Senate HELP Committee Holds Hearing on Student Aid

Last Friday, the Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing on college affordability. It was the latest in a series of Congressional action on increasing access to higher education. The focus was on general ideas and statements from the invited panelists regarding the federal student aid system. The broad focus of the hearing is likely due in part to the fact that Committee Chairman Ted Kennedy (D-MA) has introduced multiple bills regarding student aid, including S. 359, S.486, and S. 572. These bills are intended to increase grant aid, reduce borrowers’ student loan burdens by tying repayment to their incomes, step up regulation of lenders, and reshape the playing field of the government’s two competing student loan programs.

The hearing definitely appeared to be more for posturing and showmanship then actual substantive debate. The featured panelists were Suze Orman, a personal finance guru who hosts a late-night talk show on CNBC that focuses on consumer issues, and Tamara Draut, director of the economic opportunity program at the nonprofit Demos Group and author of Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead. Other panelists included Sandy Baum, a Skidmore College economist and senior policy analyst at the College Board, and Jon Oberg, a longtime Education Department researcher who recently helped to blow the whistle on a practice in which some lenders were improperly profiting from an interest rate loophole in federal student loan programs.
Although they all agreed that the government has to do more in order to help more middle and low income Americans pay for college, they differed on the details. For example, Orman believes that there needs to be more financial education for young people, a point on which the other panelists agreed. The other three witnesses all embraced the belief that increased competition in the student loan industry is a positive thing, a fact to which Orman objected. At the same time, Draut stated that a decline in state support is the driving factor in rising college costs, and Baum agreed. The two disagreed, however, on where the focus of increased aid should be. Draut’s focus is on the $19,000 debt that the average undergraduate accumulates. Baum believed the focus should be on the 15% of borrowers that have an accumulated debt of more then $30,000.

Senator Kennedy used the time to point out the work he has done and are will continue to do to help average Americans receive a college degree without going into massive debt. He took the time to mention the legislation he has introduced, as well as bills that he intends to bring to the committee, including another attempt to reauthorize the Higher Education Act. Efforts for reauthorization died out in the 109th Congress, a mistake that Senator Kennedy does not want the 110th to repeat.
Resources:

Doug Lederman and Sarah Rosser, “Scattered Thoughts on Student Aid,” Inside Higher Ed, February 19, 2007.
Author: SAS