PAGENO="0001" HIGHER EDUCATION AMENDMENTS OF 1968 HEARINGS BEFORE THE SPECIAL SUBCOMMITTEE ON EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR HOUSE OF REPRESENTATIVES NINETIETH CONGRESS SECOND SESSION ON H.R. 15067 HEARINGS HELD IN WASHINGTON, D.C. FEBRUARY 6, 7, 8, 9, 20, 26, 28, AND 29, 1968 PART 1 Printed for the use of the Committee on Education and Labor CARL D. PERKINS, Chairman U.S. GOVERNMENT PRINTING OFFICE 92-371 WASHINGTON 1963 PAGENO="0002" EDITH GREEN, Oregon FRANK THOMPSON, Ja., New Jersey ELMER J. HOLLAND, Pennsylvania JOHN H. DENT, Pennsylvania ROMAN C. PUCINSKI, Illinois DOMINICK V. DANIELS, New Jersey JOHN BRADEMAS, Indiana JAMES G. O'HARA, Michigan HUGH L. CAREY, New York AUGUSTUS F. HAWKINS, California SAM GIBBONS, Florida WILLIAM D. FORD, Michigan WILLIAM D. HATHAWAY, Maine PATSY T. MINK, Hawaii JAMES H. SCHEUER, New York LLOYD MEEDS, Washington PHILLIP BURTON, California CARL ALBERT, Oklahoma JOHN BRADEMAS, Indiana SAM GIBBONS, Florida HUGH L. CAREY, New York WILLIAM D. HATHAWAY, Maine PHILLIP BURTON, California FRANK THOMPSON, Ja., New Jersey ELMER J. HOLLAND, Pennsylvania JAMES H. SCHEUER, New York WILLIAM H. AYRES, Ohio ALBERT H. QUIE, Minnesota CHARLES E. GOODELL, New York JOHN M. ASHBROOK, Ohio ALPHONZO BELL, California OGDEN H. REID, New York EDWARD J. GURNEY, Florida JOHN N. ERLENBORN, Illinois WILLIAM J. SCHERLE, Iowa JOHN DELLENBACK, Oregon MARVIN L. ESCH, Michigan EDWIN D. ESHELMAN, Pennsylvania JAMES C. GARDNER, North Carolina WILLIAM A. STEIGER, Wisconsin ALBERT H. QUIll, Minnesota OGDEN R. REID, New York EDWARD J. GURNEY, Florida JOHN N. ERLENBORN, Illinois MARVIN L. ESCH, Michigan JAMES C. GARDNER, North Carolina COMMITTEE ON EDUCATION AND LABOR CARL D. PERKINS, Kentucky, Chairman SPECIAL SuBcoMMrrrEE ON EDUCATION EDITH GREEN, Oregon, Chairman (U) PAGENO="0003" CONTENTS Hearings held in Washington, D.C.: Page February6,1968 1 February 7, 1968 53 February 8, 1968 97 February 9, 1968 165 February 20, 1968 193 February 26, 1968 317 February 28, 1968 363 February 29, 1968 407 Statements of: Bailey, Dr. Stephen K., dean, Maxwell Graduate School of Citizen- ship & Public Affairs, Syracuse University; and national president, American Society of Public Administration 317 Collins, Rev. T. Byron, S.J., vice presient for planning and physical plant, Georgetown University; and chairman of the Commissioner's Advisory Council on Higher Education, CACHE 384 Conoway, Dr. 0. B., dean of the Graduate School of Public Affairs, State University of New York, Albany; and current chairman of the Council on Graduate Education & Public Administration 303 Denny, Dr. Brewster, director, Graduate School of Public Affairs, Uni- versity of Washington, Seattle; and chairman-elect of the Council on Graduate Education for Public Administration 308 Howe, Hon. Harold, II, U.S. Commissioner of Education, accom- panied by Peter P. Muirhead, Albert L. Alford, James W. Moore, Joseph W. Barr, and Mark Weiss 53 Howe, Hon. Harold, II, U.S. Commissioner of Education, accom- panied by Peter P. Muirhead, Associate Commissioner for Higher Education; Albert L. Alford, Assistant Commissioner for Legisla- tion; James W. Moore, Director, Division of Student Financial Aid; Hugh M. Satterlee, Chief, Educational Talent Section; and Ralph K. Huitt, Assistant Secretary for Legislation, Department of Health, Education, and Welfare 1, 97 Jones, Jerry Lee, executive secretary, West Virginia Commission on Higher Education 390 Low, Dr. Edmon, on behalf of Dr. Frederick Wagman, Jr., the Amer- ican Library Association 394 McCarthy, Stephen A., executive director, the Association of Re- search Libraries 398 Morton, Dr. Ben, executive secretary, Missouri Commission on Higher Education, on behalf of Association of Executive Directors of Higher Education Facilities 363 Oswald, Dr. John W., president, University of Kentucky; chairman, Legislative Committee of the National Association of State Uni- versities & Land-Grant Colleges, accompanied by Dr. Curley Dr. Robert Martin, and Dr. Thomas Johns 408 Pfautz, Dr. Harold W., professor of sociology, Brown University - - - - 328 Pusey, Dr. Nathan M., president, Harvard University; John Morse, director, Commission on Federal Relations, American Council on Education; Dr. Merriam H. Trytten, special consultant to the President of the National Academy of Sciences; and Dr. William G. Shannon, associate executive director, American Association of Junior Colleges 165 (III) PAGENO="0004" Iv Statements of-Continued Simpson, Donald F., Assistant Secretary for Administration, Depart- ment of Health, Education, and Welfare, accompanied by Hon. Ralph K. Huitt, Assistant Secretary for Legislation; Preston Valien, Deputy Associate Commissioner, Bureau of Higher Education Office of Education; and Ward Stewart, Director, Field Services Page Bureau of Higher Education Office of Education 193 Smith, Russell F. W., dean, School of Continuing Education & Ex- tension Service, New York University; Dr. Wifiard Thompson, and James Banovetz 350 Spalding, Keith, president, Franklin & Marshall College, Lancaster, Pa., accompanied by John Morse 488 Prepared statements, letters, supplemental material, and so forth: Association of American Colleges, supplementary statement of 496 Federal Institutional Grants foE Industrial Purposes, publication by 497 Barr, Hon. Joseph W., Under Secretary, Treasury Department: Comparisons between the insured loan program under the Higher Education Act of 1965 and the direct loan program under the National Education Act-letter dated October 30, 1967 67 Comptroller General's report on the Barr committee's study_ - - - 70 Educational Loan Plan, leaflet by Treasury Department Federal Credit Union 74 Estimated Federal cost of teacher cancellations under the guar- anteed student loan program 39 Letter to Chairman Green, dated October 30, 1967 39 Attachment A.-Comparison of relative Federal Government costs for NDEA and guaranteed student loan programs (table) 40 Attachment B.-Comparison of direct cost allowances in national defense and guaranteed student loan program - 40 Attachment C.-Cost of money and fees (table) 42 Brademas, Hon. John, a Representative in Congress from the State of Indiana: Insert in the appendix of the Congressional Record of April 6, 1967, entitled "Education and the Public Service: Three Proposals To Strengthen State, Local, and Federal Government" 217 "Recommendations for National Action Affecting Higher Educa- tion," publication entitled 429 "Toward a Coherent Set of National Policies for Higher Educa- tion," speech by Alan Pifer to the Association of American Colleges, January 16, 1968, from the Congressional Record, May 1, 1968 338 Collins, Rev. T. Byron, S.J., vice president for planning and physical plant, Georgetown University; chairman, Commissioner's Advisory Council on Higher Education, prepared statement of 385 Conoway, Dr. 0. B., dean of the Graduate School of Public Affairs, State University of New York, Albany; and current chairman of the Council on Graduate Education & Public Administration, pre- pared statement of 303 Denny, Dr. Brewster C., director, Graduate School of Public Affairs, University of Washington; and chairman-elect, Council on Graduate Education for Public Administration, prepared testimony of 310 Howe, Hon. Harold, II, U.S. Commissioner of Education: Analysis of the impact of reduced Higher Education Facilities Act funding levels in fiscal years 1968 and 1969 129 Table 1.-Relationships among HEFA program funds com- mitted, estimated cost of buildings for which committed, and cost of buildings completed with HEFA assistance__ - 131 Table II.-~stimated impact of the Higher Education Facilities Act of 1963 on the academic quantity gap 132 Table 111.-Comparison of estimated enrollment increases with estimated number of additional student places pro- vided by additions in academic facilities 132 Figure 1.-Higher Education Facilities Act funds, value of facilities committed, and value of completed facilities, as estimated with and without reduced program levels for fiscal year 1968 and fiscal year 1969 133 PAGENO="0005" V Prepared statements, letters, supplemental material-Continued Howe, Hon. Harold, IT-Continued Page Application of Public Law 84-801 126 Educational benefits available to a veteran compared with those available to a nonveteran 31 Estimate is that 180,000 men who would otherwise be engaged in graduate study in 1968-69 will interrupt their studies to enter military service 106 Estimated funding of higher education programs, fiscal year 1968-69 (table) 151 Estimated total graduate opening fall degree-credit resident enrollment in 4-year institutions of higher education (table)_ - 101 Guaranteed student loan program, Higher Education Act of 1965, title IV, part B (table) 95 Higher education amendments of 1968, administration's version (table) 119 Institutional requests and program funding, 1968-69 college year (table) 57 Institutions of higher education whose total fiscal year 1970 funds for student financial aid activities may exceed $4 million - - - 47 Interest the Federal Government would be paying on accumu- lated interest to the lender 47 Loan volume by States (table) 30 Money going to free institutions and those charging tuition - - 85 Need for automatic extension of the Higher Education Act 149 Prepared statement by 152 Profiles of family incomes for students (table) 20 Report on collections of national student defense loans 23 The program evaluation projects in process for fiscal year 1968 and proposed for fiscal year 1969 49 Jones, Jerry Lee, executive secretary, West Virginia Commission on Higher Education, prepared statement of 390 Martin, Robert R., president, Eastern Kentucky University, Rich- mond, Ky.; and member of board of directors, American Associa- tion of State Colleges & Tjniversities, statement of 482 McCarthy, Stephen A., executive secretary, Association of Research Libraries, prepared statement by 403 Percentage of books cataloged with Library of Congress catalog copy (table) 404 Morse, John F., director of the commission, American Council on Education: Letter to Chairman Green, dated March 18, 1968 504 Letter to Chairman Green, dated March 18, 1968, enclosing a memorandum from Keith Spalding 505 Morton, Dr. Ben, executive secretary, Missouri Commission on Higher Education, prepared statement of 363 Fiscal year status of Higher Education Facilities Act, title I, as reported by State commissions, February 21, 1968 (table) - - - 368 Simpson, Donald F., Assistant Secretary for Administration, Depart- ment of Health, Education, and Welfare: "State Salary Ranges of Selected Classes of Positions in Employment Security, Public Welfare, Public Health, Mental Health, Civil Defense, Vocational Rehabilitation" (booklet) 250 Spalding, Keith, president, Franklin & Marshall College; representing the American Council on Education, the American Associaiion of Junior Colleges, the Association of American Colleges, the Associa- tion of American Universities, and the Association of Higher Edu- cation, prepared statement of 489 Staats, Hon. Elmer B., Comptroller of the United States, review of the basis of the Treasury Department's justification for the place- ment fees and conversion fees in the proposed amendment to sec- tion 428 of the Higher Education Act of 1965-letter dated Nov- ember 27, 1967 42 Trytten, Dr. Merriam H., special consultant to the President, National Academy of Sciences; "ACE Commission Urges Four Steps To Meet Problems of Draft Law," paper by 171 Wagman, Dr. Frederick H., director, University of Michigan Library, prepared statement oL 394 "Utilization of College and University Facilities," a study 136 PAGENO="0006" PAGENO="0007" HillIER EDUCATION AMENDMENTS OF 1968 TUESDAY, FEBRUARY 6, 1968 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITPEE ON EDUCATION OF THE CoMMIrri~ ON EDUCATION AND LABOR, Washington, D.C. The committee met at 10 a.m., pursuant to call, in room 2261, Ray- burn House Office Building, Hon. Edith Green (chaarman of the Lubeommittee) presiding. Present: Representatives Green, Brademas, Gibbons, Carey, Hatha~~ -way, Burton, Scheuer, Quie, Reid, Erlenborn, and Esch. Mrs. `GREEN. The `subcommittee will come to order. :5TATEMENT OF HON. HAROLD' HOWL II, U.S. COMMISSIONER OP EDUCATION; ACCOMPANIED BY PETER P. MUIRHEAD, ASSOCIATE COMMISSIONER FOR HIGHER EDUCATION; ALBERT L. ALPORD, ASSISTANT COMMISSIONER FOR LEGISLATION; JAMES W. MOORE, DIRECTOR, DIVISION OF STUDENT FINANCIAL AID, BUREAU OF HIGHER EDUCATION; AND MARK WEISS, SPECIAL ASSISTANT TO THE UNDER SECRETARY, DEPARTMENT OP TREASURY Mrs. GREEN. The subcommittee will come to order for the considera- tion of the Higher Education Amendments of 1968. I think it is fair to say that, measured in almost every way, the legislation before us today is impressive. H.R. 15067 contains 12 titles, and my staff advises `me that in draft form it contained 150 pages and weighed over one pound 2 ounces. The bill pro~oses the extension and revision of 16 programs and sug- ;gests the creation `of four new ones. Iii `addition, there is proposed the `consolidation of the four student aid programs into `the Educational `Opportunity Act of 1968. In part, H.R. 15067 is identical to H.R. 6232 and in part it is similar. The subcommittee, conducted 8 days of hearings on H.R. 6232 last year. Before us also are amendments to the guaranteed student ioau program which are `in part identical and in part similar to recom- :mendations presented to the subcommittee last August. The subcom- inittee conducted 4 `days of hearings on these recommendations. H.R. 15067 suggests that certain questions, which have been asked before, need to be asked again. For example, what is the rationale for forgiving an NDEA loan of a `student who comes from a family with an income of $6,500, and for not forgiving a guaranteed student loan of a student from a family with ~an income of $7,500? (1) PAGENO="0008" 2 What is the comparable cost to the Federal Goverximent of 100,000 student loans made under the NDEA and 100,000 student loans made under the guaranteed student loan program? H.R. 15067 also raises new questions. Is it desirable to embark on new programs in a year in which the budget requests for title I of the Facilities Act represents approximately 10 percent of the authoriza- tion. H.R. 15067 also, as I see it, poses many issues, some of which are related to matters discussed in the study of the TJ.S. Office of Educa- tion, and some of which are related to questions of pressing national concern. Of great concern to me is the impact of the present draft policy on graduate and undergraduate education. Before we begin today, I should like to mention just one issue in greater detail and I think, Mr. Commissioner, you will agree with me it is the most important issue. I refer to the timing of this legislation. As I have mentioned, H.R. 15067 proposes the extension of 16 pro- grams beyond their expiration date of June 30 of this year. Stated differently, there is no authorization for these programs beyond June 30 of this year and, thus, no authorization for the Appropriations Com- mittee to recommend funds for fiscal year 1969. I doubt if there is a person in this room who is not aware of the severe problems brought about by late authorizations and late fund- ing. To avoid the problems detailed in the subcommittee report on the study at the U.S. Office and with the cooperation of that Office I think it is imperative that we in the Congress move as rapidly as we can on H.IR. 15067. This is why I felt it absolutely essential we begin hear- ings today just 1 day after the introduction of H.R. 15067. I would also ask for consideration on the part of my colleagues and consideration on the part of the Office of Education to the possibility or advisability of pulling out certain parts of the bill which would be noncontroversial in nature and moving those along faster in both the House and Senate if it seems that some of the other parts might take a little longer. May 1 take this opportunity to express my deep appreciation to my colleagues on both sides for their understanding and cooperation as far as the speed with which we need to get to this legislation, and cer- tainly great thanks to Commissioner Howe and his colleagues. May I also say thank you on behalf of the subcommittee for your coopera- tion and willingness to appear today just hours after the introduction of the legislation. The subcommittee today and tomorrow will hear from the adminis- tration witnesses and there is a possibility if there is not a full com- mittee meeting we will meet on Thursday morning to hear other administration people from Treasury and perhaps from the. Civil Service Commission. The subcommitte hearings will resume on February 19, immediately after the Lincoln Day recess, at which time administration witnesses on the Inter-Governmental Manpower Act will appear before us. In the middle of that week we will turn our attention to the higher education amendments and the opportunity will be given for public witnesses. We will continue our hearings that week, during the week of February 26, and, if necessary, during the week of March 4. PAGENO="0009" 3 With that brief introduction, Mr. Commissioner, may I ask you to proceed in any way you wish with the testimony which you have pre- pared for today in explanation of these recommendations. Mr. HOWE. Thank you very much, Madam Chairman. Let me first of all introduce my associates. I believe you know Dr. ,Aiford of the Office of Legislation on my right, and Dr. Muirhead in charge of our Bureau of Higher Education, and Mr. James Moore, in charge of all of our programs of student aid. Also, from the Treasury Department, we have Mr. Snyder and Mr. Weiss, seated directly behind me, who are here for questions related to their interests in the student aid legislation. If it meets with your approval, Madam Chairman, what I would like to do today is to present in the way of formal testimony the first 12 pages of the material we have submitted to you and then when we appear again tomorrow, take up the rest of the formal testimony at the introduction of that session. In that way, we will be focusing today on the major package of stu- dent aid concerns in this legislation and picking up some of the re- newals and new legislation in the materials tomorrow. I am particularly grateful for your emphasis on the problems of timing connected with this whole legislative procedure. The colleges will benefit tremendously if the consideration of this legislation can be advanced. We would be happy to cooperate with you in any way that may seem wise as we move along with this process, if it does appear that we can meet timing deadlines better by making some change in the order of consideration of certain portions of the legislation. Now, in presenting formal testimony, because you have so well sum- marized the first three pages of mine in your remarks, I would like to go directly to page 3 of my formal testimony, submitting those first three pages for the record, and start with the heading "Educational Opportunity Act of 1968." This year marks the 10th anniversary of the National Defense Edu- cation Act of 1958 and the landmark student loan program contained therein. During that 10-year period, additional programs for student aid have been added to create a comprehensive, federally supported, package of student aid made up of lOans, direct grants, and work-study grants. In a 10-year span the number of participating institutions in these student aid programs has doubled, from 1,100 to 2,200. The dollar amount of funds provided to students has increased tenfold, from $59 million m loans m the first full year of the NDEA loan program to an cstimated $510 million this year in the three parallel programs of NDEA loans, student employment, and educational opportunity grants. The number of students served by these programs has increased nearly sevenfold over the 115,000 borrowers in the first year of NDEA student loan activity. Such developments should not be measured in terms of Federal dol- lars alone. These 2,200 institutions of higher education als.o adminis- ter a mix of institutional, State, and private student aid programs esti- mated at in excess of $550 million for the current year. When combined with the 1967-68 Federal programs, undergraduate student assistance alone exceeds $1 billion. PAGENO="0010" 4 Of more recent establishment and in somewhat different context than the three college-administered programs is the guaranteed stu- dent loan program. The major objective here is to provide long-term deferred-payback commercial loans to assist middle-income families in offsetting the increasing cost of higher education. Administrative arrangements are centered on State loan guarantee agencies, with the Federal Government providing an interest subsidy for students whose adjusted family income is less than $15,000 per year. The growth of this program has been equally phenomenal. The number of State guarantee agencies has increased from 17 in 1965 to 35 in 1967. Additionally, in five other States, work is now underway in both executive and legislative departments on the creation of State loan authorities, leaving only 10 in which action is yet to be taken. Despite rising costs of money and consequent upward pressures on interest rates, more than 700,000 loans at the 6-percent simple interest rate, totaling two-thirds of a billion dollars, have been made between November 1965 and December 1967. Against this backdrop of growth and development, let me outline the direction and purpose of the administration's 1968 proposals for modification and consolidation of these programs into the Edu- cational Opportunity Act: First, to move effectively toward the overall goal of providing edu- cational opportunities beyond secondary school to all our youth that desire such opportunities and can benefit from them. This is to be accomplished, at least in part, by providing substantial assistance to students so that no student of ability will be denied an opportunity to develop his talents because of financial inability to meet basic higher education costs. Second, in the three college-based programs, to achieve a measure of consolidation and, in so doing, to achieve greater flexibility and convenience at the institutional administrative level. Third, within this consolidated framework to retain the major objectives and program characteristics already established. Fourth, in the guaranteed student loan program, to clarify the role of the State as the key administrative element and to indicate more clearly the State responsibility for continuing provision of part of the guarantee funds. Fifth, in the context of the reinsurance proposals, to provide a second adjustment period to allow States an opportunity to modify existing legislation or, as the case may be, constitutional provisions~ in order to establish the reinsurance program. Parenthetically, let me emphasize that the administration's position has been and continues to be that of supporting and maintaining the central role of the State guarantee agency in this program. The cur- rent utilization of direct Federal insurance in 17 States is simply an interim device until such time as the guarantee function can be estab- lished in the State itself. Key recommendations for changes in the college-based program are as follows: First. There would be a single appropriation item for Federal capi- tal in the national defense student loan fund and for the college work- study program with a 90-10 Federal institutional matching ratio, and PAGENO="0011" 5 a single appropriation for the educational opportunity grant program which would not require program matching funds. Second. The fund distribution pattern would be altered from the three separate allotment formulas, which differ in each program, to a national pooi funding basis with a limitation that no State could receive more than 121/2 percent of any single appropriation. Third. There would be a~ provision that during any year an insti- tution may transfer not to exceed 20 percent of the Federal money al- located for any one program to another. At the Commissioner's dis- cretion, this 20-percent level could be exceeded in an emergency situa- tion. This would provide a much needed authority for institutions to rebalance their programs during the year. Fourth. A $1,000 per aimum maximum would be set on an educa- tional opportunity grant award to any one student and the present $800 maximum and the mandatory $200 award for students in the upper half of the class in the prior year would be eliminated. Fifth. The annual ceiling on NDEA loans to undergraduates would be elevated to $1,500 as a reflection of cost increases over the past 10 years. Sixth. For all three programs, there would be a common require- ment for continuation of institutional expenditures in institution's own student aid program, to replace the two different and separate authorities in the existing EOG and work-study programs. Seventh. In place of the varied pattern of administrative overhead allowances presently contained in the loan and work-study programs, a common, maximum of 3 percent of the total Federal funds granted to an institution would be provided with an overall maximum of $125,000 per year to any single institution. Eighth. An overall student financial aid advisory council is pro- posed to replace the four separate advisory committees contained in the present statutes. Ninth. It is the intent of the administration to accomplish uni- form forward financing of these programs beginning with fiscal year 1970. The consolidation of these programs authorized under a single part A of title IV also allows us to request a program authorization extension of 5 years commencing in 1970. To cover the interim year, fiscal year 1969, single-year extensions are requested for title II, NDEA, and for titles TV-A and TV-C of the Higher Education Act of 1965. This 6-year request, if granted, would for the first time provide the Nation's colleges and universities with a firm, permanent operatmg base and would eliminate the confusion and uncertainty which insti- tutions are facing at the present. The guaranteed loan program: The basic objectives for the guar- anteed student loan program are- To provide a program of long-term loan assistance to all post- secondary students, with Federal interest benefits provided for most of them. To provide that the program should be operated by State agen- cies. The function of the Federal Government should be to as- sist the States to do a good job-through payment of a portion PAGENO="0012" 6 of the interest on behalf of eligible students and through the use of Federal credit to help provide the necessary backing for the loans. To provide the lenders with an adequate return so as to encour- age their active participation. To provide the lenders with maximum assistance-from the col- leges, the States, and the Federal Government-through inter- change of information, a minimum of paperwork, and the estab- lishment of common procedures. To see that colleges are involved to the extent of providing full and adequate information to the lenders. Prior to the passage of the Higher Education Act, guaranteed loan programs were in operation in 17 States. Recognizing that legislation would likely be needed at the State level, the Congress provided a 2- year interim period and encouraged the development of adequate State programs by authorizing Federal advances of "seed money" to estab- lish or help strengthen the reserve fund of the agencies. The act fur- flier provided that, if a State would not be able to establish such a program during any year, the Office of Education could contract with a nonprofit private agency to do the job. In the event that neither approach would provide students reasonable access to loans, the Con- gress authorized a standby program of Federal insurance. Since November of 1965, guarantee agencies have been created in 18 additional States, bringing the total of State-based programs to 35. In the remainder of the country and in those States that did not pro- vide for students attending college out of State, the Office of Educa- tion contracted with LTnited Student Aid Funds, Inc., to administer the program. Twelve of the State agencies further contracted with U.S. Air Force to operate their programs. However, the reserve funds of 17 States were not sufficient to enable continuation of their operation, and the Federal insured student loan program has been established on an interim basis in order to continue the loan guarantee function until such time as the States' reserves can be increased. Madam Chairman, at this point, I will ask my colleagues to give you a brief visual presentation to clarify the picture I have just pre- sented of the movement among the States in graduafly adopting the program and the way the different methods of administration have developed over the past several years. I think this will help to clarify the picture, and it won't take us long. Mrs. GI~EN. Yes, please do. Mr. MOORE. This first of four slides shows by virtue of color coding the development of the State agency-based guaranteed loan program in this country. You will notice first of all in the New England area, Louisiana, Tennessee, and Georgia, in this kind of brown color the pattern of State agencies which existed at the time the Higher Educa- tion Act of 1965 was passed. The pink color in the Midwest and the West represents those States in which agencies have been created between 1965 and the present. Texas is its own color because it has a direct plan which simply does not fall into the same category as the other hinds of agencies. In the Central Midwest, the color of Missouri and Kansas indicates the States at which at this very moment work is being done on the PAGENO="0013" 7 development of State agencies One of the sort of amusing things about this chart is that in some respects the development of these agencies is a little similar to the territorial development of the United States You begin here with the Thirteen Colonies, the Louisiana Pur- chase, and here the Oregon Territory, Mexican Cession, and so on. Mr. GIBBoNs. What are the white ones?. Mr. MooRE. Those States in which thus far no action has been taken to create a State guarantee agency. It does not mean there cannot be action later in spring or next year but at the m~oment the whole affair seems to be silent. This next slide shows the pattern of actual appropriations of State funds over the roughly two and a half years since the Higher Educa- tiion Act of 1965 was passed. `This amount totals approximately $33 million of State appropriations which `have all gone into guarantee fu'nds. There is concentration in the New England `area and to the South. Third, this slide represents the status as of this morning of the direct Federal insurance program which is `being used as a backup device to provide loan-insuring authority in those States in which the guarantee capa~bility `has b'een not sufficient. We had in Florida this week the first of a series of weeks, beginning at Tampa this morning with OE staff people, regional people, bankers, staff of colleges, financial aid officers, `an'd others and this will continue throughout the week. The program will be fully operative in Florida within the next few days. Mr. GIBBoNS. May I say I appreciate it; you are all doing a fine job, it certainly is badly needed. Mr. Moom~. Thank you. The final pattern is on this next slide. This again is showing growth an'd it shows the 18-month volume of loans `by dollar amounts in mil- lions and by number of `loans made. This "J" out here is July of 1966 and the "D" on the far end `is December `of 1967. If you compare the July, August, and September bars in here with the matching ones for this past year, you will see that there has been at least in 2 or 3 of those months a doubling of the loan volume. From what we can tell at the moment, the pattern in December, January, and February is going to follow along with about the same kind of peak as was the case a year ago, but probably with a higher volume. This `is a fairly complicated program. We thought perhaps these four brief sketches of what has happened in the past 2 years would be of help to the committee. Mrs. GREEN. Thank you. Mr. Howi~. Thank you very much, Mr. Moore. I have already prese'nted the different kinds `of participation char- acterizing the several States. In order to p'romo'te the continuation of existing State guarantee `agencies and to encourage the development of adequate State programs where none now exist, we are proposing that the act be amended to provide for what has come to be `called Federal "reinsurance" of loans guaranteed by `State agencies.. PAGENO="0014" 8 Under this proposal, the Commissioner would be authorized to reimburse an agency for 80 percent of claims paid by that agency to the lender when a loan went into default. As the agency would be responsible for payment of only 20 cents on the dollar, this would have the effect of multiplymg the guarantee capacity in the State's reserve fund by a factor of four. This would be consistent with cur- rent Federal fiscal policy of using Federal credit rather than dollars. However, m order to involve the States further in sharing the fund- ing requirements of such a program and in order to strengthen fur- ther the reserve funds of these agencies, we are proposing an addi- tional $12.5 million in seed money, to be matched on an equal basis by State appropriations. To make the program more attractive to the lenders and the guar- antee agencies, especially with a view to increasing the return to the lenders and reducing the paperwork and complexity of the program to all concerned, we are recommending the following amendments: 1. A system of application fees, each fee not to exceed $35 per year, to be paid to the lender for each loan made, and a single conversion fee when all loans for a given student are converted to an installment basis. Lenders assure us that, at the present rate of 6 percent simple interest, these loans are a losing proposition and that they cannot continue on this basis in the long run. 2. Merger of the National Vocational Student Loan Insurance Act into the Higher Education Act. The present two acts have resulted in parallel paperwork and duplicate effort for all parties concerned. Merging the two acts will do much to streamline the program and pro- vide readier access to students in vocational education. 3. At the option of the lender, the Commissioner may defer payment of Federal interest benefits until the loan is paid in full, at which time they will be paid in a lump sum with interest. This would further reduce the paperwork of the lender's billing the Office of Education throughout the life of the loan, as well as solve his problems of sep- arating the 3 percent paid by the students from the 3 percent paid by the Federal Government. Additional proposals include: 1. Encouraging the State agencies to defer repayment by students for periods of service in the military, Peace Corps, and VISTA or for students who have left school but return as full-time students. For such periods of deferment, the Government would pay the lenders the full 6-percent interest rate on behalf of the student. 2. Increasing available lending funds so that certain pension funds can be made eligible lenders under the program, and so that savings and loan associations can be permitted to make vocational loans, in the same way they can make guaranteed loans. 3. Making the program consistent whether the loans be State or privately guaranteed or federally insured. There are now differences with respect to maximum amounts of individual loans, assurances of installment obligations and minimum amounts of installment repay- ment. 4. Extending provision for Federal interest benefits for 5 years, through fiscal year 1973. Finally, we propose that authorizations for the federally insured program be extended 2 years, through fiscal year 1970. Although there PAGENO="0015" 9 ~re now 35 State agencies and although several new agencies are under consideration in the remaining States, it is certain that a State pro- gram will not be established in every State by June 30, 1968. Addi- tional action needs to be taken by the legislatures in a number of States, some of which have no scheduled session until next year. Additional changes will probably be required in some existing State programs before the reinsurance system can be adopted or appropriations made for the matching requirement of additional seed money. If the Federal program is permitted to lapse on June 30, as it would without the extension we propose, it is highly likely that loans will not be available for the next academic year for students in a number of States, some of which already have access to the Federal program. Although the reinsurance proposal may make it unnecessary to con- tinue the Federal insurance, it may take a period of time before reguh~- tions and procedures can be established and the programs `made `operative. In order that the administration of the program may continue through existing State agencies, even when it is the federally sponsored program, we propose a final change that would authorize the Federal `Government to contract for the issuance of Federal insurance to an existing State agency. 1114 of the 17 States-New Jersey, Hawaii, Indiana, and Vermont- where the Federal insurance is now operative, the majority of the paperwork and contact with lenders is being administered through the State agency, but with the final issuance of the insurance commitment being made by one of the nine Office of Education regional offices. The change we are requesting would enable a State official to perform this task. Thus, these amendments to title IV of the Higher Education Act and title II of NDEA, covering as they do the four major student financial aid programs operated by the Federal Government, will provide a re~ponsive and sensitive mechanism through which institutions of higher education, State agencies, and the Federal Government may jointly strive toward the day when no qualified student who desires `a program beyond high school will be `denied that opportunity because of economic disadvantage or family background. Madam Chairman, that concludes my formal testimony on the mat- ters we hope to discuss with you today. We will be glad to answer any questions you may have. Mrs. GREEN. Thank you very much, Mr. Commissioner, for your fine presentation. I must say that the recommendations that you make on pages 6 and 7 make awfully good sense to me, at least on first reading, and I would think it would help a great deal if the colleges and univer- sities try to work with the students. At the present time, is there any requirement for matching in the economic opportunity grant program? Mr. Hown. No, there is no matching in EOG grants. Mrs. GREEN. The work study? Mr. HowE. The matching requirement in work study is 85-15. Mrs. GREEN. No; I mean is the work study `used as matching for the purposes of fixing the `amount of money in an"EOG"? Mr. GIBBONS. It is not required. PAGENO="0016" 10 Mrs. GREr~. Is there any change in this? Mr. MooRE. No, at the moment, work study is excluded as the other half of the financial aid package. This proposal would, in effect, allow it to be used, because here we are simply saying to the institution, "Begin with the grant and then add the other components according to whatever happens." Mrs. Gi~N. But it can be for match ng purposes? Mr. Mooiu~. Yes. Mrs. GREEN. In the NDEA loans, you mentioned~ a number of loans the first year and said it increased sevenfold. You. gave a figure of 115,000 for the first year. Does this mean there are about 700,000 a year? Mr. HowE. I believe that is correct. We can get you the exact figure. Is this the student figure? Mrs. GREEN. 700,000 students are given NDEA loans each year? Mr. Mooru~. No; 700,000 students, or approximately 700,000 this year who will be helped by all three programs as compared to the 115,000 helped by NDEA in 1959. Mrs. G~N. How many of those would be helped by NDEA? Mr. MooRE. About 415,000, roughly. Mrs. GREEN. How many NDEA loans are there outstanding? Mr. HowE. As of now? Mrs. GREEN. Over the 10-year period? Mr. HowE. 2.4 million. Mrs. GREEN. 2.4 million? Mr. HowE. This is the cumulative number that has been made. Mrs. GREEN. How many students does this involve? Mr. HowE. About 11/3 million students, all told. Mrs. GREEN. Have any loans actually been made under the vocational educational loan program? Mr. HowE. Yes. It was late in beginning and there had been made roughly 11,000 or 12,000 loans at the end of last year. The number is now increasing. The program is operative in all but approximately one dozen States. Where the Federal direct program is in operation, the vocational seed money, which has been very small, has been ex- hausted, and we simply ran the program side by side with the guaran- teed loan program. This is the case in California and will be the case in Florida. Mrs. GREEN. I assume you considered the advisability of dropping the interest subsidy after graduation. You do not make recommenda- tion for a change in that? Mr. Howi~. In the guaranteed loan program? Mrs. GREEN. In either one? Mr. HowE. No; we have not taken any different position on this. Mrs. GREEN. I want to come back to cost in a minute, but I will turn to my colleague, Congressman Quie. Mr. QmE. First, Coimnissioner Howe, what will be the request for appropriation for the academic facilities and grants this time, both graduate and undergraduate? Mr. HowE. $75 million. Mr. Qtrn~. $75 million. How does it compare with last year? Mr. HowE. Last year the request was $450 million. Excuse me, Mr. Quie, the current year you are talking about? PAGENO="0017" 11 Mr. Qun~. That is right. Mr. HowE. Fiscal year 1968. Mr. QrnE. Right. Mr. HowE. $450 million. Mr. QUIE. $450 million and the authorization for fiscal year 1969, if I remember correctly is $1.056 billion. Is that correct? Mr. Howi~. I haven't got the figure before me, but I assume it is approximately correct. We can check it. Mr. QUJE. Now in the President's message he indicated that in 10 years we would have a 50-percent increase in enrollment in our col- leges. The authorizing committee in the Congress indicated its feeling that the Federal Government would have to participate in the growth of facilities in order to provide them for this increasing enrollment. At the rate you are going, with the reduction of 50 million to 75 million, what are we going to do about planning academic facilities for the students and professors to conduct their work in years to come if we continue at this rate? Mrs. GREEN. Could I interrupt here a minute? I think before you came in, Congressman Quie, the Commissioner asked if it would be agreeable if we turned our attention to the student aid parts of the bill. His testimony tomorrow will be on the facilities so a ter he responds to this question would it be agreeable to you to restrict our questions to the student aid proposals? Mr. QUIE. Yes. Mr. HowE. I think there will be a negative effect on the academic facilities available as a result of slowing this appropriations action. The rate of construction in the current year and in the next year will continue at a considerably higher rate, because you are talking about a pipeline in which commitments are already made. You won't have an immediate effect on the rate of construction comparable to the effect that you would surmise from these appropriations. Ultimately the lower appropriations will, of course, have their effect. I think you have to recognize that the President has taken the posi- tion in arranging this reduction in facilities expenditure that this is a tight budget year which calls fOr economy and a clear setting of pri- orities. He has set his priorities primarily on immediate services to peo- ple in schools and colleges, through programs that provide for more teachers, that' provide direct student aid, that provide specialized serv- ices to disadvantaged pupils and a number of other categories of services. He has placed somewhat lower priority on buildings which will not be built before 3 or 4 years from now. I think his budgetary decision is a clear response to the call of the Congress for exactly this kind of action, with hope that the Congress will act favorably `on other programs to solve the fiscal `problems of the country that he `has before the Congress. Mr. QrnE. Knowing that the President feels we ought to have lead- time and need to `continue the program for the construction of the SST, I wonder why it is more `important to get to Europe fast than it is to have facilities ready for the young people who will come into our colleges and universities? It does not seem to me the priority is very wise. ` Mr. HOWE. I will have to disqualify myself as an expert witness on that particular problem because I am certainly not an expert, but it is 92-371-68-pt. 1-2 PAGENO="0018" 12 a tough job to set all of the priorities in a total Federal budget. I have a good deal of confidence in the way the President has done this in rela- tion to education. I call to your attention that our authority to obligate funds in the Office of Education in fiscal year 1959, if the Congress meets this budget, will be more than $200 million above what it was in fiscal year 1968. We have a long list of very important programs in which there will be very considerable increase, not the least of them being the $52 million increase the President is requesting for the training of additional people to serve the schools and colleges. I think there has been a careful consideration of priorities, and I suspect that considera- tion of the item you mentioned has been part of that. Mr. Qun~. Another decision was made in the education budget and it was that the Federal Government ought to pay 5 percent more on the work-study program than it is doing in this year, that is, go to a 90-10 matching for work-study rather than 85-15. Why do you feel that for the work-study program which not only benefits the student but also the institution as well, 15 percent is too high an amount for the institution to pay as matching and that 10 percent is the correct amount? If you don't do this, we are going to go by steps to an 80-20 matching next year and 75-25 in the third year. Mr. MUIRHEAD. Mr. Quie is referring to, of course, the proposal in the combination bill that would have the same matching for the NDEA loan program as for the college work-study program-90-10 matching. It was the administration's thought that we should move toward some concept of dealing with these programs in a regular, orderly manner and that the matching requirement for the NDEA loan program of 90-10 should be just as applicable to the work-study program. Mr. Quri~. What is the institution's benefit from this loan program? Mr. MUIRHEAD. You are quite right in pointing out there are benefits that accrue to the institution from a college work-study program that do not accrue from a student loan program. The policy decision here however, was based on the fact that it is becoming increasingly dif- ficult for institutions to provide large amounts of matching money for Federal programs. If they move toward the goal of a student aid pro- gram-that is, to seek out, encourage, and induce additional numbers of disadvantaged youngsters to come on the college campus-that effort should not be thwarted by making it necessary for the institution to provide additional moneys of its own. Mr. QUIR. You are thwarting their ability in the long run to provide the opportunity for these needy children by drastically cutting back the facilities program and when you have the inducement of 85-15, it seems to me, that is a substantial one to the institution. An in- stitution benefits by more than the 15 percent it has to contribute in the kind of work that can be done around the facility. It seems to me the money you propose to spend at the Federal level which otherwise would have come locally, could be more wisely spent some other way. Mr. MUIRHEAD. Well, if you put the question in that context, I think you have to weigh it against the judgment that the administration made, which the Commissioner explained a moment ago, that in a PAGENO="0019" 13 year when it was necessary to cut back on the budget the reduction should be made on material things rather than in programs that apply to young people. Any decision on the part of the administration within the context of the Educational Opportunity Act that would tend to discourage seek- ing. out disadvantaged young people would in such measure thwart that objective. Mr. QUIE. Do you have proof that the change this year from 90-10 to 85-15 has actually discouraged the institutions? Can you submit that proof to us? Mr. MUIRIIEAD. We have no clear-cut proof except that by and large I think it would be reasonable to assume that if we required the insti- tution to put less of its own funds into the student-aid program that it could use that money for other purposes, presumably to strengthen the program at the institution. Mr. HowE. I think we could get you some clear evidence at some in- stitutions that is a definite problem to them. It is increasingly common knowledge, I think, that the higher educational institutions across the United States have a severe financial problem. This is the reason the President in his message directed the Secretary of Health, Educa- tion, and Welfare to make a major study about the financial condi- tion of higher education. I am quite sure we can get