In late April, I had the opportunity to testify in front of Senator Sherrod Brown, who was holding a hearing to gather information regarding the current student lending crisis. Here is an excerpt from my testimony:
Student loans are crucial to educational opportunity that is the foundation of our country’s future economic success. I ask your action in three ways to assure that educational opportunity continues:
1.     Encourage legislation that will provide a certainty that financial aid will continue despite the challenges in banking and student loans.
2.     Increase loan limits and funding for Perkins Loans so needy students may be assured of adequate financing without relying on higher interest loans and credit cards.
3.     Provide support for the growth in Direct Lending so that increased participation in that program does not reduce service to students.
To my first point: There is historic evidence that when student aid reductions are even discussed, students believe that aid is not available and opt out of college. This occurred in 1982 following the proposal by President Reagan to totally dismantle federal student financial aid. As students said then, a student aid cut never heals. The charts show that it heals, but over years and at the loss of many talented students required by the national economy. It is paradoxical that information about the availability of student aid is so difficult to convey, but lack of student aid – even as a possibility – causes dramatic decreases in participation.
Second, increase loan limits and Perkins Loan funding so students can have sufficient funding without higher interest loans and/or credit card use. Also included in my testimony is a study funded by the Lumina Foundation, by Dr. Shoumi Mustafa, also here today, that shows improved retention and completion of Pell eligible students when they have sufficient funds. This improvement was accomplished through use of increased Perkins Loans but could also be accomplished with higher loan limits on Stafford Loans. Simply put, without adequate funding, needy students cannot remain to pursue their degrees at rates comparable to their more affluent counterparts.
Third, we ask that you provide support to the administration of the Direct Lending Program at a level at least concomitant to the growth in that program. We have long held the view that both FFELP and Direct Lending provide what is needed for the best options for students and institutions. As you know,