Mr. Chairman and Members of the Committee:

I am pleased to appear before you today to discuss the President's fiscal year 2004 budget request for the Office of Postsecondary Education. Our fiscal year 2004 budget would complement the efforts of the No Child Left Behind Act by continuing support for a range of postsecondary education programs that prepare our nation's workforce, including teachers, to meet the emerging economic, social, and international challenges of the 21st century.

America's economic prosperity, international leadership, and long-term security in today's high-tech global economy depend on a highly educated, flexible, and productive workforce. To ensure that all our citizens have the knowledge and skills necessary to meet national goals and to ensure individual economic success, the President is committed to providing equal access to quality postsecondary education for all Americans. Our budget for postsecondary education supports the President's commitment by increasing student aid for the neediest students; by strengthening Federal programs that help prepare low-income and disadvantaged students for postsecondary education; and by increasing support for higher education institutions that provide educational opportunities for some of our nation's most disadvantaged students.

Access to Postsecondary Education

Our fiscal year 2004 budget request would provide more than $62 billion in new grants, loans, and work-study to make postsecondary education accessible for over 9 million students. The Pell Grant program is the foundation of the Federal student financial assistance effort for undergraduate students, and the President's priority for higher education. In fact, the Pell Grant program receives the largest increase—$1.4 billion—of any program in our budget. Pell Grants promote lifelong learning for older and nontraditional students by enabling them to return to school to upgrade their skills or learn new ones. Nearly 40 percent of Pell Grant recipients are non-traditional students (age 25 and older). A formal review of the program using the Administration's new Program Assessment Rating Tool (PART) has demonstrated that Pell Grants are well-targeted to the neediest students and help increase college enrollment among disadvantaged students.

Our fiscal year 2004 budget request includes $12.7 billion to provide Pell Grants to an estimated 4.9 million students. In recent years the number of Pell Grant recipients has grown faster than anticipated, increasing by close to nearly 25 percent between 2000 and 2002. Contrast this with the 5 percent increase between 1997 and 1999. As a result of this unexpected growth and the recent increase in the maximum award, Pell Grant appropriations for the past several years have been insufficient to cover program costs. Our fiscal year 2004 request would eliminate the underfunding from prior years, in part through savings described below, while supporting a $4,000 maximum award for the increasing number of individuals eligible to receive Pell Grants.

As a part of the Administration's effort to reduce erroneous payments government-wide, we propose to allow the Internal Revenue Service to match a small number of income and other data reported by student aid applicants with their tax data. This match would ensure students do not receive grant and loan awards in excess of the amount for which they are eligible. This match is projected to reduce Pell Grant costs by an estimated total of $638 million over the 2003-04 and 2004-05 award years.

To complement Pell Grants, our fiscal year 2004 budget includes $725 million for Supplemental Educational Opportunity Grants and $1 billion for Federal Work-Study. Our request includes $67.5 million for Perkins Loan Cancellations, but does not include funding for new federal capital contributions to the Perkins Loan program. We believe additional capital funding is no longer necessary because repayments of existing Perkins loans into the revolving funds held at institutions are expected to provide over $1 billion in new Perkins Loans next year.

Our fiscal year 2004 budget request does not include funding for the Leveraging Educational Assistance Partnership program or for Loan Forgiveness for Child Care Providers. The Leveraging Educational Assistance Partnership program has fulfilled its purpose. States that want need-based aid programs have them, and most substantially exceed the statutory requirement for matching funds. Other States, such as Alaska, have chosen merit-based programs over need-based aid programs as the appropriate funding mechanism for their students. Additionally, the Loan Forgiveness for Child Care Providers program does not support a sufficiently broad pool of applicants for us to determine program effectiveness, and is not cost-effective to administer.

The Federal Family Education Loan and the William D. Ford Federal Direct Loan programs provide students and families with additional options to meet the cost of postsecondary education, and we are proposing to continue support for both these programs. In fiscal year 2004, the Department's student loans programs will provide an estimated $48 billion in 11.7 million new loans to students and families. In addition to the actual amounts borrowed, we provide funds to cover costs associated with student loans. In 2002, the government paid $2.8 billion in interest benefits for low-income students and an additional $660 million to lenders for special allowance and loan cancellations. In addition, $5.9 billion in student loans entered default in 2002 but most of these funds will ultimately be collected by the Department and FFEL guaranty agencies.

Our budget again includes the President's proposed expansion of loan forgiveness to a maximum of $17,500 for highly qualified teachers in high-need areas of math, science, and special education at qualified low-income schools. This proposal, which is intended to help recruit and retain effective teachers in these vital subject areas, is projected to cost $696 million over the next 10 years.

With respect to teachers, we are also requesting $90 million to continue support for the Teacher Quality Enhancement Program. Both the partnership programs and the state programs are designed to increase student achievement by improving the way our nation recruits, prepares, licenses, and supports teachers.

In addition, significant support for postsecondary students and their families is available through tax credits and deductions for higher education expenses, including tuition and fees. For example, in 2004, taxpayers are expected to save an estimated $2.9 billion under the Hope tax credit; $3.0 billion under the Lifetime Learning tax credit; $2.9 billion under the new maximum deduction for higher education expenses; and $660 million in deductions for student loan interest payments.

The Administration's fiscal year 2004 budget also continues support for a number of higher education grant programs that provide scholarship and other financial support to ensure that high- achieving and disadvantaged students have the ability to pursue and complete their postsecondary education. Under the Administration's budget, the Byrd Honors Scholarships program would receive $41 million, Graduate Assistance in Areas of National Need (GAANN) would receive $31 million, and Javits Fellowships would receive $10 million. To assist low-income parents of young children to attend college, we are proposing to continue support for existing grants under the Child Care Access Means Parents in Schools program at a cost of $15 million.

