CHALLENGES TO MAINTAINING ACCESS

IN THE TWENTY-FIRST CENTURY:

A ROUND TABLE MEETING OF

THE ADVISORY COMMITTEE ON
STUDENT FINANCIAL ASSISTANCE

UNIVERSITY OF MISSISSIPPI
OXFORD, MISSISSIPPI

APRIL 1999
 TABLE OF CONTENTS

OPENING REMARKS...................................................................................1
INTRODUCTION...........................................................................................2
ROUND TABLE DISCUSSION.....................................................................4
EXHIBIT...............................................................................................5
SYNOPSIS OF COMMITTEE MEMBER DISCUSSION...........................29
APPENDIX A: INFORMATION REFUTING MISPERCEPTION..............33
THE COMMITTEE MEMBERS..................................................................36
THE PANELISTS..........................................................................................38
 OPENING REMARKS
APRIL 27, 1999

CHANCELLOR ROBERT KHAYAT, UNIVERSITY OF MISSISSIPPI

Good morning and welcome to the University of Mississippi. As we in the higher

education community approach the turn of the century, I think you will all agree that it is
important to review carefully where we stand on our fundamental commitment to maintain
and enhance access for low-income, disadvantaged, and minority students. The purpose
of this meeting is to begin to do just that. While we have come a long way over the last
three decades in making some kind of postsecondary education accessible to the majority
of American youth, I think you will all agree that there is still considerable room for
improvement—especially for the nation’s very lowest income students.

As you will hear today, there are many competing voices suggesting that perhaps it is time
to look at other issues along with, or instead of, access hot issues like affordability for
middle-income families, the growth in merit-based student assistance, and the great
opportunities offered by distance education—to name just three. While very exciting and
important in their own right, these issues can serve to divert our focus and attention from
perhaps the most important education issue that will still face our nation in the twenty-first
century—access to quality higher education for all Americans. Accordingly, it is very
important that we as a community have an open and honest dialogue about the condition
of access in 1999 before we refocus our attention on other matters. As a community we
have yet to truly solve the access problem.

This morning, we will hear a distinguished panel of experts discuss the challenges to
access in the twenty-first century. The hope is that all of us in attendance will leave the
meeting with a much clearer appreciation for where we stand in the struggle to provide
access and what more we need to do.

For those of you who have not attended an Advisory Committee meeting prior to this one,
I would offer this simple guidance: our Committee looks at every issue through the lens of
access. That is what Congress has charged us to do, and we take the charge very
seriously. Thus, you will hear one question from our members, over and over, regardless
of the specific issue being discussed: what’s the likely impact on access? Whether we’re
discussing the level of college costs, or the wonders of technology in distance education,
or the value of merit-based aid, or finding ways to help parents save for college, to our
Committee the bottom line is always the same: what’s the likely impact on access?

We have asked you to join us today in Oxford because you have the knowledge and
expertise that might help us fulfill our legislative charge. We need your help because it will
take a large and concerted effort, on the part of the entire higher education community, to
reach the goal of equal educational opportunity.

INTRODUCTION
PRESIDENT JULIET GARCIA, UNIVERSITY OF TEXAS-BROWNSVILLE

Good morning and welcome to the University of Mississippi. As Dr. Khayat has said, the
most important charge of the Advisory Committee on Student Financial Assistance is to
make recommendations to Congress and the Secretary of Education that will lead to the
maintenance and enhancement of access to postsecondary education for low- and middle-
income students.

In fulfilling that charge, our Committee makes regular formal recommendations in the
form of yearly reports, legislative proposals, and comments on proposed regulations.
However, just as often, the guidance we provide is informal, taking the form of briefings,
meetings like this one, and data analyses designed to inform and enhance the federal
student aid policy making process. Regardless of venue, the Committee’s ultimate goal is
always the same, maintaining and improving access for low- and middle-income students
through the expansion and improvement of the need-based Title IV student aid programs.

Let me describe very simply what our Committee means by the term, “access.” We do not
mean absolute equality in college-going rates by family income level. While that might be
our long run goal, for policy purposes, our Committee uses a more practical and
conservative definition of access. Maintenance of access, to our Committee, means—at a
minimum—doing no harm as measured by the out-of-pocket expenses facing low-income
students. Improvement of access means lowering those expenses. Our Committee fully
understands that there are other important dimensions of access like “access to what?”
and, of course, persistence. But, quite frankly, it has been so difficult just to hold the line
on the out-of-pocket expenses facing low-income students and families that we have and
will continue to focus primarily on that.

Using that simple concept of access that is, keeping what is termed “net price” as low as
possible for low-income students—there is a broad consensus in the
community that the Title IV programs have been immensely
successful. That is, they have provided “access” to tens of millions of
Americans over the past two decades. Despite that consensus,
however, Congress and the higher education community were
confronted during the 1998 reauthorization with assertions that the
programs were, in fact, fundamentally flawed—that they produced
serious negative consequences for higher education. These assertions
were based on fundamental misperceptions that persist today and will
likely affect access-related federal policy well into the twenty-first
century.

This morning we will discuss several of these misperceptions and their implications for
federal policy. With the popular press leading the way, families and legislators alike
regularly express the belief that postsecondary education is simply not affordable for most
middle-income American families. There is a very strong feeling that college costs are out
of control, and that one of the major culprits is federal student aid. The argument by now
is a familiar one, college is beyond the reach of most American families, and federal
student aid, including unsubsidized loans, is largely self-defeating, merely driving up
tuition. This is true, the argument goes, especially in the private college sector because
colleges raise tuition in order to capture more federal dollars.

Three additional themes exacerbate public disillusionment about affordability in general,

rising tuition in particular, and colleges’ apparent insensitivity to the plight of the middle
class:

first, the lowest income, lowest ability students get all the subsidies;

second, scarce need-based aid funds are being wasted on students who are
unprepared for college—especially those taking remedial courses; and

third, merit is not rewarded nearly enough.

All of these are undermining the quality of higher education. Further eroding public
confidence in, and support for, need-based student aid is the impression that the very
process of determining need discourages middle-income families from saving for college
by taxing their assets too heavily.

It is easy to see why all this seems so intolerable to a public that assumes the full need of
the lowest income students is being met in both the public and private sector through
need-blind admissions and full-need financial aid policies.

We have brought together today a panel of experts to discuss these misperceptions:

Dr. James V. Koch, President of Old Dominion University, Norfolk, Virginia;

Dr. David Breneman, Dean of the Curry School of Education, University of

Virginia;

Dr. William Troutt, President of Belmont University, Nashville, Tennessee; and

Dr. William Hiss, Vice President for Administrative Services, Bates College,
Lewiston, Maine.

Dr. J. William Wenrich, Chancellor, Dallas County Community College District.

 ROUND TABLE DISCUSSION

Juliet Garcia, President, University of Texas-Brownsville

Let me begin the discussion by directing your attention to the list of

statements in front of us (see Exhibit 1) and asking you,
Dr. Koch, a two-part question. One, is college, in general,
affordable for most middle-income families, and two, how about at
Old Dominion University?

James Koch, President, Old Dominion University

It is interesting that in Virginia this year, by action of the Governor

and the General Assembly, the tuition portion of tuition and fees has
declined by 20 percent. So we are actually going to be
quoting much lower tuition to students this coming
year than we ever have in the past. That will mean
about a $500 per year decline in net tuition. There
has not been a comparable decline in fees, in fact,
they have risen. I am referring to fees that support
auxiliary activities, such as athletics, residence halls,
and things of that sort.

However, if one looks at the Fall of 1999 and

compares that to Fall of 1994, it is actually less
expensive now, in actual dollars, to attend Old
Dominion University than it was five years ago. If
one looks in real terms and factors in price inflation,
we are talking about something in the range of 12 to
15 percent less expensive. This reflects a variety of
factors such as action of the Virginia General
Assembly, increasing competition in the higher
education marketplace, political pressure, and
changing demographics. I think it is a very complex
mosaic.

“it is actually less expensive now . . . to attend Old

Dominion University
than it was five years ago . If one looks in real terms . . .
we are talking about something in the range of 12 to 15
percent less expensive.”
 A place like Old Dominion University is simply more
affordable now than it was five years ago, and I think
this trend is likely to continue simply because of
increasing competition from distance learners and
for-profit institutions. I don’t really see this changing
for four to five years.

EXHIBIT 1

MISPERCEPTIONS UNDERMINING
MAINTENANCE AND IMPROVEMENT OF ACCESS
(See Appendix A: Information Refuting Misperceptions)

About College Costs

Postsecondary education is not affordable for most American families.

Title IV student aid serves to drive up tuition, especially in the private

sector.

Colleges have raised tuition primarily to capture federal student aid.

About Student Aid

The lowest income, lowest ability students get the largest educational
subsidies.