institutional evidence that even this small 5 percent does create a problem at some institutions. Mr. QrnE. I don't know if I should take any more time if you want to go on to some others? Mrs. GREEN. All right, Congressman Gibbons. Mr. GIBBONS. Thank you, Madam Chairman, I will comment briefly on the subject that Mr. Quie raised, because I think it is a subject we see as a real problem because there is not enough money to meet the demands. it reminds me of the story told about the problem down in my part of the country where they said they didn't want any of this tainted money and now the song is "there just taint enough." Now, I think this is the problem here, "there just taint enough" of this, the demand is so great, and the need is so great. I support most of the changes you recommend here on pages 6 and 7. I had some questions, though, about why do you recommend the change in item 4 on page 6 of eliminating reward for the student who performs better? Can you give me your arguments on that? Mr. MUIRHEAD. That was not an easy decision to make, Mr. Gibbons. But, again, in a context of limited funds `which must be stretched to accomplish a very large purpose, we felt that the practice of making an extra $200 available to students who stand in the upper half of their class-though on its own a very laudable thing to do-was not clearly in accord with the purposes of the student-aid program, which is to use the money that i's available to seek out as many able but dis- advantaged students as possible and get them into college. So that money, in our judgment, would be used to better advantage by provid- ing grants for entrance of students. Mr. GIBBoNs. But has there been any trouble in administering this part that gives a slight advantage to a student who is performing at a little higher level? I don't know whose amendment it was; I remem- PAGENO="0020" 14 ber it didn't come over in the administration bill in 1965 but it was something that came out of this committee: is that any problem? Mr. MtTIRIJEAD. There is no problem in its administration, Mr. Gib- bons. Our problem was whether or not it was in harmony with the basic purpose of the act. In making the grant to the student in the package concept, the college does all it can to use its funds to meet the financial need of each individual, and if they have done that then any additional money which the student would receive would be over and above the measure of need which the college had thought was adequate. Mr. Hown. Mr. Gibbons, I can see a possible administrative prob- lem developing because some higher education institutions are begin- fling to loosen their system of measuring student achievement in ways which might make it difficult to establish who was in the top half of the class. For example, the institution I happened to attend, Yale University, recently dropped its marking system and now has a pass-fail system and not an exact numerical average. There is quite a movement in higher education along that line. Mr. GIBBONS. Let me say on page 10 I support the merger idea of the two student loan programs, the student assistance programs, to cut down the paperwork and cut down the distinction between the types of institutions receiving the loans. Am I correct in that in your item 1 on page 10 you can get $35 a year plus another $35 conversion fee or 8 times 35, about $300, in addition to the interest the lending institution could draw, that many contracts with that $300 or $35 award? Mr. Hown. I don't think this would come in a single year. Mr. GIBBONS. For instance, a law student goes to school approxi- mately 7 years so there would be 7 times 35 and then the eighth one on the end, so you would have about, on a $7,500 loan, as I recall, roughly, $800 Federal interest subsidy and then another $300 in addition to this. I doubt very seriously we need to reward the lending institutions that high to get their interest in the program. Mr. Hown. Let me make a comment and then ask our associates from the Treasury to comment. I think it is possible to pyramid the fee in the way you suggest, and for small loans I think you are raising a very reasonable point. It seems to me that the likelihood is that the loans here are going to be large enough so that there is, when these are added together over a period of years, a reasonable charge for the banking institution when you look at all of the paper- work the banking institution has to go through. I call to your attention also the fact that this is set as a maximum and an amount not to exceed. We would arrange to have this fee set at an appropriate level, perhaps not exactly $35, which would alleviate the situation you suggest to some degree. Would one of you gentlemen like to comment? Mr. WEISS. Mr. Gibbons, the problem we discovered in studying the cost elements in the program for banks and other lenders is that this is essentially a small loan operation for the lender. It is not a home mortgage with many thousands of dollars in one loan. It is a loan of $800 or $1,000 at a shot, repeated over several years. In that context, the costs to a lender are fairly high. PAGENO="0021" 15 While further experience with this program may indicate that we will be able to cut down that fee or eliminate it, the best data we have been able to get thus far indicate that a fee within that range is needed to put the program on a reasonable basis for the lenders in- volved. I might point out that we are dealing here with a small loan at 6 percent. I am sure you are familiar with the fact that if you or I went in to get a small loan of $800 or $1,000 we quite likely would be charged more than a simple 6-percent interest rate. Mr. GIBBONS. When you have a Federal guaranteed loan, they can dump anywhere they don't get 100 cents on the dollar; they can do that on your loan? Mr. WEIss. That is quite correct; there is a minimum risk of loss of capital here. Mr. GIBBONS. If they run into trouble collecting it, they could dump it, they could dump it and let the insurance fee, the quarter of 1 per- cent charged in advance, take care of that? Mr. WEISS. I quite agree there is a minimum risk of loss of capital here. On the other hand, there is a lot of bookkeeping, and I think from a lender's point of view he is doing bookkeeping and tying up money that could be put to more profitable use in other kinds of small loans. Mr. GIBBONS. I am trying to become conversant with all of the different kinds of programs we authorize under that section of the act in 1965, but would you explain, you `have in the red colored States that were up on that slide, Mr. Moore, that i's a direct Federal guaran- tee to the lender, is that riatht? Mr. MooRE. No, sir; the red States as well as the brown ones are `those in whidh there is a State gua'rantee, a State guarantee fund un- derneath the loan, usually on a 90-10 basis. This is an actual deposit usually on a $1 for 10, an actual deposit in the guarantee fund to cover loss. That really is the heart of the program. The Federal insurance operates a little bit differently in that it is simply an insurance certif- icate. Mr. GIBBONS. Let me talk about the red colored States, those are the ones where the United Student Aid Fund is operating? Mr. Mooiu. It operates in a number of them as the administrating agency; yes, sir. Mr. GIBBONS. All right, go ahead. Mr. MOORE. Well, `the law provides for the establishment `of a guar- antee fund in very State. As the map `showed with the State appropria- tion pattern on it, about half of the States have appropriated money for deposit in the guarantee fund. In other words, the advance of Fed- eral funds from 1966 to `1968 have become `fully encumbered, and this is what happened to Florida. As you know, last month, the loan busi- ness just stopped, and the only way at the moment we h'ave of con- tinuing to provide loan accessibility is to run this interim program of direct Federal insurance into the States. If there is a claim on the loan the bank will make the claim against the U.S. Government instead of the State guarantee agency. Mr. GIBBONS. Let me ask you a question: On these red colored States we have up there, where we had the different State plans, is there uniformity or Federal ~uidelines? Let me demonstrate. Suppose I am a student first in Virginia and decide to go to school in Maryland, PAGENO="0022" 16 and these are hypothetical examples, I wouldn't want to have to go into the details of each State plan but I talk about a student living in one State and going to a school in a State right next to it for any number of reasons that you can imagine, b~t do these red-colored~ States, or the ones that have the State plans, are they required to help that student that goes over into another State or does he just become a lost soul? Mr. Moorn~. I think you are talking about here State residency requirements? Mr. GIBBONS. That is right. Mr. MOORE. The law does provide certain minimal criteria which a State must observe in order to sign an agreement with the Commis- sioner: one, to secure the interest subsidy; and, two, to secure the de- posit of seed money, maximum and minimum requirements on the - loan, and so forth. Beyond that there are areas in which the State is perfectly free to set its own ground rules, and this matter of State residency is the most common one. We have generally taken a position that if there are agencies in all 50 States, obviously everybody is covered because in theory at least everyone is a resident of at least one State. It is true in the Federal insurance program we don't have to concern ourselves with a lot of these local restrictions because there the student eligibility require- ment is simply that he be a student in a college located either in the United States or approved list of countries. This is one of the problems of dealing with a 50-State pattern, as one simply has to accept a certain number of reasonable local restric- tions. But I think, overall, once an agency is established in every one of the 50 States one can say that virtually everybody is covered. Mr. MUIRHEAD. If I may, I would like to develop that point a little more because I think it is quite crucial to the operation of the guaran- teed loan program. He was quite correct in pointing out that-whether the State has created a new agency or whether it has contracted with TJSAF to do the job-the State agencies that are in place have a va- riety of practices, and that variety is permitted under the law. You used a very good example, Mr. Gibbons, in taking up the State of Virginia. In Virginia, the State agency sets up a requirement that tile resident must attend a public institution within the State. Many of the restrictions the State agency sets up are quite understandabfe because they have not enough guarantee funds to cover all of the eligible students, so they set priorities as to how they will use the funds. It is our hope that as a result of these amendments we are suggest- ing to you-principally, the reinsurance amendment which would, in effect, multiply by four the State's capacity to guarantee funds- that the need for those restrictions will evaporate and that the States then will make the program available to all eligible students and permit the student freedom of choice as to which institution he might attend. As the Commissioner indicated in his testimony, in the long run what we would like to see in place here would be 50 State-operated pro- grams making these loans available to all eligible students to study where they wanted to study. PAGENO="0023" 17 Mr. GIBBONS. I bet you $100 if you do it you are going to have, in- stead of a rather large bureaucracy in Washington, you will have 50 medium-sized bureaucracies and nobody will figure what is going on and Members of Congress will constantly be answering mail trying to explain to 50 different agencies. It seems more reasonable for us to pick out a good, thorough, simple way we can do it and not force these States to have to hire a lot of bureaucrats to administer the programs when your federally insured programs are the simplest, most direct, and probably the least expensive programs we have. I don't know why we are trying to balance out all of these competing forces at the expense of the Federal treasury. I may be accusing you of something that is not true, but it seems to me we have the State programs, TJSAIF programs, and we have the federally insured pro- grams and it seems to me we are taking a little bit of every one to make everybody happy and what is going to happen is we build up so many little bureaucracies, public and private, nobody is able to make any sense of any of them. The Chairman is getting ready to gavel me down, so I will retire on that. Mrs. GREEN. Congressman Reid. Mr. REID. Thank you, Madam Chairman, and it is good to welcome you here this morning, Commissioner, and your colleagues. I would like to pursue one question that Congressman Quie started with in a little broader context and I think all of us on the committee are not unmindful of the fact that Congress clearly needs serious research on goals and priorities. If you take the three areas that your statement is concerned with, could you give us some rough idea of what the shortage of facilities is around United States that are relatively essential? Mrs. GREEN. Will you yield? Mr. REID. Yes. Mrs. GREEN. I think also before you came in there was an agree- ment that we would discuss facilities tomorrow. Mr. REID. All right, then; could I get to the second part of this, which is what is the shortage in terms of students who have the ability to go to college and the qualifications but lack the means. How close to meeting the need do you think these four programs will come? Madam chairman, do you want to get the graduate side this morning? Mrs. GREEN. Yes. Mr. REID. Could I ask, then, to what extent do you think the im- provements in the various student programs will meet the need? How many students do we have annually that want to go to college but are denied that because of financial reasons of one kind or another and how close to meeting the objective that any American may go to college irrespective of financial means will these several programs take us? Mr. HowE. Let me make some general comments and perhaps Mr. Muirhead can make some. Perhaps we can submit for the record some material that will in detail in numerical terms really answer your question. First of all, it is very clear that college attendance or at- tendance beyond the secondary level in the United States is very, PAGENO="0024" 18 very heavily weighted in favor of those who come from middle- and upper-income brackets, as compared with those who come from lower- income brackets. That fact, and we can document that with a good many numbers, would indicate that there is a real problem of financial support for those from lower-income brackets in getting the opportunity to go to college. If you refine that fact further and look at those from lower, income brackets who have the ability to go to college, it is still true that the percentage of those with the ability-that is, from the upper quarter of graduating classes but coming from lower-income brack- ets-find themselves in college in substantially lower proportion than they should in accordance with their ability, again probably because primarily financial need. There are motivational factors in here as well that complicate the picture. Third, you have a clear record of college dropouts which again is weighted very much in the direction of those who come from lower income families. You can't ascribe all of these college dropouts to financial need, but you can ascribe a considerable proportion of them to financial need. I would say in a general way we have a very large problem to solve here. We are not going to solve it completely by the legislation and the funding we are suggesting to be put in being this year, but the legislation will put into place the proper authorizations to reach for a solution to this problem over a 5-year period. We could submit to you some numbers which would show the kinds of options that would have to be faced in funding over that 5-year period to solve the problems of, let's say, students from families of less than $5,000 adjusted gross income, or $6,000 or $7,000, whichever level it is. Mr. REID. L~t me ask just two quick statistical questions: What is the total number of our graduating high school seniors in the United States at this time'? Mr. HowE. 2.7 million. Mr. REID. 2.7, and what is it, around 50 percent that are now going on? Mr. HowE. Around 50 percent are going on to some form of post- high school education. Mr. REID. And this would provide how much of an increase over last year? You used a figure of about 700,000 in the guaranteed student loan program and mentioned NDEA figures. Mr. HowE. Those figures, of course, reflect the students in all 4 years of college. Mr. REID. Well, how many did we help go to college an this current fiscal year or the last year? Mr. HowE. You mean new starts in September? Mr. REID. Yes; that would not have otherwise been able to do it? What is the annualized figure approximately? Mr. MUIRI-TEAD. If we talk about the opportunity grant program- Mr. REID. No, I am thinking about overall, all of these programs. Mr. MUIRHEAD. Well, in the pre:3ent year, about one and a quarter million studeiits are being assisted through the several student aid programs. Mr. REID. Do you divide it by four? PAGENO="0025" 19 Mr. MuIRnE~uI. And probably about 30 percent of those are fresh- men. I think, Congressman Reid, it is necessary to analyzethat figure a little because it includes the guaranteed loan program. As we have all said many times, the guaranteed loan program does not have the same sharp mission as the opportunity grants and the work-study and the NDEA loan programs. Those programs are directed at the finan- cially needy. Mr. REID. Assuming you are reaching, say, 30 percent, and I am just trying to get the parameters of the problem, and only 50 percent are going to college, what will the increase be this year with the pro- gram when it becomes operative? Mr. MUIRHEAD. In round numbers, the increase this year will move to about one and a half million next year over the one and a quarter million of the current year. Mr. REID. It is an increase of 250,000 and you divide by four; what you are talking about is a program of about 60,000? Mr. HOWE. Probably 75,000 freshmen, that would probably be larger. Mr. REID. And the probable need, if we looked at it, is perhaps to reach 1 million on an annualized basis? Mr. MIJIRHEAD. Within the context of the 5-year objective that we are talking about, where every youngster who has ability will not be prevented from going to college for financial reasons, we would need to raise the number of students who receive assistance from the present level of about 700,000 to 750,000, to a level of perhaps 2 million. We can present some figures to the committee to document that, but, basically, the aim of this legislation would be to raise the opportunity for young people from low-income families to the same level that is now enjoyed by youngsters from middle-income families. The sad situation at the moment is that students coming from families earning $10,000 and above who have ability for a college education-those in the upper half of the graduating classes-have about 8 out of 10 chances to go to college. In contrast, the opportunity presented to equally able young people from the $3,000 to $4,000 family income level and below is only about 2 out of 10. The objective of our 5-year plan is to raise that opportunity to the same level as the middle-income group. Mr. REID. Could I ask a quick question? Mrs. GREEN. If it is quick and the answer equally quick. Mr. REID. My one final question is what about the middle-income family which is slightly above the $15,000 level but has three or four children, all of whom want to go to college at the same time? Do you want to exclude them? Mr. HOWE. There are two points here: first, the guaranteed loan program is available to the family but at an interest rate that is not subsidized by Federal Government; and, secondly, there are, of course, in place opportunities for students' support from private and State sources outside of the federally sponsored program about equal in size to the Federal programs and that family has some chance there. Mrs. GREEN. Congressman Brademas. Mr. BRADEMAS. Thank you, Madam Chairman, I want to follow some of the questions that have just been asked. I was much impressed by what you said, Mr. Howe, about college attendance in the United PAGENO="0026" 20 States being heavily weighted toward middle- and upper-income faini- lies, and I think you said that the real problem is with lower-income students even if they have ability. I find that in my home district there is great interest in the tax credit proposal, and we already have the guaranteed loan program. Both of these programs are essentially aimed at helping middle- and upper-income students. Having said that, I would like to ask you a couple of questions. First, could you give me, if not now, at some other time, a breakdown of who benefits, and by who, I mean both in terms of family income and ability, from which student aid programs, Federal, State, and private? This information would give us some basis on which to make judg- ments as to what we ought to be doing. Do you have any general comment on that observation? Mr. HOWE. We can give you some proffles which will show perhaps in graph form where the major focus of family income is for each of the several major programs of the Federal Government. Whether we can do this for all private programs I would doubt, because there is a broad spectrum of private programs. I think you will find that on the Federal side of the educational opportunity grant program and the work-study program are providing a major focus for the needs of the really low-income youngsters. I think that the solution, the ulti- mate solution, to the problem of the low-income youngster is vastly greater funding of the grant program and the work-study program. While the loan programs ought to be picking up as you move away from the lower incomes, the pattern of funding where have a maximum of direct grants and work-study opportunities in the lower income is where we ought to reach. (The information follows:) Question: What are profiles of family incomes for students served in these programs? Answer: For the 1966~-67 college year, gross family income percent distribu- tion is shown in the table below. Note the résumé of total awards as compared to the actual number of students; the overlap is due to award "packaging." Em percentj Annual gross family incomes NDEA loans College work- study EOG GLP Lessthan $3,000 23.6 $3,001 to $6,000 28.9 $6,001 to $7,500 16. 5 $7 501 to $9,000 12. 7 $9,001 to $12,000 12.4 $12,001 and over 5. 9 31.2 36. 5 15. 2 8. 1 6.5 2. 5 28.5 11.5 42. 4 20.2 16. 6 26. 4 8.7 3. 8 16.9 Total awards 394,359 289,476 123,058 Unduplicated number of students college program, 610,300. Mr. BRADEMAS. I happen to share your feeling, but to what extent is the State loan and scholarship program really making a dent in the problem of providing aid for low-income students? Mr. HowE. Of course, most State programs for loans are now be- coming affiliated with and a part of the guaranteed loan program. We will try to give you the proffle you suggest about the income level groups involved in those. PAGENO="0027" 21 Would you comment on this, Mr. Muirhead? Mr. MUIRHEAD. Yes, the State loan programs, as the Commissioner said, are more or less becoming part of the very large guarantee pro- gram supported by the Federal Government. The State scholarship programs for the most part do include a financial means test in order to determine the stipend. In some instances, however, the State loan or scholarship programs include a test of ability which, in many in- stances, eliminates some of the collegeable students who are not of the highest ranking. So the State scholarship programs are not wholly comparable with the student aid programs that we are discussing here, because we have no test of a youngster's ability. He need only show that he has the potential to succeed in college. Mr. HOWE. And get himself admitted. Mr. BEADEMAS. There is this additional fact, that the State may have a program but not much money in it-it is on the statute books but it does not amount to much. What about the role of the guaranteed loan program? As I understand it, 35 State programs are involved. How effective have these programs been? Once again, they are on the books. Are the States providing some pretty good leadership and are there some States we can point to that are models for other States? Mr. MUIRHEAD. Yes, there are certainly some examples of leader- ship. New York State is a fine example of that. Indiana also, my good friend, Mr. Moore, states. Mr. BRADEMAS. I am glad to hear that. That was not a solicited tes- timonial. Mr. MUIRHEAD. Yes, I think the guaranteed loan program has to be measured within `the context of the circumstances under which it was launched. Against that background the guaranteed loan program has made rather significant strides forward. Mr. BRADEMAS. To `turn to the other side of that coin, if I may, how effective have the bankers been in providing leadership? My memory tells me that, when we had hearings at the Northwestern University on the Office of Education study, the bankers of Illinois conducted an ex- tremely impressive drive in' encouraging their constituents to get active in the program. Are you finding that the bankers are respond- ing with real leadership across the ~country, or are they holding their breath for us to give them conversion fees proposed in the bill before us? Mr. How~. Mr. Brademas, I think the answer is both. They have provided real leadership. Particularly, the national association has been deeply involved `and has urged its members to take part. It has done all sorts of promotional work on its own initiative and has co- operated with us in analyzing the problems of the program. Indeed, the State subdivisions have done this kind of thing, at least in some States. I think the bankers have submitted evidence to us, which has been analyzed by the Treasury, that there are very legitimate problems of cost in this kind of loan which are not fully met by the program. It is through looking at these matters with them that we arrive at some of these suggestions for an added fee for making these loans. PAGENO="0028" 22 Mr. BRADEMAS. I want: to make one final comment, Madam. Chair- man, to Commissioner Howe. I was struck in the President's message by his statement last fall that more than 50 percent of our high school graduates went on to college and by 1976, only 8 years from now, he hoped we would increase that number to two-thirds. That is putting a very great challenge before us, it seems to me, and I hope that the programs you have suggested are up to it. Mrs. GREEN. Congressman Esch. Mr. Escu. Thank you very much, Madam Chairman. I would like to express my appreciation at your being here and dis- cussing this problem. I was struck by the parameters of the problem which we face from the previous testimony. I hope that the profile will also include projections over the next 5 years as to what funds might be needed in the various programs to meet the goal. Your suggestion is that the current program will only meet from 6 to 7 percent of the real problem as it exists today. Have you projected those figures on a percentage basis? Mr. HowE. I am not sure how you arrived at the figure. We have not any comparable figure of meeting 6 or 7 percent of the goal, I don't believe. Perhaps we could formulate a 1975 objective and then assess what our present performance is in percentage, but I would suspect it would be higher than that. Mr. Eson. I would like to see it on the basis of the 75,000 more stu- dents which you indicated these programs might maximally include. 1 think it comes out roughly to 6 or 7 percent. I think it is very im- portant for us, as a Congress, to assess what kind of need we are facing and how much of that need we are meeting. I think it is very good for us to present broad-range programs and make broad-range statements~ but I would like to see just exactly and specifically what we intend to do this year about meeting the problem. I think it is minimal. Now, let me interject, if I might, and look forward to tomorrow. How inconsistent it seems to have a long-range program leading to 1975 and yet minimize the facilities need which we are aware is tre- mendous. I hope tomorrow you will present the projected facilities needs based on the great increase in student enrollment in the early 1970's and the larger increase that wifi result from an end to the Viet- nam conflict. I hope you will be able to indicate to me how these two programs, the facilities needs, and the needs in terms of scholarships, might parallel or not parallel. If we could turn specifically to the student loan provisions, in the long range, is your Federal reinsurance proposal a move toward na- tionalizing the entire student loan program operation? Do you look at nationalization as a goal? Mr. HowE. Let me comment on one aspect and Mr~ Muirhead can comment in more detail. Our whole objective in this entire program, as far as the guaranteed loans are concerned, is to reach for effective State participation, State administration, and indeed State provision of State funds for backing up a portion of the program. The reinsurance feature is simply a fea- ture that makes those State funds go further. Would you comment further on this? PAGENO="0029" 23 Mr. MUIRHEAD. I think you said it very effectively, Mr. Commis- sioner. Our objective, our clear-cut objective in the guarantee loan program, is to look toward a State operation of these programs, en- dorsing what this committee has endorsed many times: the whole con- cept of creative federalism. We should do all that we can to carry out that concept and to have the States support it. Mr. ESOH. Let us get into this. Approximately how much do you anticipate being loaned through this reinsurance eventually. Is it $1 or $1.5 billion? Mr. MooRE. With the guaranteed funds that are in place at the present time, with the addition of another $25 million in seed money, this reinsurance proposal should create a total guarantee capability of, in all 50 States, of something in the neighborhood of $3.6 billion over the next `how many years it operates. Mr. Eson. Could we talk about wha't has been the history and experience on t'he defaults? What has been the default record m either NDEA or through TJSAF? Has it not approached 3 to 4 percent? Mr. MUIRHEAD. We have no record as yet on defaults under the guaranteed loan program. It is an infant program and there have been just a few loans that have gone into repayment status. We have rather extensive reports which we will be glad to provide to the committee on the collection rate `and the default rate under the NDEA student loan program. (The following was submitted for the record:) REPORT ON CoLLEcTIoNs OF NATIONAL DEFENSE STUDENT LOANS From the beginning of the National Defense Student Loan Program in 1959, through June 30, 1967, over 2 million loans, totaling more than $1 billion, have been made to students in 1.738 institutions.' The Student Loan Program was established primarily for the purpose of providing financial `assistance to young people who were in need of such `as- sistance in order to enter or continue study `beyond the secondary school level. The Program was designed to help students who were unable to obtain financial assistance from other sources and who were willing to assume responsibility for repaying the funds made available to them `during the time they were unable to help themselves. Of the approximately 610,000 students receiving financial aid from the National Defense Student Loan Program, the Educational Opportunity Grants Program, `and/or' the College Work Study Program, during Fiscal Year 1967,66 percent were recipients of NDSL loans. An analysis of these borrowers, about 394,000 in FY 1907, reveals that 92,967, or 24 percent came from families with annual incomes of less than $3,000; 114,114, or 29 `percent `of `the borrowers came from families with `a'nnual in- comes of less than $6,000; and 65,117, or 16 percent came from families with annual incomes of less than $7,500. In `other words, 272,198 `borrowers, repre- senting 69 percent of all students who borrowed under the Student Loan Pro- gram in Fiscal Year 1967 were from families which earned $7,500 or less `a year. From this analysis, it can be readily seen that the students assisted generally came from an economic group th'at normally, by commercial standards, would have been unable to obtain loans from other sources and, therefore, would h'ave perhaps resulted in a loss to the Nation of the increased talent now made available to `the Nation's total skilled manpower needs. During the l'ast several years, there has been a growing recognition of the fact that as the total loans made under the National Defense Student Loan Program increased in numbers and amounts, and as more `borrowers reached the point at which repayments were to begin, the magnitude of the collection problem was likely to increase proportionately. Looking at the situation `at the `Figures based on hand tabulations of FY 1966 and FY 1967 reports. PAGENO="0030" 24 close of Fiscal 1966, tabulations show that of the 1,639,280 loans made, 77,087, or 4.7 of these appeared to be delinquent; in terms of the amounts involved, of the $823,928,223 loaned to all students, an estimated $7,836,210 was delin- quent as of June 30, 1966. If one were to derive the percentage of accounts past due by computing the amount of money due but uncollected as a percent of the total amount due, both collected and uncollected, the delinquency rate for FY 1966 would be reported as 19.6 percent. This was the method employed by the Student Loan Program at the time the first report on delinquent accounts was published in June, 1966. However, commercial loan establishments report loan delinquency percentages as the amount due but uncollected as a ratio of the total outstanding loan indebtedness. Employing this latter method-i.e., taking the amount past due ($7,836,210) as a percentage of the total in loans outstanding ($739,523,000)-the rate of delinquency in this program would be 1.0596 percent. Insofar as comparability with non-Government establishments is concerned, the latter method provides a far more meaningful figure. Although the collection problem is recognized, the overall collection picture is not as dismal as it at first appears. In view of our recognition of the magnitude of the collection problem, action was taken to review carefully all aspects of the Program so as to identify the major problem areas in order that corrective action could be initiated promptly. To this end, we believe we have been reasonably successful. In previous re- ports, there have been reported a number of factors which unfavorably influenced the prompt and full collection of many of the loans made under the Program. It is, therefore, our belief that it is not necessary to repeat those factors again in this report. Some of the factors previously enumerated were considered by the Congress which passed legislation designed to minimize the effect of those unfavorable factors. The effect of the legislation passed appears to have had an impact on the Program and some degree of stabilization has been achieved in slowing the pace at which student loan repayments were being neglected. Perhaps, the most promising and encouraging activity undertaken in this regard is a special effort which we in-house rather affectionately call "Project 100". "PROJECT 100 "Project 100" was conceived in the early Fall of 1966 as a means of exerting a concentrated and continuous effort to improve the administration and ftnancial management of the National Defense Student Loan Program in a selected group of institutions. Because of the large number of institutions in the Program and because of our llmited professional staff, it was realized early that in order to do an effective job, the colleges and universities included would of necessity have to be restricted to a manageable number. It was our considered judgment that by careful scheduling, we would be capable of working on an intensive basis with approximately 100 institutions throughout the Nation. The name, "Project 100" was derived from this decision. PURPOSE More specifically, the purpose of "Project 100" is: (A) to effect a substantial reduction in the number, percentage, and amount of past due loans; (B) to correct such identifiable weaknesses in the administration of the Program as may contribute to the development of poor collections and audit exceptions; and (0) to evaluate the effectiveness of such efforts. SELECTION INSTITUTIONS FOR INCLUSION The institutions included on the preliminary roster of the project were selected from the total list of participants in the Program on the basis of a summary and comparison of the FY 1965 and 1966 Repayments' RepOrts. The preliminary selection took into consideration the number, amount, and percentage2 of past- due loans. Also considered was the history of past performance, the frequency 2 Computed by taking the amount of money due but uncollected as a percent of the total due, both collected and uncollected. Using this basis, these schools represented a total delinquency rate of 47.6 percent, in Fiscal 1966, as compared with the national total of 19.6 for the same reporting period. PAGENO="0031" 25 and recency of program reviews and audits, and the weaknesses identified by such examinations. The preliminary roster thus formulated contained 210 insti- tutions. Subsequent improvements at various institutions have resulted in effect- ing a reduction of the original 210 schools to the present roster of 198 for Fiscal 1968. PROJECT OUTLINE At the time of its implementation the project outlined certain basic actions to be taken: A. Each OE regional office, in cooperation with Office of Education head- quarters, was to schedule and conduct, promptly, at each. institution selected within its region, an intensive program review covering all administrative aspects of the program. The review, designed to provide substantive evidence of existing weaknesses and the current status of the institution's program, included: (1) the identification of the number and amount of delinquent ac- counts, as defined; (2) the extent to which procedures were established for billing on a regular basis; (3) the reasons for the weaknesses identified; (4) the extent to which procedures were established to insure that borrowers were fully informed of their loan repayments' obligations, at the time the borrower left eligible student status; and (5) whether the institution took serious and positive steps to imple- ment previous recommendations made as a result of earlier audits or program reviews. B. The chief administrative officer of each institution in the project, (and such other official(s) as he wished to accompany him) was invited to a post-review conference during which the results of the intensive review were frankly discussed with him. During the conference he was to be in- formed that: (1) the records indicated the need for immediate, strenuous, and con- *tinuing action in improving the administration of the National Defense Student Loan Program; (2) the failure to institute recommended actions would result in the discontinuance of allocating additional Federal funds to the institu- tion; and (3) a specific period of time would be allowed, depending upon the circumstances, for the institution to establish satisfactory compliance. C. All institutions in the project were to be notified that future allocations would be approved only after taking into consideration their record of administration and collections; that future allocations might be denied on the basis of their records of administration and collections. D. Institutions were to be encouraged to use College-Work-Study students to supplement or augment inadequate personnel in the billing and follow-up procedures. This would not create too great a problem or raise too serious objections since student.borrowers in collection status would not be presently enrolled . students. E. Assistance was to be offered and encouragement given to institutions in ~stablising cooperative collection efforts. This would be primarily for insti- tutions that experienced difficulty in obtaining adequate and competent staff to administer the program. RESULTS The Regions exerted n tremendous effort to remedy the problems of repayment at their "100" schools. In Region IV, for example, 56 program reviews and 20 audits were conducted during the past year at the 48 institutions currently in the "Project 100" category; in Regions VI and VII, all "Project 100" schools (53) had program reviews. Region I had meetings with 27 different schools which had evidenced difficulty in maintaining a good collections' program. Such efforts as briefly described above, were not without results. Between Fiscal Year 1966 and Fiscal Year 1967, 101, or 51 percent of these 198 schools showed an improvement in repayment. This is most significant because of a four- month change in reporting periods betwen the two fiscal years. PAGENO="0032" 26 Prior to the FY 1967 Report of Repayments, institutions were permitted to re- flect teacher cancellations received between the end of the fiscal year and October 31; as of the last report, no payments received subsequent to June 30 could be shown on the report. The point to be noted is that the most recent reporting pe- riod (Fiscal 1967) denied the institutions the four-month advantage of apply- ing late teacher cancellations to those borrowers considered past due, as of June 30, the consequence of which was to increase the number and amount of de- linquencies. roI~Low-uP By the Fall of 1967, certain trends became apparent: (1) not all Regions had been able to approach this problem of delinquency with the same diligence; (2) staff limitations, and the implementation of the Federally Insured Loan Pro- gram, created severe problems in some of the Regions; (3) more support for some Regions from the Washington Office was needed in solving these national problems; and (4) we had no national data regarding the universe of `Project 100" schools. Oonsequently, in December of 1967, the Washington Office notified each of the 198 institutions of the situation and requested a detailed analysis of those ac- counts the institution bad reported past due on its FY 1967 NDSL Annual Report of Repayments. ANALYSIS OF SPECIAL REPORTS Although the Loans Branch currently is in the throes of analyzing these re- ports and of responding to the institutions, interesting results are becoming apparent: A. One Regional Director states that he expects the most dramatic im- provement to be shown by June 1968 as a result of more effective collection procedures and, perhaps even more significantly because of the concern evi- denced by the Presidents of these institutions over the problem of loan repay- ment. B. In Texas, an institution reduced its rate of delinquency from 64.6 per- cent in 1965 to 25.9 percent in 1967; currently, its delinquency stands at about 15 percent. The Regional Office states that this school now is assisting nine other institutions to rectify their problems. 0. Seven of ten institutions reporting from Massachusetts indicate there wifi be an increase in their financial aid staffs next year. D. Approximately 50 percent of the "Project 100" institutions upon having to provide a detailed analyses of their delinquent accounts, found they had made errors on their Fiscal Year 1967 Reports of Repayments. E. A sample of the reports which have been analyzed indicates that the percent of delinquent borrowers who are one year or less past due ranges from 4 to 92 percent, with a median of 50 percent. F. p~~~jmjnary analysis of these same reports (item 131) further indicates that the median percent of delinquent borrowers who terminated prior to graduation is 35. G. At the present it is impossible to determine the exact number or dis- tribution of Project 100 institutions using a billing service but the following, albeit incomplete, list indicates that the number is increasing substantially.3 1. California: of the eleven (11) institutional reports reviewed, three (3) of the schools aither belong to, or are considering the u~e of, a billing service; 2. Louisiana: two (2) of the four (4) institutions listed are con- sidering a billing service; 3. Massachusetts: of the twelve (12) institutions analyzed, none be- longs to, or is considering the use of, a billing service; 4. Pennsylvania: of the twelve (12) Institutions analyzed, all are considering the use of a billing service; 5. Tennessee: of the seven (7) institutions analyzed, all either belong to, or are considering the use of a billing service. 3perhaps the best indication of the trend toward the use of a billing service can be found in Wachovia Services, Inc., North Carolina. A survey conducted in October 1967 indicated that Wachovia was handling NDSL billings for twenty-three (23) institutions. Currently, it has sirty schools under contract and is negotiating with several others. PAGENO="0033" 27 THE PROBLEM In responding to the request for an analysis of their delinquent accounts, the 198 Project 100 ii~stitutions wbre asked to inform us as to What they considered to be the most serious impediment they encountered in the proper operation of their loan programs. Again certain trends become apparent; the majority of problems fell within five (5) categories. Rather than list these, actual quota- tions from our correspondence should provide a more meaningful picture of these problems. 1. Plbase be con$derate of my in-experience with the program~; and, I would also call attention to the difficulty in finding capable personnel to manage the program. 2. A lack of incentive to pay because of the absence, in the early years of the Program, of any penalties for non-payment or tardy responses. 3. Many of our delinquent borrowers are teachqrs Who fail `to request post- ponement of installment~s in anticipation of cancellation. 4. `A major source of delinquent repayments may be found in the drop- out cases;4 student borrowers who get away from school without an Exit Interview. 