Transcript: Testimony of Dr. Michelle Cooper on strengthening the federal student loan program for borrowers

Partial transcript of Dr. Michelle A. Cooper, President, Institute for Higher Education Policy, on strengthening the federal student loan program for borrowers. The Senate Health, Education, Labor & Pensions Committee hearing was held on March 27, 2014:

Thank you, Chairman Harkin, Ranking Member Alexander, and other committee members, good morning. Thank you for this opportunity.

Like you heard, I am Michelle Cooper and I’m the President of the Institute for Higher Education Policy, an organization that we simply refer to as IHEP. At IHEP, we focus on issues related to college access and success with an emphasis on under-served student populations.

Today, I speak to you in my role as President of IHEP. But just a few decades ago, I was simply a kid from South Carolina who had the opportunity to finance my college degrees with Title IV financial aid. So I can say with confidence that financial aid and the ability to access it made a difference in my life. And I firmly believe that it still can make a difference in the lives of today’s students.

But the reality of today’s students are very different than previous generations, and earning a college degree or credential is much harder now. So in re-examining the Title IV programs, I would encourage you to be mindful of today’s context and also be mindful of the realities and the needs of today’s students.

And so we should recognize that one-size-fits-all approaches probably won’t work and neither will layering new policy ideas over old outdated ones.

So in turning to the issue of student loans, our goal must be to help the millions of student loan borrowers who we currently have graduate with manageable debt levels that can repaid in an affordable, easy and timely manner.

Now, with this goal in mind, we at IHEP recommend that there be three types of improvements – improvements that will lead to more informed choices, improvements that will lead to more simplified options, and improvements that will lead to better shared accountability.

For informed choices, we have two recommendations, and one is about better information and the second is about better student loan counseling. When it comes to the issue of better data and better information, I’m sure you’ve heard like I’ve heard that people believe there’s more than enough information out there. There’s certainly information out there but the information is not always of high quality. The information is not always presented in a way that allows students to use it in a productive, consumer-friendly way. And it usually sometimes does not help them to make good, sound, informed choices.

So in our written comments, we recommend some very detailed but straightforward fixes to existing data in…the National Student Loan Data System that would better help students gauge the quality and the outcomes that they can likely experience at some institutions. We suggest improvements to the information around college costs, around debt repayment, and about student outcome in particular. And we also hope that these information can be made available for students for multiple years and multiple cohorts.

We also believe that student loan counseling needs improvement. So I’m encouraged that we’ve already had some good conversations about that. And we would actually agree that there needs to be counseling on student loans and financial literacy that happens before students even get to college.

We have some federal programs like the TRIO programs and the Gear Up programs where we can easily incorporate financial literacy and student loans into that structure.

Also, we believe that existing federal tools like the College Scorecard and the Net Price Calculators and the financial aid shopping sheet should be made to be applicable and more accessible and in some cases even mandatory.

And thirdly, we believe that there is much that can be done to improve the college loan – the student loan counseling. It should be more than just a checklist and we can make some improvements to the timing, the content, and the frequency of the counseling. It shouldn’t just happen at the beginning and the end. We can do a lot more with students throughout the entire college career.

A second category of recommendations represents simplified options for loan repayment. At present there are many options that we have outlined in our appendix, and we believe that the number of repayment options can and should be reduced, and we believe if there were reduced, it would minimize complexity and help to make the loan terms more transparent and accessible. And we suggest having a single standard repayment plan as well as offering a single income-based repayment plan.

The final category of recommendations relates to shared accountability. As state appropriations declined and tuitions have increased, students have been taking on more debt to pay for college. And as a result, they have been bearing an increasing proportion of that risk.

Now while students should bear some responsibility, so should the institutions. So in thinking about shared accountability, we recommend investigating options that would lead to more meaningful accountability, such as risk-sharing. While the specifics of an appropriate risk-sharing model need to be tested and vetted with institutional leaders, we don’t believe we have to start from scratch as there are some models and proposals that already exist.

So in closing, I’m happy to talk more about these recommendations in greater detail. But I do want to stress that if we really want to have real longstanding change and we want to do more than simply tinker at the margin, I encourage you to remember that the student loan issue must be looked at within the broader issue of college costs, which you’ve already begun to do, because student loans and student debts are simply symptoms of this bigger college cost problem.

Thank you.

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