Need-based student aid is inefficient because it increases remediation.

Merit-based aid is a better investment of taxpayer dollars than need-based

aid.

About Family Contribution and Unmet Need

Federal need analysis discourages saving for college by taxing assets

heavily.
Public institutions regularly meet full need for the lowest income students.

Private colleges have “need-blind” admissions and “full-need” aid policies.

Juliet Garcia Dr. Koch, let me ask you, in general, do you
think what is happening at Old Dominion University
is reflective of what is happening at other schools
similar to your institution?

James Koch No, it is not generally reflective, but I think

there has been a moderation in prices nationally.
The data I have seen suggest that tuition and fees
are not rising as rapidly now as in the past. I think
that is true across the board in higher education.
And, again, I would point to the same factors:
political pressure, rising competition in higher
education, changing technology in distance
education, the appearance of “for-profits,” and more
and more institutions reaching out and doing things
in other locations.

But also, I would point to changing demographics.

Over 50 percent of the college students in the
Commonwealth of Virginia now are part-timers.
These individuals tend to be very price-sensitive.
They tend to look, within limits, for the best deal
financially. And as long as that is so, I think that we
are likely to see moderating prices not just in the
public sector, but in the private and independent
sectors as well.

Juliet Garcia Dr. Breneman, would you care to address the

same questions, please?

David Breneman, Dean, Curry School of Education, University

of
Virgi
nia

Thank you. Yes, I actually believe that two other

states may have led the way. In California, Governor
Pete Wilson bought back five percent of the tuition
increase at the University of California and the
California State University systems. Recently,
Massachusetts has done some tuition reduction.

But I would like to focus on the issue of

misperception. I spend a lot of time talking to
 newspaper and magazine reporters. It has become
almost a joke—this perennial parade of calls from
someone doing a great story on trends in college
costs and why they are out of control. Every
newspaper and magazine writer in America seems to
be rediscovering this issue.

“I then realized that “affordability” was a code word

for middle- and upper-income family assistance.”

I began to realize that if the national press is calling, you can almost
bet that either the reporter or the editor has a junior in high school
who is looking at the Ivy League. And that is the only interest that
they have. All of higher education is then summed up in why
Princeton, Penn, or Dartmouth is so expensive. These articles
really drum that message.

I worry a great deal about this issue. It was brought home to me

recently at the state level. We had just gone through the tax credit
legislation, which was arguably based on the notion of middle- and
upper-income plight. I was invited to a midwestern policy summit
funded by the Kellogg Foundation. There were about 160 people
there, presidents of colleges and universities—public and private—-
and state legislators from 12 midwestern states. They had invited
three of us to do short papers in advance. Mine was on the topic of
affordability. I addressed many of these issues with data and clearly
indicated that we still have a continuing problem with access for
low-income students.

It was amazing; I could have been talking to a brick wall. They

thanked me and turned to the question of how they could do
something for the middle- and upper-income constituents in their
states. I then realized that “affordability” was a code word for
middle- and upper-income family assistance. But that is what they
were interested in: savings plans, tuition prepayment schemes, loan
schemes, you name it.

So I think we have a really serious problem in this country. And I

see this Committee as one of the very last defenders of access. I
think that, politically, the game has almost been lost, and I do not
know whether you can recapture it. It does trouble me. We are in a
combination of politics and ideology. For example, remediation is
now being used as an ideological club to pound on these issues.
 And I am not sure that facts and evidence rebut people who are
prepared to believe certain things. So the question is this,
how do you respond to people who believe and
assert things that are not backed by evidence? Data
does not seem to make any impact on many of these
folks.

Juliet Garcia How would you respond, Dr. Troutt?

William Troutt, President, Belmont University

Thank you. Much of what I believe about college

costs was informed by my service on the National
Commission on the Cost of Higher Education. For
the record, I would like to say that I was appointed
by a distinguished graduate of the University of
Mississippi, Senate Majority Leader Trent Lott.

Price is what we ask students and families to pay. Net

price is price
minus grant aid and subsidy—the difference between cost
and price.

We began our work on August 11, 1997. We

received a two-fold charge from Chairman “Buck”
McKeon, first, to provide a clear picture about
college costs, and, second, to offer some innovative
recommendations for keeping college affordable.
Trying to provide a clear picture of college costs is
quite a challenge. It is a topic that has been
oversimplified by the media. It is a topic that has
been overly politicized at both the state and the
national level.

We entitled our report, “Straight Talk about College

Costs and Prices,” because, in fact, there has been
little straight talk about college costs and prices.
The four basic concepts that we think are very
important for understanding college finance are
cost, price, net price, and subsidy. Cost is what
institutions spend to educate students. Price is what
 we ask students and families to pay. Net price is
price minus grant aid and subsidy—the difference
between cost and price.

Wouldn’t it be great if every policy maker

understood those basic concepts? Wouldn’t it be
great if every university trustee understood those
basic concepts? Wouldn’t it be great if every
university president understood those basic
concepts?

When you look at net price what most American

families pay from 1993 to 1996 there was a
cumulative increase of about 10 percent in the
public sector. In the private sector, the cumulative
increase was 4.2 percent. And that is fairly good
news.

“When you look at net price . . . from 1993 to 1996 there

was a cumulative
increase of about 10 percent in the public sector . . . In
the private sector, the cumulative increase was 4.2
percent. And that is fairly good news. ”

We also looked at cost and found a bit different picture. In fact,

there has not been a significant moderation in increase in cost what
institutions spend to operate. That gave us some concern. What
will happen? Will this result in prices going up, or will it result in
some erosion in the quality of higher education? We think
academic institutions do need to pay a great deal of attention to
cost. We did come down hard in stating that price controls will not
work. They would be destructive to the very quality of academic
offerings.

Instead, our Commission offered a five part action agenda

grounded in the concept of shared responsibility. One of the
agenda items was a set of recommendations for improving market
information and public accountability. It is terribly important that
we do a better job of getting the word out about cost, price, net
price, and subsidy. Several other recommendations are already
being enacted, from the American Council on Education’s (ACE)
College Is Possible campaign to the National Association of
 College and University Business Officers’ (NACUBO) ad hoc
committee on making college cost more transparent.

We asked every campus to begin to make distinctions to their

various stakeholders between cost and price. At Belmont
University, we used Gordon Winston’s formula, which can be found
in the report of the Commission. We try to tell all our families that
while they pay a price of $10,800 for a year at Belmont, the
institution spends about $21,000—the cost of education.

The primary recommendation the Commission

offered was strengthening institutional cost control.
We have encouraged the recognition of a number of
best practice efforts around the country. We asked
every institution in the country to conduct its own
efficiency review. We did so at Belmont University
and launched several initiatives, including curriculum
management, nonacademic cost reductions,
partnerships with neighboring institutions, and
review of scholarship support.

Juliet Garcia How do we take the code of academia and

communicate that more clearly to the public? Or to
a reporter?

William Troutt I think we need to get on the mantra of cost, price,

net price, and subsidy. We are working so hard
against some common sense images. When most
Americans look at our price, they are thinking of cost
inflated by poor management plus some kind of
profit. But our price is really cost minus subsidy.

While they sound like technical terms, we have to

continue on our own campuses—with families and
students—to communicate the difference between
cost and price.
“We have encouraged the recognition of a number of best
practice efforts around the country. We asked every
institution
in the country to conduct its own efficiency review.”

Thomas Dillon, Advisory Committee Member

Can I ask a question? From what you have said,

there are two senses of subsidy, the difference
between price and net price, and the difference
between cost and net price.

William Troutt Yes, there is a general subsidy that almost every

student receives. In fact, students receiving the
largest, general, subsidies are those at the higher
price institutions. But then, of course, most
undergraduate students receive additional grant and
scholarship aid.

Charles Terrell, Advisory Committee Member

Dr. Troutt, I wonder, in explaining cost, price, net

price, and subsidy, how do you work in the reality of
debt?

William Troutt The Commission was certainly concerned about

rising debt levels. So—given our charge—when we
dealt with the concept of net price, we stayed away
from thinking of loans as diminishing net price.

Charles Terrell It has been my experience that families who have

had the least access to higher education are
disproportionately affected by the thought of debt.
If you do not deal with the concept early on, what
happens to these people who are so frightened by
debt?

“It has been my experience that families who have had

the least access to
 higher education are disproportionately affected by the
thought of debt.”

William Troutt Exactly, you are touching on a larger problem that

needs to be addressed comprehensively early on.
ACE has shown through their recent survey that
families need much better information about all
aspects of college financing.

Studies have put diplomas on a table and asked

people to make a guess about price. Whether it was
a community college diploma, a public university
diploma, or a private college diploma, they always
overshot the actual price. When it came to available
aid, they always thought that there was less than
there really was. And the people who need that aid
the most know the least about it, and it is
implausible to them that enough is available. Much
more work needs to be done in this area.