5. The chief problem which we have encountered in the administration of the Student Loan Program has been its rapid growth. It became a major problem at a time when we were not sufficiently well staffed to handle it adequately.' CONCLUSION The problems manifested `by the 198 "Project 100" in~titu'tions are the same problems encountered `by the majority of all schools in the Student Loan Pro- gram; how quickly they are recognized and resolved determines whether or not an institution will be able to administer its Loan Program in a suitable manner. ,Through the special study of these "select" schools, one item has become increas- ingly apparbnrt, both to this office `and to the Regional Offices: the more frequent the personal contact with `these institutions, the less likelihood there is of their developing problems. In spite of the restriction on travel funds and the severe shortage of personnel in our Regional Offices, close contact was maintained `with these problem schools, often to the detriment of other important duties. Program reviews, meetings, visits, telephone communication, `and letters were utilized in an effort ito assist the schools to resolve their delinquency problems; as noted earlier, 51 percent of `the `schools showed some Improvement during the past year. Increasing dc- mends on the Region, however, and t'he undeniable fact `that some duties had to be ignored in order that they be able to devote as much time to their problem schools as they did, will preclude the maintenance of `such effort in the future. Only if `the Regional Offices `have sufficient ~taff to enable them to maintain frequent `and personal contact with their schools can future problems be pre- cluded. Nothing provides greater evidence of this than the situation in Region YllI'; the ratio of staff is such that each school is visited at least every year. Consequently, when the original "Project 100" institutions were called from `the universe of NDSLP participants, not one institution qualified. A~nd, `since that time, problems have been `recognized before t'hey could become `seriou~ enough to place, `an ins~ithtion in the `Project 100" category. Mr. EscH. The information I have received is that it was right around 3 t'o 4 percent from the existing, without the reinsurance. Tak- ing it at this ra1~e, with $3.5 billion, with 80 percent guaranteed, we are talking about appi~oximwtely $90 to $100 million a year in de- faults.' ` `Mr. MIIUUIEAD. I think that is `quite proper, Mr. Oongressman, to indicate that we have no baths for measuring the collection or default ,ra~e~ under the guaranteed lOan program. It would not be wholly Preliminary analysis indicates that approximately one-third of delinquent borrowers are drop-outs. 92-371----68-pt. 1-3 PAGENO="0034" 28 appropriate for us to use the record of other guaranteed loan program agencies such as IJSAF because there will be different mechanisms for collection in this program. Mr. ESCH. We do have this experience base that this has been the default rate tc~ciay. I would like to see the figures. Mr. HowE. Not on guaranteed loans. Mr. Eson. No; but on comparable situations. Now, I wonder, too, if we could just turn to the vocational educational aspect. It has been indicated that all of the seed money was utilized immediately. Are you recommending a massive new program and a great deal more funding this year to emphasize the need for technical and vocational training? What proportion of seed money will be given to vocational and technical? Mr. MUIRHEAD. One of the recommendations included in the bill would provide reinsurance, which in effect would broaden the capa- bility of the States to provide guarantees. Another recommendation is to merge the two programs together so that the guarantee fund would be available both to the college-related program and to the postsecondary vocational program. Mr. Eson. You are not, really. You are putting in $12.5 million more of seed money but in effect that is for the total seed money, so what you are doing is not really emphasizing to any extent the extension of vocational loan programs. Mr. MUIRHEAD. Yes. Well, I think it has to be developed just a little bit, Mr. Congressman. The additional $12.5 million of seed money is intended to help those States which have no guarantee funds that can be reinsured. The overall effect of the reinsurance will be to make available four times the amount of guarantee funds that are now in place. Mr. HowE. For all kinds of loans, vocational included. Mr. Eson. I am very much concerned with setting priorities but also not being shortsighted in the priorities we set. I am very much con- cerned that we have not given any attention or any priority to the vocational and technical training area and I think the proposals that you present have not done this either. We have done nothing and you have recommended nothing to meet the need in terms of technical training. Surely, if we are talking about giving opportunity to those who need it most, perhaps the best place to look is the technical training area. I yield to my colleague. Mr. HowE. Perhaps I should coniment briefly on your lastremarks and I might make two points. In broad policy concerns, we are in- troducing a whole new partnership for a learning and earning proposal which will come for hearings of committees here in Congress in mid- February and which wifi be addressed to a variety of vocational and technical training programs. Secondly,, I believe you will find that students engaged in postsecondary vocational and technical education under the proposals suggested in this legislation will have a more flexible and larger volume opportunity for getting loans for that kind of training I would not entirely agree with your earlier comment PAGENO="0035" 29 Mr. Eson. Mr. Howe, if we look carefully at how much money you are going to recommend for the technical and vocational programs we see that on one hand you are usurping the money from NDEA pro- grains and, on the other hand, not really providing additional funds of any consequence at all in terms of new technical programs. While we have talked of how much and how great a need there is for the voca- tional and technical training, neither this administration or Congress has provided the real leadership to fund it adequately and meet the * problem. I think we are not realistic and honest with ourselves. *Mr. HowE. I am not sure whether you are talking about programs or loans to students, but it is clear to me from this legisl'ition th'Lt the reinsurance feature and the eligibility of vocational students for the regular loan programs will open up loan opportunities that vocational and technical students have not had before. Mr. ESOH. To about 6 percent of the need as evidenced by your statistics. Mr. HowE. I think to a much larger eligibility. Mr. Eson. Well, I would like to see your figures. Mr. HowE. We will certainly examine it with you. Mr. QUTE. Will you yield for one question? Did the Advisory Council on Vocational Education have anything to say about the insured loan program or financial assistance for stu- dents in vocational education? Mr. HOWE. I can't recall if it was one of their recommendations or not. Their report will be sent to Congress in the next day or two, if not today; it is in the process of coming up here. They have a large number of recommendations, but I don't remember if this is one. Mr. Qtrre. Is this the same report made to the Secretary on Janu- ary 1? Mr. HOWE. It was submitted shortly afterthat. Mr. QtrIE. It won't be doctored or changed, but will be the same re- port that was submitted to the Secretary? Mr. HoWE. No, sir; no doctoring or changing. Mrs. GREEN. Congressman Carey. Mr. CAREY. Thank you, Madam Chairman. Commissioner, first, would you provide us with some additional in- formation at a later date so that I can be informed on something which is a carryover from the last presentation and at that time we had a tabulation of States showing degree under which they participated in the guaranteed loan program and my reading shows that my State,. New York, led all of the rest, m fact, had borrowed about $66 million or more and was greater than the total of all of the next 12 States combined. Can we have taibtdation brought up to date ~ I want to find out if New Yorkers are still boi rowing more than their sister States and whether we are getting "hock' h'Lppy or whether the other States `ne catching up I am mindful the States farthest removed, Hawaii and California, are moving into tuition programs, and I want to see if California is beginning to boriow money the way New York has for years PAGENO="0036" 2 (~) t~-~ ~(D 0-J00 Q1 ~ r~) - Q(D00~-J00 U' 3~U) ~ ~ 00~-JO0U1 U) N) c~(O Q~~)Q~ U'~U)t~~* o~O CD ~ 0=~~s~9~ -1 3 ~ ~< I -~ < oO ~ 0 2 w t~) t~) ~ - - - - 3 Cl) ~ -~r~ ~ .) ~ 3 %~1~ ~ C/) U~O ~U1-~J )OQl)~ - C)) ~ ~ ~ ~~*_ a, ~)tO -~ - a~ ~J C00 U1c~' U' -~ ~) 000~ 0 ~ ~) a' ~ -4 U) N~ U) U)N) 00 00~-J~ ~ OOa'C) ~U' )%) 4~ 00~-J - 00 ~00N)U) 00U1-3~ ~ 00 OOoo-4--)- N)3~N) ~~JU) 0004~0)~"0OW 0)U~U))0 ~ U'0000UI U'))) J)~U~O) ~0~U) -4~ 00) 00~00-J~N) 0U)o000))) fl 2 or N) 9 U) ~ ~~00~0° ~ -~-~ ~ g ~ -~ Q0U) N)~U) ~ ooU) U1U)U1 CON U)C))C))U)N)0~ ~UN)N) >0) 3 -~ * I CD CD Cp~ ~Cn CD ,-~ CD ~ Co~ C)) PAGENO="0037" 31 lath not interested, or it may be a good idea to look at it, in amy~ kind of preference among the available GI's but I think they should. not come baék and have a second-class-student form of assistance. Mr HowE We will examine it for you I would pomt out that GI arrangements constitute direct benefits, whereas NDEA loans are to be repaid Mr. G&uny. I am interested in not just the loans butthe fellowships and stipends Mr. HOWE. Educational opportumty grants and work study oppor- tunities ~ Mr~ CAREY. Yes. I don't want to see one student sitting in one seat who has not, for one reason or another, been in service to this country, getting more financial aid than the coming-back "GI." I am aware this can happen under this system. Mr. GIBBONS. Fellowships or graduate work ~ Mr. C&ru~y. Well, GI's coming back for graduate work. Mr. GIBBoNs. The Commissioner is not responsible for fellowships. Mr. Caiu~y. I want to see a comparison of those so we can adjust it. some way. I * Mr. HOWE. We will give it to you. (The information requested follows:) The educational benefits available to a veteran were outlined in the Veterans Pension and Readjustment Assistance~ Act of 1967. ThIs legislation provided a schedule of monthly allowances available to a veteran and specified other forms of Federal assistance for which he may or may not be eligible while receiving benefits under the "G.I. Bill." The Act made specific reference to three college based programs sponsored by the Office of Education, Division of Student Finan- cial Aid: the Educational Opportunity Grants Program, the College Work-Study Program, and the National Defense Student Loan Program. The Act states that a veteran may not receive assistance under the Educational Opportunity Grants Program, but, that he may receive assistance under the other two programs. For comparative purposes, it might be valuable to Illustrate the situation in which a veteran and a non-veteran might find himself while enrolled as a full- time student. In both cases, maximum awards under the programs are assumed. Veteran UI bill $130 per month X 9 months (academic year) ~1 170 OWSP: $1,600 (net earnings after taxes, from summer and part-time work) 1, ~ NDSL: $1,000 (legal maximum for undergraduates) 1,000 Total 3 77Q wonvoteran EOG: $800 (legal maximum) plus $200 (available to a student who ranks in the upper half of his class for the previous year) 1,000 OWSP: $1,600 (net earnings after taxes, from summer and part-time work) 1,600 NDSL: $1,000 (legal maximum) 1,000 J~JLOL 3,600 Both students would be working for their OWSP funds, NDSL loans would have to be repaid. The only difference is in terms of an outright grant of funds. In that case, the veteran fares )etter than the nonveteran, $1,170 to $1,000. Mr. Qun~. Will you yield? What happens in a graduate program if a person is under the "GI bill"? Can't there be a blending of the PAGENO="0038" 32 fellowship program which he has added to the GI bill to bring it up to this level? Mr. ~ This is a nice idea, but this is what I am tending toward. You are givrng birth to the Quie-Carey amendment before we get it framed. Are you attempting to simplify the student loan process in any way? I have had occasion to study the student loan application forms. The State has a voluminous requirement for supply of a means test, data on the means of the parent, to determine eligibility for interest forgiveness, and so forth, or interest for admission, and in many cases the student in order to get the tax returns of his father and mother or other employed person together with State application and then the requirement that the States also make him submit the. Federal application whether he wants a State loan or Federal loan, places such a burden upon the student to submit data, my information is the student begins seeking help, say, in June, July, or August, he gets a financial counselor in the institution to declare him eligible by reason of his admission and in many cases he already made two tuition payments which the father or mother probably had to go to House- hold Fmance to get before his student loan money comes through and isn't this a real condition? Mr. HowE. I don't know the extent to which it is a real condition. We are attempting to simplify administration of the program both for students and institutions You find within the proposals here a m'tjor effort to simplify them for the higher education institutions, which in turn, I think, will reflect on simplification for the student. Do you have any details, Mr Moore ~ Mr. MooRE. Mr. Carey has put his finger again on a kind of a prob- lem which can be generated within a State as a matter of local require- ments for information. We are working diligently with the Council of &ate Loan Directors on this matter to attempt to achieve some degree of uniformity among the various States' programs to indicate where various kinds of information can be deleted from a local application form without damaging the program, but it is a process of education. Mr. CAREY. When you get around to redrafting this form, ifyou are going to redraft our: own form as ivell as to try to make it a uniform form with the States, can you explain to me why on the Federal student loan application as you begin to fill up the application, you first come into category 1, which is the low-income student and the first eligibility line and then you come to the second one, and in the second one the student is told to insert w~hether the family's adjusted gross income is above $15,000, and then it says at this point: "If you are above $15,000 you `are not eligible for Federal interest benefits." Now, isn't it true that local hank employees handling it once they get to this part `of the form,. sometimes inform the student: "You are noteligibleforaloan"? ~ This' has happened, and they say, "At this point if you are above $1~,000, continue making up the form," but actually where it sa~s, "You are not eligible for rnteiest benefits," they interpret this as `i mission to tell the student, "You are not eligible," `md it tins happened, Ibelieve. ,` ` Mr HowE I am suie it has I think this reflects the fact that credit is short and that the banks are placing their priorities on students who PAGENO="0039" 33 have the greatest need. They judge that those who are not eligible for interest forgiveness probably. don't have quite as great a need as those who are, so they may be creating at their own option a cuttrng-off point Mr. CAREY. So the banks are picking and choosing on students on a means-test basis. Many banks `have combined into cooperative evalua- tion under, for instance, the New York State Higher Education Assist aiice `Corp., where the determination is made not by banks `but Higher Education Assistance Corp for application eligibility On many campuses across the country there are experiments in dis pensing with grading. Are you aware that in making loans that the Higher Education Assistance Corp. looks upon the students' grades and standin~ on campus and in some cases advises the student, "We wi:llmake this loan, but until you improve your standing in X, Y, and Z, you may not get another one," and are the `higher educational assist- ance corporations and student loan eligibility measuring people getting into the business of evaluating students? Mr. HOWE. They should not be. The Federal programs are directed entirely `to providing support for students who are in good standing at the colleges. As long as the college has the student enrolled and certifies this, I don't see that the banks ought to get into the business of discrirninatingbetween A's, B's, or C's, or other student marks. Mr. O~n~y. These are not the banks but the banks have deferred to evaluation machinery on a combined basis, on a syndicated, joint basis which they call the Higher Education Assistance Corporation Evaluation Team or some such thing, and, as you use the United Student Aid Funds and they make a determination that "your stand- ing is not such we consider you a good risk," I think this is something we should look into because it most adversely affects the lower-income students who find it difficult to carry the first-year program in many institutions and their grades are not outstanding, let's face it, but as they pick up the climate of college life and study habits, they improve in the second year, and I wonder if some students are declared ineli- gible for second-year loans because of first-year standing by these institutions. Mr. HOWE. I think you raise a good point, and I think we ought to look into it. Maybe you have a comment on this. Mr. MOoRE. If this is in fact happening in the area in which the interest benefits are being applied, we need to talk with the New York people immediately, because the pattern, or, as we call it, "the laundry list" of requirements that a State may establish does not include this matter of grade-point evaluation. Mr. CAREY. One last question. Why do you base the eligibility for interest benefits on the gross income of the parent and not on `the net taxable income? In other words if a family had a gross income, ad- justed gross income, after deducting dependents, of $15,000, they are ineligible for interest benefits; however, if the family had catastrophic illness or loss of home or big expenses in connection with a business reverse or something they may have available a net tax deduction of $5,000 but you don't take it into consideration? Mr. MUIRHEAD. We take into consideration the adjustment of family income, and if the family income is $15,000 adjusted income, so it is PAGENO="0040" 34 possible and indeed quite common for families, earning in excess of $15,000, as high as $20,000, depending. on number of children in col~ lege to be eligible for subsidy. Mr. CAREY. Why don't you put on the form the adjusted gross income after deductions, including'the allowed deductions for;in'terest on mortgages and local taxes and all of these things so the real'~figure available to family income appears On the form and not:the:inc'ome after simple deduction? ` Mr. Muii m~r). Well, we had great difficulty in ftnally arriving at, a rather straightforward way for the banks to determine whether or not this family income was eligible. `We did not want to put the~banks though the business of having to go through the income tax form and all of its various ramifications. Instead we took the rather simple. pro- cedure of saying that adjusted family income is that incorrie that remains after the regular dependency allotments. Mr. `CAREY. `That is illusory and you know it, because it is not the~ real money available for student education, and the real money is that money left to the `family after it paid the mortgage on the house, the interest on the car loan, the other expenses the family inay.'ha've under- taken in terms of illness and all of the other things which the interiml, Revenue are agreeable as to legal deductions, and why should the čdu- cation people be' competing with the Internal Revenue people?'' Mr. MUIRHEAD. Let me. ask Mr. Weiss to comment~ `~ Mr. WEIss. This isa problem we worked on with the Office of Edu- cation, and I might offer just two points about it: First, the problem goes both ways. `That is, if you go directly to the taxable `income, you benefit people who perhaps you don't want to benefit `with interest' subsidies, people who have substantial `tax-exempt `interest income, for example. ` ` ` ` ` `. `The second point is: The problem that had arisen in connection with' making all of these adjustments relates to thequestion you raised' a little while ago; that is, `the `administrative burden for `the student, the lender, and the State, private or Federal guarantee' agency.. If you' are going to make all of these adjustments, which had originally been. attempted, the form becomes long and the information is' fairly burdensome to accumulate and check. Mrs. GREEN. Congressman Hathaway. ` ` Mr. HATHAWAY. Thank you, Madam Chairman. I haven't had' a chance to examine `all of the statistics. I am in agreement with most of the statements, except I take strong objection to the $35-a-year ap- plication fee. I wasn't persuaded last year by `the bankers' teStimony they had considered all of the benefits of such student loans. Furthermore, the bankers I have talked ~to in my own State, aJ±hough they would like the `extra money, don't feel they actually need the extra money, they are `happy to participate in the program because it is doing some good and they know it is a longrun benefit to them. `In `the third place, even the bankers admitted there are more in-. stitutions participating in the program every year so why should we' at this time, with no indication of slack-off-in fact it is increasing- give them extra money to keep them in the program ~ Mr HOWE I thmk you realize here we have tried to make a factual study of the situation the banks confront in cooperation with' them. PAGENO="0041" 35 Perhaps Mr. Weiss could comment. I believe you were involved in the comments on that study in the Treasury. Mr. Wuiss. We were. The best figures we could get indicated that lenders rOlatively were losing money on these loans. I believe the com- mittee has received a review of that study from the Comptroller Gen- eral which `indicates, if I understand correctly, that it is at least in the right ball park, although `this is a matter of making findings on relatively limited data. ` The other point I might mention, Mr. Hathaway, is that we have also heard from quite' a number of lenders that they are willing to make some of these loans, even if they are a loss operation, as a matter of public service or community relations. But they do indicate that if they are doing it on that basis it is in effect an item in their advertis- ing budget and they are not willing to put much money into it. If we want to see the pro~rarn expand to the extent that the Office of Educa- `tion has `projected it `needs to expand, then we would assume we have to put it on the basis of at least' a break-even or reasonable return for the lenders. Mr. HATHAWAY. Isn't it true, though, that the number of institu- tions participating in the program, is still increasing since the pro- gram was originally conceived? Mr. WEIss. Yes. Mr. HATHAWAY. Why shouldn't we' wait until it becomes a matter of fact that institutions are not participating in the program rather than what they say is going to happen before we give extra money? They may say, "I don't think we can keep it up much longer," but as a matter of fact they do keep it up much longer. We are going to give them money just for what they say they may do. Mr HowE If we waited, we would be accused of bad planning Mrs. GREEN. Off the record. ` (Discussion off the record) Mr HATHAWAY I don't think we could be accused of asking for im- proper' planning, because if we see that the institutions are falling off, actually falling off, not just saying they are not going to partici- pate, I don't think it would be much of a problem to get a placement fee through `Congress for this and in time to save the program. What do you think of that ~ Mr. HOWE.' Judging by Our current efforts to get something through Congress, it might be difficult Mr. HATHAWAY. Just on this one item. Mr GIBBONS I think you are right Mrs GREEN Is that all ~ Mr HATHAWAY That is all Thank you Mrs. GREEN. I didn't use my 10 minutes, so I will exercise a chair- man's prerogative before I yield to you,' Mr. Scheuer. I wanted to go back to cost of students' loans with the Commissioner or representatives from the Treasury. ` ` I will refer ,to a letter which I have from the Under Secretary of the Treasury dated October 30, 196'T. I had asked for a comparison of the costs of student loans under the NDEA and under the guaranteed `student' loan program. Do you have copies of that available to you there? PAGENO="0042" 36 If we eliminate the cancellation feature and do not consider that a cost in either NDEA or the guaranteed loans, the Under Secretary advises that, if we have 500 students borrowing $4,000 each with 10- year repayment cycles, that the cost to the Federal Government for the NDEA loans for this 10-year period, would be $464,394, that the cost under GSLP would be $579,407, or a difference of $115,000 for 500 students borrowing 4,000 each over a 10-year period. Now, at the beginning I asked the number of NDEA. loans. I think it is fair to assume we could figure on a million over the 10-year pe- riod. This has been about the amount, is that right, Mr. Moore? Mr. Mooiu. A million accounts, yes. Mrs. GREEN. All right, and more than that in loans? Mr. MooRE. Yes. Mrs. GREEN. So a million would be a conservative figure? Mr. MooRE. Yes. Mrs. GREEN. Then if the additional cost for 500 students is $115,000, if my old math is accurate, the increased cost to the Federal Govern- ment is $230 million over this 10-year period if we use the guaranteed student loan program instead of the NDEA? Mr. GIBBONS. Will you yield? Mrs. GREEN. Yes. Mr. GIBBONS. I want to make sure I understand the basis of your argument, and I wish you could put that letter also in the record. Your argument is based on the fact that in NDEA you knock out all of the forgiveness feature? Mrs. GREEN. The forgiveness feature is not considered in the projections. Mr. GIBBoNs. Or interest subsidy? Mrs. GREEN. We consider interest subsidy in both. Mr. GIBBONS. In that program under an interest subsidy, the Fed- eral Government has no expense involved in the program. Mrs. GREEN. The interest paid on behalf of the borrower is $517,000, and the insurance reserve matching seed money is $5,942, and the placement and conversion fees is $56,338. Mr. GIBBONS. Obviously that seed money is just a gift. I think we would be foolish in putting it out and I hope we don't put out the other 12 million. Mrs. GREEN. All I am asking: Is there agreement on the part of Office of Education that there is an additional cost over a 10-year period if we go to a guaranteed student loan program instead of the NDEA? Mr. HowE. Mrs. Green, I have not had a chance to examine that let- ter. We would like to do so. I am sure it is a responsible study. We would like to see what qualifications and judgments have been made in the course of it and give you a response on this question, but we cur- rently don't have a copy of this. Mrs. GREEN. I will make one available. I presumed you had one. Mr. QurE. Will you yield? Mrs. GREEN. Yes. Mr~ Qurs. I would say my recollection of the U.S. Office's response in the last Congress was similar to this of the additional cost of the guar- anteed subsidized loan program being over and above the NDEA guaranteed loan program. PAGENO="0043" 37 Mrs. GREBN. I assume the figures are right. Let me ask this ques- tion: If they are right-and I will make this available to you-is it your considered judgment that this is the direction in which we should go with the cost of over $230 million additional in a 10-year period when we have a shortage of dollars for higher education? Couldn't that money perhaps be spent more wisely in the field of higher education? Mr. HowE. This is a difficult question because one of the com- ponents of it is, certainly, whether you are going to delay some op- portunities for young people to attend college now, in order to get the kind of appropriations that would be required to move into NDEA funding of this volume of students and to do it immediately. It would represent a direct budget charge which would, in all probability, not be forthcoming. Therefore to some extent, in con- sidering this question, we are bargaining immediate opportumties against dollars, and that is a very difficult thing to do. I think we need a balance of programs. I think we need to keep an NDEA program in being; I think we need a bank-supported, State- administered credit program of the kind that the guaranteed loan program is, a program which opens doors that funding under direct appropriations f or NDEA probably won't be available to open. Mr. GIBBoNs. Could I come in here, because I think this is an im- portant point because if the figures are correct-and I doubt these are correct, and I don't think he is making a valid comparison, this is some- thing the committee ought to go into. Let me ask a question to try to clarify in my own mind the difference between the two loan programs- the difference primarily in NDEA is the forgiveness and we are wash- ing it out theoretically from the argument, and the second is the in- terest subsidy in the guaranteed loan program. Now, other than that, in the guaranted loan program, the Federal Government is not putting up any money at all, it won't have any ex- pense, and the losses sustained are paid. for by the borrower or the borrower insurance pool that the borrower putsup. In effect, as I understand the guaranteed loan program, it is a whole, self-supporting type of operation where the Federal Govern- ment won't have any investment. Am I correct in that? Mr. MUIRHEAD. You are quite correct, Congressman Gibbons; and, of course, the Chair is quite correct, too, in saying that the net cost to the Government of the guaranteed loan program would be higher than that of the NDEA loan program, for the obvious reason that the interest rate subsidized under the guaranteed loan program is a higher interest rate than that which is subsidized under NDEA. But we must put it against the background of the fact that the loan appropriation for all practical purposes is a charge against the Gov- ernment. We often think-and I am sure you do, too-that a loan is a loan is a loan; but for all practical purposes, all of the Federal capital contributions which have been made since the program started in 1958 remain charged against the Government and remain in the colleges and the collections from the loans are returned to the college. They do not return to the Government. Theoretically, if the loan program should come to an end, then the collections would come back to the Government; but I don't see a situation like that coming about. PAGENO="0044" 38 Mr. Qurr~. Will you yield right there? With reference to the re- turn to colleges, that reduces the outlay of the year from the Congress; if the return had gone to the Government, then the outlay would have been increased to that extent? Mr. MtmIir~J). Yes, I think you are quite right; for example, in 1968, there will be a total of about $40 million in collections coming back to the colleges. The implication of your question is that ulti- mately the program would be self-supporting, but that will take a long, long time. Our projections indicate it will not reach the level of self- support until well into the late eighties. Mrs. GREEN. Dr. Muirhead, if we did not have the forgiveness fea- ture, how soon would it become self-supporting; how soon would the colleges and universities have a sufficient revolving fund? Have you made a study? Mr. MUmHEAD. I can't answer precisely, but obviously it would come sooner. The loan forgiveness feature in dollars as compared with the size of the program is really not very significant when you consider the fact that 10 percent of the loan is forgiven each year. It takes a long time for that to have an impact. I think, as the Commissioner said a moment ago, we are dealing with two different types of programs with different objectives. The guar- anteed loan program is intended to reach almost every young person that desires to get the advantage of a long-term loan. Some of them will get a subsidized loan, and we are talking about 2, 3, and perhaps as many as 4 million students participating in that program. I can't see a situation that would ever come about where we would be able to provide, through the appropriations route, enough money to support that type of loan capability. Mrs. GREEN. If you are correct there, it is going to go up to what you said-4 million? Mr. Muixw~&n. I am saying that, in terms of the students who are eligible by virtue of the law, it could reach that point. Mrs. Gni~EN. Four miflion. All right. The estimate I gave was based onlmillion? Then what you are saying is, if it goes up to that amount of students, we will betalking about almost a billion dollars over a 10-year period that will be an additional cost to the Government if we go the route of the guaranteed student loan program, and this would be a judgment, then, that Congress would have to make, whether or not they are willing to appropriate the money that is needed or whether they are going to say that they are willing to pay that high a cost for a guar- anteed loan program. But I think these figures do need to be looked at and need to be weighed very carefully. I would ask unanimous consent to place in the record the letter from the Under Secretary dated October 30, 1967, the letter from the Comp- troller General of the United States, dated November 27, 1967, and a lettel' from Under Secretary dated December 4, 1~67, with attached enclosures, and then I would ask to have somebody on the staff to make copies of these three available to each member of the subcommittee this afternoon, and I am sure that you would have available from the Treasury Department their documents, and we will supply a copy of the documents from the Comptroller General; and then if we could agree to take this up the first thing tomorrow morning, if that would be agreeable to my colleagues, and to go into it in more detail. PAGENO="0045" 39 (The following information was submitted for the record:) DECEMBER 4, 1967. ESTIMATED FEDERAL COST OF TEACHER CANCELLATIONS UNDER THE GUARANTEED STUDENT LOAN PROGRAM On the basis of information supplied by the Office of Education, the estimated present value, discounted at 51/8%, of the future cost of teacher cancellations per borrower under the Guaranteed Student Loan Program would be $190.95. The cost of teacher cancellations under a GSLP financing 500,000 student borrowers (the expected number of new loans to be guaranteed in 1968) would be $~5,474,000. These figures were computed by calculating the actuarial costs of teacher cancellations associated with one through five loans per borrower and w~ighting these costs with an estimate of the probability that they will occur.' It should be pointed out that the net increase in Federal costs under the NDEA. and GSLP student loan programs combined may be much* smaller, if the addition of the cancellation privilege to GSLP results in a shift of potential teachers from NDEA, and does not result in a substantial net increase in teachers. It is not known to what extent the addition of cancellation provisiona to the GSLP will stimulate a net increase in teachers. * * * * * * * ASSUMPTIONS 1. Average loan size: $810. 2. Repayment over ten years after a 9 month grace period. 3. Federal payment of interest at 3% during repayment period. 4. Cancellations made at annual rates of 10% and 15% of principal, and all interest accruing during cancellation years. 25% of all borrowers have loans canceled: 19% at 10% rate, 6% at 15%. rate. 5. Federal payment to insurance reserve is 1% of amount of loans disbursed; repaid as loan is repaid. 6. Probabilities of taking 1 to 5 loans based on Office of Education new survey information on NDEA loan program are estimated to be: for 1 loan 0. 535914 for 2 loans . 25486304 for 3 loans . 12763747 for 4 loans . 07681341 for 5 loans . 00477207 7. 500.000 loans are expected to be guaranteed. THE UNDER SECRETARY OF THE TREASURY, Washington, D.C., October 30, 1:967. Hon. EDITH GREEN, Chairman, $pecial ~ubcommittee on Education, House of Representatives, Washington, D.C. Diiars MADAM CHAIRMAN: This letter responds to the request you made for certain comparisons between the insured loan program under the Higher Ecluca- tion Act of 1965 and the direct loan program under the National Defense Ecluca- tion Act. First, you requested a comparison of the total long-range costs to the Federal government of loans made under these two loan programs to a hypothetical group of 500 students, each of whom borrows $1,000 a year for four college years and takes the full ten-year period of time permitted for repayment. I am enclosing a table showing these comparative costs. In accordance with our usual practice, this analysis represents the marginal cost to the government, in- cluding the cost of borrowing by the Treasury, dIscounted to arrive at present dollar-value totals. I A higher discount rate would produce a lower cost because the value of a future pay- ment declines as the discount rate increases. For example, at 5% %, which~ Is the current comparable Treasury borrowing rate, the 500,000 student borrower expected cost of cancel- lations under GSLP would be $92,084,000. The 5~% rate is used here for comparability with the student loan program cost analysis done in September 1967. PAGENO="0046" 40 In this model, the cost under the existing NDEA program would be somewhat higher than the cost under the insured loan program with the placement and conversion fees that have been recommended by the Administration. If the "teacher cancellation" feature of the present NDEA program were eliminkted, the cost under NDEA would be slightly less than under the insured loan program. Although in the long-run such a direct loan program would be slightly less costly to the Federal Government than an insured loan program with comparable terms, the direct loan approach involves substantially higher immediate expen- ditures by the Federal Government. It is clear that, in light of the extraordinary demands on the Federal budget, it would not be possible, as a practical matter, to achieve the same volume of student loans through a direct loan approach as we can achieve through the insured loan approach. Also, we believe that continuation of the insured loan program is very much warranted in light of the fact that we are moving into a novel area in which it should be beneficial to obtain further experience with alternative approaches to the important problem of financing student education expenses. You also requested a comparison between the provisions for reimbursement of administrative expenses under the NDEA program and the Administration's proposal for payment of placement and conversion fees under the insured loan program. I am enclosing a memorandum that sets forth such a comparison. It is important to recogitize that the two arrangements serve somewhat differ~ ent functions. The NDEA plan provides the sole Federiil funding for the admin- istrative costs incurred by the colleges in operating the loan program. The proposed placement and conversion fees, on the other hand, merely would make up the difference between lenders' interest income and their total costs, in which administrative costs are only one element. If other costs, such as the cost of money to the lenders, should decline, the interest income would be more adequate to cover lender costs, and the placement and conversion fees would be reduced or eliminated. I ~m enclosing a table showing the varying placement and conver- sion fees at various levels of the cost of money. I hope that this information will be helpful to the Subcommittee. Sincerely yours, JOSEPH W. BARR. ATTACHMENT A COMPARISON or RELATIVE FEDERAL GOVERNMENT COSTS FOR NDEA AND GUARANTEED STUDENT LOAN PROGRAMS, PRESENT VALUES IN AR1 NDEA GSLP Federal capital contribution $534, 808 Interest receipts, deduct -185,478 Payment for institutions' administrative cost 115,064 Cancellations, 10 percent and 15 percent 249,300 Interest paid on behalf of borrowers $517, 127 Insurance reserve matching seed money 2 5,942 Placement and conversion fees 56,338 Total cost ~713, 694 3579,407 I Based on costs incurred by Federal Government for 500 students borrowing $4,000 each with 10 year repayment cycle, 5ii percent discount rate. Present value is the standard method used for comparing 2 or more streams of receipts and payments which have different time patterns. It is based on the concept that a dollar at some time in the future is worth less than a dollar today. Neither calculation includes the cost of any defaults. 2 With proposed reinsurance plan; under present funding of insurance reserves, with 50-50 matching and no reinsurance, the Federal insurance reserve cost would be $29,710. 3 Elimination of the cancellation feature would reduce the NDEA total cost to $464,394. Addition of a comparable can- cellation feature to GSLP would increase the GSLP total cost to $828,972. ATTACHMENT B COMPARISON or DIRECT COST ALLOWANCES IN NATIONAL DEFENSE AND GUARANTEED STUDENT LOAN PROGRAMS I. NDEA STUDENT LOAN PROGRAM The statutory ceiling on the amount a college may withdraw frc~in the Loan Fund to cover administrative costs is 1 percent of the aggregate loan volume out- PAGENO="0047" 41 standing at the end of each fiscal year, or one-half of reasonable administrative costs, whichever is the lesser. For 1965-66, half of the institutions operated under the 1 percent outstanding balance rule, and the remainder one-half of reasonable cost. The amount of administrative payment per loan made during the year averages at $20 per loan in the 1 percent category and $13 per loan in the one-half of reasonable cost category. II.. GUARANTEED STUDENT LOAN PROGRAM The proposal now before the Oongress is to provide fee payments to lenders at the time each annual loan is placed on the books and at the time the "in-school" notes are consolidated, and converted to installment payout notes. The amount of the fee in any given year would. range from $0 to $35, depend- ing upon the cost of money or. the net return on alternative investments. At present, the fee is estimated at $25 for both placement and conversion. The fees, when payable, generally would constitute only a portion of the revenue available to lenders to cover administrative expenses; so long as the cost of money is less than the 6 percent interest received by lenders, some portion of the interest income can be applied toward administrative expenses. The $25 fee used in the following comparison assumes a cost of money of approximately 5~42 percent, leaving 1/2 percent to cover a portion of administrative expenses. It should be noted, however, that although this 1/2 percent is revenue to the lender, it is not a cost to the Federal government except in the case of students qualifying for interest subsidies; in other cases, the cost is borne by the student. (Under the NDEA program, all of the administrative payments are cost to the Federal government.) IlL COMPARISON Since NDEA cost data is available only for FY 1966, and the Guaranteed Loan fees are only in the proposal stage, there is no effective experience base for direct comparison. However, it is possible to use the actual average loan in each program to show parity of treatment. For calculation of NDEIA administrative expense, 10.5 percent of the face of the . note will equal the amount of overhead earned by the loan over a 15-year period. In the guaranteed loan program, each loan earns a placement fee and, assum- ing each student makes at least two loans, one-half of the conversion fee. In addition, one-half percent per annum from interest payments on the reducing balance is available to cover the lender's costs. The following examples are based on actual average annual loans of $600 in the NIThL& program and $800 in the Guaranteed Loan Program. Each loan is held over a four-year in-college period and a year of grace, and is repaid over a ten-year period. A. NDEA loan A $600 NDEA loan will yield $63 in. administrative suppor.t to the college (10.5 percent of $600). `The same loan, under the Guaranteed LoanProgram will yield $69 in aciminis- trative support for the lender: Placement fee $25.00 3~ of the conversion fee 12. 50 ~ percent interest on balance * 31. 50 Total 69.00 B. Gnaranteed stndent loan An $800 loan will yield $79.50 in administrative support for the lender: Placement fee $25.00 ˝ of the conversion fee 12. 50 1/2 percent interest on balance * 42 00 Total 79. 50 *paId by the Federal government only. if the student qualifies for interest subsidies. The same loan, made by a college under NDEA, will yield $84 in administrative support. , . . . PAGENO="0048" 42 ATTACHMENT C COST OF MONEY AND FEES Based upon current estimates of lender costs other than the cost of money, and the proposal for equal fees (a) each year that a loan is put on the lender's books and (b) for each conversion of a borrower's loan(s) to repayment status: If the cost of money to lenders or net return on alternative investments is: The atnoumt 0! each fee would be: 4.66 percent or less 0 4.81 $5 4.96 10 5.11 15 5.27 20 o.42 25 5.58 30 5.74 or more 35 COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C., November 27, 1967. Hon. EDITH GREEN, Chairman, Special Subcommittee on Education, Committee on Edacation an4 Labor, Hovse of Representatives. Dw~ MADAM OHAIBMAN: In response to your request of August 28, 1967, we have reviewed the basis of the Treasury Department's justification for the placement fees and conversion fees in the proposed amendment to section 428 of the Higher Education Act of 1965 (20 U.S.C. 1078) herein referred to as the guaranteed student loan program. The proposed amendment authorizes the Commissioner of Education, Depart- ment of Health, Education, and Welfare, to make payment to lending institu- tions of a loan placement fee not to exceed $35 for the processing of each student loan and a conversion fee not to exceed $35 for the consolidation of each student's loans to a repayment status when the student graduates. These fees would be paid to lenders in addition to the 6 percent interest per annum on loans. Students participating in this program are granted loans for 1 school year; subsequent loans must be obtained separately for each additional school year. For example, a student in a 4-year college program could receive four loans and the Government could pay the lending institution placement fees of $140 on the four loans and a conversion fee of $35 for consolidating the loans to a repayment status. The Treasury Department estimated that a placement fee of $25 for each loan and a conversion fee of $25 for each student would cost the Government about $22 million in fiscal year 1968. Mr. Joseph W. Barr, the Under Secretary of the Treasury, in his statement of August 16, 1967, justifying the proposed amendment before your Subcommit- tee, stated that the guaranteed student loan program had not been as successful as contemplated because lenders were not fully participating in the program. Mr. Barr has attributed this lack of participation to burdensome paper work and administrative costs involved in the program and the current cost of money, which results in a rate of return to the lenders that is not competitive with other income sources. Mr. Barr stated also that lending institutions were currently realizing a net return of 4.66(1) percent, exclusive of cost of money, on student loans, whereas the net return on other guaranteed loans, such as the 6-percent Federal Housing Administration and Veterans Administration housing loans, is 5~ percent. For Federal Housing Administration and Veterans AdministratIon loans, points are generally paid to the lenders and a total of four points increases the return on these loans to about 6 percent. Mr. Barr concluded that increased participation in the program by all types of lenders could be accomplished by reducing the burdensome paper work and 1 Computed on an actuarial basis based on an average loan of $810. PAGENO="0049" 43 administrative costs involved in the program and by providing assurance to lenders that they would not have to make these loans at an out-of-pocket loss. The proposed amendment to the Higher Education Act of 1065 was developed as a result of a study by the Interagency Committee to Study The Guaranteed Student Loan Program (Committee). The Committee included representatives from the Treasury Department, Department of Health, Education, and Welfare, and the Bureau of the Budget. Mr. Barr in his statement before your Subcom- mittee on August 16, 19~7, used the study in justifying the proposed amendment. SUPPORT FOR THE PROPOSED AMENDMENT Since the Treasury's position was based principally on `the results `of the study made by the Committee, our review was directed primarily to evaluating the data in the Committee's study that were used `to support the proposed fees for placing and converting loans under the guaranteed student loan program. We found that the support for the fees was `based on cost estimates. obtained without verification from the American Bankers Association (ABA) and other sources. We contacted ABA and were advised that the cost estimates furnished to the Committee were obtained from `~9 banks during a 2-week period in December 1966. ABA acknowledged that the information submitted by many of the `banks probably was based upon judgments since not all b'anks have developed a cost- based information `system. The survey `showed that `the estimated average cost of placing a loan ranged from $20 to $54. We were advised also that responses from two `banks were eliminated because their estimated costs were `way out of line. ABA concluded from this `survey that $35 was a reasonable estimate of the cost incurred by lending institutions in placing and converting students loan's' under this program. We asked ABA representatives whether they `had any additional support for their $35 cost estimate for placing an'd converting loan's. The representatives stated that they had no additional data but offered `the `following reasons for a higher cost estimate `than that used by the `Committee in its study. Guaranteed students loans `are more costly to process than other installment loans because (1) more time is required to interview applicants, (2) more paper work i's in- volved, and (3) more `parties are involved i'n each `transaction, such as the student, his parents, the university, the `State guarantee agency, `and the Office of Education, Department `of `Health, Education, and Welfare. ABA `representatives stated further that one `of the `reasons that other install- ment loans are less costly to process than student `loans is that the vendors who make sales on the. installment basis handle much of the paper work and thereby reduce the banks' costs considerably. Installment `auto loans were cited as an illustration of installment loan's on `which interest earned i's `higher than the 6 percent simple interest earned on student loans. During our review, we obtained the pertinent data used by the Committee in its study regarding estimates of cost's incurred by lending institutions in the student loan program. These `data generally showed that the lending institutions did incur costs in placing and converting loans to a repayment status but that there was a wide diversion of opinion on the cost estimates. We are not aware of any verifica- tions of the cost estimates having `been made by the `Committee or the Treasury. The da'ta are `summarized `below. Estimated Estimated cost of- cost of -_...._ money Loan Conversion (percent) placement of loans Committee and Treasury Department 1 4. 50 $25. 00 25 Federal Reserve System (1965 time deposits) 4. 08 21. 51 ABA (January1967) 5.50 35.00 Range of costs 20-54. 00 NewYork bank 23.00 National Association of Mutual Savings Banks 21. 97 U.S. Savings and Loan League, (March 1967) ,~ 55 20 Credit union current dividends (February 1967) 4 50 Federal Deposit Insurance Corporation (interest on time and savings de- posits, 1966) 4.04 I Treasury advised us that the average rate during early 1967 was about 4.5 percent. 