On Wednesday, May 12, 2004, the House Education and Workforce Committee received views and feedback from higher education experts and stakeholders, including California State University (CSU) Chancellor Charles Reed, on the recently unveiled College Access and Opportunity Act (HR 4283). The bill is sponsored by Committee Chairman John Boehner (OH), along with Rep. Howard P. "Buck" McKeon (Santa Clarita), Chair of the Subcommittee on 21st Century Competitiveness, which has jurisdiction over higher education policy. Boehner touted the bill as a revenue-neutral effort that would expand college access to low and middle-income students. Some panelists however thought the bill could go further to assist students with the growing cost burdens of college tuition and fees.

Boehner's opening statement outlined his bill's main provisions including: strengthening Pell Grants - by making them available to students year-round; reducing the cost of loan origination fees from 3 percent to 1 percent; simplifying the financial aid process; removing barriers for non-traditional students by eliminating the 90-10 rule; and empowering parents by making college financing and accreditation more transparent.

Rep. Boehner justified HR 4283's proposal to switch student loans from fixed rates to a consolidated variable rate, citing a GAO study making the same recommendation, and the prediction from experts that such a move would release up to $21 billion over the next seven years. Noting a recently published Congressional Research Service (CRS) report finding lower interest rates under a variable structure than under the fixed kind, Rep. Boehner considered the switch to a variable rate as a benefit to borrowers too. Dallas Martin, President of the National Association of Student Financial Aid Administrators (NASFAA) testified in support of the market-based variable provision, noting that borrowers would be protected from interest rate spikes by the bill's retention of an 8.25 percent cap on all Stafford Loans.

The Committee's ranking Democrat, George Miller, though pleased with HR 4283's provisions to reduce student loan origination fees and excessive subsidies to banks, voiced opposition to the variable rate switch, citing another CRS study that warns of $5,500 more in debt burden for the average student if variable rates were to imposed. He also opposed the bill's proposed $5,800 cap on Pell Grants through 2011.

Panelist Rebecca Wasserman, President of the United States Student Association (USSA) echoed Rep. Miller's concerns about the potentially adverse effects of instituting variable loan rates and Pell Grant limitations, stressing the need for Congress to provide added student loan protections and greater financial assistance in light of growing debt burdens for average students (now standing at $19,000). Ms. Wasserman reminded Committee members that tuition rates have increased significantly and that the 2002-2003 Pell Grant was worth $500 less in real dollars than in 1975. She considered freezing the Pell Grant as an act that would reduce higher education access to low and middle income students. All panel members agreed that Pell Grants should be boosted to higher levels than those proposed in the bill. Chair Boehner countered that a $400 million squeeze is placed on the Treasury for every $100 increase in Pell Grants, and that he did not want to mislead people about the availability of funds for appropriation during an era of fiscal constraints. Rep. McKeon defended HR 4283's Pell Grant freeze, noting that though the bill caps Pell Grant maximums, it expands grant eligibility to a larger number of students, thereby increasing access to low income students.

In his remarks to the Committee, CSU Chancellor Charles Reed expressed support for HR 4283, though he thought it could be improved in some areas. Dr. Reed, in charge of the largest university system in the nation, registered his support for year-round Pell Grant availability and was encouraged by, though he would like to see it accelerated, HR 4283's proposal to phase out and eliminate the base guarantee for campus based aid. He approved of efforts in the bill to reduce loan origination fees and to increase borrowing limits, citing such moves as ways to expand flexibility for financial aid professionals. Dr. Reed was also in favor of early outreach and student support provisions in the bill and efforts to increase funding for Hispanic Serving Institutions (HSIs).

When asked about ways to limit campus imposed student fee hikes, Chancellor Reed reported on a recent agreement he and the President of the University of California struck with Governor Arnold Schwarzenegger to peg tuition hikes to the state's per capita income rate (capped at 10%). Chancellor Reed challenged the notion that higher federal grant aid for college campuses correlates to higher fees at universities, testifying that CSU fees did not rise over ten years through the 1990s, whereas Pell Grants doubled and campus base aid grew through the same period.

Chancellor Reed also noted the CSU system's successes in striking innovative partnerships with select industries to secure resources and learning tools for students while meeting the demands of the private sector. He presented examples of collaborations such as campus partnerships with a local hospital to encourage students to study nursing, and partnerships with Disney and Dreamworks to produce more animators at San Jose State University.