Juliet Garcia Dr. Hiss, what is the context against which this
is all playing out? What are the implications for
access?

William Hiss, Vice President, Administrative Services, Bates

College

I would offer several observations. First, have the

so-called aid wars, or packaging wars, helped low-
income students gain access? The evidence on
unmet need suggests, no. Because they have no
grant funds to speak of, one of the places we may
want to look to see if low-income students are being
hammered is in non-flagship public universities.
Second, challenges from conservative groups over
affirmative action will require some of us to start
thinking about proxies for race and what we mean
by affirmative action. Third, at institutions favoring
or forced to move to merit-based aid, the
percentage of the budget used for student aid is
going up over 25 percent, and one-third, forty
percent is not uncommon. Save a deep endowment,
there is simply no way this can be sustained without
drastic adjustments. Fourth, our public K-12 system,
 still the principal engine of improvement in our
society, is based upon the most regressive tax
system we have, the local property tax. State
formulas bring us up to only a lowest common
denominator, leading to a continuation of the
uneven playing field. Fifth, I worry about the
unaccounted for costs of low-income non-success—
like incarceration costs. As we fail to succeed with
these students, we pay other costs down the line
that have to be factored into all this.

“at institutions favoring or forced to move to merit-based

aid,
the percentage of the budget used for student aid is
going up
over 25 percent--a third, forty percent is not uncommon.”

So, the educational and social context for

maintaining access for the very lowest income
students is very complex.

Juliet Garcia How do you decode the complexity of the

environment for the Congress and state legislators?
How do we communicate, for instance, that it is a
misperception that student aid has been driving up
costs? And that more support for student aid does
not work against access?

William Troutt Well, it is a problem. Few policy makers will take

time to understand the complexity. I tried to put it in
a West Tennessee context for the Cost Commission.
I’m from Bolivar which is not far from here; college
costs are sort of like Tennessee goat meat. The
more you chew on it, the bigger it gets. That is, it
has an expansive quality to it.

This is partly a self-inflicted wound. We have not

done the job of analyzing costs that we do in other
areas of university research. I am very hopeful
about the NACUBO ad hoc committee on college
costs, trying to provide policy makers more clarity
about college costs. Let’s face it, there is deep
suspicion about college costs. And until we take
more of a lead as an industry, and be more
transparent about it, we are going to continue to
 have people suspicious about us. And you have
legislative staff at the state and federal level who
are unencumbered by any self doubt—staff with
deep, preconceived notions about what drives cost.
Our Commission did document that federal grant aid
is not a driver of cost.

We all just have a tremendous job ahead of us to

educate policy makers.

David Breneman About three weeks ago, I had a call from a Wall
Street Journal reporter who observed that higher
education now is virtually the only sector where
prices are rising faster than inflation. I’m not sure
what he thought about pharmaceuticals and other
services. But his question was, why are other sector
prices holding steady and yours are not?

Part of the dilemma is that, for the foreseeable

future, tuition will be going up at only five percent
per year. We may feel good about that, but that
doesn’t play very well with the public.

In the public sector, during the downturn in the late

1980s and early 1990s, states cut appropriations
dramatically. We responded, in what might be
considered a rational way, by raising our tuition for a
couple of years at double digit rates. Then, we got
horse-whipped by the next governor for raising our
prices—when, arguably, it was a reduction in
appropriations that caused it. We seem to be in a
sucker’s game that we can’t get out of.

Yes, there is a self-inflicted dimension to this, but it

isn’t anybody’s fault, and it will be hard to work our
way out of it.

James Koch Over the last couple of years, I have found

something very useful. I write all my students and
their parents responding to the question, are you
getting your money’s worth? I point out to them
what they are paying vis-a-vis what it is we are using
to support them. For in-state students at Old
Dominion, there is a $6,000 per year subsidy. For
out-of-state students, of course, the subsidy is much
less because we are required by state law to charge
 them the full out-of-state costs of their education.

“Are you getting your money’s worth? I point out to

them what
they are paying vis a vis what . . . we are using to support
them . . . it has changed the tenor of discussion on
parents’ days.”

I have found this to be very useful, and it has

changed the tenor of discussion on parents’ days. I
recommend that to other people, because there is a
tremendous lack of understanding about what we
are actually spending in colleges and universities to
educate people versus what they’re paying us.

Charles Terrell If Boston University is any example, no one,

particularly faculty, really understands these issues
except those in student aid, perhaps some in
admissions, and the president. And not many
students and parents will come in contact with the
president. I wonder how we can do better at
educating our own community to communicate the
real sense of these issues?

William Troutt I think you are right. I think everyone has to start
with their own colleagues on the faculty. The faculty
often have no sense of cost versus price. In many
cases, no one has ever explained it to them. At
Belmont University now, everyone knows the
difference between cost and price; we now have that
down. We even let a Chronicle of Higher Education
reporter run free on campus a few weeks ago.

This Committee may want to urge that institutions

drive down in the organization a better knowledge of
cost and price. A student is not likely to be asking
the president; he or she is more likely to be asking a
faculty member in class about why tuition has risen
by four percent. I think that is a very perceptive
notion that the people who may be most
knowledgeable about these issues are not the
people to whom students are most likely to talk.
Toni Larson, Distance Education Panelist

I lobby for the private colleges in Colorado. Often,

one of my frustrations is the difficulty of finding
someone on campus to help with an issue before the
state legislature. Following up on Bill’s [Troutt]
remarks, it would behoove us all to do more
educating about these issues on our campuses.

In higher education, we want to be sure we are

speaking accurately. We bend over backwards to do
that. Sometimes we have to put some of the detail
aside and do the sound bite to get the message
across. Often this requires identifying flag bearers in
the legislature who will listen to the details and take
the message forward for us. And we need to be
persistent. We move forward in education in the
legislative process by half gains or quarter gains—
and sometimes no gain at all in a given year. But we
have to keep after the issues and not pull back when
we don’t experience victory right away.

“these misperceptions . . . affect not only the Texas or

Colorado legislature
but also the Congress of the United States . . . (and) can
determine national policy . . . we need to be very
concerned about how to communicate our message.”

Juliet Garcia I think those are great points. Let’s not forget
the primary reason our Committee is focusing on
these misperceptions is because they affect not only
the Texas or Colorado legislature but also the
Congress of the United States. Insofar as a
misperception can determine national policy on
student aid, we need to be very concerned about
how to communicate our message. So we’re not
merely talking here about a “how-to manual” for
dealing with our state legislatures, but how these
misconceptions can impact need-based aid
nationally.
Susan O’Flaherty, Advisory Committee Member

I am curious to follow up on what the Cost

Commission did in terms of defining costs. In the
last quarter century, I have been at five different
institutions and have had several discussions about
what it costs to educate a student. I am interested
in spreading the word on campus about these
matters, but we first have to agree on what cost is.
How did your Commission get to common ground on
cost?

William Troutt Good question. In Appendix B of our report,

“Straight Talk about College Costs and Prices,” you
will see the work of Gordon Winston of Williams
College—work that tries to come to grips with capital
costs. That’s pretty good work, and we would all do
well to apply that formula on our own campuses.

Back to what Toni Larson said, we worry so hard

about being precisely right. As the "Chairman of
Omaha," Warren Buffet, said recently in his
stockholder newsletter, sometimes it is better to be
roughly right rather than precisely wrong. We have
to work harder with policy makers to be roughly
right.

For example, how precise do we have to be,

especially at research universities, to describe in
detail the complex issues of cost accounting? We
may be better served by being approximately right
with policy makers. I am not sure that extreme
precision always serves us well in getting our
message across.

Once again, Gordon Winston’s formula is easy to

calculate and served us well on the Cost
Commission.

“Higher education is a trust market . . . Somehow, during

the period from
1985 to present, we have reached the point where some
people don’t trust us.”
David Breneman One final point— at root core, our dilemma on
the cost issue results because we have in some way
lost public trust. Higher education is a trust market.
Anyone who is a college administrator knows if he or
she ever loses the faculty’s trust on what you’re
telling them about the budget, you’re dead in the
water. You can never go back and recapture that
trust by showing data and analyses. Either you’ve
got it, or you don’t.

Somehow, during the period from 1985 to present,

we have reached the point where some people don’t
trust us. So they are going to nit-pick with us. I am
not sure the response that will be effective is
countering with ever more detailed cost analyses.
That’s the fundamental dilemma.

Thomas Dillon Isn’t the picture made even more complicated by the
huge difference between private institutions and
public institutions? I think at the University of
California the average family income is higher than
at private institutions in California. This means that
the wealthy at UC are being subsidized more than
are middle and low-income students. I think that
complicates the issue.

