not exactly a word we use in education which is a real shame. so, again, just kind of asking the question of, you know, why all of our good intentions -- let's face it, this is -- what we spent in college, around college in terms of student aid was about $2 trillion since 1963, was all well intentioned, but did it have a very serious negative unintended consequence? in other words, in trying to make college more accessible, did we actually make it less accessible because we've made it so much more unaffordable? oh, by the way, just to add a little more detail to that chart, of the $2 trillion we've spent over that timeframe, about $200 billion was spent between 1963 and 1988.

$1.8 trillion was spent as college costs really skyrocketed and soared. again, cause and effect, i'll leave that for the reader to judge. i think mr. vedder is going to talk a little bit about that as well. madam chair, you were correct. it's a shame that in 2011, which is the latest figures i have from the college board, average student loan debt after four years of college is $25,000. of those, 57% of students that actually incur debt in a private institution, it's about $29,900. 65% of private college students incur debt. another interesting statistic is how long it's taking our students to graduate. about half graduate pretty much in the four-year time period. in other words, they graduate within 52 months, about 4.3 years. but the other half raises the average time to graduate to 6.3 years. again, just asking the question, why is that? particularly when you is so many kids leaving high school with college credits in the bag? have we made college funds

available so readily that people can dither in college? just a question i'm asking. now, i know part of this hearing is to talk about other types of pieces of legislation to supposedly solve the problem. one thing i think is important for us to talk about, though, is how those proposals might be scored. currently, the cbo is constrained by having to score the cost of these college aid programs under the federal credit reform act. and under that scoring for the ten-year period, 2015 to 2024, because it doesn't account, really, for varying economic conditions or for loan defaults. it's actually showing that the student loan program saves the american taxpayer, in other words, reduces the deficit by $135 billion over 10 years. but if you use a fair-value basis, if you actually account for tougher economic times, varying economic times, and defaults, you'd actually cost the federal government $88

billion over the 10-year frame, timeframe. so i think it's important if we're looking at a piece of legislation, we actually take a look at the fair-value cost and the effect it has on the deficit. and then i think finally the only thing i want to talk about is another potentially unintended consequences of some of these programs designed to forgive loans. in 2007, congress passed into law the college cost reduction and access act of 2007. it established a new public service loan forgiveness program that discharges any remaining debt after ten years of full-time employment in the public service. the borrower must have made 120 payments as part of the direct loan program in order to obtain this benefit. in other words, they have to keep their -- you know, they can't be in default over the ten-year period while they're working for the public sector. now, "politico" wrote a column on this and said law school looked at the new laws and saw an opportunity. income-based monthly statements are lower than standard payments so the schools could cover graduates' payments entirely for

the first ten years. the money for law school repayment assistance programs usually comes out of tuition mostly paid with federal student loans. you understand what i'm saying there? so the law school is gaming the system. they're saying, oh, so all we have to do is we'll make the loan payments for our graduate students for ten years and at that point, the american taxpayer will pay for law degrees. at berkeley, for example, it's part of the fee that all professionals agree students pay. at georgetown, 350 borrowers are taking advantage of this program. at berkeley, 263. by the way, the average student debt of a law graduate in georgetown is $150,000. at berkeley, it's $115,000. and the "wall street journal" wrote about this, too. not just berkeley and georgetown. columbia university, university of chicago is also doing that. and until recently, georgetown had on its law school website basically talking about how the school's aid combined with the

federal plan, quote, means public interest borrowers might not pay a single penny on their loans ever, exclamation point, end quote. the school spokesman said the statement was removed this year, so, again, i understand that this $3.5 trillion year entity called the federal government and the student loan program and all these aid packages are all well-intentioned programs, but i think we have to honestly take a look at the reality situation and look at the very severe and serious negative unintended consequences of our good intentions. part of that being as we have collectively enticed our children to incur $1.2 trillion in student loan debt, now we're trying to figure how to solve that problem at the government's cost. thank you. >> thank you. we're going to turn to our witnesses. again, miss jones, thank you for coming and sharing your personal experiences. we're going to start with you. >> good morning, chairwoman murray, senator johnson, and members of the committee. my name is brittany jones.