College Preparation

Statistics indicate that America's college population is on the rise and will increase by more than 10 percent by the end of this decade. Students from low-income families and other disadvantaged students, however, continue to be underrepresented in higher education. Furthermore, disadvantaged students who do enter college are less likely to have the academic preparation needed for success and are significantly more likely to leave before earning a degree than students from higher income families. To help reduce this achievement gap, our fiscal year 2004 budget continues to support programs that prepare disadvantaged students to enter and succeed in postsecondary education. The Federal TRIO Programs and Gaining Early Awareness and Readiness for Undergraduate Education (GEAR UP) are the Department's primary vehicles for providing college preparation and support to low-income and disadvantaged students.

The Federal TRIO Programs fund a comprehensive range of support services to assist disadvantaged pre-college students stay in school and prepare for college; enter and succeed in postsecondary education; and pursue advanced degrees. Our fiscal year 2004 budget for the Federal TRIO Programs includes $802.5 million to support existing projects, including recent investments to increase the intensity of services in Student Support Services, Upward Bound, Upward Bound Math/Science, Talent Search, and Educational Opportunity Centers. We plan to continue efforts to improve the effectiveness of Upward Bound by targeting students most in need of the services and retaining them in the program, and to improve the retention rate of disadvantaged students during their early years of college by providing grant aid through Student Support Services.

GEAR UP provides academic enrichment and college preparation programs to entire grades of students beginning no later than the 7th grade. We are proposing $285 million for GEAR UP to continue support for on-going projects that provide services to approximately 1.4 million middle school and high school students, and to support a 6th year of funding for all projects initiated in fiscal year 1999. Our request would also support the evaluation of GEAR UP to assess program impact on long-range outcomes such as high school graduation and enrollment in postsecondary education.

Aid to Institutions that Serve Disadvantaged Students

Our fiscal year 2004 budget request supports the President's continuing commitment to strengthening the academic programs and financial stability of the institutions that serve large numbers of disadvantaged students. We are proposing increased support for Historically Black Colleges and Universities (HBCUs), Historically Black Graduate Institutions (HBGIs), Tribally Controlled Colleges and Universities (TCCUs), and Hispanic-Serving Institutions (HSIs). Our budget would provide $224.1 million for HBCUs and $53.3 million for HBGIs to increase the capacity of these institutions to provide high-quality undergraduate and graduate programs to increasing numbers of African-American students. In addition, Howard University, which has served African-American students since 1867, would receive $237.5 million.

We are proposing $93.6 million to support HSIs. A significant educational achievement gap continues to exist between Hispanics, our nation's fastest growing and youngest population, and non-Hispanic students. The increase we are proposing would help to expand and strengthen the academic offerings and increase the stability of institutions that provide postsecondary educational opportunity for large numbers of Hispanic students.

Our fiscal year 2004 budget proposes $19 million to strengthen TCCUs. These thirty-two institutions enroll an estimated 30,000 students. They are located primarily in rural areas not served by other postsecondary educational institutions, and offer the only opportunity for postsecondary education for many of their students. Within this amount $8 million is for construction projects to enable TCCUs to upgrade their physical structures.

We are also requesting $6.5 million for institutional support to Tribally Controlled Postsecondary Vocational and Technical Institutions. This program is currently authorized under the Carl D. Perkins Vocational and Technical Education Act, but the Administration plans to propose that the program be reauthorized under the Higher Education Act (HEA) given its similarity to other institutional development programs supported under HEA.

Our budget also includes $76.3 million for the Strengthening Institutions program to improve the academic quality, institutional management, and fiscal stability of a wide range of postsecondary institutions, the majority of them community colleges, that serve significant numbers of financially needy students. We are also requesting $4 million to support Alaska Native and Native Hawaiian-Serving Institutions, and $8.5 million to continue support for the Minority Science and Engineering Improvement Program.

Other Institutional Programs

As our nation continues to adjust to the aftermath of the terrorist attacks and faces unprecedented challenges in the international arena, developing and maintaining international expertise in world areas, economies, and foreign languages have become increasingly important. Our budget request includes $102.5 million to continue support for the Department's 14 International Education and Foreign Language Studies (IEFLS) programs. These programs strengthen opportunities for Americans to gain training as language and area specialists to meet the economic, diplomatic, defense and security needs of the United States.

In fiscal year 2004 the Administration is proposing to transfer the remaining balance in the National Security Education Trust Fund from the Department of Defense to the Department of Education. The Trust Fund supports the National Security Education Program, which funds undergraduate scholarships, graduate fellowships, and grants to educational institutions in critical area studies, foreign languages, and other international fields. We are requesting that $8 million from the Trust Fund be used to support these activities in fiscal year 2004.

The Fund for the Improvement of Postsecondary Education supports exemplary, locally developed projects that are models for innovative reform and improvement in postsecondary education. Our fiscal year 2004 budget includes $39.1 million to support new and continuing projects in a number of priority areas as well as international consortia programs with Canada and Mexico, Brazil, and the European Union.

We are proposing to eliminate a number of small programs that can be supported under existing programs, or for which there is no demonstrated need.

Evaluation

We are requesting $1 million for Government Performance and Results Act (GPRA) Data/Higher Education Act (HEA) Program Evaluation to continue to collect and analyze performance data on higher education programs in preparation for the reauthorization of the HEA. A portion of these funds will be used to continue collecting data for the State accountability reports required under Title II of the HEA.

Conclusion

Today we face increasing demands for resources as our nation strives to meet new and challenging goals at home and abroad. We believe our budget targets funds to the most important issues in postsecondary education and honors the President's commitment to making education accessible and affordable for all Americans.

My colleagues and I will be happy to respond to any questions you may have.

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