Marc Glenn, Advisory Committee Student Member

From the student viewpoint, the concern is not

where or why there are cost increases, but rather to
stop the increases. I would like to ask Dr. Troutt
three questions: first, has student aid played any
role in tuition increases over the last decade;
second, if student loans had been unavailable over
the last two decades, would tuition be so high; and
third, isn’t it true that the less you subsidize middle-
and upper-income students, the more money you
have to provide aid to lower income students?

William Troutt As the parent of a graduate student at the University

of Virginia, I must say it is a great deal, and I am
happy to have it. But those are very important
issues to talk about.
 “Where we came down as a commission is that the data
are
simply not there . . . not enough conclusive data to
say loan availability drives price.”

The Commission was asked to look at eleven

proposed cost drivers, and one of those was student
aid. Clearly, it is easy for this Committee to see that
there is no connection between grant aid and cost.
We spent a long time on the Commission looking at
whether loan availability had been a driver of cost or
price. Clearly, it has been a driver of access. But
has it somehow been a driver of cost?

We commissioned multiple papers. You can debate

both what data are available and you can debate the
underlying assumptions. Where we came down as a
commission is that the data are simply not there.
That’s not to say that further study might not give
some more conclusive evidence. It was a point of
fervent conversation, but at the end of the day,
every Commissioner voting felt there were just not
enough conclusive data to say loan availability
drives price.

Brian Fitzgerald, Advisory Committee Staff Director

Marc, the staff has taken a very close and detailed

look at these issues. One risk is to examine highly
aggregated data, chart the increases in prices and
plot the growth in student loan volume, and see an
inescapable correlation. But correlation is not
causality. In other words, it is very easy to draw a
conclusion at the aggregate level that is just not
supported at the institutional or student level.

One has to ask what incentive institutions could

possibly have to raise tuition when the loan limits
have been frozen since 1986? A freshman who is
already at the $2,625 maximum does not get one
dime more aid. That is, no one gets any more
 federal student aid because of the very powerful
effect of loan limits. Also, the majority of increased
loan volume has been in unsubsidized loans. I don’t
think that anyone is asking, does the existence of
mortgages at market rates drive up the price of
housing? Or does the existence of car loans at
market rates drive up the price of automobiles?

“Would tuition be lower today in the absence of loans . . .

if you
eliminated those loans, would tuition go down? . . . they
are
more likely in fact to go up if loan capital is restricted.”

Perhaps the best way to look at this is to turn the

question around, would tuition be lower today in the
absence of loans? And in particular, if you
eliminated those loans, would tuition go down?

I think an extremely strong argument can be made

that they are more likely in fact to go up if loan
capital is restricted. And that is what these critics
are arguing for—not a reduction in subsidies or an
interest rate increase, but decreasing the availability
of loan capital to students and families.

Marc Glenn I am not by any means advocating the

restriction of student loans, but I would come back to
the point that the less you subsidize higher income
students at higher priced institutions, the more you
can subsidize lower income students.

James Koch As an economist, I would like to point out that

there are plausible models that student financial aid
can increase tuition and fees. It depends on what
kind of student aid you are examining. If you are
talking about loans, perhaps not, probably not—or if
so, not very much.

But if you begin to talk about grants, the probability

of that occurring is higher, and if you consider
institutional merit-based aid, probably so. Not only in
 theory, but my own experience at Old Dominion
indicates that’s true when one considers what it
might take to attract students to the institution. It
really depends on the element of the financial aid
package we are talking about. One of the problems
is that public officials do not differentiate between
institutional merit-based aid and loans. With respect
to public policy, it makes a big difference whether
we are talking about student loans, which are
innocent or mostly so versus institutional, merit-
based aid.

Juliet Garcia These issues (see Exhibit 1) overlap

considerably. Can I ask you to turn your attention to
those under student aid? One that is most
interesting to me is the perception that merit-based
aid is a better investment of taxpayer dollars than
need-based aid. What do you think?

James Koch Setting aside issues of equity and justice,

need-based financial aid is economically very
efficient. The rate of return to societal investment in
need-based financial aid is simply much higher than
it is for merit-based aid, or aid that is not need-
based. Over the last 15 to 20 years, in several
economics journals, some very persuasive evidence
has been presented that need-based aid is really
much more efficient than other kinds of financial aid.

“The rate of return to . . . need-based financial aid is

simply much
higher than it is for merit-based aid . . . Giving financial
aid to people
who would have gone to college anyway is not . . . very
efficient.”

Intuitively, what it boils down to is this: giving

financial aid to people who would have gone to
college anyway is not societally very efficient. Yes,
when we do give need-based aid, we sometimes
give aid to individuals who do not graduate or drop
out, but in an overall sense, it is very efficient. This
is something we should defend, and we ought to do
 that from the standpoint of economic efficiency,
even if there were not equity or justice arguments in
favor of it as well.

Juliet Garcia I think we can all agree with that assessment.

Let me now raise the issue of remediation. The
Texas Higher Education Coordinating Board did a
study this last year in which they traced the growth
of remedial education over the last decade. And,
looking only at that piece of evidence, the study
raised great concern among our legislators about
what we were doing in higher education, and
whether or not remediation is part of our mission as
institutions of higher education.

Putting justice and equity back on the table, how

does that fit into whether or not federal public policy
should be looking at the issue of remediation. How
does it fit in to that discussion? Bill?

William Wenrich, Chancellor, Dallas County Community College District

In Texas, the Texas Academic Skills Program requires

that you pass it before taking collegiate courses.
About 46 percent of the first-time freshmen who
come to Dallas County Community Colleges need to
be remediated. About 56 percent of those coming
from the Dallas Public School District require
remediation. And yet, about 56 percent of the
students who graduate from one of our colleges
have a remedial course on their transcript. And
when they transfer, they do better at the universities
than people who began at the university.

This tells me that people are not getting quality

education in the secondary public school system. If
we fail to allow them to be remediated, they would
be thrown out of the mainstream and lose the
opportunity for access to higher education. So,
while it is a major political problem with the
legislature as Juliet has indicated, fundamentally if
your concern is access, remediation is one of the
major issues. And it is not Texas alone, by any
means. In fact, I would ask the university
representatives here if they do not have,
somewhere at their institution, a remedial program?
 “ . . . until someone comes up with a better way . . .
we should stick with remediation. I strongly believe
these
programs would pass a well done cost-benefit analysis . .
.”

David Breneman About a year and a half ago, Diane Ravitch

was putting together a book at the Brookings
Institution and called to ask if I had seen any data on
the national costs of remediation. I said that I had
not and agreed to try to come up with an estimate.
We have now pretty thoroughly surveyed the states
on this issue and the data are just awful. But I was
able to make a stab at an estimate of budgetary
expenditures and came up with a figure for the mid
1990s of about $1 billion in the public two-year and
four-year institutions. And the question arises, is
that a big number? That is probably an
underestimate because a lot of the four-year
institutions do not want to divulge that number. So
let us say it is about $2 billion.

Total expenditures in higher education in that year

were about $115 billion. So one way of looking at it
is this: it is about one percent of public outlays. If
you considered outlays for only the first two years of
college, the percent of course would be larger. But
my conclusion after looking at the issue is that the
number is not huge, and that we ought not be
incensed about this. We are not going broke in the
universities paying for it. Really, the technology is
simple, and the people teaching are part-time
adjunct faculty. As I understand remediation at most
institutions, you are not getting degree credit for
remedial work, but rather institutional credit, which
does count as part of your course load allowing you
to receive federal student aid.

This has flared up, for example at CUNY, and is a hot

issue. I keep coming back to the question, what is
the alternative? Do you slam doors on these young
people? In fact, they are not all young people. Our
 work shows that perhaps up to half of the people
doing remedial work in our colleges are actually
returning adults. This is not just 18-year olds
entering college. That is a misperception. And I
think you have to distinguish between remediation
of poor reading skills and brush up courses in
mathematics. The latter strikes me as something we
should not get exercised about.

“Certain groups of people just do not receive their fair

share of resources. If we could reframe the concept in
this
way getting away from ‘remediation’—we might do
better”

My conclusion is that until someone comes up with a

better way to deal with the problem, we should stick
with remediation. Personally, I strongly believe
these programs would pass a well done cost-benefit
analysis, which is the correct way to do it. What
troubles me again is that this is a topic that is ripe
with ideology right now. People know the answer,
and they are ready to implement it without any
concern for social consequences.

Charles Terrell Let me follow up Dr. Breneman’s remarks, Juliet, by

suggesting that we need to look at the essence of
remediation differently by looking at educational
needs and resource allocations. Certain groups of
people just do not receive their fair share of
resources. If we could reframe the concept in this
way getting away from “remediation”—we might do
better, not only in traditional higher education but in
job retraining as well. As long as the issue is framed
as “remediation,” there will be a big problem.