92-371-68-pt. 1-4 PAGENO="0050" 44 ABA advised us that the New York bank shown above had considerable experience with the New York State student loan program and had established a separate unit to administer this program. The representative of the bank indi- cated that the costs of the guaranteed student loan program would be coon- parable to the costs of the New York State student loan program. During our review of the basis for support for the Treasury's justification for the placement and conversion fees, we noted the following areas where addi- tional consideration might be given in cost determination. 1. The cost estimates are based on the assumption that the same costs as those incurred by lending institutions in placing the initial loan to a student wifi be incurred in all subsequent loans to him. It appears to us that a lender's cost of placing each subsequent loan would be less than the cost of placing the initial loan inasmuch as the student's case history and credit investigations would be on file and subsequent loan requests would probably require only an updating of the file. 2. The Office of Education, Department of Health, Elducation, and Welfare, is currently reviewing its loan procedures, with the objective of eliminating any unnecessary paper work. Any reduction in paper work may result in reducing a lender's cost of administering student loans. 3. We are not aware of any cost experience in the conversion of student loans to a repayment status since the guaranteed student loan program is relatively new. ABA advised us that the principal factor contributing to this cost would be the locating of students after graduation so that loan repayment schedules might be set up. In view of the fact that the program was initiated in 1966 and that rela- tively few repeat loans were made in fiscal year 1967, it appears that there is not sufficient experience on which to base a cost determination. DIFFERENCES BETWEEN ESTIMATED FINANCIAL RESULTS Both Mr. Barr and ABA in their statements before the Subcommittee pointed out that most lenders have been incurring out-of-pocket losses in the student loan program for the past year. ABA in its statement submitted eight hypothetical examples of loans showing the income and related costs of the loans for each example, based on estimated placement and conversion costs of $35 each and on a cost of money at a rate of 5.5 percent. All the examples show estimated net losses-varying from $71.50 on one $750 loan to a student to $149.50 on four $750 loans to a student. We recomputed the estimated results under each of the examples submitted by ABA, using the Committee's placement and conversion cost estimates of $25 and the Treasury's estimate of 4.5 percent for cost of money. Our computations show an estimated net gain in seven of the examples-varying from $2.50 on one loan of $1,000 to a student to a total of $235 on four $1,000 loans to a student. A loss results only in the case of a single loan of $750 to a student. The results of the eight examples of loans as computed by the ABA and as recomputed by us using the cost estimates developed by the Committee and the Treasury are shown below: , Number of loans and amount of each loan to same Repayment borrower time Total Interest Income Loss (-) computed by ABA Gain or loss (-) based on Treasury cost estimates 1 loan: 2 $270.00 390.00 540.00 840. 00 877.50 1,440.00 1, 170. 00 2,040.00 -$71.50 -73.50 -96.00 -95. 00 -127.37 -116.00 -149.50 -125.00 -$12.50 2. 50 15.00 60. 00 44.37 140.00 77.50 235.00 $750 $1,000 3 years 2 loans: $750 do $1,000 5 years 3 loans: $750 do $1,000 Syears 4 loans: $750 6 years $1,000 10 years PAGENO="0051" 45 Presented below is the detailed comparison of the estimated results in one of the examples of a loan of $750 to a student during each of his freshman, sopho- more, and junior years and repayment of the loans over a 5-year period, starting 1 year after his graduation. ABA estimates Based on Treasury Basis Amounts Basis estimates Amounts Costs: $75. 00 Acquisition (placement) $35 per loan Cost of money: Before repayment 5.5 percent During repayment 5.5 percent Conversion $35 Collection $1 a month Total Income (6 percent simple interest): Interest before repayment Interest during repayment Total Estimated gain or loss (-) to lender $105. 00 $25 per loan 495. 00 4.5 percent 309. 87 4.5 percent 35.00 $25 60. 00 $1.25 a month 1, 004. 87 540. 00 337. 50 877. 50 -127. 37 405. 00 253. 13 25.00 75. 00 833. 13 540. 00 337. 50 877. 50 44. 37 The principal reason for the difference between ABA's and the Treasury's estimated results is the cost of money. ABA. used a marginal rate of 5.5 percent, whereas, as Treasury advised us, the average rate during early 1967 was about 4.5 percent. The marginal cost of money was defined by ABA to be the highest current cost of money to be obtained from outside sources. As shown on page 4, the Treasury's use of the 4.5 percent rate is supported by the Federal Deposit Insurance Corporation and the United States Savings and Loan League. Thus it appears that a 4.5 percent rate was a reasonable indication of the cost of money in early 1907. The difference between ABA's and the Treasury's estimated costs of place- ment `and of conversion of student loans also accounts for part of the difference between the estimated results. ABA based its computations on an estimated cost of $35, whereas the Treasury's estimated cost was $25. Our computations show that repeat loans made to the same students should not result in an out- of-pocket loss to the lending institutions. The Committee, in projecting the ac- tivity under the guaranteed student loan program, anticipates a significant in- crease in the number of repeat borrowers, as shown in the following tabulation. Fiscal year Numb er of loans Percentage of repeat borrowers Total Repeat borrowers 1966 1967 1968 1969 1970 1971 1972 105,000 480,000 750, 558 1,270,073 1,682,724 1,935,107 2,197,247 78,750 360,001 573,573 960,224 1,177,707 1,400,947 0 16 48 ` 45 57 61 64 On the basis of cost data used to compute the costs shown in the examples, the anticipated increase in the number of repeat borrowers will result in a `significant increase in the return to the lending institutions participating in' the program, and, on the basis of the Committee's projections, fiscal year 1968 will be the first year for any appreciable increase. In our opinion, any proposals for loan placement and conversion fees should give recognition to the characteristics of the program `as they will be after the program has become fully operational. It is our `view also that unit costs of processing student loans will decrease as experience in the loan program is gained and as the volume of loans `increase. CONCLUSION The Treasury and `ABA have stated that lenders, particularly commercial banks, are incurring out-of-pocket losses on `loans made under' the guaranteed student loan programs. This indicates that the interest rate of 6 percent per annum now being charged by lenders for student loans does not cover lenders' PAGENO="0052" 46 administrative costs and cost of borrowing money. The Treasury and ABA con-- tend that one of the reasons that the program has not been too successful ~S: that it is not attractive to lenders because the yield on student loans is not comparable with the yield on other installment loans. The proposed. fees to be- paid by the Government would take the lenders out of a loss position and would result in a return which would be comparable to that on other installment-type loans. The data developed by the Committee and used by the Treasury Department in support of its position on loan placement and conversion costs were not based on verified cost data but consisted of estimates obtained from the sources de- scribed in this report. Furthermore, the guaranteed student loan program is relatively new and lenders have made few repeat loans to the same students. Adequate experience data is therefore not available for determining the costs. on which fee justifications can be based for second and subsequent loan, place- ments and for conversions of loans. Since the justifications for these fees are not based on actual cost experience, we are unable to express an opinion as to~ the reasonableness of the proposed maximum fee of $35 for placement of stu- dent loans and of $35 for conversion of the student's loans to a repayment status. under the guaranteed student loan program. You also requested our staff to evaluate the cost comparison study being per- formed by the Treasury Department on the cost to the Government for student loans under the National Defense Student Loan Program and the Guaranteed Student Loan Program. The study was recently completed by the Treasury De-~ partment, and we will report on our evaluation of the cost comparisons at a later date. We plan to make no further distribution of this report unless copies are spe- cifically requested, and then copies will be distributed only after your approval has been obtained or public announcement has been made by you concerning the contents of this letter. Sincerely yours, ELMEB B. STAATS, Comptroller General of the United states. Mr. QUIE. Will you yield here? Mrs. GREEN. Yes. Mr. QUIR. I believe we are talking about really three different loan programs-the NDEA student loan program, the guaranteed sub- sidized interest program, and the guaranteed loan program. Now, my feeling is that we ought to have a guaranteed loan program so that each lending institution would not have to check on the repay- ability of each student who asked for a loan and therefore the Federal guarantees their burden and, in effect, reduces the interest rate to the student no matter what the income level. What I question is this: Mrs. Green says the guaranteed loan sub- sidized interest program and the reason for a difference in cost is that the institution of higher learning assumes rčspónsibility today in case of NDEA loans and where the bank wants to be given back every bit of its cost in the guaranteed subsidized interest program. I doubt your contention that the Congress would be unwilling to increase the amount of money for the loans. It seems to me that the proof is in the fact that the Congress continued to increase the amount for NDEA student loan program until this guaranteed subsidized loan program came along and gave them the illusion that we are saving the Federal Government some money here and we actually weren't. Mrs. GRET~. May I also ask for information tomorrow in writino~, if we have time on the committee, of the following: Would you outlh~'e- in detail how the institutions' allotment for student aid programs will be determined if we repeal, as you recommend in the legislation, the- three States allocation formulas? How would you divide it? PAGENO="0053" 47 As I understand, you only have a 121/2-percent limitation per State. Would you also include in that what the allocation formula is for Puerto Rico and the Virgin Islands? Second, under the new student aid program, may a student receive Just a educational-opportunity grant or would the student also be required to have other forms of financial aid as is presently the case? Third, if an institution wishes to transfer 20 percent of its EOG money for which there is no institutional matching, as you suggest, if they wanted to transfer the 20 percent to NDEA student loans, would the institution then be required to match on the 90-10 basis for that 20 percent transfer? Then there appears to be a growing interest in having student-aid cxfficers play a more significant role in the administration of the guai anteed loan program, and would you comment on whether the legislation should require that the student-aid officer provide to the bank an assessment of the student's financial need and to what degree this involvement should be ~ Mr. Qun~. May I add several other requests? First, on page 7, item 7, you suggest the 3-percent administration cost with an overall maximum of $195,000 a year. I would like to know which institutions will be up against the maximum in that case. (The information follows ) INSTiTUTIONS OF HIGHER EDUCATION WHosE TOTAL FISCAL YEAR 1970 FUNDS FOR SrCJDENT FINANCIAL Am ACTIvITIES MAY EXCEED $4 MILLION {$125,000 maximum 3% of $4,167,000] (A) Institutions at which $3 million or more was obligated in SPA programs for use during fiscal year 1968: California: Indiana: Indiana University. University of California at Ber Michigan Michigan State University keley. Wisconsin: University of Wisconsin. University of Oalifornia at Los Angeles (B) Institutions at which $2-3 million was obligated in SPA programs for use during fiscal year 1968 California San rose State College Michigan University of Michigan Massachusetts.: Minnesota: University of Minnesota. Boston University. New York: SUNY at Buffalo. Northeastern University.. Ohio: Ohio State University. Second, on page 10, item 3, if the lender chooses to wait until the end of the period of payment,: and so forth, how much interest would the Federal Government be paying on the money that. has been accumulated? Mr. HOWE. Interest on interest. (The information follows:) Question: How much interest would the Federal GOvernment be paying on accumulated interest payments to the lender? Answer: Reflected below are some examples showing the. dollar amount of interest a lender would receive under the preposed "Accrual of. Federal Interest Payment," under Section 427(a) of the Higher Education Amendments of 1968. The assumptions used in the examples are: (1) Full term is used for repay- ment, (2). the average market yield on U.S. obligations is 5%%, and (3) all loans are for 6% simple interest, .with.the student paying 3%, and the Office of Educa- tion paying 3% after payment in full, plus interest compounded semi-annually on the amount accrued PAGENO="0054" 48 (1) Principal amount of loan, $1,000; term, 36 months: Interest paid by student $46. 91 Interest paid by OE $46.91 Plus, earnings on deferred interest 5. 99 52. 90 Total interest paid lender ------ __ 81 (2) Principal amount of loan, $4,000; term, 60 months: Interest paid by student 312. 46 lnterestpaidbyOE 312.46 Plus, earnings on deferred interest 55. 12 367. 58 Total interest paid lender 680. 04 (3) Principal amount of loan, $7,500; term, 120 months: Interest paid by student 1, 190.00 Interest paid by OE 1,190.00 Plus, earnings on deferred interest 474. 69 1,664. 69 Total interest paid fender 2, 854. 69 Nrs. GREEN. Congressman Scheuer. Mr. SOHETJER. Very briefly, Madam Chairman; I know the hour is late. During our October hearings, I asked you and the Under Secretary whether it wouldn't be helpful to the Congress, in considering each of the individual loan and grant programs, if we had some kind of comprehensive survey of the programs-the loan programs, the grant programs, various tax programs as have been suggested-as well as a close, effective analysis of how these programs have operated in the past, particularly the Gil bill of rights and the World War II GI bill and the Korean Gil bill and cold war Gil bill, to give us some indication of how all the proposals impacted the individual students, the family, the institution, and effects on society in general; and you both agreed that such a study would be constructively worthwhile. I am more than ever convinced, after this discussion this morning, it would be helpful. Has anything happened, has any progress been made in commencing such a survey? Mr. Howio. I don't think there has been any study as comprehensive as the one you are suggesting. We have had some examination of various student-aid efforts on the part of the Federal Government by the College Examination Board and we have a report from them. Mr. Muirhead, perhaps you can tell Mr. Soheuer the comprehensive- ness of that study. Mr. MUIRHEAD. We have not carried out all of your suggestions, Congressman. Mr. SCHEUER. I am not being a stickler for every last element, but for the concept of a comprehensive study of how these programs have functioned. Mr. MUIRHEAD. We will be presenting to you, hopefully within the next week or so, a rather comprehensive study conducted by the College Entrance Examination Board. They had a study done independently that will analyze the workings of the guaranteed loan program up to this point, the reaction of the State agencies, and the reaction of the lenders. The study includes several recommendations as to how the program might be improved. We have not, of course, had enough experience with the loan pro- gram to really make a comprehensive study as to its effect upon the students-whether or not it was a factor in keeping them in college. That remains to be done, but we do have what at this juncture is rather a comprehensive study of the guaranteed loan program. PAGENO="0055" 49 We hope that as a result of legislation now before the Congress, that there will be resources made available in the Office of Education to do the type of thing you are su~gestmg should be done-and in my judgment it is overdue-concernmg whsther or not the programs are meeting the objectives that we say they are, and whether or not there should be changes. Hopefully, if that request to the Appropriations Committee is suc- cessful, we will be mounting a number of significant studies nexl year~ and we would be glad to put in the record for you what our plans are. Mr. Sc~u~u. I think that would be helpful. Mr. Howu. Let me add that in the President's message, there is a directive to HEW to take a look at the whole, broad problem of higher education. I am sure the President's intent is that it be such a broad study that it will include some of the elements of institu- tional support as well as elements of general student support. (The information follows:) THE PROGRAM EVALUATION PROJECTS IN PROCESS FOR Fiscai. YEAR 1908 AND PROPOSED FOR FISCAL YEAR 1909 1. EVALUATION STUDIES IN OPERATION FOR FISCAL YEAR 1968 A. Study of The College Facilities Program 1. Grantee: Associated Consultants in Education, Inc., Tal1ahassee~ Florida 2. Grant No.: OEC-1-7-070959-3491 3. Amount of Grant: $40,581 (mci. supplemental of $700 for revised report) 4. Final report due about April 1, 1968 5. Objectives of the study (a) The effect of the academic facilities program on the avail- ability and utilization of facilities to accommodate the in- creasing numbers of students qualifying for and desiring higher education. (b) The distribution of funds by type of institution, the accom- modation of increasing enrollments, the effects on other in- stitutional funds and on facility utilization and the effect that facility construction may have had on academic programs B. Study of Student Personnel Services for Disadvantaged Students 1. Contractor: University of Michigan (ERIC Clearinghouse on Counsel- ing and Guidance) 2.. Contract No.: OEG-O-8--080051-1885 (010) 3. Amount of Contract: $68,757 4. Final report due about June 1,1909 5. Objective of the study-to identify, describe, and evaluate an optimal program of . student personnel services for students from disadvan- taged backgrounds. C. Study of NDEA Title IV Fellowship Program 1. Contractor: Bureau of Social Science Research, Inc., Washington, D.C. 2. Contract No.: OEC-1-7-07---1052-2808 3. Amount of Contract: $63,800 4. Final report due about July 15, 1968 5. Objectives of the study (a) Part 1-to compare characteristics of NDEA fellows with the characteristics of other groups of Ph. D.'s and Ph. D. can- didates. (b) Part 2-to assess the effectiveness of the program in terms of program aims, viz., (1) to promote more rapid completion of doctoral programs, (2) to increase the number of stu- dents working toward a doctorate degree in preparation for undergraduate and graduate teaching, and (3) to increase the number entering the teaching profession. PAGENO="0056" 50 D. Study of Student Financial Aid Programs (NDSL, BOG, & CWSP) 1. Contractor: Educational Testing Service, Princeton, New Jersey 2. Contract No.: OEO-1-7--071133-4423 3. Amount of Contract: $64,449 4. Final report due about June 30, 1968 5. Objectives of the study (a) Part 1-to ascertain the amounts of grants, loans, and work- study funds from Federal sources distributed by American colleges aiid universities and to ascertain loan repayments under NDSLP, Title II, NDEA. (b) Part 2-~-a precursor of a national study on financial aid re- sources and student characteristics. This part is intended to provide a method for developing data collection instru- ments and statistical analysis techniques before embarking on a more exhaustive study. B. Study of Administration of Federally Assisted Student Loan Programs 1. Contractor: College Entrance Examination Board 2. Contract No.: OEG-3-7-002805-2805 3. Amount of Contract: $125,304 4. Final report due about mid-February 1968. Preliminary draft report received 1/29/68 5. Objectives of the study (a) To review the legislation affecting six student loan programs in DHEW, the organization responsible for formulation of policies and procedures and regulations. (b) To review administrative and operating policies and proce- dures at institutions and agencies as they affect students and parents. (a) To collect data on legislative, organizations, and administra- tive problems of present programs. (d) To collect informed opinion on strengths and weaknesses of present programs and alternative methods of removing weaknesses. (e) To develop best set of plans with alternatives. P. Study of Title III, HEA, Developing Institutions Program 1. Contractor: University of Michigan, Center for Higher Education 2. Contract No.: Contract ~tot let 3. Amount of contract: $75,000 4. Final report due about December 31, 1968 5. Objectives of study (a) To determine the degree of relationship between educational promise and such variables as level of funding, institu- tional characteristics, types of programs, undertaken, and the character of relationship with external agencies such as cooperating institutions and USOE. (b) To determine the degree of relationship between types of programs and educational promise. Types, of programs might include curriculum improvement, faculty improve- ment, administrative improvement, student improvement, facilities improvement and interinstitutional cooperation. II. EVALUATION STUDIES PROPOSED FOR FISCAL YEAR 1969 A. Cohort Analysis of student Financial Aid PrOgrams Administered by the Bureaa of Higher Edncation.-A 5-year study. Purposes of this study are to determine: (1) the interaction of programs ; (2) the contrast in characteristics of student aid recipients group vs. a comparison group of non-aided students; (3) the impact of Federal student aid programs on the need for student finan- cial aid: (4) the impact of such programs on continuance or discontinuance of pursuit of higher education; and (5) the effectiveness of the Federal student aid programs. The estimated fiscal year 1969 cost is $429000. B. Comprehensive Eval'uation of Program Effectiveness of the Higher Educa- tion Facilities Act of 1963, Titles I, II, and III, and of Part A, Title VI of the `Higher Education Act of 1965.-The purpose of this study is to provide in-depth ease studies of approved grants and completed facilities'which will assess (1) the impact of the programs on various types of institutions (2) the relationships PAGENO="0057" 51 between results and program objectives, and (3) the problem and costs en- countered by institutions in connection with their participation in the pi~ograms. This project will also evaluate the total current situation and the projected needs for all categories of facilities fOr various types of institutions and will put esti- mated price tags on future needs for higher education facilities. The estimated fiscal year 1969 costis $388,000. 0. Analysis of Recipient Characteristics under Educational Opportun4ty Grants, Part A, Title IV, H1~L4. of 1965.-The purpose of this study is to provide information cOncerning the characteristics and academic performance of socio- economically disadvantaged students receiving Educational Opportunity Grants. Dependent variables in this study are socio-economic background, educational achievement (before and during higher education pursuit), dropout rate, educa- tional aspirations, and impact of program on student continuance in higher education. Data will be gathered by means of interviews of and questionnaires administered to a representatives sample of grant recipients and to personnel at various types of institutions participating in this Federal program. Estimated cost of this study is $175,000. D. Analysis of the Impact of the College Work-Study Program, HEA, Title IV-C on the Educational E~rperience of Aid Recipients.-This study Will examine the effect of work on students' progress, the extent of curriculum-related work available to students, the type of work and the number of hours worked, and their relationship to student performance, and the types of jobs available to students, including summer program activities, involvement with state and local governments, etc. The data, which will be collected from students and college personnel on a sample basis, will be analyzed in light of the soclo-economic background of the student and of the type of institution which the student is nttending. Estimated cost of this study is $75,000. E. Continuation of the Evaluation of the Developing Institutions Program, HEA-III.-This study, which is to be initiated during fiscal year 1968, will gather statistical evidence and evaluate (1) the extent to which developing institutions can absorb funds and institute meaningful change; and (2) what areas of institutional organization are best suited to the investment of funds to effect improvement. Additional funds are requested for fiscal year 1969 to con- tinue and, to some extent, enlarge the scope of this study. Estimated cost of this study is $50,000. F. Continuation of Contract to File the Graduate Records Eccamination Scores of New Fellows in the NDEA IV Program Data Bank.-This data will be used to estimate the academic capabilities of the fellowship recipients in an analysis to determine the type of student being aided by the Graduate Fellowship Pro- gram. Estimated fiscal year 1969 cost is $4,000. Total estimated cost for fiscal year 1969 $1, 121,000 Mr. SCHEUER. I notice that on page 7, and that is one of the reasons I asked. I put in a bill that would create a commission to be appointed by the Secretary that would make exactly this kind of broad-scale evaluation and cost-benefit analysis of all of these programs and come up with a package program of an integrated, coordinated support of universal higher education which would include all :of the elements that your office felt had been effective in the past. Do you have any comment to make on this; are you familiar with it? Mr. Hown. I have a copy of it here, and certainly in terms of a directive to take a comprehensive look at a significant problem, I have no problem with it at all. It very clearly embraces all of the aspects of the problem. Mr. SCHEtTER. Thank you. Mr. ESOH. Mańam Chairman, may I ask one question? In light of the present consideration-and I know the college board's study came ,in some time ago-is there any reason why we can't have it immediately? Mr. MUIRHEAD. No reason at all. We have the study in its prelimi- nary form now; the delay is that it is being printed. PAGENO="0058" 52 Mr. Moomi~. It will be here Monday. Mr. ESOH. I wonder, Madam Chairman, if we couldn't get it.. Mrs. GREEN. Yes, if they could be made available. Also, I believe last year you told us you were going to make a study of the effectiveness of the forgiveness feature in NDEA, and could we have it available? Mr. HowE. This is part of the study and we can report to you what the study has to say about it. I don't feelwé have définitiveanswers on this as a result of it. Do you want to take it up now or tomorrow? Mrs. GREEN. Tomorrow. Then, the committee will be adjourned until 10 o'clock tomorrow. And for the interested groups in the room, there is a strong possibility that we will consider the effects of the draft on graduate education on Thursday of this week, either in the morning on the record or perhaps in the afternoon at an informal session. (Whereupon, at 12 20 p.m., the subcommittee recessed, to reconvene at 10 a m ,Wednesday, February 7,1968) PAGENO="0059" MIGHER EDUCATION AMENDMENTS OF 1968 WEDNESDAY, FEBRUARY 7, 1968 HotrsE OF REPRESENTATIVES, SPECIAL S1JI300MMITrEE ON EDUCATION OF THE COMMITTEL ON EDUO~LTION AND LABOR, T'Vashington,D.C. The subcomn-uttee met at 10 a m, pursuant to recess, in room 2261, Rayburn House Office Building, Hon. Edith Green (chairman of the subcommittee) presiding. Present: Representatives Green, GibbOns, Carey, Hathaway, Burton, Scheuer, Quie, Reid, and Erlenborn. Mrs. GREEN. The subcommittee will come to order for the further consideration of the Higher Education Amendments `of 1968. We are delighted to welcome back to the committee the Commis- sioner `and his colleagues and `also the Under Secretary of Treasury, Mr. Barr, as.we' furtbcr con~idčr the :sttidei~t assistance programs. Mr. Commissioner, you suggested we start out this morthng with Some of the answers to `the questions we posed as the meeting was com- ing to a close yesterday. Oould we, or do you want to respond `to those questions or do you want Mr. Moore to `answer STATEMENT OF HON. HAROLD HOWE II, U.S. COMMISSIONER OP EDUCATION; ACCOMPANIED BY PETER P. MUIRKEAD, ASSOCIATE COMMISSIONER FOR HIGHER EDUCATION; ALBERT L. ALPORD, ASSISTANT COMMISSIONER FOR LEGISLATION; JAMES W. MOORE, DIRECTOR, DIVISION OP STUDENT FINANCIAL AID, BUREAU OP HIGHER EDUCATION; JOSEPH W. BARR, UNDER SECR~TARY OP THE TREASURY; AND MARK WEISS, SPECIAL ASSISTANT TO THE UNDER SECRETARY OP THE TREASURY Mr. HowE. Madam Chairman, I think we could do two things at once, if you `approve. One would be to `ask Mr. Moore to give you `a quick response to the questions you raised at the end of the testimony and then to ask Secretary Barr to nd'dress himself to some of the issues that were raised yesterday, following Mr. Moore's presentation. Mrs. GREEN. I suppose the other would take `a longer period of time, and if we could have the~ other matters for the record. Mr. GmBoNs. May I ask, when are we going to take up the rest of the Secretary's testimony? I am really traveling on a short schedule and I want to be here. Mrs GREEN With the approval of my colleagues, I `thought we could spend part `of the time `this morning finishing the students' financial (53) PAGENO="0060" 54 part and then turn to the testimony on the other parts of the Higher Education Act, the facilities and the new programs. I would hope that we could finish up maybe setting a time of quarter toll and then turn to the others. Mr. Moore. Mr. Mooun.Mrs~ Green, at the end of yesterda~r's sessiOn, yOu asked four questions, and let me take them briefly in order. Number one, how will the në~ allotment system for the college stu- dent aid programs work and within it how wiJi. Puerto Rico and Virgin Islands be treated? The proposed system substitutes a national pool funding pattern for the existing State allotments, recognizing institutions are more able to define precisely the needs of the students for financial assistance. Addi- tionally, in our panel review process, we have a method of helping: institutions to establish a reasonable. and appropriate request. There- fore, all of the funds appropriated in a given year for a given program would be divided equitably among all 2,200 instittltions,:and when the appropriation equals the demand, of course, everyone will:receive 100 percent support. When there is a shortage ofappropriated funds, every institution would share proportionately in the shortage rather than the present difference we have with some States at 100 percent and some at 60 or 70 in such a program as NDEA student loans. The colleges in, Puerto. Rico and Virgin Islands would receive the same treatment as any other institution. in the country under this method. : Mrs. Gunsx. Before you leave that, if theniillenniumhas not arrived and there is a shortage of funds, could you tell us first what is the total amount requested in dollar value and how much money there is:to meet such request? Mr. Moons. The best figures I have are for next year. Our outside request for funds for all three programs which we are;as~ a matter of fact, working on right now comes out~ to about. $580 million. Now,. against that we have slightly under $500 million. I would have to do some quick mathematics here to add the NDEA and work study Mr Qtm~ Are these authorizations or requests for appropriations ~ Mr. MOons. Actual appropriation requests, Mr. QuiO. The authoriza- tions are much higher. A point here is that if this pool funding system were, for instance,to be used in 1969, every institution would have its programs supported at five-sixths of its approved requests, but with the present allotment forthullas, when we go into this matter of State distribution, first we wind up with widely varying differentials, The institutions in some States are supported at 100 percent and in other States at 50 or 60. : : :::~ We feel that for programs of this size, this is an inequ table way to handle the distribution of funds, primarily because these requests are put together in terms of a specific number of students to be helped at a: specific college. We feel that the system should be developed to get the money downto the student, wherever he is.:: : Mrs. Giuo~N. Are the colleges being realists in making applications for funds? : ~: : Let me give you a specific example~ In the Portland area~ one college which had a large student body told me they had pared down their PAGENO="0061" 55 requests to their real needs, but that another college, of smaller enroll- ment, had requested a much larger figure, and then when the reduc- tions had t.o be made, there was an across-the-board reduction for every college. This financial, student-aid officer said, c~rp~1j5 is the last time I am ever going to be honest; instead of sending in a realistic request, I am going to pad it and get the figure up as high as I can." Mr. MOORE. This is the reason we use a set of nine regional panels across the country-to review the initial requests, because this has been a Problem over the years between the bulk of the institutions who are straightforward and quite candid and those that assume there will be a reduction and consequently multiply the requests by two or three. The panel reviews each request and decides whether or not it is rea- .sonable. If it feels it is not, before it comes to WTashington, it is re- duced and a figure at a more fair level, if you will, is negotiated with the institution. It is to get at t.his very problem you mentioned. We have done this for 3 years in a row. Frankly, time panel people-and we used 110 of them t.his year-are all from colleges and universities, so it is a peer- group situation where people are sitting in judgment as far as their own college is concerned. The second question: If grant funds allotted to an institution are placed in the work-study account or NDEA loan fund, must they be matched on a 9-to-i ratio? The answer is "Yes," as would be the case with money going directly into the fund. rllhird question is: Tinder the new proposal, may the student receive only a grant? The answer is "Yes," with some qualifications. This would be at the option of the institution, provided that the grant amount plus, for example, the student's own summer earnings equal the annual cost. Generally this will happen only in a case, first of all, where the student has 110 help at all from his family, and see- ondly where the cost is $600, $700, or $800. a year. The problem we are facing now with the required matching, espe- cially in the junior colleges and community colleges, is that a student who requires grant support of $500 is required to take a $250 loan a.nd a $250 grant. This proposal would allow more flexibility, according to the institution's desire to put this package together. The last question: I-low should the college financial officer be brought into the guaranteed-loan, program? I-lore, I think, as compared to NDEA, the financial-aid officer has three primary functions: First of all, he should define for the bank the t.rue out-of-pocket costs for attending college for the year. Second- ly, he should detail other, kinds of financial assistance, if any, which had been provided to the student, although, by and large, people in the guaranteed loan program do not fall into the category subsumed by NDEA, work-study and tile grants program. Third, lie should establish the enrollment status of the student. If he had other infor- mation about him, he could put it on the application. We think this guaranteed loan program is basically one of supple- menting the cash outlay of the family in these middle- and upper- middle-income areas. Consequently the ultimate decision as to whether -or not to make the loan and how much to lend should really-stay with PAGENO="0062" 56 the lender rather than be handled, as is the NDEA type of operation, on the college campus. Mrs. GREEN. On the point that Mr. Carey raised yesterday, if that procedure is followed in other States, then you think this should be reviewed? Mr. MooRE. Yes. First of all, I have not been able to talk with Mr.~ Hollister of New York because he was not in his office yesterday afternoon. But a State guarantee agency really should not be involved in making the grade average assessment. Secondly, as is the case with virtually all of the Federal programs,. the statute clearly talks about a qualified student as being one enrolled in college and making progress toward a degree. I think, as we all know, one makes progress at various levels- C-pluses, A-minuses, B's, and so on. We have generally taken the posi- tion in all of these activities that as long as the student was in school and moving toward a degree or certificate objective, this satisfied the law, that there was no room in here for making discriminatory judg- ments as between cumulative grade-point average or what have you. Certainly a State guarantee agency should not be in the question. Mrs. GREEN. I have a question on the $580 million request. Mr. MOORE. Yes. Mrs. GREEN. Are there other applications to come in or are all of the applications in? Mr. MOORE. They are all in-2,247. Mrs. GREEN. Does this represent the amount of their original ap- plications or after your panels pared them down? Mr. MooRE. This is the approved requests for the country. The orig- inal request was on the order of $669 million, I believe, or $679 million,. but there has been a reduction already applied by the review panel. Mrs. GREEN. And a factor should be taken into consideration that most of them know the funds are short, so the $669 million would not necessarily represent what could actually be used? Mr. MooRE. I think it does, because we always encourage institutions to state their requirements wi~thout regard to what ~a State allotment may be or what a funding level of a particular program may `be, on the grounds this is really the only way we have of knowing what the total national requirement is. Mrs. GREEN. Thank you. Are there other questions? Mr. Qurs. Yes. Do you have a breakdown of the $580 million in the three programs; that is, how much you are going to put in or how much was requested for each one? Mr MOORE I don't have those precise figures They are being worked on in the office, but I can get them for the record. I can get the precise figures by program. We have just fini~hed summarizing everything, as a matter of fact, over the weekend. I know they total to about $580' million, but I am not sure exactly what those components are. Mr. QuiR. If you would do that, and then also break down the amount for each program under the budget request Mr MOoRE Yes I will be happy to do that Mr QuiR Both of those (The information requested follows:) PAGENO="0063" 57 Question: How much will be allotted to institutions under each of the three- programs in academic year 1968-1969 ~ Answer: See table below. INSTITUTIONAL REQUESTS AND PROGRAM FUNDING, 1968-69 COLLEGE YEAR Gross Program institutional request Regional panel approval Estimated support levels NDEA student loans $266, 113,453 $244,939,984 $190; 000,000 Educational opportunity grants 172,354, 552 157, 077,328 1 133,027, 000 College work-study 231, 168,639 193, 004, 170 2 129, 800, 000 Total 669,636,644 595, 021,482 452, 827, 000. I Fiscalyear 1968 appropriation utilized in 1968-69. 2 Composed of $74 million fiscal'year 1968 funds and estimated $55 million of fiscal year 1969. Now, you say your proposals changed the programs now so that a student, if he attended an institution where the cost was $600 or $700, would be able to get the entire amount in an educational-opportunity grant? Mr. Mooi~. Yes. Mr. Qmn. Why do you feel it is necessary to do that? Why wouldn't it be possible for any student to secure some portion of a loan? A $250 loan does not seem'to be too great to me for a student to handle for each year of school, judging from what wouldundoubtedly happen to him iu development of job skills during that time. Mr. MooRE. In the first place, I don't think we should assume, you know, that this would happen in all instances. It is quite fair to say that a number of these or most of these students, especially those receiving full support from the program, would be expected to bring some sup- port from summer earnings whether on jobs secured by `themselves or perhaps on the work-study program. Really, what we are trying to get' away from'is the requirement as the law now reads, that the institution put the support package to- gether in a very precise way Second, this flexibility, would be of more assistance to the com- munity colleges, especially the new `ones that are short on their own local financial aid money because they are new and usually `have access: only to the NDEA as the othei part of the package In `such.a case'a youngster'is told that he must; if he wants the grant half, `take the loan half along with it. In some instances this may be a good thing, but I would' rather leave that decision to the people who are running the program in the college rather than prescribe `it for ~every one of 100,000 or 150,000 students. , The other part of this is, that for the impoverished student whose family `income is $3,000 or $4,000 a year, what we are trying tO do is, provide him enough grant support to move him to a level of support that. is similar to that used, for instance, by the college board in its. modest `but adequate budget. A family with an income of $7,900 or- $8,000 a year is expected to provide $800 out of income for the student'to start school This boy can go to a junior college because the support is there The youngster from the impoverished situation can't, and the notion here is to introduce this sort of balance Mr. QUIE. If there were an adequate amount of money, wouldn't all of the institutions prefer to give a total grant to the student rather than. PAGENO="0064" 58 a loan; that is, a grant either with a work grantor else aneducational- opportunity grant? Mr. Moons. It is very difficult to generalize on what institutions want to do with these programs, because each one has its own philosophy of putting packages together and applymg different kinds of aids at different levels. Some, for instance, want to make only grants to incommg fresh- men and only loans to seniors. Others would always do the half-and- half business. Others require that everyone work before any sort of grant assistance is provided. It is this kind of open flexibility that we are attempting to stay with in this proposal. Mr. Qum. Yesterday, I asked two questions. First I wanted you to bring answers as to which institutions will be up against the maximum limit of $125,000 administration. Mr. Moons. This list I think has been prepared and is on its way up. We had to go back and add support levels from the various con- gressional announcements this year in order to come up with what we think might be the number of schools that would come up against this deal next year. Mr. Qum. What do you mean-"congressional. announcements"? Mr. Moons. These are the documents we send to the Congress each time grants are made each year to colleges under these various pro- grams, 70 or 80 pages long. Mr. GIBBONS. Little yellow books? Mr. Moons. We use different colors for each program-yellow for work-study and green for NDEA, and so on. It is a ready source of combining funding support for the same schools that appear on all three lists. Mr. QUIE. The second question is: What would be the interest that lending institutions could earn on the interest that the Federal Gov- ernment was to pay if they didn't collect it until the end of the loan period? S Mr. Moons. I have two of what I call actuaries figuring out a number of examples on this one, and we will have it for you. Mrs. GREEN. Are there any other questions? All right, then, may we turn to this other subject. Mr. Em i~oiuc. May I ask one question. This has to dO with the work-study program. As you know, the law presently provides an 85-15 division of support to this program. Under the law we passed last year, it would go to 80-20 in fiscal year 1969, 1 believe, and then to 75-25 in fiscal year 1970. Can you tell me, from your experience whether. any schools are really hard-pressed to come up with their 15 percent this year, fiscal 1968? Mr. Moons. I can't name a specific school which has* either with- drawn. from the program or has been forced to cut back severely because of the shift to 15 percent. However, what 1 have from a num- ber of institutions goes, I think, beyond this irnmediate85-15 problem. In looking down the road, the institution sees itself caught with two kinds of conflicting forces One is the fact that the work-study dollar under this present matching arrangement becomes increasingly an institution dollar and less a Federal dollar on the one side At the PAGENO="0065" 59 same time, the minimum wage that must be paid college students is escalated so that by 1970 or 1971 it provides increased support for the same number of students, and will require not just a shift to 25-75 on the part of the institution but some figure really higher because of the minimum~wage business. That is ~hy all that I have heard from colleges indicates that their real preference is to move to the 90-10 pattern and stay with it. Mr. ERLENBORN. I am not surprised by that. As a matter of fact, when we passed the law last year, I predicted we would never get to 80-20. I presume, since we were under the gun at the time, we were able to pass the law, but I didn't think it would stay on the books. What was the appropriation for work study? Mr. MOORE. $139 million. Mr. ERLENBORN. What will it be in 1969; what is your recom- mendation? Mr. MooRE. $145 million. Mr. ERLENBORN. Now, changing from 85 to 90 percent, would that use up most of the increased appropriations? Are we going to help more students or increase the Federal share? Mr. MOORE. It will help a few more students. We still have the in- crease of the minimum wage to $1.30 next February right in the middle of the year to reckon with. I am afraid a large part of that increase is probably going to go into more pennies per hour because the minimum wage has the effect of changing the whole pay pattern in the institution. Mr. ERLENBORN. The 5-percent increment of the Federal. support plus the minimum wage apparently will use up all of the increased appropriation? Mr. MOORE. It will, I am afraid, come fairly close to stabilizing the oper'thon Mr. ERLENBORN. Thank you. Mr. QuTE. Are we through with this? Do you plan to go on with the Secretary reading the statement? Mrs. GREEN. Yes, on the guaranteed loan program, unless there are other points. Mr. CAREY. One moment. Can we address questions to Secretary Ban~? Mrs. GREEN. On the guaranteed student loan? Mr. OAREY. On the matter of availability to student loan funds. Mrs. GREEN. We are going to turn to Mr. Barr to present any state- ments he wants, and then he will be available for questioning and you can take as long as you need. Mr. Secretary, we are delighted to have our ex-colleague back here with us this morning, and we are interested in your comments. Mr. BAirn. Madam Chairman, 1 do not have a prepared statement this mornimig. I would like to make a few observations, and then Mr. Snyder and Mr. Weiss will be prepared to address themselves to any technical questions. In the approximately 1 year that I have been involved in this pro- gram I have had an opportunity to look at it and I have profited from the discussions we have all had on the program. I have come to a few conclusions in this past year that I think are quite firm in my own mind. Let me list them for you. 92-371---68-pt. 1-5 PAGENO="0066" 60 First of all, I am convinced that the costs of a college education to- day, particularly in a private school, really must be looked at in a new light. I don't believe that the American families, unless they are in an income group above $20,000 or $30,000, can really expect to be able to save enough, or to pay out of income enough, to pay the cost of a child in college. I speak from personal experience, Madam Chairman. I think the committee knows what the Governrn~nt pays me, and my personal ex- perience is that with three in school this is extremely difficult. If it is not possible to treat these costs as a current expenditure, I am convinced, Madam Chairman, we must look at these costs as a financing operation, the same way we would look