i thank you for inviting me here today. my story begins as a second grade decision in elementary school, when the decision was made, i, brittany jones would declare to the world i'd become a second grade teacher. i pursued this plan throughout my studies then as a teacher in public schools, followed by receiving my bachelor's degree from virginia commonwealth university and early elementary education. it was during high school when our counselors first began the conversations about attending college. they talked in detail about scholarships and grants and financial aid awards. naturally i assumed everyone could attend college. it was not until i was accepted and learned the amount of financial aid i would be offered that i feared i could not attend. after conversations with my financial aid counselor and various chats with my parents regarding the necessity of a college degree, i made the decision to enroll with the assistance of student loans and pursue my dream of becoming a teacher. unfortunately, the cost of attendance constantly increased

while the grant funds decreased. upon graduation in 2011, the joy of completing the first portion of my program was overshadowed by the truth that i had borrowed well over $70,000 in student loans from various sources. federal subsidized, unsubsidized, perkins, and personal loans. and still i needed to complete another year of school which was required to get my teaching certification. i, like many of the students i encountered as student virginia education association president was facing the difficult decision of whether to continue my education and follow my dream of being a teacher or seek immediate employment. i recall one student who having borrowed the maximum amount of student loans allowed for one school year was unable to fill the gap in his cost of attendance. he later withdrew from the university and never returned. another student who ironically served as our chapter treasurer also left school for financial reasons. a full-time student in the master's program, she also had a job in sales and was offered the

position of store manager. faced with the decision of incurring student loan debt, she decided becoming a teacher was no longer the career path she would follow. for me personally when confronted with the decision to borrow another 20 grand, $20,000, to complete my program, i decided it was best to post phone attendance. immediately after commencement services ceremonies i drove to an interview for a preschool teaching job, got it and began teaching the following tuesday. i was excited to have a position despite the low wage of $10 an hour because unlike many of my colleagues, i was working in my desired field. i was the lead teacher in my own classroom. i was elated until the loan statements started to come. because i owed approximately $60,000 in federal loans at the time, and i was working full time, i had to start paying them back. this proved problematic. they figured i'd be able to afford paying $600 a month.

i was making $10 an hour and paying over $900 in rent, insurance, and other expenseses a month. fortunately my parents were able to help with some of the payments to keep the loan in good standing. this continued for a few more months until i lost my job. in 2012, i received notice that i had defaulted on the remainder of my federal loans, totaling approximately $58,000. a nice gentleman from the loan company called and requested the date by which i could send the $58,000 check or money order. after a laugh or two, he then said he would be happy to help set up a payment plan. he put in the calculations and determined i would be able to pay $653 a month. at this time, i was working as a pre-kindergarten teacher making $13 an hour and paying $783 in rent with more payments for utilities and insurance bills. again, simple math, the numbers did not add up. i worked as many as three jobs at once to make my monthly payments. now two years later i was finally cleared to apply for financial aid and return to

school to pursue my master's. as you can imagine, the ordeal i won't through with my student loans made this decision a wary one. the search for alternative programs began. i did not want to collect any more student debt. my goal is to become a classroom teacher, not a teacher with more loan debt than she makes in a year. this search led me to find the denver teacher residency program. through this program, which i will begin this summer, i will become a highly qualified educator with a master's degree. all fees associated with the cost of attendance will be repaid upon the completion of the program which includes four years teaching in denver public schools. this program is promising and it is an exciting time in my life. yet almost $50,000 still awaits repayment. student loan debt has been the driving force of my decisions for the last eight years of my life and according to my current repayment plan, it is projected to be for the next 25 years of my life. well into the years for which i should be planning a retirement.

it should not be this way. senators, you have the power to make sure that it isn't this way any longer. you can take actions to help make college more affordable to students have a fair shot at so that students have a fair shot at pursuing their dreams. i urge you to help increase student aid, especially for those who need the most financial help. i urge you to help make student loans for more affordable including allowing refinancing of the loans. and i ask for you to look for way to make careers in public service like teaching more expandable. thank you for the opportunity to share my story today. >> thank you very much for coming and sharing that with us. >> chairman murray, senator johnson and members of the committee, thank you for the opportunity to testify today about the potential impacts of student debt. you know, the financial crisis

destroyed trillions in wealth for families preparing to send children to college. in addition to considering how to make college affordable for future students, we cannot ignore the impact of the $1.2 trillion already owed by more than 40 million americans. there has been growing consensus that today's $1.2 trillion can have repercussions that threaten the broader economy. the treasury secretary remarked that student debt is hampering our economy across multiple sectors of society. and the federal reserve identified student debt as a risk to aggregate house hold spending. executives in the banks industry has also cautioned that the condition of the student loan market quote is now having a significantly negative impact on students, the economy and taxpayers. according to a survey by the national association of

realtors, 49% of americans cited student loan debt as a huge obstacle to home ownership. in the national association of home builders with noted that student debt can impair the ability for graduate to qualify for a mortgage. higher debt burdens might not only delays house purchase, but other purchases as well. student debt can hamper entrepreneurship. preliminary research on small businesses find a negative correlation between student loan debt and certain small businesses. it may have a longer term effect on retirement security. young workers who save early for retirement can generate significant retirement over the course of their years. but student debt may be stopping workers from even contributing at all. the same can be said about the