Carolyn Sabatino, Advisory Committee Member

Based on my own experience at Ohio University and

ten years experience also at the community college
level, I think this issue has been oversimplified as
well. Dr. Breneman addressed that. When one looks
 at numbers in the aggregate, they seem
overwhelming.

It really would be interesting to see how many

courses are taken to refresh one’s knowledge of that
material as opposed to an 18-year-old who has been
poorly prepared by the K-12 system. Too often, this
issue becomes a whipping boy for the K-12 issues.
The way it is presented in the media is very
simplistic. It is a far more complex issue. If the
average age of students in this country is in the mid-
20s, then surely a significant proportion of those
courses are really taken for purposes of trying to
ease your way back into a higher education setting—
so that one has a better chance of succeeding. So it
would be interesting to see if there are any data on
how many of these courses are taken by first-time
students coming straight out of high school versus
older, returning, nontraditional students.

“ remediation is a serious problem but it is also an

opportunity for
higher education to partner with local . . . schools—not
only to reduce the need
for remedial courses . . . but also to improve . . . quality
and standards . . .”

Frank Holleman, Advisory Committee Member

Juliet, I think that this issue—remediation—does offer

the higher education community an opportunity to
partner with the K-12 system. For example, I know
that in my community, our local community college
started a program with local high schools. They
administer a test to juniors in high schools that have
had a number of students who needed remediation.
They explain the score to the student and then work
with those students during the remainder of their
junior and senior years to take the courses they
need, and have the tutoring they need, so that when
they graduate, they will be able to move right into
the community college course work.
 So it is true that remediation is a serious problem,
but it is also an opportunity for higher education to
partner with local K-12—in this instance high schools
—not only to reduce the need for remedial courses
once the student reaches the community college,
but also to improve the quality and standards of high
school education in communities. So it is a serious
problem, but one that offers opportunities for
creative solutions that both improve the public
school system and the local community colleges.

Juliet Garcia I think we can all agree on that, Frank. Let me

return for a moment to the interesting way that
Charles suggested we look at remediation. It is not
unpopular today to say that a worker needs to be
retrained—eight to ten times in their lifetime! As a matter of
fact, it has become a strong agenda to support politically. Is not
that, in fact, what remediation is for adults? For the older person,
is not worker retraining remediation?

If we allowed that same positive view to be borrowed by

remediation or developmental education perhaps we would raise it
to a new plane of discussion, and eliminate some of those negative
constraints.

Charles Terrell Just one last word on what I will now call “resource allocation.” I
do think that historically black colleges and universities (HBCUs)
can serve as a wonderful role model for higher education in this
area.

Traditionally, HBCUs have taken a population that has come to

them prepared at very different levels, but have not made learners
feel that they are second class citizens if they needed more work in
a particular area. So I think that higher education could look at this
subset of institutions for guidance.

“we found that remediation, even in schools that do a lot of it,

is a “mile wide and an inch deep . . . those students taking remedial courses
were taking only between one and two classes.”

Brian Fitzgerald Let me follow up with some information that may be helpful to the
discussion. It seemed as if the issue of remediation was going to be
 a big one in the last reauthorization. Anticipating that, about two
years ago, we did a quick, purposive survey to find institutions
where we thought remediation would be greatest. So we looked
especially at inner-city colleges, HBCUs, and tribal colleges. We
found some very interesting and, from the standpoint of common
perceptions, counterintuitive information. First, we found that
remediation, even in schools that do a lot of it, is a “mile wide and
an inch deep.” When we surveyed these institutions, we found that
on average those students taking remedial courses were taking only
between one and two classes. There is a perception among some
that students are retaking their high school curriculum and
spending years in remedial training.

Second, we found that remediation is effective. One

of the studies we found most enlightening was by
the Texas Coordinating Board. As Bill Wenrich
indicated, all students are tested before they can
take collegiate courses and programs. If they fail,
they must take remediation. Those students who
successfully complete those courses do as well as
students who require no remediation.

We anticipated that remediation would be a very

contentious issue in reauthorization. Fortunately, it
did not become one I think, in some regards,
because of the position this Committee has taken.
Following up on what Dave Breneman has said, the
data certainly belie the common perception that this
is high school by another name—very expensive and
wasteful. We concluded, that from an access
perspective, funds spent on remediation may be the
most efficient dollars spent because, without them,
most of those students would not be in college or
get through college.

David Breneman As a defensive strategy, assuming this issue

may arise again, I would say this: The two factors we
could not get much good information on were the
age distribution of those taking remedial courses
and success measures. We could not find hard
documentation. It seems to me that if you had
those two pieces of information, you could deal with
almost any attack.
 “We know that students who successfully complete
remediation perform better in basic freshman
composition
than do those who are not mandated for remediation.”

William Wenrich Just one more point, we do follow what

happens after remedial English. We know that
students who successfully complete remediation
perform better in basic freshman composition than
do those who are not mandated for remediation. We
believe remediation does work. But we all have to
work together to be successful.

Oscar Porter, Early Intervention Panelist

May I make one brief comment? We are waltzing

around an important issue: Part of the agenda on
opposing remediation is about exclusion. It is about
telling people they do not belong, they should not be
there, and not making space for them. It is a way to
keep out the people we have always kept out. And
we cannot have a political discussion about
remediation that does not acknowledge that reality.

Juliet Garcia With that in mind, let me return for a moment

to Dr. Breneman’s point about the costs and benefits
of remediation and share a story about what
happened in our community, Brownsville, Texas. Our
campus is one block from Mexico. We are a
predominantly Hispanic community and, at half the
per capita income in Texas, with the lowest
educational attainment in the state, one of the
poorest communities in the nation.

We are a community college in partnership with a

university. We are in the ninth year of our
experiment to eliminate barriers for students
between community colleges and universities. As a
result, we must act as both a university and a
community college. So when it comes to issues like
a crisis requiring worker retraining, we must be
flexible.

We had a very large company go out of business.

 When this happened, we had 600 plus women out of
work within six months. When tested in
mathematics, reading, and writing, these women
had, on average, a third- to fifth-grade educational
attainment. One of the options is say too bad, these
companies are going further south or offshore to get
cheaper labor, and no more welfare for you after a
year. You did not learn while you were in school, so
too bad. Or you have the option of worker
retraining.

“How does a low-income Hispanic student from

Brownsville, Texas afford Bates College?”

Let me give you the success story. These ladies

were the most studious students we ever had. They
attended class 38 hours per week. After one year,
they were trained in three different areas: as nursing
assistants, as computer specialists, and as office
computer assistants. Of the students that took the
nursing assistants exam, 96 percent passed that
state board exam within one year.
Let me return to the issue of college costs, and ask
Bill Hiss the following question: how does a low-
income Hispanic student from Brownsville, Texas
afford Bates College?

William Hiss Our commitment would be to meet that

student’s full need for four years. The average
Bates College grant now is about $15,000. The
student you are asking about would receive a much
higher Bates grant, let’s say $22,000. With federal
aid, and campus employment, we would strive to
minimize that student’s loan burden, hopefully,
keeping it to zero if possible.

We began eight years ago looking at the issue of

how we would bring more diversity and quality
simultaneously to our institution. We wanted
unquestioned quality to stay at the top of the list—
feeling that in the long term, that was the best way
for us to go. We wanted our graduation rates to stay
between 85 percent and 90 percent. Those
 graduation rates are the same no matter what the
socioeconomic background or race of the student.

Charles Terrell Bill, what is unquestioned quality?

William Hiss We wanted to increase diversity but continue

to admit superior students based on their entire
portfolio of achievements, strengths, and talents.
And I think it has worked. Over the last twenty
years, the cost has gone up fivefold but the
applicant pool has doubled.

Brian Fitzgerald What has been the reaction to your efforts?

William Hiss There are two groups of people we are not

reaching very successfully: first, in general, those
who look at sticker price, feel they simply can’t
afford it, and don’t even apply; and, second,
specifically, the low-income students who don’t know
how the system works. With regard to the latter,
once we get the aid package to them, you hear an
audible sigh of relief as they realize we can do this.
But the labor to bring those young people to
consider high cost places is very great, first, to
convince them that the college has an outcome that
will do them some good, and, second, leading them
through all the details of the process.

“There are two groups . . . we are not reaching very

successfully:
those who look at sticker price . . . and don’t even apply;
and
. . . low-income students who don’t know how the system
works.”

Donald Vickers, Advisory Committee Member

Bill, what percentage of tuition revenues does Bates

College put into its own grant aid?
William Hiss It has gone from 15 percent to 18 percent in
the last ten years.