at the purchase of the house. Costs are now, in the private schools, in my own personal experience, in the range of $12,000 to $14,000 to educate a boy or girl. This puts it into a range where I think we must look at them not as an expenditure but as a capital investment that merits financing. My second observation, Madam Chairman, is that there are not many routes available, practically available, at this time. A tax credit has been considered at various times by the Congress, but I believe that the position of the tax-writing committee, as expressed by the chair- man of the House committee especially, is quite clear. There are so many tax-credit proposals currently facing the committee that he has slammed the door on all. He has indicated on the floor of the House that he will not tolerate attempts to relieve the burden on the Ameri- can people through the tax-credit route; he insists that we go through the normal appropriation process of the Congress. So I would say at the moment that, regardless of the merits and the debates on both sides, this tax-credit route for all practical pur- poses is closed off. I would say, thirdly, that giving some help to the middle-income family would probably have to take a lower priority than some of the other prOblems that are confronting the country at this time, even in the areas of education and health. I think it would of necessity take a lower priority. Fourthly, I say, Madam Chairman, as I look at the country in the past decade, there is one thing very, very apparent: The growth in our budgetary coSts in the area of education, health, and welfare has been the one factor that has characterized all of our recent budgets. I know that a lot of attention has been focused on Vietnam~ and on the military spending, but if you look at the percentage increases in these areas of education, health, and welfare, I think you will find by far the largest increases in the past 4 to 5 years have been in this area. I will venture to make a prediction today, Madam Ohairman, that this particular segment of the budget-education, health, and wel- fare-will, in the next decade, grow even faster. So, as you look at the posture that we find ourselves in, in this coun- try today, as you try to look down the road, I am convinced if the committee wants to do something to assist these lower-middle-income and middle-income families to meet the costs of financing a college education, that some device such as this is the only practical device: to throw the weight of the burden on the financial community and try to induce the financial community to cooperate by subsi~lizing them, if you will, on the margin. PAGENO="0067" 61 This is the only way that I frankly can see, Madam Chairman, we can (a) get it in the budget; (b) justify the priority; and (c) have a program that we can live with in the years ahead. This is a general observation, `but as I say, it has been formed after a year's look at this particular problem, trying to relate it to the totality of financial problems that we face in this country. I would `like to `h'ave just a few general comments, Madam Chairman, on the GAO `report. I think it is a helpful report. I think as always the GAO wa's forthright, and I t'hink their `analysis was excellei~t. I have a couple of points of disagreement. We used a cost of money in our table of 41/2 percent as of this time last year. This question of the cost of money can be a tricky one. I can tell you what the cost of money is for one financial institution that borrows money, and that is the U.S. Treasury. The cost of money to us today-and we have a financing in the market at the moment- is 5% percent for a 15-month note and 53/4 percent for a 7-year note. That is the cost of money to us. This is what it costs us as we take ~money from people and relend it to other people. So I don't know whether 41/2 percent was accurate. It was extremely conservative last year. The cost of money to most corporations today is running from 61/z to 7 percent. Consequently, the 41/2-percent figure may or may not have much meaning today. Second, I don't believe, in my testimony before this committee last year I indicated I was concerned about financial institutions' los- ing money. On the contrary, I said that if we were to get to this lower- middle-income and middle-income group and give them help, the best way to do it was try to lend the support of the Federal Govern- ment to their credit and put them on a rough par with the `best-rated financial business institutions in the country. I think I used General Motors rather facetiously as a example of one of the best credit rat- ings in the world. That is our objective here, is to try to take these students and, by giving our own credit and~ assistance to the financial institutions, put them on a par with the best credit ratings in the world. I personally have great hopes for this program. `I think it can move. I think we are running at the moment around $500 million this year,. and I think we can go to $750 million this year and $1 billion the following year and get up to a couple of billion dollars a year when it is fully implemented, with a marignal budget cost to the United States. I think personally this has great merit and can be of great value to the country. Mrs. GREEN. Thank you, Mr. Secretary. In order to accommodate Mr. Reid's schedule, I will yield to him for hisS minutes at this point. Mr. REm. Thank you, and I will be very brief. Thank you very much, Mr. Secretary, for appearing and I appre- ciate what you have said. I think it is eminently true that the middle- income family today is largely the forgotten family in America~, and I believe the principle is-and it was enunciated in the President's message to the Congress-that `no American should be denied a col- lege education, where qualified, because of lack of financial resources, and I take it that you agree with that broad principle? PAGENO="0068" 62 Mr. BARR. I do, Mr. Reid. Mr. REm. Mr. Secretary, I have just one question there for you. I believe that we do need to help the middle-income family but I am con- cerned over the eligibility requirements and in Commissioner Howe's statement yesterday on page 4 there is the following sentence: "Admin- istrative arrangements are centered on State loan guarantee agencies with the Federal Government providing an interest subsidy for stu- dents whose adjusted family income is less than $15,000 per year." My question is this, and I would state it as an affirmative proposi- tion: I believe it would be desirable to remove the income limitation and have a statement that this program would be available without dollar limitation and based on the need of the student because if you take a $15,000 figure, you would exclude even with adjustments some of those you have just been discussing, and I think if the principle is clear that we are trying to reach all students who lack financial re- sources, shouldn't it be on that basis rather than on a dollar-limitation basis? Mr. BARR. Mr. Reid, I am not try to duck your question, but I am really not competent to answer. I stand on my statement that I think this is designed for lower middle-income and middle-income families. As to whether or not the $15,000 limit for subsidies should be removed, there are people more knowledgeable in the area a.s to where the need really arises. Mr. Rnw. What I am getting at is: Shouldn't we give consideration to the question of actual need? Mr. B~uiR. I think so. Mr. REm. Rather than necessarily trying to find a dollar limit which might or might not be relevant? If you have two or three children going to college at the same time in the $15,000 bracket, you can't afford it. Mr. B~um. I think your point is well taken, but I want to disqualify myself as an expert. Mr. Hown. I agree here that the $15,000 limit is designed to be a gross measure of need, and you are speaking of really a more refined measure of need. Mr. Rnm. That is correct. Now, all I am saying is, I hope we can give consideration to this and conceivably an amendment could be off ered by the committee to the bifi having a more refined basis, if you will, addressed to any student in need rather than trying to put an arbitrary figure on it. Mr. BARR. I think your point is well taken. I have found the arbi- trary cutoffs to be troublesome in most areas. While I want to repeat I am not an expert in this area, it is a troublesome point. If the com- mittee can do better than this definition, I would personally support it. I can't speak for Mr. Howe, but I would support it. Mr. Quin. I think you remember there is no arbitrary cutoff in NDEA. It is left to the institution to work out this plan. Mr. Hown. If we were to suggest some system for the measurement of need, or some system more effective than this, the only stipulation I would want to make about it would be that the establishment of need probably has to reside in the higher education institution, in the schol- arship offices involved. Many of them have developed an expertise in assessment of needs. PAGENO="0069" 63 I think there is a problem in handing that matter over to the baiiks. We would certainly want to explore the additional administrative load this would place on the institutions and the problems of adjustment they would have, were such a system to be introduced. But I must agree there are more accurate systems for measurmg relative need than the one now embraced in this legislation. The ques- tion is whether, with the complexities of the administration of this leg- islation, it is desirable to introduce the concept of relative need. Mr. REID. I can merely add-and this is all, Madam Ohairman; I thank you for the time-I would merely add the expression and hope that we could make this program available to all students in the middle-income families. Mr. BARR. May I add there is a precedent in an `area which I am more Rualified to speak: In the tax law there we do, of course, give addi- tional relief as the family size increases-and this is one area of relief that now is incorporated in this loan program. If you wanted to go further, you could provide that if you had more than one child in school `at a time there is more need for purposes of this program, and you can move in that direction. Mr. REID. That is the kind of thought I had. Mr. HowE. I want to clarify one point I am sure you are aw'are of. The program is generally available above the $15,000 level, but the for- giveness features don't continue for the people above that level. Mr. REID. I am also aware in New York and some other States `the $20,000 figure has no't been worked out and there are a number in New York that were denied loans despite this program and that is why I have d'oubts about an arbitrary figure and would feel with a little cominonsense the question of need on a broader basis could be the criterion that would make more sense. Mr. CAREY. Will my colleague from New York yield? I would not like the record to rest insofar as the prototype program for the coun- try, as far as the New York Higher Education Assistance Corpora- tion is concerned, I don't believe there is any set criteria in terms of dollar figure as to whether the student will obtain a loan. The student on application may submit or the parent may submit in support of the student's application any `special circumstances of a financial nature which make the arbitrary figure one that is not con- trolling. If there has been any kind of special burden, financial burden in the `family in a given year, the student can develop it and make it available to the Higher Education Assistance Corporation and the dollar figure goes out the window. It is the real assets to support the student in college that they make the decision on. Mr. REID. Just to support my colleague, I have a fair body of cor- respondence with the Commissioner and with the head of the Higher Education Assistance Corporation, and unfortunately New York has not worked out the full benefit program and it does exclude on the basis of certain dollar limitation, and I would be happy to show you you the correspondence and indeed negative correspondence saying why the board of regents cannot at this time take action. Mr. CAREY. If my colleague would yield further, I can give him information on the application of my son which has just been ap- proved, and it was done on the basis of extraordinary expense as a result of having to contest my seat against a Republican. PAGENO="0070" 64 Mr. REID. I don't contest the gentleman's sophistication in these matters, but would be happy to show him the correspondence. My only point is, it should be on the basis of need and not arbitrary. Mr. CAREY. The need is there, I assure you. Mr. REID. I am sure the gentleman is in a position to know. Mrs. GREEN. Mr. Secretary, did I understand you to say in con- sidering the budget, this is a lower item? Mr. BARR. Madam Chairman, as you look at the priorities that exist in the United States, first of all, I think you must recognize that we have limited dollars, and we have to put the highest priority on the people that obviously are not going to get an education under any circumstances without assistance. So I would say the highest priority would be making sure that the child out of the ghetto or some place else who had no chance without assistance would be the highest priority. Mrs. GREEN. I was referring to your statement in terms of the money available for education and of having to go to the guaranteed student loan because of the current national budget picture. Mr. BARR. I am sorry. What I meant was that this particular pro- gram designed for middle- and lower-middle-income people would have to take a lower priority than the programs designed for the child ivho has no chance-where it is not a question of the family sacrificing, hut no chance at all without assistance. No, indeed, I don't make any such assertion. I did, on the contrary, try to point out in the past 5 years the budget would indicate that the real explosion in our spending in percentage terms has been in the areas of education, health, and welfare. I also venture to predict, Madam Chairman, in the next decade. this trend will not level off; it will not slow down. If anything, I would bet that this trend for a larger and larger proportion of our budget dedi- cated to these three areas would continue and increase. Mrs. GREEN. As I look at the budget, that has not been my impres- sion when I review the space program expenditures, highway construc- tion or defense. Mr. BARR. Madam Chairman, I don't intend to argue about the budget today, but I would say that highway construction has been al- most level for the past 4 or 5 years, running at the rate of $3i/2 to $4 billion a year. The space program has leveled off for the past 3 years to .eround $4 to ~5 billion. Defense has gone up, because of the Vietnam cost, roughly 50 percent. I think if you look at the budget and include all the funds that we ihave under the new unified budget, I think you will see that the real surge, percentagewise in the budget, is in these three areas, and I think it appropriate and I applaud it. I am speaking not in absolute terms but in percentage terms. We started from a low base; for instance, in elementary and secondary education, it was zero. Mrs. GREEN. You can increase it 500 percent and not have very much? Mr. BARR. That is right, when you start with zero or a very low level. But all these areas, in percent terms, have gone up quite rapidly, :and I predict this will continue. I would hope so. PAGENO="0071" 65 Mrs. GREEN. I think we might, or this committee might, well take a look at national priorities. I was not impressed in terms of the amount of money that is recommended for education this year and the cuts that will be made in various programs. We may have only a few dollars involved, but in terms of the need, in terms of the crisis in the cities and in schools and in private colleges, it does not. seem to me that we have an exceedingly high priority for education. Mr. BARR. Madam Chairman, I would say, in defense of the total budget, that I know this particular area carried a very high priority in all of the considerations that went into the budget. In my opinion, the cities' problems and education and health were given top priority in the money available after the requirements for Vietnam and defense. * Mr. HOWE. Perhaps, just to get on the record the situation, it will be useful to try to come up with numbers. If you look strictly at the Office of Education budget, the round numbers are that we will obligate about $3.9 billion in fiscal year 1968 and $4.1 billion in fiscal year 1969. If you look at the total educational outlay of the Federal Government for all educational purposes, the figure for fiscal year 1968 will be $10.8 billion and for fiscal year 1969 it will be $11.6 billion. You have to say that there is a steady increase in commitments to education in a tight budget year, and I think you have to say also that the reallocation of priorities within these new commitments places the Federal Govern- ment in the position of following directly on the kind of priorities that Secretary Barr has been outlining-investments in people and par- ticularly investments in disadvantaged people. Mr. BARR. If it is any consolation, the figures will indicate the defense budget will rise this year about $3 billion, which is one twenty-fifth, or 4 percent, while the total education budget will rise 10 percent. Mrs. GREEN. Again, we must consider the starting place. Mr. BARR. Of course, but we are getting up to a place where, in $10 billion, you have a pretty good base point. Mrs. GREEN. Is it fair to say the costs of Vietnam today are about $3 billion a month? Mr. BARR. This is one of the most difficult figures to arrive at, be- cause it involves some arbitrary assumptions. The latest figure Defense has, I think, is about $26 billion a year. Mrs. GREEN. This is compared to what is actually the case? Mr. BARR. I think one way of looking at it is that before we went into Vietnam, defense was running to about $50 billion a year and it is now up to $75 billion. Mrs. GREEN. I think one of the most eloquent statements made on education was given in President Johnson's message on education, January 12, 1965: Nothing matters more to the future of our country: Not our military pre- paredness-for armed might is worthless if we lack the brain power to build a world of peace; not our productive economy-~for we cannot sustain growth without manpower; not our democratic system of Government-for freedom is fragile if citizens are ignorant. We obviously don't have the brainpower now to build a world of peace. We have a "brain drain" in the United States, and the wealthiest and most powerful country in the world can't train the number of PAGENO="0072" 66 people we need to keep our own machinery running. Freedom is fragile if citizens are ignorant. We have to look at the Newarks and Detroits and Cambridges and a few other places to understand the full impact of this. Then I have the Harris report, dated November 1967, indicating the American people would like to see increased Government spending in aid to schools. Forty-one percent indicate this as the highest priority. Mr. BMa~. That is correct. Mrs. GREEN. And if we take all of the first, second, and third answers we find that the American people want it by 71 percent, that they would place aid to education in the first three categories. Aid to schools is recommended by 41 percent of the people. Only 5 percent of the American people would like to see increased spending for de- fense. Three percent want more for highways and 1 percent of the American people would like to see more spending for space. It seems to me we are setting priorities that the Nation as a whole does not support. I am just wondering as we consider these programs if perhaps this committee ought to take as a major consideration the national priorities and where we are going? Mr. BARR. Madam Chairman, I am the Undersecretary of the Treas- ury, and we pay the bills in this country or try to pay the bills as well as we can. I do recognize the squeeze we are in. My jurisdiction does not extend to the whole question of the military, diplomatic, ed ucational, and welfare policies of this country. The President did ask me to look at this one particular area of student loans. Because I know the squeeze we are in, I spent the time and I have been intrigued with this program, because it did seem pos- sible that in this particular area we could bring some relief and some help to the American people with a marginal cost. That is frankly my real interest in this area. Mr. GREEN. Do you agree with the comments made yesterday that if we utilize the guaranteed student loan program the cost for a thousand students over a 10-year period, the actual costs to the Federal Government, would be $230 million more than if we utilize the Na- tional Defense Education Act? Mr. BARR. Was this my letter to you? Mrs. GREEN. Yes. Mr. BARR. You asked about NDEA. I write a lot of letters. Mrs. GREEN. And I am sure you sign some you don't write. Mr. BARR. I sign a lot more I don't write. I think I did indicate to you that if we could establish an education bank we could probably do it cheaper in tue long run. Do you have a copy of the letter, Mr. Weiss? Mr. WEIss. Yes. Mr. BARR. We did our best to cost out these two alternatives. I stand by that letter. I think it is accurate. We do have some comparable data that is available in the operation of the farm credit agencies, the land banks, the other banks, and they are more comparable to something we had established here. The only thing I said, and I want to repeat this, Madam Chairman, is I just don't know where we would get that kind of money from this Congress or in the budget in the near future- to establish a program that would be lending roughly $750 million up to a few billions a year to meet the needs I see. PAGENO="0073" 67 I just don't know where we can squeeze it in the budget as we look at it now, or practically how we could get it from the Congress. Mrs. GREEN. Well, do I understand you to say that this is really the basis for the guaranteed student loan program, not that it is the best program? Mr. BAIu~. That is correct. Mrs. GREEN. You are suggesting this even though it will cost a billion dollars perhaps over a 10-year period? Mr. BARR. I would like to supply for the record again my comment on that statement. (The following was submitted for the record:) On the same basis as the cost comparison presented in Attachment A to Under Secretary Barr's October 30, 1967 letter to Chairman Green, the cost for a 4 million student loan program under the National Defense Education Act and the Guaranteed Student Loan Program would be $5,710 million and $4,635 million, respectively. Elimination of the cancellation feature would reduce the NDEA total cost to $3,715 million. Addition of a comparable cancellation feature to GSLP would increase the GSLP total cost to $6,632 million. THE UNDER SECRETARY OF THE TREASURY, Washington~, D.C., October 30, 1967. Hon. EDITH GRsnN, Chairman, ~S~pec~ial ,S~ubcommittee on Education, House of Representatives, Washington, D.C. DEAR MADAM CHAIRMAN: This letter responds to the request you made for certain comparisons between the insured loan program under the Higher Edu- cation Act of 1965 and the direct loan program under the National Defense Education Act. First, you requested a comparison of the total long-range costs to the Federal government of loans made under these two loan programs to a hypothetical group of 500 students~, each of whom borrows $1,000 a year for four college years and takes the full ten-year period of time permitted for repayment. I am enclosing a table showing these comparative costs. In accordance with our usual practice, this analysis represents the marginal cost to the government, including the cost of borrowing by the Treasury, discounted to arrive at present dollar-value totals. In this model, the cost under the existing NDEA program would be some- what higher than the cost under the insured loan program with the placement and conversion fees that have been recommended by the Administration. If the "teacher cancellation" feature of the present NDEA program were eliminated, the cost under NDEA would be slightly less than under the insured loan program. Although in the long-run such a direct loan program would be slightly less costly to the Federal Government than an insured loan program with com- parable terms, the direct loan approach involves substantially higher immediate expenditures by the Federal Government. It is clear that, in light of the extraordi- nary demands on the Federal budget, it would not be possible, as a practical matter, to achieve the same volume of student loans through a direct loan ap- proach as we can achieve through the insured loan approach. Also, we believe that continuation of the insured loan program is very much warranted in light of the fact that we are moving into a novel area in which it should be beneficial to obtain further experience with alternative approaches to the important problem. of financing student education expenses. You also requested a comparison between the provisions for reimbursement of administrative expenses under the NDEA program and the Administration's proposal for payment of placement and conversion fees under the insured loan program. I am enclosing a memorandum that sets forth such a comparison. it is important to recognize that the two arrangements serve somewhat different functions. The NDEA plan provides the sole Federal funding for the administrative costs incurred by the colleges in operating the loan program. The proposed placement and conversion fees, on the other hand, merely would make up the difference between lenders' interest income and their total costs, in which administrative costs are only one element. If other costs, such as the PAGENO="0074" 68 cost of money to the lenders, should decline, the interest income would be more adequate to cover lender costs and the placement and conversion fees w ould be reduced or eliminated. I am enclosing a table showing the varyihg placement and conversion fees at various levels of the cost of money. I hope that this information will be helpful to the Subcommittee. Sincerely yours, Josnen W. I3AER, Under Secretary of tit e Treasury. Attachment A COMPARISON OF RELATIVE FEDERAL GOVERNMENT COSTS FOR NDEA AND GUARANTEED STUDENT LOAN PROGRAMS IPresent values in dollars 11 NDEA GSLP Federal capital contribu ion $534 808 Interest receipts, deduct -185,478 Payment for institutions' administrative cost 115, 064 Cancellations, 10 and 15 percent 249,300 Interest paid on behalf of borrowers $517, 127 Insurance reserve matching seed money 25,942 Placement and conversion fees 56.338 Total cost 713, 694 3 579, 407 I Based on casts incurred by Federal Government for 500 students borrowing $4,000 each with 10-year repayment cycle, 53/8-percent discount rate. Present value is the standard method used for comparing 2 or more streams of receipts and payments which have different time patterns. It is based on the concept that a dollar at some time in the future is worth less than a dollar today. Neither calculation includes the cost of any defaults. 2 With proposed reinsurance plan; under present funding of insurance reserves, with 50-50 matching and no reinsurance, the Federal insurance reserve cost would be $29,710. 3 Elimination of the cancellation feature would reduce the NDEA total cost to $464,394. Addition of a comparable cancel- I ation feature to GSLP would increase the GSLP total cost to $828,972. ATTACHMENT B COMPARISON OF DIRECT COST ALLOWANCES IN NATIONAL DEFENSE AND GUARANTEED STUDENT LOAN PROGRAMS I. NDEA student loan program The statutory ceiling on the amount a college may withdraw from the Loan Fund to cover administrative costs is 1 percent of the aggregate loan volume outstanding at the end of each fiscal year, or one-hall of reasonable administra- tive costs, whichever is the lesser. For 1965-66, half of the institutions operated under the 1 percent outstanding balance rule, and the remainder one-hall of reasonable cost. The amount of administrative payment per loan made during the year averages at $26 per loan in the 1 percent category and $13 per loan in the one-half of reasonable cost category. II. Guaranted student loan program The proposal now before the Congress is to provide fee payments to lenders at the time each annual loan is placed on the books and at the time the 4in- school" notes are consolidated and converted to installment payout notes. The amount of the fee in any given year would range from $0 to $35, depend- ing upon the cost of money or the net return on alternative investments. At present, the fee is estimated at $25 for both placement and conversion. The fees, when payable, generally would constitute only a portion of the revenue available to lenders to cover administrative expenses; so long as the cost of money is less than the 6 percent intereDt received by lenders, some portion of the interest income can be applied toward administrative expenses. The $25 fee used in the following comparison assumes a cost of money of approximately 5~ percent, leaving 1/2 percent to cover a portion of administrative expenses. It should be noted, however, that although this 1/2 percent is revenue to the lender, it is not a cost to the Federal government in the case of students qualify- ing for interest subsidies; in other cases, the cost is borne by the student. (Under the NDEIA program, all of the administrative payments are costs to the Federal Government.) PAGENO="0075" 69 III. Comparison Since NDEA cost data is available only for FY 1966, and the Guaranteed Loan fees are only in the proposal stage, there is no effective experience base for direct comparison. However, it is possible to use the actual average loan in each pro- gram to show parity of treatment. For calculation of NDEA administrative expense, 10.5 percent of the face of the note will equal the amount of overhead earned by the loan* over a 15-year period. In the guaranteed loan program, each loan earns a placement fee and, assum- ing each student makes at least two loans, one-half of the conversion fee. In addi- tion, one-half percent per annum from interest payments on the reducing balance is available to cover the lender's costs. The following examples are based on actual average annual loans of $600 in the NDEA program and $800 in the Guaranteed Loan Program. Each loan is held over a four-year in-college period and a year of grace, and is repaid over a ten-year period. A. NDEA Loan A $600 NPEA loan will yield $63 in administrative support to the college (10.5 percent of $600). The same loan, under the Guaranteed Loan Program will yield $69 in admin- istrativesupportfor the lender: Placement fee $25. 00 One-half of the conversion fee 12. 50 One-half percent interest on balance * 31. 50 Total 69. 00 *Paid by the Federal Government only If the student qualifies for interest subsidies. B. Guaranteed ~8tudent Loan An $800 loan will yield $79.50 in administrative support for the lender: Placement fee $25. 00 One-half of the conversion fee 12. 50 One-half percent interest on balance* 42. 00 Total 79. 50 *pajd by the Federal Government only if the student qualifies for Interest subsidies. The same loan, made by a college under NDEA, will yield $84 in administra- tive support. ATTACI-IMENT C COST OF MONEY AND FEES Based upon current estimates of lender costs other than the cost of money, and the proposal for equal fees (a) each year that a loan is put on the lender's books and (b) for each conversion of a borrower's loan(s) to repayment status: If the cost of money to lenders or net return on alternative invest- The amount of each. ments is: fee would be: Percent 4.66 or less 0 4.81 5 4.96 10 ~.11 15 5.27 20 5.42 25 5.58 30 5.74 or more 35 Dollars; I will say in my opinion it will be more costly, yes. I will say, frankly,.. that a Government bank would be cheaper in the long run. While say- ing that, however, I adhere to the conclusion that if this needs to be PAGENO="0076" 70 done, we have to rely on the private sector even though it costs more money. Mr. HowE. Madam Chairman, it does seem to me, just as we made this point yesterday, it is important to bring out that the guaranteed loan program provides the way to get these funds into the hands of large numbers of young people now, and that there is very great value for the country as a whole in doing exactly that. Perhaps there is a value that is not entirely measurable in dollar terms, and perhaps the value-when you seek to measure it in dollar terms-has to include the factor of the added productivity and the added gross national product that will emerge from having a trained, educated population as opposed to one that is not. It seems to me if we are thinking about substituting an expanded loan program for the guaranteed loan arrangements, we run the dan- ger of training a lot fewer people in the immediate 5 years ahead, and that the added cost to us over the 10-year period may well turn out to be worth it. Indeed, the costs may have a dollar figure attached to them that, in the long run, would represent a saving. Mr. BAmi. Madam Chairman, may I comment there, too, I am speak- ing not just for now. The Commissioner spoke of the situation as it confronts us at the moment. I am looking on down the line. Even if we get out of Vietnam, I see billions in needs to be spent in our cities. This program is going to have to compete in the future not with de- fense, as it is at the moment, but I think it is going to have to compete in the future with the staggering problems of our cities and the stag- gering expenditures we have to put in our cities. I don't know how the priorities would come out here. I want to concur that this pro- gram will cost more than the Govermuent doing it directly. I also want to observe, however, that this is designed for people who can make it, who could educate their children by virtue of heavy sacrifice. Consequently, I think this program would have a lower priority than some other Federal programs, looking at it objectively. I come out with the conclusion that if the committee wants to extend this as- sistance to the lower-middle and middle-income people of the country, this is the best way to do it-now, and from anything I can see, in the future. Mrs. GREEN. If my colleagues do not direct questions to these two points, would you in writing estimate the costs over a 10-year period if we have 4 million students obtaining loans? Mr. BARR. Right. Mrs. GREEN. Then would you respond to the Comptroller General's comment about the figures? Mr. BARR. Yes, madam. Mrs. GREEN. On pages 2 and 3? Mr. BARR. Yes. (The following was submitted for the record: COMPTROLLER GENERAL'S REPORT1 ON THE B~um COMMITTEE'S STUDY The burden of the Comptroller General's report on the Barr Committee's Study is that the cost data were "obtained without verification from the Ameri- can Bankers Association (ABA) and other sources." 1 Report to the Honorable Edith Green, Chairman, Special Committee on Education, House of Representatives, B-114830, Nov. 27, 1967. PAGENO="0077" 71 "The data developed by the Committee and used by the Treasury Department in support of its position on loan placement and conversion costs were not based on verified cost data but consisted of estimates obtained from the sources de- scribed in this report. Furthermore, the guaranteed student loan program is relatively new and lenders have made few repeat loans to the same students. Adequate experience data is therefore not available for determining the costs on which fee justifications can be based for second and subsequent loan placements and for conversions of loans. Since the justifications for these fees are not based on actual cost experience, we are unable to express an opinion as to the reason- ableness of the proposed maximum fee of $35 for placement of student loans and of $35 for conversion of the student loan program." The meaning of the term "verify" in the context of the Barr Committee's study and report is not clear. The Committee had no authority to audit the cost records of participating lenders or otherwise directly to "verify" their cost estimates. However, the Committee did not rely exclusively on the data reported by the 17 banks in the American Bankers Association sample. In fact, as indicated in the Committee report, the working cost estimates were based on a wide variety of data including- (1) The ABA Instalment Credit Survey for 1965. This survey was under- taken not to justify any particular estimate of bank costs in making and servicing guaranteed student loans but to allow banks to determine whether their operating results in their consumer credit departments are more or less favorable than the operating results of other banks. The purpose of the Instal- ment Credit Survey, therefore, would have been totally negated if the results were deliberately biased to indicate either higher or lower costs than actual costs for instalment lending. (2) A functional cost analysis prepared by the Federal Reserve System with comparative data for 61 banks reporting in both 1964 and 1965 and with data for 176 participating banks in eight Federal Reserve districts reporting in 1965. This analysis was also undertaken to provide member banks with benchmark data for evaluating their comparative operating results. (3) An analysis furnished by the National Association of Mutual Savings Banks. (4) An analysis supplied by the United States Savings and Loan League which also draws on the results of a doctoral dissertation at Ohio State University. (5) Cost data and estimates provided by several credit unions at the re- quest of CUNA International. (6) A sample of 51 administrative cost reports (OE-1/25, Statement of Work Volume and Administrative Expenses, NDSL Program) submitted to the Office of Education by schools participating in the NDEA program. (7) Data contained in the Report on Collection of National Defense Stu- dent Loans prepared for the Subcommittee on Education by the Office of Education. The direct cost data were also supported inferentially by the generally accepted figures for costs in other lending areas and from experience with lending rates established in competitive markets where some of the features of the operations are analagous to those in the guaranteed student loan program. Although the Comptroller's report emphasizes the 17-bank study, the use of the data from these various sources was discussed at length with the GAO representatives. The Comptroller's report also calls attention to the operating results reported by one New York bank. The two New York banks included in the ABA 17-bank survey both reported a cost per loan of $23 and a cost per month during repay- ment of 75~. If these figures are accepted as representative, the actuarially calcu- lated rate of return is 5.14 percent, compared with the Barr Committee's estimate of 4.66 percent, a difference of approximately 1/2 of 1 percent. Assuming that the current cost of money to banks is equal to the Treasury Department's current borrowing rate, approximately 53/4 percent based on the pricing of the 7-year note offered in February, the Barr Committee's analysis would indicate fees of $36 would currently be necessary if lenders were to cover their cost of money; the cost figured of the two New York banks would indicate fees of $20 would be necessary. The following table contains factors necessary for calculating the actuarial rate of return on guaranteed student loans for various assumptions regarding lender costs. PAGENO="0078" 72 Factors for calculating lender returns Percent Gross return 6 Less: Placement cost of first loan $ X0.0086 Placement cost of subsequent loans $- X0.0143_ Loan conversion cost $ X0.0073 Monthly servicing cost during repayment $ X0.449 Equals: Net lender return to cover cost of money The following example, using hypothetical figures, is intended only to illustrate the use of the factors: Percent Gross return 6 Less: Placement cost Of first loan $25 X0.0086 . 215 Placement cost of subsequent loans $20X0.0143 . 286 Loan conversion cost $15 X0.0073 . 110 Monthly servicing cost during repayment $1X 0.4491 . 449 Equals: Net lender return to cover cost of money 4. 94 There is some question also regarding the statement in the Comptroller's report tlmt the cost of money for lending institutions in early 1967 was in the vicinity of 4~/~ percent. The Comptroller's representatives were advised that market yields on Treasury obligations of comparable maturity in January-March 1967 averaged approximately 41/2 percent. The connection between this rate and the cost of money for lending institutions, however, is somewhat tenuous. Also, the data presented in the Comptroller's report on average rates paid on time and savings deposits does not directly answer the question, since it does not take into account the noninterest costs incurred by the institutions in obtaining and maintaining deposit accounts. The Committee recognized that lender operating costs can be reduced in the program if the guarantee procedures are simplified. It also stated that the "en- couragement of efficiency in operations, therefore, should be a fundamental con- sideration in the method adopted to increase lender returns." Whether larger volume operations will also lead to additional economies may be more doubtful; even so, it can be necessary to provide an initial inducement for lenders to enter the program. The Committee also recognized that the cost of placing subsequent loans may be less than the cost of placing the initial loan, and that as experience is de~ veloped under the program it should be possible to collect better cost data and to adjust the level of fees appropriately to achieve the desired level of lender participation. Thus, the Committee's report stated: `To provide the flexibility needed to assure maximum lender participation under changing money market conditions, this [fee payment] authority should be broad enough to permit the fees to be varied with changes in lender costs and market rates of interest. It should also allow the placement fees to be reduced for the second and subsequent loans to the same student, since the costs of making later loans to a student should be less than the cost of making the first loan." It is somewhat astonishing that the Comptrollers' report indicates lack of knowledge of conversion costs, since the names of specific institutions with such experience were furnished to the GAO representatives. The record shou1d also be corrected at this point to indicate that Mr. Barr did not testify that lenders were incurring out-of-pocket losses from the guaranteed student loan program. The thrust of Mr. Barr's testimony has been that lenders will not willingly engage in volume operations in this program, which are necessary if it is to support higher education adequately, if their rate of return is very unfavorable relative to rates of return in other forms of investment. In this connection, it may be noted that VA and PHA mortgages bear a 6% interest rate, but the gioes yield taking into account points and prepayment experience is in excess of 63/4%, substantially more than on guaranteed student loans. The maximum fees recommended by the Barr Committee would increase gross lender returns on guaranteed student loans to approximately 7.05% computed PAGENO="0079" 73 on the actuarial basis. A 7% maximum rate is already authorized by statute for Federally guaranteed loans when determined necessary by the Commissioner of Education. Thus, adoption of the Barr Committee's fee recommendations would simply provide flexibility for adjusting rates in accordance with changing circumstances for loans made with State or private guarantees as is already pro- vided for Federally guaranteed loans. While the form in which the flexibility could be exercised would be changed and made more effective, it would be under the same control as in the Federal program. The central issue, therefore, is simply whether current lender returns in the program are sufficient to bring forth an adequate flow of funds for guaranteed student loans and not, as the Comptroller General's report suggests, the means for raising lender returns. The Barr Committee looked upon the payment of placement and conversion fees as a means for adjusting lender returns in response to changes in money mai'ket conditions. It did not look at such fees, except incidentally, as a means for directly or exactly offsetting specific administrative costs incurred by lenders. In other words, whatever the cost of putting a loan on the books-say, $25-the placement fee for any semester or school year might be set at $10, $15, $35, or nothing, depending on market interest rates, to provide a net return to lenders required to bring out a sufficient supply of funds for guaranteed student loans. There is no question that some lenders will' participate in the program volume even without payment of fees. A number of commercial banks' have been doing so. However, other commercial banks, savings and loan associations, mutual savings banks, credit unions, insurance companies, and pension funds, have not been willing to participate to any substantial degree and some of these institu- tions have established their own student loan programs in which the terms are much less favorable for the studentborrower. Mrs. GREEN. Congressman Quie. Mr Quir Wh'~t is wrong with people who h'tve the means to edu cate their children to suffer a little sacrifice or even hard sacrifice? Is there something wrong? Mr. BARR. No, there is nothing wrong with that at all, Mr. Quie. As I said, however, the whole cost of education has arisen so sharply that I think you can no longer look at it purely as a current cost. I think it must be financed in some way or another. This is a Federal program designed to assist them to meet this changed situation, where you don't look at it as a cost now but as a capital expenditure, and a capital expenditure that is being financed. Mr. Quin. I strongly favor the guaranteed loan program. It is the subsidized interest about which I have reservations. Mr. BARR. That is another question. Mr. QUIE. To make certain they can secure the money now and are to have education. Mr. BARR. If you don't have a subsidized interest rate, Mr. Quie, I think you would have to compare with it the VA and FIIA pro- grams which are costing, well, around 7 percent at the moment. Mr. Qrnu. If it is going to be utilized to pick up the slack of the NDEA program, which it can't meet, as I understand by testimony prior to yours, we are going to meet about five-sixteenths of the need, and undoubtedly we can pick up some of that. Then if the institu- tion itself determined the need of the students who receive the guar- anteed loan program for at least the subsidation of the interest rate phased up, that is all that is necessary, during that period of time when the student himself was not earning any money. This is the time before he, say, finished college, graduate school, the Peace Corps, and so, and so, military services, during that period? Mr. BARR. Yes. PAGENO="0080" 74 Mr. QunD. If this is the case then, we could handle the subsidiza- tion some other way. Why is it necessary to put a limit on the in- terest rate that a bank can charge on a guaranteed loan program? Mr. BARR. It is not necessary. The committee can remove that limit if it so desires. The Congress is removing limits on FRA and VA, or are requesting they be removed now. The rates at issue here would be high, I think if you went to the GAO Credit Union, and I assume they have a credit union, for a college loan, they would probably charge you 9 percent-I think they would have to at the moment. Mr. QuIE. Well, wouldn't any institution have to charge more when the Federal Government would not act as the guarantor? Mr. BAlm. Yes. Mr. QUIE. So I think it is an advantage to have the Federal Gov- ernment behind the loan. Mr. BARR. Yes, but I think the credit union, even with a guarantee, might well charge 8 or 9 percent at the moment for these small loans. This is what we are talking about, Mr. Quie. Even a nonprofit insti- tution, a credit union, would have to get about that much. If you like, we can do this. (The following was submitted for the record:) The Treasury credit union education loan plan described in `the attached folder involves (1) a 9 percent interest rate (2) repayment while in school, (3) minimum annual payments of $348 for loans of $600 per year or $468 for loans of $800 per year, and (4) cosignatures of parents as well as student. PAGENO="0081" 75 Educational Loan Plan College costs are increasing at a rapid rate, faster even than the cost of living. The average student today pays almost $2,000 a year in fees and living costs. The importance of higher education is becoming more apparent each day and is being stressed constantly by gov- ernment and education leaders. The late Presi- dent, John F. Kennedy, stated - `Our twin goals must be: a new standard of excellence in education-and the availability of such excel- lence to all who are willing and able to pursue For these reasons your credit union has developed the Educational Loan Plan described herein which we hope will assist our members *with credit they might need for the most provi- dent of purposes-higher education. TREASURY DEPARTMENT FEDERAL CREDIT UNION 92-371-68-pt. 1-6 PAGENO="0082" THE FOLLOWING QUESTIONS ANb ANSWERS DESCRIBE MOST FEATURES OF THE EDUCATIONAL LOAN PLAN L~. Who is eligible for the Educational Loon Plan? `A. Any member of The Treasury Deportment Federal Credit Union who will accept fi- `nancial responsibility for the education of `n,family member or friend or for his own ct~lucational pursuits is eligible under the Educational Loan Plan. Q. What do you mean by education? A. A course of study pursued in any recog- nized educational institution. Q. What charges and costs may be included in an educational loon? A. Tuition, books, transportation, meals, room rent, clothing and all other incidental and miscellaneous costs solely related to edu- cation. Loans for automobiles may not be included as a part of educational loans. Q. What is the limit on funds I may borrow? A. The plan described herein lists up to $1,000 per semester or $8,000 for a 4 year total. It is felt that this will cover the average situation but of course higher amounts will be considered by the credit committee where needed. Where there are two or more students in the same family the credit committee will also work with the member to tr~ to cover the needs. Q. What collateral' will be required? A. Usually, the signatures of both parents and the student will be sufficient. Under certain circumstances the credit committee may accept the signature of one parent and the student. The student will `be required to sign an acknowledgment that the loan is for his personal benefit. A letter or some other documentary evidence of the stu- dent's acceptance and attendance at col- lege will be required within thirty 1301 days after the start of the school semester. The credit `committee may, however, ask for additional collateral wlsere deemed ne'ces- `nary. 0. What is the interest jate?' A. 3/4 of 1% per month on tise unpaid balance. Q. Are there any charges besides the monthly payment? A. No. Monthly payments include interest and principal. Q.' Is prepayment permitted? A. Yes. As with any credit union loan the in- terest is charged against the unpaid bal- ance so it is to your advantage to repay as soon as possible. Terms shown herein are the minimum terms and members are urged to repay faster whenever possible. Q. When ore funds disbursed? A. Funds are disbursed to meet the tuition payment schedule as agreed upon at the time the loan is approved. Q. When ore payments due? A. All educational loans will be due on the 10th of each month. Q. What happens if the student leaves school for any reason? A. The regular payment continues as before until all funds previously disbursed are fully repaid. Q. May I have an educational loan wh~Ie I also have a regular loon (tons the credit union? A. Yes, provided the credit committee deter- mines that you are able to repay all of your obligations. Q. How do I apply? A. Use the long form educational loan appli. cation. Each six months you will also com- plete an abbreviated form to report cur- rent information, at the time you receive the next disbursement of funds. The abbre- viated form and a new signed note is re- quired each six months following the origi- nal application. IOn each semester change in case of fri-semester or quarterly semes- ter plarss.l Q. Is this plan covered by life insurance? A. Yes, in the event the borrower dies or be- comes permanently and totally disabled, the unpaid balance of the loan will be cancelled. SAMPLE PLANS PAY AS YOU GO PR~ PER `FEAR 8',, YEARS SEMESTER YEAR TOtAL 102 PAYMENTS $300.00 $600.00 $2,400.00 $29 per month $39 month $400.00 $800.00 $3,200.00 per month $500.00 $1,000.00 $4,000.00 $49 per $58 month $600.00 $1 .200.00 $4,800.00 per $705051 $1,400.00 $5,600.00 $6,400.00 $68 per $77 month $1,600.00 per $87 month $900.00 $1,800.00 per month $1,000.00 $2,000.00 $8,000.00 per PaymentE taRt peyme of RACER dottEReo nteIIl boloRs. foe yooeo000ERnlRnnO. PAGENO="0083" 77 In the pay as you go plan loans a e enewcd To show you exactly how the Educational Loan and disbursed each six months, August and Plan works we have selected the $300 per February, after six pOyrnents have been re~ semester or $2,400 4 year total plan and show miffed. It will be necessary to make a loan below the detailed workings of such a loan. payment each month, induding that month in f at any point during the period of schooling which the loan is renewed for another semes- the student leaves school you would continue ter s tuition with reguiar payments uitil the full unpaid bal ance at that time was repaid LOAN PROGRESSiON CHART PAY AS YOU GO $300 per semester, $2,400 4 year total, $29 per month BEGIN COLLEGE- 3rd YEAR- $300 disbursement $300.00 AUGUST $300 disbursement $884.68 $2.25 $26.75 $273.25 SEPTEMBER 6.64 22.36 862.32 2.05 26.95 246.30 OCTOBER 6.47 22.53 839.79 1.85 27.15 219.15 NOVEMBER 6.31 22.69 817.10 1.65 27.35 191.80 . DECEMBER 6.14 22.86 794.24 1.45 27.55 164.25 JANUARY 5.96 23.04 771.20 1.24 27.76 136.49 FEBRUARY 579 23.21 747.99 $300 disbursement $436.49 FEBRUARY $300 disbursement $1,047.99 3.28 25.72 410.77 MARCH 7.87 21.13 1,026.86 3.08 25.92 384.85 APRIL 7.71 21.29 1,005.57 2.88 26.12 358.73 MAY 7.55 21.45 984.12 2.69 26.31 332.42 JUNE 7.39 21.61 962.51 2.50 26.50 . 