impact on labor market outcomes, the american medical association said that some student may abandon primary care all together. it can affect the availability of other professions, farmerer as e workers in communities. veterinary students are graduated with debt of over 150,000 dollars per borrower making it less likely that they can make ends meet. and the list goes on and on. there are several areas that warrant attention. servicing, refinancing an data availability. first is servicing. as the financial crisis unrafld, many americans faced improper foreclosures due to mistakes from their mortgage servicer. and i'm concerned that inadequate servicing may be contributing to our growing student loan default problem now

topping 7 million americans in default over $100 billion in balances. last month after referrals from the cfpb regulators ordered sally may to paid $100 million for violating multiple laws, including illegal treatment of service members with student loans. second, unlike other markets, refinance opportunities for student loan borrows are few and far between. when mortgage borrows see broader interest rates plummet, their incomes rise and their credit pro files improve, they try to refinance. responsible student loan borrowers rarely have these options. third, a student loan market transparency which we must address. as fed chair janet yellen noted, they hissed the linkages whereby problems in the mortgage system -- currently they lack fundamental information on student loan origination and

performance. unsurprisingly, the drivers of prepayment delinquency and default in the student loan market are not well understood and we must work to close the transparency gap. in conclusion, we must ask ourselves how do we preserve the drive to succeed for so many who feel that the dream is just now out of reach, ignoring the warning signs may prove to hold back not only the future growth of our economy but also the entrepreneurial seert. addressing the concerns in this near term may prove dividends. thank you for allowing me to participate today. i look forward to your questions. >> thank you very much. dr. vetter. >> thank you senator murray and senator johnson and other members of the budget committee. i wish to make three points. first the current student loan debt crisis would have never

happened had college costs increased at the generate of inflation. the primary cause of the student debt problem is increased university fees. you must deal with the root cause of this, namely runaway college cost inflation. second, there are many reasons for this university price inflation, several of which i mentioned in my written statement. but one that is relevant here is that rising tuition fees are partially caused by federal tunt financial assistance programs themselves. the programs themselves are part of the problem. any significant successful solution to the problem of rising college costs will work only if you radically change the nature and magnitude of federal finance. third, we are at or near a tipping point where fundamental change will come to higher education.

these changes are starting to happen. i believe many policy proposals gaining prominence these days do not fundamentally address the broader problems and would indeed likely worsen than improve the situation. now table one looks at the inflation adjusted, increase in tuition fees of various years over the last 75 years. we see that for the first half of that period tuition fees tended to rise about 1% more than the overall inflation rate. but since 1978 inflation adjusted division growth has about tripled to well over 3% a year. if college tuition inflation since 1978 were what it had been before that day, say 1% a year, tuition levels today would be almost 60% lower than they actually are. public four-year university

tuition levels would be in the 3 to $5,000 range instead of 7 to 12,000 dollars. student loan volume would be dramatically less. it's a bigger burden for a citizen of indiana to send their child to per due university today than at the end of the great depression. even room and board charges far out distance food and housing rates. solve the tuition fee problem, you will dramatically reduce the student loan crisis. there are many explanations for rise in tuition fees and three are discussed in my written testimony. but the most relevant here is the explosive grote in federal student financial aid. there will be no permanent solution to the debt crisis without reigning in federal programs. there are many way to downsize these programs to make them for progress f, which liberal

democrats should like, but also smaller and teacher which republicans should like. existing programs have failed miserably in providing greater access for lower income americans. the pro portion of recent college graduates coming from the lower income distribution is smaller than it was in 1970 before pell grants. rising income equality has been associated with more federal student financial aid assistance and i don't think that is coincidental. in my written testimony i show concerns about several administration initiatives, including the college ratings system and gainful employment regulations. but i want to briefly comment on the proposal of senator warren to lower interest rate on loans to past borrowers. i think this is a bad idea for several reasons. beginning with the fact that it does udderly nothing to address college tuition inflation.

conscientious payers and didn't obligations end up getting punished relative to now payers who get low interest rates. a bad message. it will add tens of billions of dollars to the deficit and national debt. there are other objections as well. we may be, as senator johnson hinted, overinvesting in some ways in higher education. the advantages of getting a degree are actually starting to decline, not increase, particularly for young graduates. we need to reduce our aid programs, probably doing away with tuition tax credits and plus loans in con training other grants. there are no painless solutions, but merely doing more of the same, lowering interest rates, more loans will worsen this situation and probably enhance, not reduce, income in equality in america. thank you very much. >> thank you very much. i really appreciate all of ou