Donald Vickers One of the arguments we often hear is that a

private institution will put a higher percentage of its
revenues into student aid than a public institution.
Share your thoughts on that. Should public colleges
be able to make a similar commitment? How do you
see that entering into getting the right students?

William Hiss That is an institutional decision; I would hope

they would. The young people I am worried about
are those who head toward a public institution,
assuming it will be a lot cheaper, when it can in fact
turn out to be more expensive. My sense is that the
public flagships have the flexibility to prevent this.

Juliet Garcia Two of the remaining issues that are of great

interest to me relate to whether or not institutions
meet the full need of the lowest income students.

William Hiss I should point out that Bates College meets full
need for four years, but we are not fully aid-blind in
admissions. When we reach the later stages of the
reading session—because we are committed to full
need for four years—that puts a cap on how many
low-income students we can handle. To some
extent, those students who are wait-listed represent
unmet need.

Juliet Garcia I would tell you that most of our students are
having to work even with Pell Grants and loans. We
try to discourage the taking of loans if possible, but
it is hard to tell someone, don’t feed your family or
quit school.

William Irwin, Advisory Committee Member

I am not sure my experience at my institution,

Lockhaven University, agrees with some of the
information presented. We try to call our institution
low-cost. Our unmet need group is neither the high
end or the low end. The lowest-income students
 have about 65 percent of their hard costs met out of
federal and state aid. It’s the student from the
family with $40,000 to $60,000 income that will
have the highest level of unmet need. I would
suggest that is not a typical in the public sector. In
our situation, we are serving the low-income student
very well.

“Two . . . issues that are of great interest to me relate to

whether or not
institutions meet the full need of the lowest income
students . . . most of our
students are having to work even with Pell Grants and
loans.”

Susan O’Flaherty My experience at Western Michigan University

hasn’t been quite the same. I do agree that for
some time that the middle-income group had the
largest unmet need. I think some things have
occurred that have helped that.

But what I see at our public institution is that low-

income students are actually taking out more loans
than our middle- and upper-income students. They
have absolutely no place to turn for additional
resources. When they receive a $3,000 Pell Grant
and a $1,000 SEOG, what is left on a $11,000 to
$12,000 budget? And we call our institution low
cost. We actually find it necessary to offer, in
addition to a $2,625 loan, a PLUS loan to families
who have a zero family contribution.

I feel very strongly that the low-income student is at

great disadvantage. They do not benefit from the
tax credit. On the state level, new initiatives for
scholarships are all drawn for middle- and upper-
income families without regard to need. So while I
understand that middle-income students can have
unmet need, I feel that unmet need is very serious
at the low-income level.
 “I feel very strongly that the low-income student is at
great
disadvantage . . . while I understand that middle-income
students can have unmet need, I feel that unmet need is
very serious at the low-income level. ”

Donald Vickers Going back to what Bill Hiss said, there has been a
trend in New England that a qualified low-income
student will not get admitted to the school of his or
her choice because admissions are not in fact need-
blind.

What I am really concerned about is the low-income

group. We are seeing students from families making
less than $25,000 a year packaged with a $4,000 to
$5,000 PLUS loan per year.

Thomas Dillon Don, you said that low-income students are not
getting admitted to the school of their choice; are
they getting into college at all?

Donald Vickers Yes, they are getting into college. But often when
the student is not admitted to a private school with
the resources and commitment to full need, and falls
back to the public school, we have the very problem
that Sue articulated—excessive loans.

Carolyn Sabatino A lot of the issue has to do with how middle-

income is defined and the exact structure of the
state program. In Ohio, the state grant is capped at
$32,000 income. So a family with an income over
$32,000 is out of range of the state grant. At Ohio
University, our student budget is about $11,000.

We have the good fortune to be able to protect

students from really low-income families to ensure
there is no “gapping.” Those families can’t make up
even a $500 gap. At our institution, the low-income
student is for the most part fully funded. Then there
is a middle-income bubble, exactly like Bill was
talking about. Those students’ packages will be
predominantly employment and loans including a
 PLUS loan. While a good resource, a PLUS loan is
unreasonable for our low-middle income families.

It is amazing the length to which parents will go to

borrow in order to make that education possible.
There is a lack of recognition of the cost to families,
particularly loans to parents with more than one
student in the family. Even at the publics, it is quite
large.

“It is amazing the length to which parents will go to

borrow . . . There is
a lack of recognition of the cost to families . . .
particularly with more
than one student in the family . . . Even at the publics, it
is quite large.

William Irwin What we are also seeing is the willingness for

students to borrow in the expanded unsubsidized
program when the parents are rejected, further
increasing student debt burden.

Juliet Garcia Our time has been exhausted. I thank all of

you for your time and contributions. They will
greatly benefit our Committee in making
recommendations to Congress and the Secretary.
 SYNOPSIS OF COMMITTEE MEMBER DISCUSSION
APRIL 28, 1999
Robert Khayat, Advisory Committee Chair

Good morning. The purpose of this morning’s session is to review

and discuss what we learned from our distinguished panelists
yesterday. I would like to ask our Vice Chair and session
moderator, Juliet Garcia, to lead the discussion.

Juliet Garcia Thank you. I thought the speakers yesterday helped us, from their
own perspectives, take a look at important perceptions that the
public has about higher education. This will allow us to fine tune
and qualify our message as we go forward. I also felt that the
explanation that we heard from Dr. Troutt on college cost, price,
net price, and subsidy was excellent but also worrisome. I think it
is important that we begin to decode these things for the public.

“these issues are being driven by . . . people on the street . . . saying that
college costs too much, too much aid is going to low-income students, the
middle-income family isn’t getting any assistance, what are you going to do
about it? As an advisory committee, we need a simple, effective message.

We should not expect the public to allow us the privilege of a

thirty-minute detailed analysis of how we come to understand each
of those terms. We are not going to get it. And, if we are not
going to get it, it is not going to be communicated and it is going to
affect national policy. So while Dr. Troutt’s analysis is very helpful
in understanding the issue, we have to find a way to communicate it
better to the public as well as to Congress. As you know,
perceptions may not have anything to do with facts.

Donald Vickers This is a very complex issue from my perspective. The ice can be
very thin for us on this particular pond. With regard to the issues
discussed yesterday, the U.S. Congress goes home and these issues
are being driven by their constituents and people on the street.
They are saying that college costs too much, too much aid is going
to low-income students, the middle-income family isn’t getting any
assistance, and what are you going to do about it? As an advisory
committee, we need a simple, effective message.

Charles Terrell In addition to cost, price, net price, and subsidy, we must look at
debt comprehensively to assess its impact on families at different
income levels. A $3,000 debt to a low-income family might be
 much more onerous than a $15,000 debt would be for a higher
income family. Unless debt is built into these concepts, we will not
be able to communicate a realistic picture of the entire issue of cost.

Juliet Garcia Good point. Perhaps we could, as a Committee, work toward

painting a picture of the positive outcomes of our current policies.
That is easy to communicate to a member of Congress. That, I
think, would have more impact.

Frank Holleman In our advocacy for making the case—which is compelling—for

need-based aid, I think it is a mistake to pose it as a conflict
between middle-income and low-income families. That should not
be the way we cast the issue. For one thing, there is the confusion
over what is meant by those terms. So I don’t think it’s wise or
convincing to make it a choice between middle-income and lower-
income aid.

“In our advocacy for making the case—which is

compelling—for need-based aid . . . it is a mistake to pose it as a conflict
between middle-income and low-income families.”

And trying to convince people who consider themselves middle-

income that they are not having a problem paying for college will
not be a successful way to persuade the public or elected officials of
the need for continued need-based aid. I am not sure that’s good
policy. Instead of trying to pit one group against another, we need
to show the public good of need-based aid.

An example from yesterday’s discussion is remediation. There is a

compelling case for why that’s so important for individual
communities, families, states, and the country as a whole. We
should not shy away from our basic, strongest point. That’s why
the programs were established to begin with, and that’s the function
they serve—to make big differences. Pitting one group against
another, I think, is a losing battle.

William Irwin There is another phenomenon I think is important here: the move in
the public sector, particularly at the state level, toward merit-based
aid. It is couched in terms of targeting the best and the brightest.
And it’s very hard to argue with that. But as Bud Hodgkinson said,
the one thing that SAT scores are a predictor of is family income.
So we know what population will be served by increased merit-
based aid. I think that is an important factor.
 Brian Fitzgerald I think it is an extremely important point and was underscored
yesterday by David Breneman recalling his experience with
midwestern legislators.

Frank Holleman Let me add to what I said before. One thing we need to convince
people of is that college is affordable. ACE’s data has shown how
widespread the misperception about affordability really is for many
families.