305.92 JULY 7.22 21.78 940.73 2.30 26.70 279.22 AUGUST 7.07 21.93 918.80 2nd YEAR- 4th YEAR- $iOO di bursem nt $57922 AUGUST $300 dis bursement $1 218 80 4.36 24:64 554.58 SEPTEMBER 9.15 19.85 1,198.95 4.16 24.84 529.74, OCTOBER 9.00 20.00 1,178.95 3.98 25.02 504.72 NOVEMBER 8.85 20.15 1,158.80 3.79 25.21 479.51 DECEMBER 8.70 20.30 1,138.50 3.60 25.40 . 454.11 JANUARY 8.54 20.46 1,118.04 3.41 25.59 428.52 FEBRUARY 8.39 20.61 1,097.43 $300 disbursement $728.52 FEBRUARY $300 disbursement $1,397.43 5.47 23.53 704.99 MARCH 5.30 23.70 681.29 APRIL 60 payments @ $29 continued for `5.12 23.88 657.41 ` MAY a regularS year loan of $1 .397.43 4.94 24.06 633.35 JUNE 4.75 24.25 609.10 JULY High balance for credit committee 4.58 24.42 584.68 . AUGUST collateral consideration $1,397.43 Mr. QUIE. Why would it have to charge that much? Mr. BARR. That is what they charge now for any kind of, loan for a Federal employee. Mr. QtrIE. They are not guaranteed by the Government. Mr. BAirn. Well, in effect,' they are about the same because they are loaned to Federal employees and they know they are going to get paid Mr QuIB They are not going to get fired Mr BAirn That is right I don't know what the lending rate is in the credit union here in the Congress. I suppose we could call up the credit union and see "what it is. I' am told it is about the same, 8 or 9 percent So the issue, Mr Quie, is how much do you w'Lnt to help this group? `If you want to `subsidize them, yOu hold it, to 6 percent and do something marginal to make it sufficiently attractive PAGENO="0084" 78 to the financial institution. If you don't want to subsidize them, you guarantee the loan and do the best you can-and as I say they will pay 8 or 9 percent. It is for the committee to resolve. Mr. Qun~. In the case of your proposal where you pay up to a $35 placement fee, would the Federal Government pay that only for those individuals from a family with earnings of less than $15,000 or would that $35 placement fee be made to everybody? Mr. BAnn. That would be made for everybody. Mr. QtrID. So, in other words, everybody, no matter what the wealth of his parents, gets some kind of subsidization? Mr. BAiu~. Yes. In effect, they won't be paying over 6 percent. We would be limiting the rate to 6 percent. Mr. ERLENBORN. Would you yield? Along this line, we are talking about the middle- and upper-middle-income group as you say con- sidering this is an investment rather than a current expenditure, what relevancy is there to the forgiveness of principal payments during the period that the student is in school? It would seem to me if this is a family expenditure and an investment made in this child's education, that the family should begin to repay during the period the child is in school? Now, if it is a child alone, an individual expenditure, I can see the rationale. Mr. BAits. I am going to ask the Office of Education to speak to it. Here again I am outside of my field. Mr. MUIRHEAD. I think you raised an interesting point concerning the program. The way the program is constructed now, it provides a loan to the student; it is not a loan to the family. That would be another approach, but it is not the intent of the program. It is a loan to the student. There is quite a good case for not requir- ing the student to begin to pay back the principal of the loan while he is still in school. Mr. QUID. Is there any change in the number of States that have usury laws that prohibit charging more than 6 percent, or is it the same as it was last year? Mr. SNYDER. I don't believe there is a change. There are a number of States considering changes, including Virginia. I think there are five or six. Mr. BARR. There soon might be quite a few considering a change. The truth-in-lending bill passed by the House puts upon the Federal Government the responsibility for enforcing State usury laws. The FBI would have to ~heck on people charging usurious interest rates, and there might be a few changes here. Mr. QuID. Then the problem resolved here then in time? Mr. BARR. Yes. Mr. QuID. I have no other questions. Mrs. GREEN. Congressman Hathaway. Mr. HATHAWAY. Mr. Barr, I asked a question yesterday in regard to the $35 charge. I know you testifi~d on this last year and so did the leading bankers and I was not convinced last year but maybe you can convince me this year on the $35 charge. Mr. BARR. The $35 is the upper limit. You have a sliding scale from $0 to $35. PAGENO="0085" 79 Mr. HATHAWAY. Yes. Can you tell me in a few minutes what the justification is for it? Mr. BARR. Yes, it is a combination. Mr. HATHAWAY. What cost factors were taken into consideration and what benefit factors were taken into consideration? Mr. BARR. The first cost factor that was taken into consideration was the cost of money. If we were operating a Government bank to- clay, the cost of money to us would be about 5~/8 percent-someplace in that area, 55/s or 5:~4. Then you have the cost of administering the program, of interviewing the child, and getting the loan on the books, and then renewing the loan. Then after the student is graduated, you have the cost of finding out where he is and getting him started on a repayment schedule. These are roughly the costs involved. The benefits involved are, I would suppose, the benefit to the Nation in encouraging some of these people who might be reluctant to make the sacrifices to go ahead and educate their children. Maybe another way of putting it would be that you will take away from them part of the sacrifice they are cur- rently facing. Mr. HATHAWAY. I speak specifically of the benefits to the bank. Mr. BARR. Mr. Hathaway, the whole attempt here is to take that student who comes into the bank, and by throwing behind him the resources of the Federal Government, to put him on a par with General Motors, so he would get roughly the same deal as General Motors would get from the bank. Mr. HATHAWAY. Is that cost computed or estimated or benefits computed? Mr. BARR. What we did was take the prime loan rate which prime customers, with the best credit ratings, pay to borrow from the banks, and try to give the student roughly the same deal they give to General Motors. In other words, General Motors is an easy situation; they don't have much cost of getting a loan on the books and they know they are going to get repaid. When you have millions of students coming in, these two factors are not there. First of all, it is more expensive to get the loan on the books. You don't have to run a credit rating on General Motors, but you would have to run something on the student. You have to interview the parents and go through all of that procedure, and it is costly and takes time, so there is more cost involved. What we are trying to do, as I say, is to move aside these two factors, by throwing a guarantee behind them and giving the student the same credit rating as General Motors; and by giving the sliding scale fee that is adusted to the cost of money, so we obliterate the additional cost involved in the processing of the student. Mr. HATHAWAY. And so it came up to 35 maximum ? Mr. BARR. There are two sides of the computation. One is the cost of money to the institution, which will vary; it will go up and down. The other is the cost of getting the loan on the books, which should be rela- tively fixed, which should not fluctuate too much. So the amount that we would pay mainly would change according to the cost of money to the institution. PAGENO="0086" 80 Mr. HATHAWAY. By the benefits, I mean the benefit to the bank in the long run because these students are getting in the habit of borrowing. Mr. BARR. There is no question about that. Mr. HATHAWAY. The students, like General Motors, are kind of loss leaders, will attract others to the bank and they are going to come back tO the bank and borrow mOney outside of the guarantee. Mr. BARR. That is correct. I think one factor that intrigues the banks, definitely, and it should, is the fact that they are establishing a rela- tionship with a man whose credit rating should be the best in the community at one time or another. Mr. HATHAWAY. But was the bank rate computed with this other factor, to reduce the amount it is really costing the bank in the long run? Mr. BARR. I don't believe it is. Perhaps it should be. Mr. HATHAWAY. I think it should be. Mr. BARR. Perhaps, in other words, you are saying, Mr. Hathaway, that maybe the bank should be prepared to give to the student a slightly better deal than to General Motors because of the other rela- tionship, is that where you are leading? Mr. HATHAWAY. Yes. Mr. B~a~R. Perhaps it should be. Mr. HATHAWAY; Plus the fact that isn~t it true that more and more lending institutions are getting into the act, getting into the guaran- teed loan program? Mr. MOORE. The volume is increasing. Mr. HATHAWAY. So, as a matter of fact, there is no real need to give them this additional inducement; is that right? Mr. BARR. It is my impression, Mr. Hathaway, that more and more of the institutions are getting into the lending program because they have been under the impression, rightly or wrongly, that the Congress is going to at least put them in a little better profit and loss position in this program than they have been in the past. Now, that may Or may not be correct. Is that correct, Mr. Muirhead? Mr. MuImE~i. lit is correct, Mr. Secretary, that we had before the Congress in the last session a proposal to provide some supplement to the bank. The bankers have felt it would get favorable consideration by the Congress, and this anticipation probably has affected the behavior of a number of banks in participating in the program. Mr. HATHAWAY. To what extent have they made this representation to you or others that they anticipate the additional fee andy therefore, they are in the program, otherwise they would drop out? Mr. MU1~HEAD. They have not made such a representation to us, but the American Bankers Association has informed its membership that there is now before the Congress a proposal to provide a supple- ment to the 6-percent interest. They went on to say-all they can say,. obviously-"We hope it will receive favorable consideration by the Congress." Mr. HATHAWAY. But they have no indication that the membership will not continue to go along with the program if it were not in there? Mr. MmRHEAD. There is no measure of that whatever. PAGENO="0087" 81 Mr. QuIE. Will you yield? If.the Congress' action would h'ave.any- thing to do with `the loans made `this year, we would have to make it retroactive and I don't think there is ~ny approach to making it iet- roactive. Do you propose to make it retroactive? Mr. MUIRHEAD. Well,, the proposal that is before the Congress does make it retroactive. Mr. QuTE. No kidding-that is amazing. I mean they made the loan already and we are going to, oh, well. Mr. GIBBONS. Don't worry about it. Mrs. GREEN. Isn't this to carry out a commitment made by Govern- ment people, that this would go into effect as of July 1, 1967? Mr. MUIRHEAD. No commitment has been made, Madam.Chairman.- Quite obviously no commitment could be made. Mrs. GREEN. Weren't statements made to the American Banking Associations that this would be effective July 1, .1967? Mr. MUIRHEAD. Statements were made to the American Bankers Association that there was a legislative proposal before the Congress during the last session that would have made the fee system retro- active to July 1967. Of course, it was a matter of public record that the bill was before the Congress, and that it did include retroactive provision. That has been communicated. Mr. BARR. Mr. Hathaway, may I state that if the Treasury were running this education bank at the moment, we could not begin to loan at 6 percent. I think we, of necessity, would have to get at least 7 or maybe 7.5 if we were to break even without cost to the taxpayer. So if you are asking, "Why the fee ?" maybe that is the example. We can get money as cheaply as anyone in the world, but could not run this bank and break even without loaning .at, I would say, between 7 and 7.5 percent for these loans. Mr. HATHAWAY. You are not exactly in the same position as the private loan bank that is loaning at the longrun picture and getting' business in the future? Mr. BARR. That is right. Mr. GIBBONS. Let's talk about the cost of bank money because I think the picture is all distorted. Most of the bank money is there on demand deposits drawing no interest at all. It does not cost them a nickel, it is mine and yours and everybody else's money. You would have us believe that banks only get money from going out and paying' 4 to 5 percent interest rates, and better than half of the deposits in most commercial banks are there completely interest-free and the' Government has all of their deposits there interest-free and most of the States and cities have the same situation and the cost of money' to banks is just simply not that high. Mr. BARR. Mr. Gibbons, you can look at the cost of money in several ways. As you pointed out, banks have roughly half of their money~ in demand deposits on which they pay no interest. On the other half they are paying interest rates ranging from 4 to 5.5 percent. On cer- tificates of deposits, largely they are paying 5.5 percent and on those under $100,000 they are paying 5. The S. & L.'s have no money on demand deposit. Mr. GIBBONS. We are not just considering S. & L.s' Mr. BARR. No; I am talking about all lenders-including S. & L.'s and credit unions. PAGENO="0088" 82 Mr. GIBBONS. You are talking about the union treasurers? Mr. BARR. We. are talking about 4 to 5 percent in credit unions. Now it is true, you have to work out a factor here for the money the banks have on deposit free of interest, but also for what they are domg for that money, and the cost involved might come out roughly even. Mr. GIBBONS. Most of them come out pretty good? Mr. BARR. They have been. Mr. GIBBONS. They are making a lot of money. Mr. B~im. They are charging pretty high interest rates. Mr. GIBBONS. But I don't jump on them for making money, but I want to say I think you are only distorting the cost-of-money situation for this loan program by not including the demand deposits that are there in great volume. The savings went up last year and American people are saving more than they ever saved before. I think we are going to see these interest rates turn around and come back down if we quit pushing the panic button and saying they ought to be higher. I think you have done a disservice to the whole program of loanable capital by pushing the panic button on what is happening. Savings have never been as high as they were last year despite the fact all of you economists predicted they were not going to be as high. They were never as high as last year. The American people saved more than ever before. Mr. CAREY. Will you yield to me? I want to correct the record that our colleague is not an economist. Mr. BAirn. I am a `banker. That probably makes the record worse. Mr. (i~irny. Will my colleague yield further? My colleague from Florida makes an excellent point that a great amount of interest money rests in demand deposits but when the bank arrives at the cost of doing business and the cost of money it wants to put out on loans does it not examine the whole portfolio and see what it is getting, 8.5 percent in terms of personal loans, and the other dis- counts, and amounts less the interest, and so forth, and amount of deposits and so forth and examine the whole portfolio? I know in New York State the least attractive loans for the bank today are student loans. The size of the loan makes `it a high-cost operation and the return is limited by iaw and the service on it is considerable be- cause it does not get to be paid until the student `graduates, and so forth, so it is the least attractive loan a bank can make and the student is competing with a great many more loan possibilities in the bank. So I am not going to stand here and be a darling to the bankers, but insofar as the bankers are concerned, I think they deserve credit for putting the students in a position to borrow money even though in the least attractive sector. Mr. B~irn. That is an excellent statement `and I think you `put your finger on it. I think the committee has two alternatives. If we want to do something in this area, we are going to have to do it with `a Govern- ment bank or else in the private `sector, so I think it is necessary to tell you what I `can `do with the cost of money. Mr. GAREY. If you do it in this area it is whatever it cost you for the money. Mr. BARR. Yes, there are only two ways to go-either Government or private bank. There is the issue. Maybe I have distorted it, and if PAGENO="0089" 83 I have, I hope the record will be clear enough that I was illustrating the cost of these two routes. Mr. Hathaway's point might argue that maybe we ~houldn't compensate the banks as much as we are planning to do. `That is, of course, open to debate. Mr. HATHAWAY. My final question is, why shouldn't we wait until the participation `does drop off before considering extra amounts of money for educational fee? Mr. BARR. I would hate to kill this program. Mr. HATHAWAY. But if the thing is increasing, you are not killing the program, it seemed to be going along all right without it. Mr. BARR. Perhaps so. Maybe the banking community- Mr. `GIBBONS. Will the gentleman yield? There are advantages other than lending money, the building of good quality grade customers for the future by establishment of a banking connection early, and bankers are smart enough to understand these things. I don't see why we are not smart enough to do a little salesmanship on this, say, we have to increase the interest rate and increase the service fee on guaranteed student loans, depending on the type of program you use, whether Government program or the USAF program. But if it is a Govern- ment program, you `have the full faith and credit `of the Government b~hind you. They can dump `anyone they don't want and at no expense to them. The `borrower i's paying the insurance, a quarter of 1 percent. I would think that from the banker's point of view it would `be relatively `an attractive matter and I don't think it should be so attractive; they would put all of their money in this sort of thing `because the banks were not designed just to support students `but it isa competitive matter and I think the interest rate we have is reasonable. Mrs. GREEN. I think the time for the gentleman from Maine has expired. - `Congressman Erlenborn. Mr. ERLENBORN. No questions~ Mrs. GREEN. `Congressman Carey. Mr. CAREY. Thank you, Madam Chairman. Mr. `Secretary, I gather the thing you want to do is free up `as much money as possible in the banks for the support of education? Mr. BARR. Correct. Mr. `CAREY. Therefore, part of your job is to make it attractive ~or the banks to commit as much of their reserve as possible for the pur- poses of the `student `loan? Mr. BARR. That is correct. Mr. `CAREY. Isn't it true, `again, in a prot'otype, one that has done the most lending, savings and loans `in New York, just about reached the limit o'f mo'ney they can make available for student loans? Mr. BARR. I've `heard that is corredt. Mr. CAREY. Now, isn't this because under your regulation or under the law, I don't know which, I would like to find out. Mr. BARR. Under the law. Mr. `CAREY. Under the regulation or law, the loans to students are called nonconforming lo'ans? Mr. BARR. That is. correct; nonconforming or nonqualifying loans. Mr. CAREY. Loans for housing purchase, real estate are conforming loans? PAGENO="0090" 84 Mr. BAm~. That is correct. Mr. CAREY. S~ why do you give a better preference for a loan to pur- ~chase a house than a loan to a student to get his education? Why is one ~priced at a more attractive rate than the other as far as S. & L's? Mr. BARR. This was a provision written into the law in 1962 when we first really began seriously to tax the S. & L.'s. It is one that Treasury ~has under study at the moment with a recommendation to clean it up. In 1962, when we were looking at the. S. & L.'s situation, even the corn- mercial banks had little interest in student loans, as you will remember. This is relatively a new development in the whole private financial area. That is why we didn't consider it at that time. 1 think we should change it, and I have so stated to the loan institutions. Mr. CAREY. I am glad you say it because I hope, Madam Chair- inan, some form of resolution can be made in the committee that this is a discriminatory provision. Mr. BARR. I think it would be useful if you did so. ~ir. OAREY. There is no reason why the student loan should not get the same basis in estimate of attractiveness to S. & L.'s as a loan to buy a home? Mr. BARE. Correct. Mr. CAREY. This would free up, I think, sizeable amounts of money :at a time when actually students are being turned away now because they have reached~ the limit of their lending potential, so I think it is something we can do in government without spending any money and free up money that the banks I think would be glad to make available to students. Mr. BARR. Treasury would be glad to support that recommendation. We are presently considering legislative proposals concerning the ta.x treatment of mutual thrift institutions generally, including prob- lems arising, as this one does, from the definition of an S. & L. under existing law. Those proposals would remove any impediments that pre- sently exist and permit S. & L.'s to participate fully in guaranteed stu- dent loan programs. Mr. CAREY. Now the purpose of a student loan program by and large is to finance education for the student and for the institution, to enable the institution to expand or at least maintain its enrollment. This is not directed to Secretary Barr, but anyone at the table, and do we have a breakdown available under educational opportunity grants, work study, and student loans to free tuition institutions as compared with ~tuition institutions? Mr. HowE. Mr. Carey, these work study and opportunity grants, of course, are based directly on the cost of education. Therefore, the tui- tion charges of institutions are reflected in the amounts given. Maybe Mr. Moore can give you a definite answer. Mr. MOORE. We do have that. Mr. CAREY. It is true, though, that free tuition institutions can have their students eligible, or to put it differently, students in free tuition institutions are eligible for opportunity grants, work study funds, and student loans? Mr. MOORE. Yes. Mr. CAREY. And none of this money goes to the institution? Mr. MOORE. No, it goes against the room and board charges, expense, and other costs. Mr. CAREY. To get room and board, no, I am talking about larger universities where there is no room and board. PAGENO="0091" 85 Mr. HowE. There is still cost to a student of making his education `possible. Mr. CAREY. But it is really student assistance, not for education? Mr. HOWE. It is to make education possible, and student assistance is a partof it. Mr. CAREY. But it does not go to the institution, that is the point? Mr. HOWE. In the institutions that have a charge of this kind, the programs are adjusted by financial aid officers of the institutions to meet student needs, depending on the total cost of education, including subsistence. Mr. CAREY. Can we get a breakdown of how much money went to nontuition charging institutions, free institutions, and money to in- stitutions charging tuition because I want to see how much money actually went into education and how much into student assistance so they can become educated, because I think there is a difference of whether we are building educational facilities or not? Mr. HowE. We can supply it, Mr. Carey. Our whole concept of the college student aid program, which is what we are talking about, is that it is directed toward the cost of education in which we include tuition fees, room and board-what in other words it cost the student to get an education. We can make a breakdown and will do it. Mr. CAREY. In the breakdown, will' you show the number of bor- rowers or eligible recipients in each class? Mr. HowE. Yes. (The information follows:) Question. How much money did public and private institutions of higher edu- cation award to students in these Federal financial aid programs during FY 1067? Answer. Approximately 808,000 awards totaling more than $388,000,000 were made to some 610,000 students across 3 SFA programs (NDEA, CW-SP, BOG.) Approximately 330,000 loans totaling nearly $248,500,000 were insured by the Federal Government. By public and private, the figures are: MONEY GOING TO FREE INSTITUTIONS AND THOSE CHARGING TUITION Public institutions Private institutions Iota I institutions SFA programs - (college-based only) Amount Number (in Students of millions) institu- tions Amount Number (in Students of millions) institu- tions Amount (in millions) ` Number Students of institu- tions NLSLP12 $103.7 187,000 801 $115.3 208,000 890 CWSP 91. 8 217, 500 770 30. 6 72, 500 770 EOGP 4 24. 5 69, 900 566 22. 0 53, 100 817 Duplicated total 220.0 474, 400 167.9 333, 600 Unduplicated total $219.0 122. 4 46. 5 395,000 1,691 290, 000 1, 540 123, 000 1,383, 388. 0 388.0 808, 000 610,000 1 Federal share no more than 8/9. 2 Includes some 400 students and $122,000 funded in NDSLP by EOG-transferred dollars. `~ Federal share no more than 90 percent. All Federal money. However, institutions must provide at least an amount equal to the EOG for each student. Public institutions Private institituons Total institutions Amount' Number Amount Number Amount Number loaned of loaned of loaned of (in millions) loans (in millions) loans (in millions) loans Guaranteed loans pro- grams (HEA and VocEd) $149.1 198,000 $99.4 132,000 $248.5 330,000 PAGENO="0092" 86 Mr. CAREY. Mr. Secretary, I gather from the speech made by the chairman of the Ways and Means Committee that the matter of tax credit is related only to the whooping crane family right now? Mr. BARR. Not even that good, I am afraid. Mr. CARi~r. This does not mean that the constituencies have forgot- ten about it? Mr. BARR. No. Mr. CAREY. Especially those paying tuition? Mr. BARR. No. Mr. CARET. Is it not true. that the graduating student today who has a student loan when he meets the brainpower of a representative of Dow Chemical, or I wish I could choose a better one, I ha.ppen to like Dow Chemical. Mr. BARR. CIA. Mr. CAREY. Let's take "CIA." What would you do without styrene? But when they meet this man who is offering blandishments and inducements for them to come aboard in one of their programs, especially the technical quality stu- dent I am told arnoiig the inducements are the offer, in the further education of the student, that the corporation will assume the student loan obligation, and somehow arrange for admission of this either through indirect payments to the student or otherwise, are you aware of this? Mr. BARR. No; I am not, but here again I am not an expert. Mr. CAREY. When they pay $400,000 to~ a football player, it is not. unthinkable, is it? Mr. BARR. No. Mr. CAREY. This becomes, then, a legitimate business deduction for the corporation? Mr. BARR. Yes. Mr. CAREY. So the corporation will get tax credit forgiveness but the parent will not? Mr. BARR. That is correct. Mr. CAREY. Will you make sure the next time we talk it over with Mr. Mills we make it clear? Mr. BARR. Yes. Mr. CAREY. This is the head refugee of the corporation getting this,. but the parents do not? Mr. BARR. On the other hand, if we got any break for education in the tax laws, please don't take it out; I don't care if it is corporations or anything else. My objective is to get as much money in this area as we can. Mr. CAREY. Is it the policy now and the philosophy of the adminis- tration that we should sort of declare that we have reached a high water mark as far as Federal participation in financing educatioii for stu- dents that are concerned through the loan method and from here on in we are going to expand through the private sector and that the de- velopment will be to more or less put the Government out of the lend- ing business on a gradual phase-out basis? Mr. BARR. I don't think that is it at all, Mr. Carey. I think there are two problems and I think they are very distinct. I don't think you can ever get the Federal Government out of the problem of making loans PAGENO="0093" 87 directly to a lot of the children in the ghettos who are never going to get to a financial institution, not even a credit union. I don't think we can ever drop that responsibility. I think, on the contrary, the Federal effort will have to be expanded and I would hope so. In the very low income groups that really have been untouched, I would hope and expect that the Federal effort will be expanded in these areas. What we are talking about, Mr. Carey, is moving on up the line to the lower income and middle income groups, and I have stated to the chairman that I think as you look at the priorities it is going to be difficult, as we meet our obligations to people who have to be helped and have no way of helping themselves to give much help to lower income or middle income groups unless we do it in the private sector. Mr. `CAREY. Are you sure the people of Harlem would not rather `do business with the Freedom National `Bank than a bureaucrat? Mr. BARR. I put it to the `savings banks and some of them might want to, and I hope in time this would be the `development. But it seems, Mr. Carey, and I am no expert in poverty or ghettos or any- thing else, but it seems a lot of the people simply don't know how to go to a bank. :They are frightened ~and won't `approach them, and it is going to be literally a job of dragging them in. `I think it `is going to be a Federal `or `Government effort. `It' is not one I believe we can' turn over to the private sector at this point. At some point in time perhaps. ` ` ` `M'r. CAREY. The `Commissioner could probably make a comment. Mr. `HOWE. I waut to say, Mr. `Carey,' a major purpose of the `new legislation before you is to expand, over `the next few years, our efforts in educational `opportunity grants `and work study grants, primarily for the `ben~fit"Of the very low income groups, and to `build `a :com.pothte package of ~tudent aid' which represents diredt Federal spending for those `groups and loan opportunities for `somewhat higher income group's. ` ` ` ` ` ` ` Mr. `CAREY. Again, `but in a major city, in fact I speculate it is true in all of the cities, to make it possible to `have a student `attend on `a financial basis, you know very well large universities are filled to the doors as far as `facilities `are concerned `and as a result they `are making seats `available on the basis of most qualified `and n~t on a `low income group `basis and `that is where the question is diredted as to how much money is going to financial institutions to build institutions and how much on student assistance where you place a burden on the institution to allow the students to enter but you don't help the institutions themselves. You `are putting them in a bind. Mr. HOWE. Lot me say first of all I have to agree with you in the implication there is a maldistribution of higher education facilities in `the metropolitan areas. We need to address ourselves to thi's. Y'ou have identified a problem we should have an answer `for-not `right now, but I hope we have `an answer very shortly. `Second, we "have a'd'dressed ourselves `in this `legislation `before you, not yet formally testified on, to the problems of low-income students in the `undergraduate college. We are attempting to start a program to pay undergraduate colleges to make `ti~ese students successful by pro- PAGENO="0094" 88 viding for disadvantaged students, while in college, special counseling services. We also hope to encourage colleges to take in a larger pro- portion of such students in the facilities they have. I think basically you and I agree here, but we have not met and have no major programs to meet the first need you identified. Mr. CAiu~r. There is no question that very competent student a-id counsel is on the campuses of all major universities and colleges, all institutions of higher learning, but I am afraid this is not where the student needs the information, he imeds it in the secondary school level and in the secondary schools, they have available counseling but on only a 1 to 600 or? to 1,000 ratio at the time when the student deter- mined whether or not he is going to college is in the junior year and senior year in the secondary school. Thanks to wonderful advertising in the community now in Christ- mas Clubs and Hanukkah Clubs and all kinds of clubs and any way to g~t deposits of money into the bank, do you suppose if we give the banks this $35 or any portion thereof, nonretroactive, we ca-n induce them to enter into some kind of joint campaign with the Treasury such as you do in Liberty and War Bonds, and so forth, to get some infor- mation into the hands of potential college enrollment students early enough in their secondary school career so they know how to finance education? Mr. BARE. I don't see why it wouldn't be possible. Mr. HoWE. Mr. Carey, let me make a brief comment on your obser- vation. I think we would get cooperation from the banks in mounting- a major campaign of this kind. I call your attention in addition to the talent search program of the Office of Education, for which we have doubled the budget for fiscal year 1969, we believe it is an effective program and this is why we have gotten backing fOr- the Government. budget. I think both of these sources can be used. Mr. CAREY. I wifi close on this. I believe that adequate grounds are present for my opinion, that among the low-middle-income and mid-- dle-income families there is an antipathy to borrowing and they don't want to go into debt any more than they are and fOr- that reason in many cases they will defer college opportunities and the student will go out and take a job or something in the hope he can get capital to pay tuition. I think this is unfortunate; I think that the student loan program is an attractive one, that anyone who enters an institution of higher- education should consider borrowing as an appropriate method of financing education, but I think we have to do somethingto overcome the reluctance to go into debt because, as far as I am concerned, it is- the best possible way to go into debt if you are goIng into- debt Mr. HowE. I concur. Mrs. GREEN. Congressman Burton. Mr. BURTON. I don't think much of the continuatiOn- of this 121,6~ percent limitation on the State. Could someone develop for me the rationale behind that? Mr. MOORE. Yes, Mr. Burton. That limitation has been- substituted~ for the present allotment formula in the law. This- was taken from the Higher Education Facilities Act of 1963, and it isin-fact a sort of an upper limit. If my memory serves me correctly-and. Peter, you PAGENO="0095" 89 can check me on this-this is sort of the New York portion; isn't that. where the figure came from originally in the facilities program? Mr. MUIRHEAD. Yes; 12˝ percent, as you know,, is a governor to~ prevent too large an amount of money flowing to. one State. By and large., I think the rationale for reaching the 121/2. percent was that in most Federal programs that are based upon some njeasure of popu-~ lation-be it the number of high-school graduates, the elementary-~ secondary school enrollment, or college enrollment-about 10 percent of' the money, or a' little above that, tends to flow to. the highest-. population State. Mr. BURTON. This is based on the 1963 standard? Mr. MUIRHEAD. Yes. Mr. BURTON. Well, then, would you have any objection that within the framework of this limitation, that we permit an upgrading, using- that 1963 ratio? You are seeking long-term authorization, and my owu~ State may well have more than 12˝ percent of the college students. toward the end of this program, and I wouldn't think you would be suggesting that a student in California would be precluded from the same consideration as students elsewhere. Mr. MUIRHEAD. No, Mr. Congressman; the 12%-percent figure is; there bec.ause it has been a kind of established governor. You are quite right that it probably should be reexamined. Mr. BURTON. The other question I have is, the $15,000 family amount just simply does not mean the same thing in some States as it does. in others. Would you object to some kind of an increment factor for those States that have a cost of living that is distinguishably greater than `the national average; or, putting it somewhat differently, many workers in our city receive, including fringe benefits,. jii.st something around the Order of $6 an hour and cannot be considered to be in the same kind of income limitation standards operative in. Mississippi or~ some of the other States; that $15,000 figure means a good deal more to families in some parts of the country than they certainly do. in our part of the country. Mr. GIBBONS. Will you yield on that? I think you. are off' on a dan-. gerous ground; grits cost the same out in Los Angeles as it does in. Mississippi, and 10 pounds of potatoes cost the same thing, give or take. a couple of pennies; and I think the people in CalifOrnia ought to be very thankful they have as high an income as they have without try- ingto distort this thing further. Mr. BURTON. I am trying to ascertain from the witness before us his views, before we resolve this among ourselves.. Mr. HOWE. If I could comment on this, I think I would say that we are going to consider more precise measures than the $15,000 for estab- lishing need, and this is why it is put in there. I think I prefer to look at the kind of measures that were bemg suggested by Mr. Reid earlier in this discussion this morning than trying to pull into, this legislation. the variable business of cost of living in different parts of the country.. It seems to me that it is possible to establish need in a more precise fashion than the way it is now done by financial-aid offi~ers in institu- tions. There has been a customary practice, and there is a well-trained' expertise to do this sort of thing, but I seriously' question whether the. direction you are suggesting would be the constructive one.. PAGENO="0096" 90 Mr. BURTON. There isn't a ceiling on the ever-increasing flow of revenue from our State but we have been troubled of late with a per- sistent pattern to limit the level of California's participation on the sharing side. We ran into it in the Social Security Act, where there was a good deal of Federal savings on welfare expenditures in the country; a disproportionate share of it were savings at California and New York's expense. We think we are part of the same grand Union and pay the taxes out without ceiling, and we think standards ought to apply to permit the benefits to flow without arbitrary ceilings with reference to State and local subdivisions. Now, dealing with limitations, on page 7, point 7, you talk about $125,000 maximum to a single institution. I assume I am safe in con- cluding that in the instance of the University of California, which has several campuses, each campus would be treated as a separate institu- tion; is that correct~ Mr. HowE. Correct. Mr. BURTON. We have made an effort in our State to bring together under one university tent that which, if fragmented, would result in several institutions; and how, if at all, is that factor going to, be weighed in using the $125,000 limit? Mr. MOORE. Mr. Burton, which campus? Are you referring to the college system at Irvine or what? Mr. BURTON. I am merely stating, I want to ascertain from you what recognition you are going to give to those States that rationalize their higher education services or are we going to be confronted with a policy that will induce, in very small terms, a fragmentation of services so they are not confronted with this maxinnim-for-institutioń ceiling? Mr. HowE. You are really asking what the definition of "institu- tion" is? Mr. BURTON. Yes. Mr. Moom~. We have had pretty well worked out procedures since NDEA for establishing what is an "institution." Generally we look at a single institution as well as systems, a group of State universities in any one of the `State. The State University of New York actually is looked at as 45 separate institutions within a complex. Fra~nldy, this maximum here is established in accordance with, as we look at matters now, what the "Big 10" schools would require to run these programs. Mr. BURTON. Let us say, for example, we `have a college of architec- ture and dentistry and college of law and college of performing arts; even though they are in the same general physical setting, under one blanket University of Southern California or University of Califor- nia, would I be correct in assuming those are separate `institutions? It is not this massive complex of 30,000 to 40,000 students that will be treated the same as an 800-student college somewhere else? Mr. Mooi~. Well, to be specific, the University of Southern Califor- nia is treated as a single institution, and University of California has 11 separate institutions, and the State college system in California has either 17 or 18 separate institutions. Mr. BURTON. Are you telling me, if the educational people in our State, in order to rationalize the educational services, in order to reduce overhead, situate a variety of discip'lmes, educational opportunities in PAGENO="0097" 91 one place, that that `will `be dealt with as one institution, whereas if they fragmented it and had 10 or 15 blocks' separation one from the other or a 40-block or' 3-mile one, even with compounded administra- tive `problems, they would `be separate institutions? Mr. Moo~. This ultimately depends on how the institution, as you describe `it, is defined under `California law, as to whether or not it is a single university or it is a universitysystem. ``Mr. BTJRTON. in other' words, if our State enacted legislation saying that "for purposes of the Higher Education Act of 1968 that we will, for th'is purpose, define `institution' in' the following way," that `would bring to the `benefit of the students in these institutions, and `the institu- tion itself, the same. benefits as their counterparts with t'he same or fewer number of students or with the same or lesser needs elsewhere in the country?~ ` ` ` Mr. MUIRHEAD. Mr. `Burton, this,of course, has been a problem ever' since these programs started, because of the wide variety of umversi'ty systems of administration. In arriving at `a conclusion, just as Mr. Moore `indicated a moment ago, one `of the criteria we use is whether or not the instituti'on is an `administrative entity. Does the institution have a president, does it usually make its own decisions, does it have `a sepa- rate `business `office? `With the `advice of our counsel, `we have come up with a variety `of different solutions to it. Basically, it arrives at something like this: If an institution `stands on, its own and makes its `own `administrative decisions and `has its own budget, then that is a `single institution. Mr. BURTON. As I understand y'ou, unless we alter in some w'ay the 30,000 students th'at you see at Berkeley or 40,000, the 30,000 at UCLA are going to have to be subject to the same ceiling as the' 600- or 700- student bodies in other parts of the country? Mr. Mooit~. No; I think perhaps you are confusing, Mr. Burton, two things. The $125,000 limit applies only to t'he administrative `set-aside which may `be used by the university for `operating the student-aid program. There is actually no limit in theory on the amount of money which could be put into a single institution even if there were 500,000 students at a `single univers'ity. Mr. BURTON. With minimums you `will accept a notion it should be on some kind of unit basis as a measurement of performance rather than `arbitrary ceiling? Mr. HowE. Just for the administrative~ purpose. Let me say `here, I think the organizational imagination of the higher education people in California can probably confront us with some new situations here, as you are suggesting. As we confront new formulations in higher education organization, we are go'ing to have to make coinmonsense out of a provision like this as we do admin- istratively. Mr. BURTON. Let me foreclose this because I have used more time than I have. I am merely going to' state that the entire HEW De- partment is stuck with this ceiling syndrome and they are going to find this administration or any succeeding administration to the ex- tent they try to impose this on our State, they are going to find we have ways of expressing ourselves even though some of us may not' be very happy with the outcome. 