Brian Fitzgerald Following up on Frank’s comments, if there is a college cost crisis,

it is largely one of perception, in my view. There is a component of
that that unfortunately did not get discussed yesterday as directly as
we need to talk about it. There really is a crisis not so much in
ability to pay but in willingness to pay. The big reauthorization
battle in 1992 was over need analysis, particularly the elimination of
the consideration of home equity. This was just one example of
how, in fact, over time, expected family contributions have gone
down. Even the Ivy League schools have done so for families they
consider middle-income.

“There really is a crisis not so much in ability to pay but in

willingness to pay . . . Many families who consider themselves
e paying full freight at public institutions.”

But in conversations with aid administrators, I have learned that

families are as shocked as much with their expected family
contribution as with “sticker” price. One issue, for the long term, is
how we deal with family contribution which, though relaxed, is not
believable to many middle-income families. That leads these families
to ask why are other families getting grants and we’re not?—
particularly at public institutions. Many families who consider
themselves middle-income are paying full freight at public
institutions.

States are beginning to deal with this by launching tax-advantaged

savings programs and prepaid tuition programs. But the
willingness to pay issue may be a hard nut to crack. And the
message that public higher education is a good deal may not be
enough. Even at an institution likes Bates College, which, as Bill
Hiss indicated yesterday, is very successful at minimizing loan
burden for its needy students, as many as one third of the families
will still request a review of their aid package which is to say they
want to be considered for more aid. The other aspect that is
 important to consider is the sectoral one. The issues are different
for publics and privates. And the information campaign must work
for all of higher education, and not play one sector off against
another.

Robert Khayat Let me try to summarize. I think we all agree that the session
yesterday was extremely productive for our Committee. Juliet
started the discussion today with the theme that we have to develop
a simple, understandable message. Frank added that we should
communicate that college is affordable. I think we all agree with
those two propositions.

I would like to emphasize Brian’s point that all of the participants in

this enterprise must cooperate in delivering those messages in
order to avoid making one sector look affordable or not
affordable relative to the other sectors. Juliet, do you have a final
thought?

Juliet Garcia I would add only this: we need to be clear about why we are doing
this in the first place. We must communicate why we are so intent
on maintaining need-based aid, and what would be the effects on
the nation if we do not succeed.
 Appendix A: Information Refuting Misperceptions

About College Costs

“After a period of decline in the 1960s and 1970s, average tuition, room, and board at
public institutions rose to 15 percent of median family income in 1993 and has remained
stable ever since.” The Condition of Education.

“Despite the concerns we have noted about the impact on access of the recent rise in
college costs for low-income students, the high overall rates of college attendance in
recent years point to considerable success in making at least some form of
postsecondary education financially accessible to a very wide range of Americans.”
McPherson and Shapiro, The Student Aid Game.

“In our study on tuition increases at four-year public colleges and universities for
school year 1980-81 through 1994-95, we found that the two major factors associated
with these increases were the rise in schools’ expenditures and schools’ need to increase
tuition revenue to make up for smaller increases in state appropriations.”
GAO, page 1.

“The Commission finds no evidence to suggest any relationship between the availability
of federal grants and the costs or prices in these institutions . . . The Commission has
found no conclusive evidence that loans have contributed to rising costs and prices.”
The Cost Commission, page 11.

About Student Aid

“The American system of selective admission to a competitive set of institutions tends

to sort students with the highest academic qualifications and promise into the
institutions with the most ample resources with which to subsidize the students’
education.”
McPherson and Shapiro, The Student Aid Game.

“The considerable increases in net tuition for low-income students have led to a
growing gap between enrollment rates for high-income and low-income students and to
an increased concentration of low-income students at the least costly institutions. With
merit aid increasing at a faster rate than need-based aid, these trends seem likely to be
exacerbated in the future.”
McPherson and Shapiro, The Student Aid Game.

“Remediation is a core function of higher education . . . There is no evidence that

remediation is expanding in size or scope . . . The financial costs of remediation are
modest.”
 Institute for Higher Education Policy, College Remediation, page 5.

“We believe that remedial education would pass the basic cost/benefit test required of
any efficient social program. True, it would be far better if all high-school students with
college aspirations prepared themselves adequately for college-level work while in high
school . . . But, in the short run, what is the alternative to remediation?”
Breneman and Haarlow, page 3.

“Admitting a low-income student to Bates does not mean a federal aid windfall. It
means an initial $20,000 commitment from our own scholarship budget.”
William Hiss, page 2.

“We found no evidence that . . . private institutions increased their tuitions when they
received more federal student aid . . . Given the tuition increases that have occurred
since (the mid-1980s) . . . we would not be surprised to discover that the effect of
federal aid on public tuition has been substantially attenuated by now.”
McPherson and Shapiro, The Student Aid Game, page 84.

“Using more recent data, the Coopers & Lybrand LLP report could not find evidence to
support . . . (the) finding that federal student assistance resulted in tuition increases at
public four-year institutions.”
Pearson and Baldi, page 95

“We found that private institutions tended to increase their spending on institution-
based aid when federal student aid increased.”
McPherson and Shapiro, The Student Aid Game, page 84.

About Family Contribution and Unmet Need

“Average unmet need was about $6,200 ($3,800) for full-time dependent
undergraduates from low income families attending private . . . (public) 4-year
institutions.”
The Condition of Education, page 4.

“The prevalence of large amounts of unmet need--net prices frequently exceed EFCs,
especially for students in the lower income categories--suggests that net prices may be
rising faster than most families’ ability to pay.”
Institute for Higher Education Policy, Grants, page ix.
“Differential treatment of students within the aid-eligible population is very common
(including) making admissions ‘need-aware’ . . . ‘differential packaging’ . . . ‘gapping’ .
. . ‘admit-deny’ . . . (and) need-aware second review.”
McPherson and Shapiro, The Student Aid Game, pages 94-95.

“Families with incomes of $70,000-79,999 had an average EFC of $12,300, enough to

cover the price to attend a public 4-year institution without aid. Families with incomes
of between $100,000 and $124,000 had an EFC about equal to the price to attend a
private, not-for-profit 4-year.”
The Condition of Education.

“When Congress decided to write the need analysis rules directly into the 1992
legislation, it made those rules significantly more lenient with respect to middle- and
upper-middle-income students.”
McPherson and Shapiro, Priorities, page 143.

“In 1993-94, the net value of the principal residence and the net value of a family farm
on which the family resides was eliminated from all EFC formulas . . . The formulae for
calculating the EFC provide for asset reserves that ‘protect’ a portion . . . of assets
when determining the contribution from assets.”
End of Year Report, page 75.
 COMMITTEE MEMBERS

Dr. Thomas E. Dillon was appointed by the Speaker of the House in August 1996 and reappointed to serve
another three-year term that expires in September 2001. He is currently the President of Thomas Aquinas College
in Santa Paula, California. Dr. Dillon has more than 20 years of experience at Thomas Aquinas, which has
acquired a reputation as an outstanding institution of higher learning under his tutelage, and has worked to
advance and sustain Catholic liberal education. He holds memberships in several professional organizations and
currently serves on the National Association of Independent Colleges and Universities (NAICU) Commission on
Campus Concerns. Dr. Dillon earned his B.A. in Integral Liberal Arts from Saint Mary’s College of California in
1968 and his doctorate in 1977 from the University of Notre Dame.

Dr. Juliet V. Garcia, Vice Chair of the Advisory Committee, was appointed by the Secretary of Education in
1997 and recently reappointed to serve a three-year term which expires in September 2002. Dr. Garcia has 25
years of teaching and administrative experience in higher education. Since 1992, Dr. Garcia has been the
President of the University of Texas at Brownsville and Texas Southmost College. Prior to her current position,
she served as Dean of Arts and Sciences. She is a board member of the White House Initiative on Educational
Excellence for Hispanic Americans, the Ford Foundation's Campus Diversity Initiative, and the Carnegie
Foundation for the Advancement of Teaching, among other appointments. Dr. Garcia received her B.A. and M.A.
degrees in Speech/English from the University of Houston, and her Ph.D. in Communications and Linguistics
from the University of Texas at Austin.

Dr. Henry Givens, Jr. was appointed by the Speaker of the House in February 1998 to serve a three-year term
that expires September 30, 2000. Since 1979, Dr. Givens has served as the President of Harris-Stowe State
College in St. Louis, Missouri. At the request of the Governor of Missouri, Dr. Givens served as Interim President
at Lincoln University in Jefferson City in 1987, while continuing his presidential duties at Harris-Stowe. He is a
member of a number of professional organizations, including the American Association of State Colleges and
Universities (AASCU) Board of Directors, the Missouri Coordinating Board for Higher Education, the Council
on Public Higher Education (COPHE) and the National Association for Equal Opportunity in Higher Education
(NAFEO). Dr. Givens earned his baccalaureate degree at Lincoln University in Missouri, and received a master's
degree at the University of Illinois. He received a Ph.D from Saint Louis University and has participated in
post-doctoral studies in higher education administration at Harvard University.

Mr. Marc Douglas Glenn, was appointed by the Secretary of Education in October 1997 to serve a three-year
term which expires in September 2000. He is a recent graduate of the University of Virginia School of Law in
Charlottesville, Virginia, where he was founder and editor-in-chief of the Virginia Journal of Sports and the Law.
Mr. Glenn currently works as an attorney at the law firm of Powell, Goldstein, Frazer & Murphy, LLP in Atlanta,
Georgia. Mr. Glenn earned a B.A. from the Plan II Honors Program at the University of Texas at Austin in 1996.
He also interned at the White House in the summer of 1995.

Mr. Frank S. Holleman III was appointed by the Secretary of Education in October 1997 to serve a three-year
term which expires in September 2000. Mr. Holleman is a member of the law firm of Wyche, Burgess, Freeman
& Parham, P.A. in Greenville, South Carolina. Prior to his current position, Mr. Holleman served as Chief of
Staff to Richard Riley, Secretary of the Department of Education from 1994-1997. Mr. Holleman is a board
member of Success by Six, a project of the Greenville Community Planning Council. He holds a B.A. from
Furman University, a J.D. from Harvard Law School and a M.Sc. from the London School of Economics and
Political Science.

Dr. William A. Irwin was appointed by the Speaker of the House in August 1996 to serve a three-year term that
expired in September 1999, however, he will continue to serve until reappointed or a successor is named.
Dr. Irwin is the Director of Student Financial Aid at Lock Haven University of Pennsylvania in Lock Haven,
Pennsylvania. Before joining Lock Haven, he served as Director of Financial Aid at Urbana College in Urbana,
Ohio, and Administrative Assistant in Financial Aid at Ohio State University in Columbus, Ohio. Dr. Irwin has
been an active member of several professional associations, most recently serving as the 1995-96 National
Chairman of the National Association of Student Financial Aid Administrators. He earned his B.S. in Personnel
Management/Business Administration and M.S.Ed. from Indiana University, and his Ph.D. in Student
Personnel/Higher Education from Ohio State University.

Dr. Robert C. Khayat currently serves as Chair of the Committee. He was appointed by the President Pro
Tempore of the Senate in 1996 and recently reappointed to serve a three-year term which expires in September
2002. Dr. Khayat is the Chancellor of the University of Mississippi in Oxford, Mississippi. Prior to his current
 COMMITTEE MEMBERS

position, he served in numerous positions at the University of Mississippi, such as Professor of Law and
Executive Director of the Sesquicentennial Celebration, Professor of Law and Interim Director of Athletics, and
Vice Chancellor for University Affairs, respectively. Dr. Khayat holds several memberships in professional and
community-based organizations and is the author of several publications. He earned his B.A.E. and J.D. from the
University of Mississippi and his LL.M. from Yale University.

Ms. Susan O'Flaherty was appointed by the Secretary of Education in October 1995 and was reappointed to
serve another three-year term which expires in September 2001. Ms. O'Flaherty is Director of Financial Aid at
Western Michigan University in Kalamazoo, Michigan. Prior to joining Western Michigan, Ms. O'Flaherty was
Associate and then Acting Director of Financial Aid at the University of Colorado at Boulder. Ms. O'Flaherty has
held several positions at California Polytechnic State University in San Luis Obispo, California, including
Assistant Director for Financial Aid, Financial Aid Counselor, and Financial Aid Technician. She is a member of
a number of professional organizations and is active in the National Association of Student Financial Aid
Administrators. She completed her bachelor's degree at Adelphi University, and she received a master's degree
from the School of Education at California Polytechnic State University.

Ms. Carolyn M. Sabatino joined the Advisory Committee in July of 1995 and was reappointed by the Secretary
of Education in October 1995 and September 1998, respectively, to serve another three-year term which expires in
September 2001. Ms. Sabatino currently serves as Project Director for Administrative Systems at Ohio
University. Prior to accepting her current position, she served as Director of Financial Aid and Scholarships at
Ohio University from 1991 to 1998. Ms. Sabatino also served as the Director of Financial Aid and a
Microbiology Instructor at Parkersburg Community College. Ms. Sabatino has been very active within both the
Ohio and West Virginia Student Financial Aid Administrator associations, and she has done a number of
presentations on financial aid issues and direct lending. Ms. Sabatino received her bachelor's degree from the
University of Connecticut and a master of science degree in microbiology from Ohio University.

Mr. Charles Terrell was appointed by the President Pro Tempore of the Senate in October 1997 to a three-year
term which expires in September 2000. Mr. Terrell serves as the Associate Dean for Student Affairs at Boston
University Medical Center in Boston, Massachusetts. Prior to his current position, he served as Assistant Dean
for Student Affairs from 1980 to 1987. He also served as Director of Financial Aid from 1978 to 1980. Mr.
Terrell is the author of numerous publications and a member of several professional associations, including the
Coalition of Higher Education Assistance Organizations and the National Association of Financial Aid
Administrators. Mr. Terrell holds a B.A. from Colby College and a M.A. from Boston University. He is currently
a doctoral candidate in higher education at Nova Southeastern University.

Mr. Donald R. Vickers, the Committee’s newest member, was appointed by the President Pro Tempore of the
Senate in February 1999 to serve a three-year term which expires in September 2001. Mr. Vickers serves as
President and CEO of the Vermont Student Assistance Corporation (VSAC). Prior to his current position, he
served in numerous positions at VSAC such as Interim President, Associate Executive Director, and Director of
the Grant and Scholarship Division, respectively. From 1969-1971, Mr. Vickers served as Director of Financial
Aid and Student Placement at Johnson State College in Johnson, Vermont. He is a member of numerous
professional organizations, including the Stern Center for Language and Learning, the Robert A. Ellsworth
Educational Trust, the Eastern Association of Student Financial Aid Administrators, the National Council of
Higher Education Loan Programs, the National Association of State Scholarship and Grant Programs, and the
Vermont Association of Student Financial Aid Officers, among others. Mr. Vickers received his B.S. degree from
Johnson State College and has participated in graduate studies at the University of Vermont and Northeastern
University.
 THE PANELISTS

Dr. David W. Breneman is the Dean of the Curry School of Education, University of Virginia,
Charlottesville and former Visiting Professor at the Harvard Graduate School of Education, Senior Fellow
at the Brookings Institution, and President of Kalamazoo College. He has written extensively, including
five books on the financing of higher education and higher education policy.

Dr. Brian K. Fitzgerald has served as the Staff Director of the Advisory Committee on Student Financial
Assistance since 1988 and has conducted policy research in the private sector. He is a former Dean and
Lecturer at Bates College and currently serves as an Adjunct Associate Professor in the School of Public
Affairs at American University in Washington, D.C.

Dr. William C. Hiss is Vice President for Administrative Services at Bates College in Lewiston, Maine
and a former member of the Advisory Committee. Dr. Hiss is widely considered an expert on admissions
and federal and institutional aid policy and practice, and has written extensively on these topics.

Dr. James V. Koch is President and Professor of Economics at Old Dominion University in Norfolk,
Virginia and former President of the University of Montana. He has had a distinguished career in
teaching and research, and is the author of five books on economics.

Ms. Toni E. Larson serves as Executive Director of the Independent Higher Education of Colorado and
has played a leading role in the National Association of Independent Colleges and Universities (NAICU)
on the issue of distance education. Ms. Larson’s member institutions include Regis University, which
sponsors extensive distance education programs.

Dr. Oscar F. Porter is a nationally recognized expert on access, college/school partnerships for early
intervention, and the relationship of student financial assistance to college persistence. He currently
serves as Associate Director for Research, Evaluation, and Information Management for the Mathematics,
Engineering, Science Achievement Program (MESA) at the University of California. Prior to joining
MESA, he served as Assistance Executive Director of the National Institute of Independent Colleges and
Universities in Washington, D.C., the research arm of NAICU.

Dr. William E. Troutt is the President of Belmont University in Nashville, Tennessee and served as
Chairman of the National Commission on the Cost of Higher Education. Belmont University, like fellow
members of the Associated New American Colleges, is a teaching university offering a comprehensive
liberal arts education with real-world, professional application. Affiliated with the Tennessee Baptist
Convention, Belmont offers six undergraduate degrees in 56 major areas of study and nine master’s
degrees.

Dr. J. William Wenrich is the Chancellor of the Dallas County Community College District, the largest
undegraduate institution in the State of Texas and is comprised of seven colleges located strategically
throughout Dallas County with an enrollment of 50,000 credit and 45,000 non-credit students per
semester. Previously, Dr. Wenrich served as Chancellor of the San Diego Community College District and
has written extensively on student aid from a community college perspective.