92-371-68-pt. 1-7 PAGENO="0098" 92 Mr. HowE. Let me say also our purpose in arranging for this ad- ministrative set-aside is to provide adequate funds for the administra- tive purposes of this piece of legislation. Wherever it becomes clear this does not reach that purpose, we want to try to find ways to change it so it will. Mrs. Gn~EN. I think the committee might reexamine the 12˝-per- cent limit and see if it should be extended to the Defense Department, so that no one State could get more than 12i/2 percent of the Gov- ernment contracts. Mr. BURTON. You might limit the Defense expenditures to 12˝ percent. of the total budget.. Mrs. GREEN. Now, Mr. Secretary, the student financial officer at Yale University has asked whether a university should be made eligible as a lending institution under the guaranteed student loan program. He points out that Yale University has their own loan program and that if they became eligible under the GSLP it would, of course, permit the payment of the subsidy. Mr. BARR. I see no objection to their qualifying as a lending insti- tution but I would defer on this; I see no financial objection. Mr. HowE. I agree with that. I say at the same time there are complexities in this because of the nature of the student body at this institution. Many institutions have the same problem; in fact they desire it this way, having a student body coming from many States. This would place the State of Connecticut in the position of in- curring expenses for the State of Connecticut for subsidization of student.s from other States. So the problem is here, but the eligibility aspects of this I quite agree with. Indeed, I believe that the law makes some provision of this kind; is this correct? Mr. MUIRHEAD. Yes, the law does permit this now, a university may be a leiicler if it is eligible, but as the Commissioner points out, the State guarantee agencies impose restrictions. They may say: "We will provide this guarantee for our own residents. They may attend college where they want to, but it is for only our own young people." Now, Yale University, as an example, might be identified by the Connecticut Guarantee Agency as an eligible lender. The agency could then say: "but only for Connecticut residents attending Yale." Mrs. GREEN. But the same restriction would be on the other financial lending institutions? Mr. MUIRHEAD. Yes. Mrs. GREEN. One other question regarding maintenance effort. In the college work-study program could we permit maintaining the total level of all forms of student assistance and not limiting it to employ- ment assistai~ce only. Mr. MOORE. We have recommended in 111.11. 15067 that the mainte- nance of effort be combined into a single requirement applicable to the institution's total aid program. Mrs. GREEN. Mr. Commissioner, we have a few minutes remaining and you have one part of your testimony you have not given which is related to student assistance. This is a program of services for disad- vantaged students, would it meet with your approval to turn to that.? It seems to me it has some relationship to the matters we have been discussmg. PAGENO="0099" 93 Mr. BARR. Madam Chairman, could I be excused unless you have other questions? Mrs. GREEN. Yes, and thank you very much. Mr. BARR. Thank you, and 1 am at your service at any time. Mrs. GREEN. May we have the written answers we asked for? Mr. BARR. Yes. Mr. QUIR. First, I have .one question here of Commissioner Howe, and you stated last year you wanted to wait until the completion of the study on forgiveness in student loans for those that went into teach- ing before you actually went to this, and has the study been completed? Mr. HOWE. It has, but it does not give us what you describe as really definitive information in this area. We have begun to wonder whether this information is possible to get. The situation is tha~t the financial aid officers of higher education in- stitutions believe that the forgiveness feature does not have a signifi- cant effect in motivating people to undertake the particular kinds of situations that the forgiveness feature was designed to bring about. Therefore, there is some indication from the study that financial aid officers at least don't regard this as significant in the legislation. Is this approximately correct, Mr. Muirhead? Mr. MUIRHEAD. That is right. Mr. QUIE. May we see the study? Mr. HOWE. It is in print and will be available shortly. Mr. QUIE. The second question I have is on the educational op- portunity grants. Have you made a study now to determine to what extent they actually have been beneficial in bringing people into higher education who otherwise wouldn't have been? I know a study was to be made, but I don't know if it is completed. Mr. MUIRHEAD. It is not complete, but on the roster of evaluation studies we propose to carry out. As I suggested yesterday, I would be glad to place into the record the list of studies that we are hoping to support in evaluating the various higher education programs; one of them, of course, deals with the effectiveness of the opportunity grants program. Mr. QUIE. When do you expect to complete such a study? Mr. MUIrmEAD. I think such a study would probably not be com- pleted before the end of this calendar year. Mr. QUIE. That is all. Mrs. GREEN. One other question along that line: Have you made any study on the amount of money that would be available to stu- dents under NDEA if we would liberalize it a bit and drop the interest subsidy after graduation? Mr. MUIRHEAD. We don't have precise information on this point. We do have information, as Mr. Moore indicated a short time ago, that the total requests from the institutions for NDEA loan funds are in excess of the total amount available. I don't know the answer, Mrs. Green, as to what would happen if we were to liberalize it some more. I assume you mean the possibility of easing up on the means test in the NDEA. I also don't know what the effect would be of withdrawing the subsidy after, graduation. I think that the two changes together might have a net effect of increasing the demand, but I don't know the magnitude. PAGENO="0100" 94 Mrs. GREEN. Would you give us the figures on how much money would be available to liberalize NDEA if we dropped all interest sub- sidies after the student graduated from college? Mr. Muiimr~&i~. Yes, we wifi be glad to provide that. (The requested information follows:) If the 3 percent interest subsidy provisions were canceled for all new loans originated after July 1, 1968, savings over the next four fiscal years are estimated as follows: Fiscal year 1969 None Fiscal year 1970___~ None Fiscal year 1971 $13, 410,000 Fiscal year 1972 - 27,889,000 The vast majority of loans made from November 1965 to the present are held by students still in school, and the subsidy already committed could not be canceled retroactively. Therefore, savings on future loans would be realized only as students moved out of college into the repayment period. Savings would in- crease sharply after 1973 as more of the 1965-68 loans were paid out. Mrs. GREEN. Is it true in your first recommendation to the Congress that you did not recommend an interest subsidy after graduation? Mr. MUIRHEAD. You recall that we had discussions, of course, in the last session of Congress on the advisability of dropping the subsidy for the guaranteed loan program. The rationale was that for the most part, these young people come from families that are not as much in need of the money as the NDEA families; and that the family prob- ably can be expected to help the student repay the loan. But to my recollection, I don't think we appeared before you in support of drop- ping the subsidy after graduation in the NDEA loan program. Mrs. GREEN. When it comes to the time, maybe we can defer these to tomorrow. Mr. HoWE. Fine, Madam Chairman. Let me report to you we did research a matter yesterday about the award patterns between men and women. Mrs. GREEN. In relation to income? Mr. Howil. No; in relation to awards of educational opportunity grants and national student loans and work-study, and it is a very even picture really. It turns out that there are somewhat fewer awards to women, not dramatically fewer, but when you consider the propor- tion of women in college they do a little better than men. One of the interesting features to me was that when you break it down, there are more women getting work-study grants than men and I am `told that the reason for that is that there are more positions in the college itself for women than men. So on the whole, the picture turned out to be one favoring the ladies. Mrs. GREEN. One other question then: What percentage of the NDEA loans go tO men and women? Mr. HOWE. The NDEA loans, almost 50-50. Mrs. GREEN. What `about guaranteed student loans; isn't it true that it falls way, way down for women? The last figures I had were 52 percent of the NDEA went to women and 48 to men, but under the guaranteed program, it was about 42. Mr. HowE. We have not got data on the guaranteed loans, just on the college-sponsored programs. PAGENO="0101" o~ C, 0 a a, a, a, a, a, a, a,a, a,a,~ ~ (3~ (.)W(33C.3 (3) N) N) N) N) N) N) N) N) w cJ~ -4 CD (D~C~ ~2Oo(7~~ C, -4 r~. ~,((,, ~ ::::::::::E:::::::: C,, o ~ I (```(`II -4 H:: ::H::::H:::::H : -4 1 0 ~ : : : ::: :: : -o S ~ ~ a, N) r~ - N) a, - a, oo-a'-~a' 0) a, N)~ o~ N) N) ~-~J 0) r.3 ~C - - 2 o 0' 00 ~ ~ .~ (7(7 ci C, 00300(3~) ~ CJ~ `°: 0)a'00a'N)a'000 a,-~-J -~ CD )-~ - N) - - - -`00 (.3 00 ~ N) ~ C, C, 9 C) ------5-- -5--.--- 5 5 (7 I a, N) a, N) ~ 00 N) -~-. ()C, ~ ~ : ~ -~ N) (33a,Ji~N)N)(7)~N)C,N)C,0OC,~ N)a'WN) N)a,~~_C,~33C(7~; ~> I :::: : - IN I -i ~ ~ ~ 0000~N)~ a,(3N)~a'~H ~ ~ 0 I I C) ~O a, 0~ a, a, 0) ~ a, a, (00)0 -~ WON) ~C.3 00 a, 000 C, c~ 000 a,0-.3N)N)SS (3)0) ~ C) ~ N) H ~ -Ja,~-o, N) (7 C, : C)a'C)N)C)C)a'a'~N)C,a,0N)C,0~C,C,a,(0C)a,N).a,C,C,SC,C, ~ 2 -C - ..~, 000 -. ~.; > I I (3) a, N) (O0000)~00 -.3 -~ -~`-~-` oo N) - ---`(3) ~ r~ 0~-.~-.a,-- ~ a, a, - ~ (C) C) )0'.3 N)(0 (0 ~ C) ON) N) C, ~ ((1 ~ ~C)J ~ - - 00) (Y~ 0) - ~ ~J (3) C)33)~ -~ ~ `sIC' (0 OC' (3)000 sS-'00 (0 I'll (0 - -- (I) (3)1 I I O-Jf3)03a,'sJa,C,a,(0(000~oo'sI.J003sC,~4o~sN)-Q)sJ0)ss.~s OC)a,a~OC, OC,~ C)-~-'-'I-- ~00C,C,N)(0 PAGENO="0102" 96 The Civil Rights Act does not apply to any guarantee, does it, to a federally guaranteed loan program? Mr. MOORE. Under the guaranteeing agency. Mr. MUIRHEAD. Under the guaranteed loan program, the guarantee- ing agency does file with us the civil rights compliance form; however, the bankers, the lenders, are not required to file such a compliance form. Mrs. GREEN. They do not come under title 6? Mr. MUIRHEAD. That is right. I am speaking of the compliance form under title 6, Madam Chairman. Mrs. GREEN. I think you raised a good point, Mr. Quie. In the hearings in February of 1965, some charts were presented on low income and aptitude. Could they be brought up to date? Mr. Mooi~. In fact I may have them with me for submission in the record this morning; they are based on last year's data on the college programs, income levels, and by programs and so on. Mrs. GREEN. All right, then, the 1neeting will adjourn until 10 o'clock tomorrow morning, and we will then continue with Com- missioner Howe. At 1 o'clock tomorrow afternoon I invite all of the members of the subcommittee on both sides of the aisle to join in an informal discussion of the current draft policy and how it affects graduate education. That is at 1 o'clock and it will be an executive session. (Whereupon, at 12:10 p.m., the subcommittee recessed, to reconvene at 10 a.m., Thursday, February 8, 1968.) PAGENO="0103" HIGHER EDUCATION AMENDMENTS OF 1968 THURSDAY, FEBRUARY 8, 1968 HOUSE or REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR, Wa~shington, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 2261, Rayburn House Office Building, Hon. Edith Green (chairman of the subcommittee) presiding. Present: Representatives Green, Gibbons, Hathaway, Quie, and Erlenborn. Mrs. GREEN. Mr. Commissioner. STATEMENT OP HON. HAROLD HOWE, II, U.S. COMMISSIONER OP EDUOATION; ACCOMPANIED BY PETER P. MUIRHEAD, ASSOCIATE COMMISSIONER FOR HIGHER EDUCATION; ALBERT L. ALFORD, ASSISTANT COMMISSIONER FOR LEGISLATION; JAMES W. MOORE, DIRECTOR, DIVISION OP STUDENT FINANCIAL AID; HUGH M. SAT- TERLEE, CHILI?, EDUCATIONAL TALENT SECTION; AND RALPH K. HUITT, ASSISTANT SECRETARY FOR LEGISLATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE Mr. HOWE. Thank you, Madam Chairman. What I would like to do is to select from the testimony and not read it all. I think I will select by reading those portions which describe the details of the new programs which we are suggesting and, if you are willing, enter the entire testimony in the record. Mrs. GREEN. The entire statement will be made a part of the record immediately following your comments. Mr. HOWE. Fine. In the beginning, I would like to say in regard to our conversation of the past 2 days that whereas I think we have examined many, in fact almost all, of the details of the major student aid proposals that we bring before you, somehow in examining the details we may not have caught the flavor of the entire proposal itself. This is the old business of looking at the trees and missing the forest. It is necessary to look at the trees in this case, but I would not want to miss the forest. I would call to your attention that when this entire program of student aid is put together it does represent a much better arrange- ment for young people who need assistance in going on to higher edu- cation, for the convenience of higher education institutions in helping those young people, and for the plans of the Federal Government in (97) PAGENO="0104" 98 making larger amounts of money available over the years a;head for those instatutions and young people. So that it seems to me in this broad student aid proposal we `have a launchmg platform in regard to Student aid which will place major focus on opportunity grants and work study supported by loan pro- grams, in a mix that will be convenient both for staidents and for institutions. I think this is a significant proposal in its administrative `aspects as well as in its potentialities for funding in~'the .fi~iture. Mrs. GREEN. Did you have time to get figures ciii how much money would `be available if we dropped the interest subsidy after graduation? Mr. HOWE. I `don't believe we have those yet, have we? Mr. MOORE. We are working on them, Mrs. Green. This requires assessment' of'wh~re we have been and `where we are going. Mr. HowE. Thank you, Maclam Chairman. I will comment first then on new legislation we are suggesting, on a new program of grants to graduate schools, a program Which recog- nizes the growing enrollment of graduate schools, winch recognizes the need for `improved quality in graduate education, and w~hich recog- nizes t;he need for support from the Federal Government for program improvement in a significant number of our graduate schoolS. The proposed program for the strengthening of graduate `education is designed to meet these needs. We envisage a program of institutional grants. For the individual gra.dua:te school, grants would `be graduaily increased for several years, following by diminishing Federal support, during which time the `institution would take up the slack through the use of its own resources. Grants under this progra'm would be available for. `the following purposes (1) The establishment, expansion, or improvement of courses of study leading to `the Ph. D. or equivalent degree;' (2) The addition of faculty, or t.he upgrading of existing faculty; (3) The acquisition of curriculum or research materials appropriate to the fulfillment of the `activities in `clause (1) above; (4) The establishment or improvement of administrative procedures or services in doctoral programs either within the institution or iii cooperative arrangements with other institutions at the doctoral level. Grants would not be' available ,for the construction of buildings or traineeship support of students; and no portion of the gra.nts could be used for the support of sectarian religious training or purposes. As' envisaged, the plan does not `duplicate other Federal programs designed `to support advanced level training. Other related Federal programs are designed either to adva.nce substantive research, or to support mclividual students The present program, however, is aimed at mstitutional expansion and improvement, and seeks in this achievement the best way of en- larging and improving advanced educational opportunity of high quality. . . The universe of institutions of primary eligibility for this piogram comprises about 100 Ineligible would be those top quality institutions generally conceded to be among the leaders in American graduate and professional education PAGENO="0105" 99 Institutions ranking at the lowest end of the scale in doctorate pro- duction would be accorded a lower priority in eligibility, because of the limited contribution they could make to a significant expansion of `highly trained individuals. This leaves 95 to 100 middle-range in- stitutions which would be accorded top priority `for grants. The precise number which will receive grants cannot be predicted exactly because each applicant would have to justify its request by the merit of its individual proposal, its past record, and the realism and quality of its plans for improvement. We would plan to administer these grants in a fashion to give enough funds to each institution to bring the leverage for a change in the quality of its program. As in other OE programs, panels of experts will appraise the merits of all applications submitted, within the broad policy directives determined by the advisory council on graduate education. The second program for graduate education which we are sug- o~esting is the increase in cost of education allowances for graduate ~ellowships. This really is a very simple program to move from $2,500' level for cost of education allowance at the present time to the $3,500 level which we would place in `being for the graduate fellowships which we administer in fiscal year 1969. We would phase this program in, Madam Chairman, by allowing the $3,500 amount for initial grants in fiscal 1969 and then over a period of 3 years we would build up to the point of having all grants receive the $3,500 level. We have allowed for that phasing in our budget request for fiscal 1969. Mrs. GREEN. Does that include tuition or $3,500 in `addition to tuition and fees? Mr. HowE. This is the institutional grant that goes to the institution over and above the fellowship that goes to the student. It is really in lieu of tuition and, of course, represents an amount of money larger than any institutiOn charges for tuition. The program recognizes the fact that graduate education is a loss operation in every respect and that a Federal fellowship given to a graduate institution, while it helps the student get his education, confronts the institution with an additional financial problem. My hope is that this program will move throughout the Government for fellowships sponsored outside the Office of Education, as well as by the Office of Education. In other words, there are a great many grad- uate fellowships in other departments of the Government and I believe that arrangements are being made to have them adjust their programs to move in this same direction. This is our specific adjustment to this added cost factor for graduate education. Specifically, next year, the funds that we will have to move to the $3,500' level will take care the new graduate fellowships that we awarded under NDEA title IV, which is about 6,000 new fellowships, and then an additional number of fellowships that we haive in the Office of Education under the Education Professions Development Act, about 3,000 of those, in round numbers. We will give you the exact numbers on those if. you would like to `have them. So, this is not a piece of hmgislation that has major changes of principle involve in it but it does permit us to support graduate edu- cation through this added cost of education award. PAGENO="0106" 100 I move now to the program for special services for disadvantaged students. Mrs. GREEN. Could we stop here and ask two or three questions on this recommendation? I have been asked what criteria you would use to determine the 100 possible institutions that would be receiving grants. You make reference to it on page 16 and say the doctorate production. Will this be the only criteria? Mr. HOWE. This certainly cannot be the only criterion. We will certainly make major use of an advisory committee which will be representative of graduate education and include, I am sure, a number of graduate deans and people who are familiar with policy problems of graduate schools. For instance, in the proposals of institutions we will want to en- courage a proposal which strengthens enough departments so that it might change the institution in a fundamental way. We are looking for proposals which might build relationships between departments of a university or between departments of one university and another for the strengthening of graduate education. Will you comment on this, Mr. Muirhead? Mr. MUIRHEAD. Yes. We will draw, of course, Mrs. Green, on the long experience we have had in administering title IV under NDEA from which there has been gathered together a good deal of information about the strength of various programs and various disciplines in the universities. We will, as the Commissioner indicated in his testimony, give con- sideration to a much better distribution in the Nation-regional dis- tribution, if you will-for opportunities for graduate excellence. It would seem that the criteria will evolve not only from the advisory commitee but from the studies on graduate education that are avail- able. Mrs. GREEN. It will be pretty much a subjective judgment, then; i~ that right? Mr. Mumii~&r. As many of these things are, there will be a high degree of subjectivity in it because there are not really many precise measures of the sorts of things we are looking for. As we do with other programs, I think we will have to avoid the problems of individual subjective judgment by using a normal ar- rangement of consultants to read proposals. We will also have an ad- visory committee to set policy and advise us on the cutting off points of various kinds that have to be introduced in the selection process. We have such arrangements already in relation to higher education in title III of the Higher Education Act, for example, where there is this kind of selection process for the award of grants to developing institutions. We have familiarity with this same kind of process through our research grants to higher education institutions. This, of course, is typical also of the kind of award-making process that the National Institutes of Health and other organizations in the Government take part in. Mrs. GREEN. You say that during the past decade the graduate en~ roliments have increased two and a half times. What are your projected figures for the next 5 years? PAGENO="0107" 10! Mr. MtTIRHEAD. I don't have a precise figure on it but the projected enrollments are that the graduate education enrollments will increase at a faster rate than any other segment of higher education. Mr. HOWE. We can give you projected figures. I just don't have them at hand. (The requested information follows:) The new Projections of Educational Statistics, to be published within the next several months, will include the following data in Table 12: Estimated total graduate opening fall degree-credit resident enrollment in 4-year institutions of higher education 1968 751, 000 1971 866, 000 1969 779, 000 1972 921, 000 1970 816, 000 1973 979, 000 The projections include in each year, in addition to the number of enroll- ments based on the 1955-63 trend, an estimated 7,000 enabled to attend college through aid provided by the Veteran's Readjustment Benefits Act of 1966. (Vet- erans who would have attended without the assistance are assumed to be in- cluded in the trend projections.) The impact of changes in military draft policies is not reflected in these projections. Mrs. GREEN. Are you considering the current draft policy in making these projections? Mr. MUIRHEAD. We are not considering the current draft policy, Mrs. Green. We are looking in our projections beyond the immediate problem that confronts us. Mrs. GREEN. What are you asking in this part of the program? Mr. HOWE. For grants to graduate schools? Mrs. GREEN. Right. Mr. HOWE. As an initial fiscal year 1969 amount, I believe it is $8 million. I hope we get the $10 million amount, but we have not solidi~ fled this as yet. Mrs. GREEN. Beginning in 1969? Mr. HOWE. This will be a small program in 1969. Mrs. GREEN. And the fellowships? Mr. HOWE. The total cost of the fellowship change in 1969 will be just over $9 million. Mrs. GREEN. $9 million additional? Mr. HOWE. $9 million additional to carry those additional thousand- dollar amounts. Mrs. GREEN. What is your view about the projected enrollment in the next 5 years? Mr. HowE. In bringing up the draft, I think you are bringing up a point that in the short range may make a problem for the graduate school enrollment picture. In the long range, I don't think it will. ,Mrs. GREEN. Have you studied this to know exactly what effect it will have? I don't see that this committee can make an intelligent judgment on what to do in the graduate field without knowing what effect the cur- rent draft policy will have on enrollment and also in subject matter areas. Mr. HOWE. It is clear that the current draft policy will have con- siderable impact on the graduate school. All male physically fit eli- PAGENO="0108" 102 gibles, because of the operation of the draft rule which drafts the old- est first, will go to the top of the list as they come out of the under- graduate college. Those who are in graduate school in the current year and who are aspirants for graduate school next September fall under this oldest first policy. There is going to be some considerable impact on the graduate schools from the current draft policies. Mrs. GREEN. Could you be more precise on what that impact is go- ing to be? Mr. HowE. I don't have it in mind, but we have worked on this and I can give you figures in regard to it in terms of our analysis if you would like to have them. Mrs. GREEN. Can you break this down by various disciplines? As I understand here, there is no subject limitation. Mr. HOWE. There is no subject limitation here. If you are referring to the draft law, there is one adjustment which might he made to handle the problem of the draft. It would be an adjustment which de- clares certain disciplines essential. I believe under the draft law it is within the authority of the Na- tional Security Council to make recommendations on that. In past draft policy from time to time I believe that has been done. It seems to me that that is not the way to solve the problem. If the problem is going to be solved, I suspect there are better ways of doing that. When you start seeking to segregate subject fields that are sort of national priority needs, you find pressures to put the sciences and mathematics in the special categories, pressures to leave the arts and the humanities without any attention. I would argue that for the long range health of education itself, and the country as a whole, that is not a particularly sensible policy. Mrs. GREEN. Is the Office of Education consulted when these recom- mendations are made? Mr. HowE. We are consulted. We are not directly responsible for any aspect of the draft law, but because it does impinge on education, we are from timeto time consulted by those who are. Mrs. GREEN. Were you consulted on the recommendations this year? Mr. HowE. On the draft law itself? Mrs. GREEN. Yes. Mr. HowE. Yes; I believe informally I was involved in several con- včrsations in regard to the changes suggested in the draft law. Mrs. GREEN. I think there might be a better balance in the country if the Office of Education had a stronger voice inmaking recommen- dations on deferments. Isn't there in one of the bills a requirement that the Office of Edu- cation also study manpower needs? Mr. Ara'oi~n. The Educational Professions Development Act. Mrs. GREEN. Have you made a study of future manpower needs? Mr. HowE. We are just getting organized to do this under the Edu- cational Professions Development Act. This will be a responsibility of a major division of our new bureau. We have not made any really sophisticated study of this kind under that act as yet. To mount something of that scope is going to take us PAGENO="0109" 103 a year, really, to get started. But we are planning the organization that will make the study. Let me go back to your earlier question. I have here numbers on graduate students. In 1967, 404,000. Projected for 1969, 492,000. Pro- jected for 1973, 617,000. These are full-time equivalents. This takes into account part-time graduate students on a full-time equivalent basis. Mrs. GREEN. This does not consider the draft? Mr. HOWE. This does not consider any impact of the draft in 1969. Mrs. GREEN. In 1969, your estimate is 492,000? Mr. HowE. That is right. Mrs. GREEN. Would you hazard a guess if the present draft policy is iiot changed, what that number would be? Mr. HowE. Half of them are women~ Mrs. GREEN. Are they? Mr. HowE (continuing). And two-thirds of the remainder might be eligible. It could go as high as 100,000. Mr. MUIRHEAD. 100,000 to 150,000. Mr. HowE:. I know that people disagree about these estimates. It seems to me that the range of 100,000 to 150,000 is perhaps possible. I think that the draft law very constructively makes provision for a random selection procedure. The only problem is that we haven't as yet done it. If there were a random selection procedure and these graduate students were subject to draft in accordance with a random selec- tion procedure, I think it would be quite reasonable and one out of five or six might be taken out of that group of 100,000 to 150,000. But there are not being in effect at the present time a random se- lection procedure, the problem is created by the fact that they are al- most automatically the oldest eligibles so they are going to go first. Mrs. GREEN. I was under the impression that I had read estimates from some of the graduate schools that they expected their graduate enrollment to `be 50 percent of what it is now. Is that correct? Mr. HOWE. There are all sorts of expectations there. There are real problems right now `for the `graduate schools in regard t'o the draft because they receive their fellowship awards from us. They are `award- ing their fellowships. But they don't know whether the people they award their fellowships to are going to s'h'ow up at the university iii the fall. There are various reactions. Some institutions are hedging by awarding more people fellowships than they have fellowships to award, knowing that some of them will be drafted. If the draft laws are changed in the meantime, it will leave them with more~people than they know what to do with. Other institutions `are on'ly awarding the fellowships they have, thereby creating a situation in which no change in the draft law will result in their `not h'aving enough graduate students. It is a problem for graduate schools looking toward their organization next September. Mrs. `GREEN. As the Commissioner `of Education for the United States, would you give us your views on the current draft policy and what it does to education in the United States? ` Mr. HowE. I am not really an expert on it, Mrs. Green. PAGENO="0110" 104 I think on this particular problem that we are discussing, my view is that the solution of it is to find a way to a random selection procedure as allowed for in the new Draft Act. I think the new Draft Act in creating that policy of a random selection procedure creates a very fair arrangement. I think the discussions which have been held about a random selec- tion procedure, which have caused a lot of emotional reaction to it because it has been described by the word "lottery," have been destruc- tive because I believe this random selection idea is ultimately fair and sensible and it can be worked. So, specially, on the pr~blern we are discussing, it would he my view that we have to try to move in that direction. Mr. GIBBONS. Would the gentlelady yield? I hate to interrupt her line of questioning but I would like to throw out an observation I have. Having served 5 years of military service in World War II and having gone to graduate sthool after World War II, it is my recollec~- tion that while World War II did play havoc with graduate schools at the time everyone was in the service, that it probably increased enroll- ment in graduate schools. I know many people, personally, who never would have gone to graduate school, even to college, had it not been for the fact that they had matured more, saw the benefits of education, and came back and made a very determined effort to take any ad- vantage they could. I think the long-range impact is that we will have more graduate students but for the 2-year period right now we may have some dis- ruption. There are constantly people returning from the service every day now. I think it will equalize itself out. Mr. HowE. I would quite agree, Mr. Gibbons, with the view that there should be no exemption for graduate students from the obliga- tion to military service but it seems to me what is implied in the way things are now set up is that they don't have the benefit of the normal selection processes. The oldest-first rule hits them all, all at once. This makes very difficult problems for the individual in planning for his educational future and an almost unmanageable problem for the institution that has to deal with multiple individuals. So, I again come back to the idea that graduate students ought to be normally vulnerable to the draft. It is going to be an interesting thing, by way of side comment, to see what the military does with all of these graduates when they do get into the draft call all at once. I think it will make some problem for them. Mrs. GREEN. What about brain drain from other countries to the United States? Do you have figures on that? Mr. HowE. I haven't any figures on that. I am aware of this as a problem in the medical area for other countries and certain special- ized teclmical areas. I am aware of the problem as it relates to some of our efforts at providing educational opportunities to people from other countries with the hope that they would return and provide really a developmental resource in those countries and then a tendency at least in certain categories for people to stay here. Mrs. GREEN. It is true, then, that the United States, the wealthiest and the most powerful country in the world, is not educating a~ suffi- cient number of people to meet our manpower needs? PAGENO="0111" 105 Mr. HOWE. I suspect that that has always been true and always will be. Yet, the machinery has run fairly well in the last hundred years. I think we are going to have a problem about adequate supply of trained people. We have one now; we will continue to have one. We will always need to be working at that problem. But I would not say that we ought to act as if the problem were to- tally unmanageable or out of control. I think it is a problem to which we have addressed ourselves in many ways. I have to say at the same time that certainly the shortage of highly trained people is one of our great shortages compared to the shortage of other resources, money, natural resources, and so forth. So, we need to be working at it. Mr. QUIE. I wonder, though, if this is something that we ought to consider as a burden or responsibility of the United States. Isn't there some responsibility in these countries, themselves, to entice their educa- tion people to come back again? I wonder, also, if it is not a sufficient requirement that such per- sons have to go back for two years so that these other countries can get a crack at them in enticing them to remain longer? Also, in the area of science research, I wonder what helps an un- developed nation most: To give their most intelligent citizens a chance to work here in good laboratory facilities, the results of which could be used in that country, or to ask them to go back and work there in some medicare facilities? I don't think we should feel entirely guilty about the brain drain. I think we are doing a tremendous service for other countries, too. Mr. HOWE. I agree with you. There is no policy on the Federal Government's part to create a brain drain. It emerges, to some degree, from the individual choices of people rather than from anybody's attempting to create it. I think we probably could show you figures which would indicate ti~at the brain drain is a relative matter rather than a catastrophic one, that important proportions of people who come here for training do return to their own countries and provide very significant services there. I think that it is very important for the United States to maintain an open door to people from other countries to all sorts of training opportunities here. It seems to me this is a very significant part of a one-world view, and clearly, that is what we have even though it is pulled apart in various ways. Mrs. GREEN. It seems to me it is in conflict with our statements about how we want to help the developing countries. Mr. HOWE. We, of course, provide these opportunities with the hope and expectation that they will return. Mr. QUIR. We have a brain drain in West Virginia, too. Mr. HOWE. It has been said recently that there is one in Washington. Mrs. GREEN. Are there any other questiOns on the graduate program? Mr. GIBBONS. It is like migration between Georgia and Florida. The Governors say it helps both the States. Mr. QulE. Could I ask a question on the draft, Madam Chairman? Mrs. GREEN. Yes. Mr. QUIE. You estimate some place between 100,000 and 150,000 young men will not be in graduate school next year be~au'se of the PAGENO="0112" 106 draft, if you take the. oldest eligible men first and subject them to the draft. Mr. Howu. Could I submit for the record an accurate figure there? I am just not sure enough to have that used right off the cuff. We have some figures on these. I just don't have them here. It may be in that range. (The information follows:) Question: Estimated number of potential graduate students who will be lost to graduate study in 1968-69 because of military service? Answer: Our best estimate is that 180,000 men who would otherwise be engaged in graduate degree study in 1968-69 will interrupt their studies to enter military service in 1968-69 because of the newly announced restrictions in grad- uate deferment policies. The calculations follow: Originally estimated graduate degree-credit enrollment in 1968-69 751. 000 Graduate students eligible for military induction under the newly an- nounced graduate deferment policies 180, 000 Not eligible for military induction 571, 000 Women 228, 000 Men age 26 and over 225, 000 Men age 25 and under with dependent children 10,000 Men age 25 and under who are veterans 10, 000 Men age 25 and under who are divinity, medical, or advanced grad- uate students eligible for deferment 38, 000 Estimated number of draft-eligible men who are likely not to pass the physical examination (25 percent X 240,000) 60, 000 Mr. Qniu. It looks a little low to me, but maybe it isn't. Some of them may have lost their physical health by studying so long or some- thing. But then what happens the next year? Suppose 150,000, and we will wait to see what your correct figure is, but suppose it is correct for this school year, what does that mean then for the fiscal year 1970? Does that mean it would approximately double? Mr. Hown. It may be that in an ensuing year there would be some possibility of ironing this out, but in the immediate year, which starts with the opening of universities next September, the time-relationship of giving graduate awards to people who don't know whether they are going to be drafted or not is going to create some decline of member- ship in the graduate schools. Now, it might be in the planning phase of an ensuing year we could work out some way to avoid that. Right now, we confront that prob- lem. Do you want to comment on this, Peter? Mr. MUIRHEAD. It seems to me on the figure that we suggested here it probably is too low, Congressman Quie. I think in order to get a. fix on that figure you have to look at what possibly will be the draft call this year. The best estimate we have of that is somewhere in the neigh- borhood of 350,000. The present policy, as the Commissioner has explained, will put a very heavy drain upon graduate students in meeting that particular draft call. So, probably the figure of 100,000 to 150,000, as you commented, Congressman Quie, is low. It seems to me, too, that we have to look upon the present situation as being. atypical-I am almost inclined to say intolerable-in terms of meeting both the education needs and the draft needs of the Nation. PAGENO="0113" 107 The Commissioner has given a good deal of thought to. this and we have suggested that in the long run the most effective way to handle the problem would beon a random-selection basis. There is quite a hope that the Congress this year will amend the selective service law in such~ a way that a random-selection basis will be injected. If that is the case, then in the fall of 1969, the problem will not be as acute as the one that we are facing in the fall of 1968. Mrs. GREEN. This, though, can be changed by administrative action. Mr. MIJIRHEAD. Yes, Madam Chairman. It is possible by administra- tion action at this time, by Executive order, perhaps, or by regulatory changes, to come up with a random-selection procedure that would se- lect a percentage of students by age of those who are eligible for the draft rather than to rely upon the procedure that is now in place, of taking the oldest first. Mr. Quii~. Could we expect that it would take 3 years then before we get back to a normal pattern even if the war were to continue dur- ing that time and we were drafting graduate students? In the first year, of course, the graduate student would not be drafted immediately; therefore, he would lose some time. Then, if he were drafted, he would not be able to start his graduate program immedi- ately after returning from military service. So, there could be a loss of about 3 years in each person's life. Mr. MTJIRHEAD. That situation certainly could develop. There are so many unpredictables in the problem that it woiTld be difficult to really predict which situation would come about. If, for ex- ample, we did have a random-selection procedure established next year, then it would be this class entering in 1968 that would create the dip in graduate enrollment. There would be no way of catching up. Ultimately, it would be caught up in part, as Congressman Gibbons indicated a moment ago, when these graduate students return from service. If the policy remains as it is now beyond the fall of 1968 and is in effect in 1969, then the problem becomes very grave. Mr. QUIE. If there were going to be a selective determination of which disciplines were the most necessary for national defense or for the needs of our country, and I guess there is already a deferment for doctors and dentists, would the exact sciences possibly be the area where there would be deferment? Because I imagine a doctor's degree in history would not be as important as a physicist. Mrs. GREEN. It might be more important. Mr. Quii~. It might be more important? Mr. HowE. You can get into arguments on this subject easily as to who is more important. As I said a moment ago, from a personal point of view I would hope that that particular option of handling the problem of graduate en- rollments by giving special privilege to a number of disciplines or professions would not be exercised because I don't think you can nec- essarily defend, except perhaps in a total emergency situation, certain categories. Mr. Quii. If it were left to the National Security Council, they probably would not give a deferment for somebody studying Latin American culture for a doctor's degree as. much as they would a mathematician. 92-371--68-pt. 1-8 PAGENO="0114" 108 Mr. HowE. I really can't speak for the National Security Council on that but it is interesting to speculate about it. Mrs. GREEN. What is the current situation? Is there a recommenda- tion? Has the National Security Council made a report? Mr. HowE. I honestly don't Imow, Mrs. Green, what the administra- tive situation is at this point. Mr. QuIE. To return to your proposed program for improvement in graduate education, evidently some institutions have made it and will be ineligible for the upgrading. Do you have the names of these great institutions? Mr. HOWE. No; I don't, Mr. Quie. I would not attempt to name one. I would certainly depend on the advisory council we intend to set up to help us define the sort of "lighthouse" institution they are. But you will recall that the Congress placed in being not too long ago a concept of developing colleges isthich created the same kind of problem at the undergraduate level. We have been able, we think, in a sensible and manageable way to define a group of institutions that have the strength to improve themselves but that have improvements to make. Mr. QuiE. The developing college is in the lower part of the spectrum of graduate institutions. I understand both the top quality and lowest quality ones will be ineligible. That lowest quality institution is probably the type of institution that the Developing Instituiton Act was supposed to help. Mr. Howi~. Congress built into that act some provisions that would prevent the consideration of certain kinds of institutions that might be thought of as having characteristics that were of lower quality. If I recall correctly, the act requires that the college be 5 years old and that it have an accreditation and so on. There were elements of quality control actually built into the law in that case. I think we would have to develop criteria here along the line we were testifying to, Mrs. Green, a moment ago, to define t;he eligibles here. In mentioning these numbers that we do in this formal testimony, I think we ought to not regard them as totally definite. They simply describe a broad universe of graduate schools that might be eligible. Mr. Qmu. I Ilmow the University of Minnesota will be interested iii this. I am wondering if I am going to tell them that they don't get any money or that they are of such poor quality that they will be getting some. Mr. HowE. I don't want the concept to get aroiind that we are talking aibout graduate schools of poor quality here because we really aren't. We are talking of graduate schools of very considerable promise for excellence. I would not want to commit myself on any particular university. Mrs. GREEN. It seems to me that this ought to be one case where you ought to reverse your procedure and HEW ought to send the announce- ments directly to the institutions and not do it through Members of Congress. Are there any other questions on the graduate program? Mr. ERLENBORN. I might just make the observation that~ I think the answer to the draft problem with the graduate schools is to give preference to the halt and the lame. PAGENO="0115" 109 Mrs. GREEN. I am in favor of having it on a voluntary basis because I `am told that there are so many that support the war completely that there would be a lot of volunteers. Mr. ERLENBORN. I understood last year that the random selection policy was being recommended by .the administration and would be implemented. Mr. Howi~. It was not adopted in Congress last year. Mr. ERLENBORN. It was not recommended as a legislative action, as I recall. Mr. QuIE. Percentage selection of each age group is permitted under the law. They are considering it now, I understand. This, in effect, is a random selection. Mr. HowE. This is what Mr. Muirhead was referrmg to a moment ago as `a possible option here. I think it is worth exploring. Mr. QuiE. It must be random selection. I don't imagine for example, that they will take only the ones born in the first half of each year, if they need only half of the eligible ones, so that anybody who has his birthday after July 1 wouldn't be selected. Mrs. GREEN. I am under the impression that there is a recommenda- tion on this that either has been made or isabout to be made. Because it does have a relationship to the legislation before us, 1 wonder if it would meet with the approval of the committee to ask the staff to find out the status of this before we take any action on the graduate part of this bill. Mr. GIBBONS. I think the graduate issue will wash itself out. The draft will last only 2 years. The person who is going to go to graduate school will go to graduate school, anyway. I think you will find that the people having been in the draft, are going to have their perspective broadened and they will have a greater desire to continue their educa- tion. It has been my experience-I don't advocate military service for that purpose-but it does happen that way as a practical matter and I think you will find the demand greater for graduate work particu- larly in the humanities areas rather than so much the specific sciences. Because when you get out and you see the world you become more in- terested in continuing your education when you return. While it is going to create some temporary dislocation, I don't think it is something that Congress can legislate because I don't think we can foresee exactly what is going to happen. I think we have to leave the flexibility in the hands of the administration to carry out a policy which seems sound and rational on the basis of the situation. Mrs. GREEN. When there is a big cut in funds for undergraduate education, don't you think it would make a difference to this corn- mittee on where we put the funds for next year, if there is going to be a 60 percent enrollment in graduate schools? Mr. HOWE. I don't belive there will be a 60 percent enrollment in the graduate schools. Mrs. GREEN. We are going to call graduate deans and others on tins subject so we will have an understanding of the current situation. Mr. HowE. Let me go ahead with this third program of special .~ervices to disadvantaged students. These are disadvantaged students in undergraduate colleges. There have been a number of undergraduate colleges in this country :mounting their own special service programs involving counseling, PAGENO="0116" 110 involving tutorial work, involving remedial English and other kinds of special services to students they have admitted because they think these students have potential for completing the BA degree or indeed going on to graduate school. Although they believe also that these students have not received in their elementary and secondary years the education that would develop their full potential, a nunTher of institutions have admitted students they would regard as risk students and not normally meeting their admissions requirements. They have found that they could have some success in what might be described as a retreading operation to build up their skills and capabilities for college-level work. We are proposing here a program to allow more colleges, with Federal support, to do exactly that kind of thing. In the first nine pages of my testimony here in regard to this new program, you will find a number of examples of that kind of activity by different sorts of undergraduate colleges. I would like to go to page 29 of the testimony and read you the description of the exact program we have in mind. It is the purpose of this proposal to meet the need for special serv- ices to the disadvantaged student so that he can readily adjust to his new environment and academic life, and at the same time to encourage the college to attempt new solutions and to search for new educational techniques which are especially suited to the needs of the disadvan- taged student. It is our belief that, as these techniques are further developed, col- leges will willingly admit a larger proportion of students they now regard as academic risks and find ways to make them successful. Emphasis would also be placed on programs designed to encourage students from disadvantaged backgrounds to pursue graduate and professional education by: (1) identifying capable students with aspirations to attend graduate school, and (2) providing counseling and guidance services to prospective graduate students concerning opportunities available to them. Effective in the fiscal year ending on June 30, 1969, the special services for disadvantaged students program, as a part of the Higher Education Amendments of 1968, would provide assistance to institu- tions of higher education and other public and private nonprofit orga- nizations and agencies for the development and maintenance of student personnel service programs to assist disadvantaged students in completing their undergraduate education and in encouraging able students to undertake graduate studies. The Commissioner of Education would be authorized to make grants to plan for and to implement student personnel service programs, and to award contracts to provide support for the operation of dem- onstration projects of exemplary student personnel practices. Funds would be available for the development and operation of comprehensive guidance, counseling, placement, and other student personnel services, including tutoring programs to remedy academic deficiencies, and to enable persons to remain in higher education programs. The program would be authorized for 5 years through fiscal 1973. For fiscal year 1969, $15 million in appropriations is being requested, PAGENO="0117" 111 and such sums as may be necessary to attain the objectives of this program for the next 4 fiscal years. Do you wish to discuss this? Mrs. GREEN. This would not be limited to graduates in professional education? Mr. HOWE. The investment here is during the undergraduate years although the counseling services may be designed to help these stu- dents move on into graduate education. But it is not proposed tocarry the remedial concept into the graduate years. Mrs. GREEN. This is an extension of Talent Search? Mr. MtTIRHEAD. Yes; this is an extension of Talent Search, and is intended, I think, to carry out the purpose both of the student finan- cial aid programs for the disadvantaged and the Talent Search pro- gram for the disadvantaged in making some provision to help them succeed in college. Mr. Q~uIE. Would the gentleilady yield? Mrs. GREEN. Yes. Mr. QUIE. Just as "Follow Through" can only be used for Head Start pupils, can this program be used only for the ones who are picked up in Talent Search? Mr. MUIRT-TEAD. No; that is not our intention. This program is intended to support disadvantaged students who are on the college campus no matter how they go~ there-by the Talent Search route, the LTpward-Bound route, or whatever. Mr. QUIE. What is the dropout rate of those who start their fresh- maii year and don't finish? Mr. MUIRHEAD. The dropout rate for this type of student-and again we don't have as good studies on this as we should have-is considerably higher than the normal dropout rate. At the present time the normal rate runs to about 25 percent the first year, and 15 percent the second year, and drops off sharply in the third and fourth years. Mr. QuIE. Of those who start in their freshman year, only about half actually graduate? Mr. MUIRIIEAD. That is right. Mr. Qun~. Why do you say "this type"? Isn't everybody eligible who doesn't make it through to his graduate year or aren't you dis- advantaged if your parents have some money? Mr. MUIRHEAD. The interpretation of "disadvantage" that we are using here, Congressman Quie, quite obviously does have a financial connotation, but it is more directed at the disadvantage the student brings in terms of his elementary and secondary school preparation and the disadvantage he might bring from his, family background? Mr. HowE. I think, Mr. Quie, we would expect an institution mak- ing a proposal to us for funds under this program to include within.the students to be served a fairly high proportion of those who are receiv- ing education opportunity grants, who are involved with work-study opportunities, who are what we normally call scholarship students in school and to include also a definition of students having some form of educational problem with having success at the colleges. I thmk the focus has to be set in such a way that this serves students who may have been discriminated against in their elementary and secondary years through the kind of education they received. It may PAGENO="0118" 112 have been segregated education, as is the case for about 80 percent of the Negro youngsters who go to college. It may have been ill-supported education. I would suspect a major proportion of the young people served by this program would come from those categories, but I think the institu- ions would also have a flexibility to try to meet the special needs of some educationally deprived youngsters who didn't necessarily repre- sent those from a particular financial background. Mr. QUIB. I would have imagined any Negro who is about to drop out from college or Mexican-American or Puerto Rican or American Indian would automatically qualify so we ai~e not talking about any discrimination against them. But what about the discrimination against or among the white peo- ple? What makes a person who drops out of college not qualify for this program? Isn't it as much of a concern to us if the dropout should be a child from the suburbs, who may be disadva.ntaged as well, even though his parents have enough money to put him out there on "mini farm"? Mr. RowE. I think this is directed to the point 1~fr. Muirhead made a moment ago of trying to work on the high percentage of dropouts that does indeed come in college among people from low-income fami- lies. That is a distinct, identifiable problem. That percentage of dropouts comes from several sources. We know it comes in part from financial sources. We have talked the last two days about a program to meet that financial problem. We know also it comes from a background of education which fails to equip these youngsters with the capacity to succeed in college even though they have the potential to do so. So, some kind of retraining, some kind of special counseling, seems to be worth trying. There is evidence in trial projects that we have observed, many of them funded by foundation efforts. For example, I happened to be talk- ing the other day to the President of Cornell ljniversity, Mr. Perkins, who told me that over the past 2 or 3 years his admissions offi- cers have admitted to Cornell on a risk basis a group of students who would not normally meet the Cornell standard. With foundation sup- port they were providing special education opportunities for these youngsters in the undergraduate college at Cornell. It now appeared these youngsters were indeed going to be successful and graduate, whereas every prognosis when they were admitted was that they would drop out and fail. It is that kind of direction that we see this program moving in. Mr. ERLENBORN. It would seem to me that what you are making here is a social decision rather than an educational decision. Any potential dropout, I think, would be the concern of the educator regardless of the background of the individual. Mr. HowE. You are absolutely right. Any potential dropout is bound to be the concern of the educator. You still confront the fact that when the educator wants to mount a program to get at the biggest piece of the problem, he finds that the biggest piece of the problem is among those from low-income families. PAGENO="0119" 113 So, if he is looking for guidelines as to whom to help first as they come in the freshman year, he would quite naturally seek out people from that group and try to give them some special counseling help and assistance. He would not as easily identify the individual who was going to be- come a potential dropout from some other source, but as that individual is identified the educator ought to help him just the same. The drop- out problem from college is a very complex one. Many very able stu- dents drop out. Some of the most highly selective colleges are now experiencing a pattern of student attendance which is quite different from what is was 20 years ago. A recent study at Harvard shows a very interesting pattern of dropouts and returns in that highly selec- tive institution. It shows, interestingly enough, that these students do better after dropping out and returning than would be expected if they had just stayed on. This is a very complex matter related in many cases to the individ- ual's psychological makeup and a great many other factors. Mrs. GREEN. How many are in Talent Search now? Mr. MTJIRHEAD. How many students are in Talent Search? Mrs. GREEN. Yes. Mr. HOWE. I would like you to meet Mr. Satterlee, who is in `charge of the Talent Search program. Mr. SATTERLEE. I believe it would be very difficult to state how many are in the Talent Search program, because all are not readily identi- fliable as Talent Search kids. Many are reached by a single contact or counseling effort and may not need any additional help. We do have figures on the number of youngsters that were coun- seled by Talent Search contractors last year, as well as the number of kids that entered college as a direct result. Mrs. GREEN. How many in both of those? Mr. SATTERLEE~. Last year there was slightly over 400,000 individual contacts made by counseling contractors with young people from grades 9 through perhaps grade 13, or the first year of college, if you want to call it that. Over 14,000 of those youngsters returned to secondary school or have enrolled in higher education, we believe, as a result of the educational talent search program, and well over 30,000 students were afforded sustained counseling and guidance. Mrs. GREEN. What do you mean by 30,000 receiving sustained coun- seling and guidance? Mr. SATTERLEE. This would be far more than one single initial con- tact. It would be a series of contacts on a personal basis, sitting across the table, going to meet the family, talking to the child several times about his aspirations and hopes, perhaps helping him to make deci- sions on the college he wishes to attend, filling out the financial aid forms for him, finding remedial help if this is necessary. Mrs. GREEN. You do provide remedial help, tutorial services? Mr. SATTERLEE. We provide the egress-no; we would provide the introduction to remedial help. In the talent search program, we fund almost no remedial help, per se. A lot of it comes through the use of volunteers. In fact, I would say over 50 percent of our programs utilize' volunteer help, college students, high school teachers, women who are PAGENO="0120" 114 out of college who wish to do something in social programs-and they provide tutorial help for these youngsters. In a sense, we pay nothing except perhaps transportation for these people to a tutoring center. We also find that our contractors make extensive use of other avail- able Federal programs or local programs. There are a lot of them. In fact, I believe a large directory of tutorial assistance programs was published last year, listing several hundred tutorial programs through- out the country. Our people find out about them and refer their young- sters to these programs for help. Mrs. GREEN. Do you give grants to colleges and universities? Mr. SATTERLEE. A contract to a college or university; not a grant. Mrs. GREEN. How many colleges participate in this? Mr. SATTERLEE. Individually it would be hard to say, for many in- stitutions may be involved in consortium efforts. There might be as many as 19 institutions involved in one contract. We are currently operating 58 contracts throughout the United States; well over half of these are with consortiums or institutions of higher education. Mrs. GREEN. Do you ever contract with high schools? Mr. SATrERLEE. We have no contract with a high school at this time although there is no reason why we could not. We have contracts with boards of education, State departments of education, consortia, and private, nonprofit agencies. We have a variety of contracting organizations. Mrs. GREEN. Do you give stipends to students? Mr. SATTERLEE. No. Mrs. GREEN. You would pay transportation if necessary for tutorial services? Mr. SATrERLEE. No; not to the student. Mr. HowE. I think, Mrs. Green, we have to think of talent search as a system for putting young people in touch with opportunity, of building a bridge from the young person through information, through contact, either with a college or counseling arrangement or a `special tutoring opportunity or volunteer service or a variety of other possibilities, to give him added services, to give him added choices, but not to pay to provide those services or choices. It is a putting in touch operation, a middleman kind of activity. Mrs. GREEN. You said that last year 14,000 returned to high school or went to college. Mr. SArrrEi~E. Yes, ma'am; approximately that number. Those are incomplete returns. We would say the number would be higher than that. The returns we had were picked up in July and August. A num- ber of youngsters got into school late in August, simply because finan- cial aid became available. One contract in a major city was able to place 120 youngsters for the fall of 1967. Mrs. GREEN. Do you have summer programs? Mr. SATTERLEE. ~Not what are normally considered summer pro- grams; just the counseling and guidance activity that we carry on during the summer months. Ours is a 12-month program. Mrs. GREEN. The students that are participating could have tutorial services during the summertime? Mr. SATTERLEE. If it is available in the area. PAGENO="0121" 115 One of the problems here is that the counselors or contractors work- ing with individuals become personally involved with these young people. It is very difficult for them to give advice and not give any concrete help. If more specific help is necessary, they will try their very best to provide that, too. Mrs. GREEN. Doyou have figures on the number of youngsters that returned to college for the second year? Mr. SATTERLEE. No; we do.not have figures on that. Mr. HOWE. I would think that it would be very hard to establish figures of that kind for this program because, again, this is a program that will give a youngster guidance in selecting among colleges that might make sense for him. He makes such a choice but it does not pro- vide him any special services either before or at the college. I think many of the youngsters involved with this program are simply helped to know that college is a possibility. Mrs. Green. It was just said that you do provide tutorial services. You do provide guidance and counseling. Mr. HOWE. Not in the sense of paying for these services. I would like Mr. Satterlee to comment, but I suspect that the ma- jority of the services provided are really in the sense of making the youngster aware of what college opportunities are available and how to get financing to go to college. Is this fair to say? Mr. SATTERLEE. This is very fair to say. I think a good example is a project located in your State, which is Project Boost, in the Oregon System of Higher Education. They have been working with the pub- lic school systems and now have 398 firm commitments of financial aid for youngsters in the 17 institutions of higher education in Oregon In other words, Boost now Imows they will place almost 400 kids in higher education next year. Mrs. GREEN. I don't understand what you are saying. It seems to me there is a contradiction. I thought you said you had a 12-month program. Mr. SATTERLEE. Yes, ma'am. Mrs. GREEN. That the youngsters had tutorial service in the summer time following the 12-month program. Mr. SATTERLEE. If there is tutorial assistance available to them, yes.. In other words, the activities go on the year around. Mrs. GREEN. You told me a moment ago how many people were mvolved in the tutorial program. Mr. SATTERLEE. I may have misstated that. Mrs. GREEN. You mentioned volunteers and so on. Mr. SATTERLEE. Volunteers, yes, ma'ain, are helping. the children. * Mrs. GREEN. Didn't you say how many were in these kinds of programs? Mr. SATTERLEE. If I did, I misstated because I could not tell you how many volunteers are involved. Mr. HOWE~ Mrs. Green, I think the distinction here is that Upward Bound, for example, is a program that provides direct~ services to youngsters and pays for those services and has youngsters enrolled in its activities on a regular basisin the summer time. Talent Search is not doing that kind of thing at all. Talent Search is providing primarily counseling services, making youngsters aware PAGENO="0122" 116 of opportunities. I would be surprised if Talent Search did not from time to time make youngsters aware of the Upward Bound services but ithas not had the funding to provide services. Talent Search is currently a $4 million operation and we are doubling the amount of money in the next year's budget for Talent Search. But it is a very small-scale operation in terms of any kind of service. The reason it can reach so many people is that it is a commu- nicating activity rather than a service activity. Mrs. GREEN. But you do provide tutorial services, too? Mr. HOWE. Not and pay for it. If it is available Mrs. GREEN. I don't care whether you pay for it or not, but the student is provided the service. Mr. HowE. I would say relatively few youngsters are getting direct tutorial service. We could analyze this for you, but it is really much more a program of identification of people who have the potential to go to higher education and an encouragement of them to seek that op- portunity, information about Federal programs, other Federal pro- grams that will pay for that opportunity. Mr. ERLENBORN. Might I ask a question that might help to clarify this? As I understand it, you do not provide any tutorial service. You merely counsel and advise the student where he may find this. Some- one else pays for that? Mr. HOWE. Our contractors do this kind of thing. Mr. ERLENBORN. In Talent Search you do not pay for or provide any tutorial service? Mr. HowE. That is right. Mrs. GREEN. You have volunteers that are volunteering their time and provide it? Mr. HOWE. We don't organize those volunteers. We have no arrange- ment. We might use those volunteers in being. They may be available in communities throughout other programs and the Talent Search operation, I am sure, fi~quently puts them in contact with those opportunities. But we are not in the business of creating an educational or tutorial service that is not already there. Mrs. GREEN. Do you plan to in your request for additional funds? Mr. HowE. No. The request for additional funds will expand the kind of thing we are now doing. lYe would not, with those small funds, be able to provide services of any kind. Mrs. GREEN. You said you had contracts with boards of education and private groups and so on. What do they provide? Mr. SATTERLEE. The board of education? We have one at White Plains, N.Y., for instance, that is engaged in locating the youngsters who have either been suspended from school or who~ have dropped out of high school, try to find these youngsters and encourage them to go back to school or arrange for them to find other means of achieving a high school diploma so that if they wish to go on to college this can be accomplished; a contract with the board of public instruction in Iowa was essentially this sort of thing, to reach out to all the coun- selors in the high schools and all the youngsters who had dropped out of school and try to encourage them to go back to school. PAGENO="0123" 117 Mrs. GREEN. And the contracts with the colleges? Mr. SATTERLEE. The contracts with the colleges may vary a great deal. The contract with a college in the State of Louisiana was to help to establish counseling programs in high schools so that youngsters would know about the advantages of higher education. It was a very limited program, in small sections, about three or four of the southern- most counties. Other contracts with colleges vary a great deal. I would be more inclined to feel that instead of contracts with single colleges, we con- tract with a group of colleges who will utilize their group efforts to tell young peqple about higher education and the possibilities. Mrs. GREEN. Then outside of not providing definite classes for tu- torial service and paying for them, what is the difference between this and upward bound? Mr. HOWE. That is indeed the major difference. The upward bound program with which I am not fully familiar but I know something about it, is a program to identify young people and then get them into specific course work experiences arranged under the auspices of a higher education institution and with the distinct purpose of adding to their education with intensive work usually in English vocabulary and reading, but also subject fields and also in providing `them motivation in connection with this. The higher educa- tional institutions persuade them they should go on to college and give them additional training which will help them become candidates for college. The upward bound program really mounts a direct service to young people. It frequently has them in a residential arrangement, I believe, at a division of the college, using some college facilities during the summer, providing instruction, supporting faculty. None of these things are done in the talent search program. The talent search program instead is an information and counseling program primarily to encourage the youngster, to go ahead and take advantage of either local school opportunities or college opportunities and to give him information about what he can expect for these and how, he can get his new options financed. These are really quite different programs in terms of the services they provide. Mrs. GREEN. Both of them are directed to the disadvantaged child who should go on to college but is not. Is there any reason why these should not be combined into one program? Mr. HOWE. Right now what we have is a very close working rela- tionship between these two programs. I think it is true we have worked during this past year to dovetail them in ways that would be con- structive. We have also tried to dovetail the educational opportunity grant program which we administer with the upward bound pro- gram, as well as with our talent search so that these youngsters get the benefit of these opportunity grants. 1 think that the arrangement that we have for this now works very well. Do you want to comment on this, Mr. Muirhead? Mr. MUERHEAD. Yes; I would like to comment on it. PAGENO="0124" 118 In the long run, it seems to me that the talent search program, the upward bound program, the student aid programs, together with the special services we are suggesting today to aid the disadvantaged when they reach the college, should be of one part. At the present time, we are hopefully getting some of the advantages that would come from having them all together by having a very close relationship with up- ward bound. Mr. ERLENBORN. Madam Chairman, would you yield? Mrs. GREEN. Yes. Mr. ERLENBORN. Don't you suppose the legislative possibility of merging these depends on whether you are transferring the talent search to OEO or the upward bound to OE? Mrs. GREEN. Of course, having already decided that in my own mind, I was not going to ask these questions. Mr. HowE. I was waiting to see which way that was going to go. Mrs GREEN. May I start; out to clarify it? When the director of talent search advises me that on $2 million this last year they had counseled 400,000 students and 14,000 returned to the high schools or to higher education and 30,000 were in a program of sus- tained guidance, and then when I read the first paragraph of a letter written by Mr. William Steiff which starts out: Most of the teenagers in the $30 million a year antipoverty program are flunk- ing out of `the colleges they are motivated to go to according to Mr. Froornkin, ASsistant Commissioner of Education. I do have some rather strong views about the direction in which it should move. Mr. Qurs. I have a question. What is your estimate for the next 4 years? I understand Congress is supposed to have those estimates, not just the first year cost of $15 million. Mr. HowE. Under this new program? Mr. QmE. Yes. Mr. HowE. We will develop them and send them to you. May we do that for the record? Mr. Qurs. Yes. (The information follows:) PAGENO="0125" DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, OFFICE OF EDUCATION HIGHER EDUCATION AM ENDMENTS OF 1968-ADMINISTRATION'S VERSION 1969 1970 1971 1972 1973 NEW OBLIGATIONAL AUTHORITY Title I-Amendments to title I, Higher Education Act, community service and continuing education programs $10, 000, 000 $50, 000, 000 Title Il-Amendments to title II, Higher Education Act, Library Development: Part A-College library resources 25, 000, 000 85, 000, 000 Part B-Library training and research, and library school program develop- ment 11,800,000 28,000,000 Part C-Strengthening college and research library resources through library of Congress 5, 500, 000 11, 100, 000 Title Ill-Strengthening developing institutions; improvement of graduate schools-Amendments to title III, Higher Education Act, and other statutes: Extension of developing institutions program 35,000, 000 70,000,000 Improvement of graduate programs 10, 000, 000 20, 000, 000 Increase in cost-of-education allowance 1 3, 185,000 5,240, 000 Title IV-Student assistance: Part A-Consolidation of educational opportunity grant, national defense student loan, and work-study programs: Educational opportunity grants__ 140,600,000 250, 000, 000 Student loans and work-study programs 329, 000,000 550, 000, 000 Teacher cancellations 1,400,000 2,200, 000 Loans to instututions 2,000,000 2, 500, 000 Part B-Amendments to student loan insurance programs: Advances to State and nonprofit private reserve funds 12, 500,000 Payments to reduce student interest costs and fees payable to eligible lenders 62,900,000 137,844,000 Federal loan insurance program 2 Part C-Special services for disadvantaged students: Contracts to encourage full utilization of educational talent 8, 500,000 12, 000, 000 Special services for disadvantaged students 15, 000,000 35, 000, 000 Part D-Amendments to national defense fellowship program 92,600,000 148, 700, 000 See footnotes at end of table. $60,000,000 $70,000,000 $80,000,000 90,000,000 95, 000, 000 100, 000,000 38,000,000 54, 500, 000 83, 000,000 91,000, 000 96, 500, 000 100, 000, 000 31, 000, 000 43, 000,000 53, 000, 000 2,055,000 350,000, 000 580, 000,000 3, 100,000 2,500,000 550, 000, 000 595, 000, 000 3,200,000 3, 000, 000 750, 000, 000 610,000,000 3,400,000 3,000,000 171, 187,000 7, 552, 000 208, 274, 000 24, 362,000 243,999, 000 24,463,000 18,000,000 55, 000,000 165, 000, 000 24, 000, 000 75, 000, 000 198, 600, 000 30,000, 000 95,000,000 209,500, 000 PAGENO="0126" DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, OFFICE OF EDUCATION HIGH ER EDUCATION AM ENDMENTS OF 1968-ADMINISTRATION'S VERSION-Continued 1969 1970 1971 1972 1973 litle VI-lnstructional equipment and materials: Part A-Equipment and materials for higher education-Amendments to title VI, Higher Education Act: Television equipment Other equipment Part B-Equipme,t and materials for elementary and secondary education- Amendme.ts to title III, National Defense Education Act Title Vll-Guidance, counseling, and testing-Amendments to title V, National Defense Education Act Title VIll-Language development-Amendments to title VI, National Defense Education Act Title IX-Networks for knowledge Title X-Amendments to general provisions of Higher Education Act and Na- tional Defense Education Act: Dissemination of information Program planning and evaluation for higher education programs Title Xl-Amendments to Higher Education Facilities Act: Grants for construction of undergraduate academic facilities (title I) State administration and planning Grants for construction of graduate academic facilities (title II) Loans for construction of academic facilities (title III) Title Xll-Education for the public service: Part A-Grants and contracts to strengthen and improve education for the publieservice Part B-Public service fellowships $1, 500,000 13, 000, 000 17,950,000 22, 000,000 19, 050, 000 8,000, 000 1,117,000 936, 000,000 7, 000,000 120, 000,000 400, 000,000 4,600,000 5,400, 000 $1, 500, 000 13, 300,000 120,000,000 45,000,000 30, 000, 000 33, 000, 000 2,000,000 1,900,000 382, 000,000 7,000,000 50, 000,000 200, 000,000 10,000,000 15,953,000 $1, 500,000 13, 500,000 130,000,000 54,000,000 38,500,000 57, 000,000 2,400,000 2,320,000 358, 000,000 7, 000, 000 50, 000,000 200, 000,000 10,000,000 31, 406, 000 $1,500,000 13, 500, 000 140,000,000 66, 000,000 40, 500,000 80, 000,000 2,700,000 2,740,000 344, 000,000 7, 000, 000 50,000,000 200, 000, 000 10,000,000 41, 459, 000 10,000,000 46, 359,000 Total, new obligational authority $1, 500, 000 13, 500, 000 150, 000,000 77,000,000 42, 500, 000 90, 000, 000 3,000,000 ~ 3,160,000 ~ 336,000,000 7,000, 000 50,000,000 200,000,000 4 2,321, 502, 000 2,319,237,000 2,620, 020, 000 3, 039, a35, 000 3,415,381, 000 Amendments cover fellowship programs under part C of Education Professions Development 4 Includes $1,463,000,000 currently authorized. Act and title IV of National Defense Education Act. Amounts represent increased costS for part C for which authorization for new awards expires June 30, 1970. Increased costs for title IV are included Note: The projections contained in this table represent the best departmental estimates available in total costs under I)art D title IV of amendments which would extend program for 5 years. at this time and do not represent the administration's position on future programs or budgetary 2 Claims on defauult and ~eath: Negligible in 1969 and 1970. requirements. ~ Currently authorized. PAGENO="0127" 121 Mrs. GREEN. Are there any other questions on this part? Do you want to continue? Mr. HowE. I will go ahead to our networks for knowledge proposal which I think I can describe best by reading the testimony here, start- ing in the middle of page 31. A new program, networks for knowledge, would become title VIII of the Higher Education Act, designed to encourage such resource- sharing among institutions of higher education. Emphasis would be placed on the stimulation of arrangements whereby institutions of higher education would share technical and other educational. facilities and resources, while maintaining institutional identities. The Commissioner of Education would be authorized to make grants to institutions of higher education to support the planning and opera- tion of such sharing agreements. In certain instances, grants might be made to other established agencies and organizations, including professional organizations or academic societies-for example, for the development of a common program in a special subject field to be used in computer-assisted instruction, the subject-matter professional asso- ciation might be the most effective grantee. Funds could be used for development and operation of a series of interinstitutional arrangements: Collection and sharing of curricular materials and information on modern curricular advances: This could take many forms, such as creation of a curriculum clearinghouse, for a geographic region or a specific subject-matter area. An institution which had conducted indepth research into a facet of instructional content or technique could share its findings with other interested colleges and universities. Needless duplication in curriculum development could be avoided, if institutions were aware of the cur- ricular materials available to them. Development of effective systems of processing and maintaining financial and student records; multi-institutional arrangements for standardization or simplification of recorclkeeping could prove ex- tremely beneficial to a number of our colleges and universities. Perhaps such a simplified system could be combined with a centralized data processing facility, for which each participant would be assessed a pro rata share. Joint use of facilities such as classrooms, libraries, or laboratories: Library networks, providing access to collections of maeerials in the possession of a nun'iber of institutions. Some institutions of higher education have already established library consortiums to reduce the costs of maintaining specialized library collections in a large number of fields. However, in the main such consortiums have consisted of colleges large enough and wealthy enough that each would have a specialized, expensive library to "contribute" to the system. Federal assistance to a multi-institution library network might assure that the poorer insti- tutions-those who need the most to share library resources-would be able to participate. Establi~hment and joint operation of closed-circuit television facili- ties: Such TV networks would allow institutions to share their facul- ties by wire and could result in improvement of quality while limiting costs. PAGENO="0128" 122 Planning and operation of electronic computer networks: Sharing of a single centralized computer by a number of institutions can cut the costs to any single institution significantly, while still providing suffi- cient computer time for processing of financial or student records, student course work, or transmission of library or other rnateriaJs, or providing a resource for faculty research. The scope of the computer's use, as part of an educational network, would be limited only by the imagination of the group of institutions proposing the project. Exchange of faculty on a part-time of full-time basis: Less wealthy institutions may not be able to afford-or use-the full-time services of a distinguished professor. Again, sharing would enable more schools and more students to benefit from a single faculty member's knowledge. For fiscal year 1969, it is requested that $8 million be authorized to be appropriated for resource-sharing programs, with such sums as might be necessary for the next 4 fiscal years. Funds are not to be spent for providing capital equipment, library resources, or other assets to a single institution. These are intended, instead, to pay the costs of transmission or other changes incident to establishing a network. Madam Chairman, I might observe that this proposal probably had its origin in a walk I took with Secretary Gardner on the Mall one day. We were discussing the affairs of higher education. He observed that there were a great many networks developing among institutions of higher education across the country but that they always seemed to neglect the professor in his classroom; that he seemed to be very much alone while there were networks for such matters as admissions prob- lems, for such matters as student aid, for all the administrative affairs of the institution. He raised the question of whether it would not be possible to do something to get higher education institutions to think about sharing their strengths and particularly their instructional and research and academic strength in new ways, and perhaps to make the teacher in the classroom a less lonely figure, a person who was fortified by resources from outside his own institution. That walk took place 2 years ago. Now we are coming up with an idea. I think there are clear evi- dences already of institutions' having moved in this direction on their own in very effective ways. There is nothing original about this. But this seems to us an important development to encourage; particularly for certain specialized resources and particularly with the possibility of modern communications technique, it seems to us that this kind of encouragement might result in improvements in efficiency and im- provement in quality of higher education. That is why we bring this proposal before you. Mrs. GR~N. Under title I of the Facilities Act, can grants be made to a group of colleges working together on a cooperative basis? Mr. MUIRHEAD. Tinder title I of the Facilities Act, I suppose this could be possible if, first of all, the project met the priority standards of the State commission and did result in the construction of facilities to meet enrollment increases. Mrs. G~EN. Have you ever given such a grant? Mr. MUnuIEAD. We have not. PAGENO="0129" 123 Mrs. GREEN. Have you under title II? Mr. MUIRHEAD. Under title II which is'the graduate facilities pro- vision of the Higher Education Facilities Act, we have not supported a consortia type of facility, to my knowledge. Mr. HOWE. I think the basic response here is that institutions think of themselves alone when they think of building university facilities and they don't always think of what the possibilities might be for pulling in other institutions. We would encourage them to think of that possibility. I think that kind of network which we are suggesting, which does not include capital construction at all, might have an influence on the construction side and might encourage institutions to think about joint planning for construction possibilities- Mrs. GREEN. As I recall we specifically wrote into title II authority for cooperative efforts. It is my recollection we did this because there were a lot of cooperative efforts. Why would it not be advisable to stress this too in terms of facilities in title las well? Mr. HOWE. I think it is a very good suggestion to stress the facilities side of this. I think we probably have adequate authority, don't we, Mr. Muirhead, to do this? Mr. MUIRHEAD. Yes; we do have adequate authority. Mrs Green is quite con ect in pointing out that this is one oi the goals that we had hoped to achieve through title II, that we would find the universities joining together and sharing their resources. It has not emerged. I think one of the reasons is that there would have to be a new board set up representing the constituent parts; that board would be representative not only of the universities but the communities to. be served. This has proven to be ~ difficult thing for universitiesto achieve. I would like to second what the Commissioner has just said, that we should encourage these efforts, not only with respect to the proposal for the education networks but also with respect to the proposal for strengthening graduate education. if we could find some way by which graduate schools could combine their resources, the whole concept of sharing resources should be stressed. Mr. HATHAWAY. I wonder if you would go a step further and apply a little mild coercion by way of withholding funds unless universities that were close together and could cooperate very e~'sily came up with a plan for cooperation? Mr. HOWE. I have discovered that withholding funds is not a popu- lar exercise. So I think maybe we ought to do it through encourage- ment and suggestion rather than withholding funds. Mr. HATHAWAY. They both could amount to the same thing. What I was wondering is whether you thought we should write into law words to that effect. It seems to be a waste of money to be building libraries that are only a half mile apart and doubling the amount of money that we would have to spend. Mr. HOWE. You are suggesting writing this into the. Higher Edu- cation Facilities Act? . Mr. HATHAWAY. Yes. ,. Mr. HOWE. Suggesting. a concept of.a bonus or planning money to~ make the exercise possible or something of that kind? 92-371-68-pt. 1-9 PAGENO="0130" 124 Mr. HATHAWAY. Right. Mr. Howi~. I think this is well worth exploring. We would like to look at the language that is there now and perhaps make a. suggestion to you. Mr. HATHAWAY. Thank you. Mrs. GREEN. What aJ~ut the same kind of inducement in the net- work provision? With the explosion of knowledge, I am told that all the colleges cannot possibly have adequate libraries. Mr. HowE. Of course, in the network provision you have a basic requirement that there must be multi-institutional involvement right from the beginning. Mrs. GREEN. We have other programs that contribute, for instance, to libraries. If we went back and dovetailed these together so that it would be real inducement on all the programs to make cooperative efforts. Mr. HowE. You are suggestrng the application of the networks proposal in such a way that it would influence title II of the Higher Education Act, for example? Mrs. GREEN. Yes. Mr. HowE. I see real possibilities here. Mr. MuriurE~&D. Might I add, too, that there are real possibilities in title III of the Higher Education Act-the developing institutions program. There has emerged in that program a very substantial use of the cooperative arrangement and the consortium in carrying out the purpose of the legislation. Mr. QUTE. Speaking about cooperation, what about more coopera- tion within the institutions? I am thinking of some of the schools that have audiovisual equipment whose departments don't share with each other across the corridor. I'm not talking about another institu- tion a half mile away; how about sharing resources across the cor- ridor? If you are going to use inducement, I suppose you could give them a bonus for cooperating. Mr. Quii~. How about exchange of faculty, the last item you have, 33; isn't that a complete duplication of the developing institutions? Mr. HowE. Not necessarily, because first of all, all institutions are eligible under this proposal. This might lead, for instance, to an ex- change of faculty among two or three or four institutions that were in no sense developing institutions. Mr. QmE. They just happen to be less wealthy. Mr. HowE. No; not at all. This could involve two major institutions that wanted to share faculty on some mutually agreeable arrangement so that a particular esoteric specialty could be met that did not require faculty at both places. I think this is really addressed to the possibility that with modern means of communication available, a very able professor in a par- ticular field can teach at three institutions if the arrangement can be made for it and this sort of thing is happening. 1 recall several years ago when Henry Steel Commager was, I be- lieve, teaching at three institutions at one time and stimulating all of them. I think that was a good thing. It cost some extra money. It is a simple concept. I think we ought to make that kind of. thing possible. PAGENO="0131" 125 Mr~ QUIE. You think the Federal Government ought to be setting up `all these networks and programs? Mr. HowE~ No; we will not be setting them up. The proposals will be made to us because the institutions get together. - Mr. QUnD. You want the Federal Government to fund this ?I think there is such a myriad of Federal programs that the fabric is going to be pretty big after a while. I understand that the institutions need money `and the Federal Government is the source of the money. I have proven through the years that I strongly support that idea. But it rather appalls me to have a network for knowledge, NFK, just on top of everything else we have. It seems to me we should move to an institutional grant and let the institution make decisions because they must `have been walking on the Mall and coming up with ideas, too. Mr. HOWE. Let me say I `agree with you that we need to find the way to provide institutional grants for general support of institu- tions of higher education. You will find in the President's message a directive to the Secretary of HEW to do exactly th'at, in recognition that t'here is a need for thi's. This is a very complex problem of finding the kind `of formula or funding `arrangement which will pay `attention to the very diverse spectrum of higher education in the United States. Mr. QUIE. You are saying that there are private institutions and that others are public. Mr. HOWE. Not `only that. There are private institutions that cut across the full range of activity from the University of Chicago to a struggling Negro college in Florida. We must seek the kind of institutional grant arrangement that will be fair `and reasonable to both those extremes of the private spectrum. You will find the same kind of problem on the public side. As you begin to explore this issue of what people call general aid to higher education, as I have been exploring it this past year very vigorously, you rapidly find that to reach the formulation which is acceptable to the h'igher education community is n'ot simple. Mr. QUIE. We have many of these little programs and you still have the same problem of reaching all these institutions but they are so caught in the confusion of what `all these programs `are that they never get to the point of battling with each other to decide who is to receive so much money from general `aid. Mr. HowE. I understand they find out very rapidly w'hat the pro- grams are and apply for them very vigorously `and make use of them very well. Mr. QUIE. I am thinking of the personnel to go through the cata- log of programs. Mr. HOWE. It takes some energy; there is no question `about that. Mr. QuTE. You need a catalog of a catalog. Mr. ERLENBORN. I make `an observation we are getting into a greater area of grant'smanship, a subject that has bothered our sub- committee. Another thing that bothers me about this proposal, I think I de- tect a proposal for a new network of regional laboratories for higher educati'on. Isn't th'at so? PAGENO="0132" 126 Mr... HowE. No; none of us intended to imply a network of new institutions in this of any kind. What we are really addressing our- selves to is sharing the strengths that the institutions have and pro- moting efficiency in institutions. Mr. ERLENBORN. My recollection is that I didn't, and several mem- bers of The committee didn't, anticipate the regional laboratory setup when we saw the legislation before us. I am a little suspicious that this is here even though it may not be too obvious. Mrs. GREEN. Will you yield? Mr. ERLENBORN. Yes. Mrs. GREEN. I might suggest it might be appropriate to write lan- guage on the limitation in this bill on the regional laboratories. Mr. ERLENBORN. It might be. At least, we ought to give this some consideration. I notice this program as well as one or two others here have 1-year authorizations spelled out in dollar terms and the next four such sums as may be necessary. Mr. Quie addressed that problem. I would like to ask, isn't there Public Law 801, I believe it is, that when a proposal for a new program is made it would require you to give us a 5-year projection of costs at the time that this is submitted? Mr. HOWE. I was not aware of that teclmicality. I was aware that whenever we come up here with this phrase "such sums as may be necessary," we always get asked for the 5-year projection and we always supply it. So, we certainly shall. Mr. EELENBORN. I would like, if you would, for your counsel to give us a memo on the applicatioiI of Public Law 801 as a requirement of law that you apparently have not complied with, not as a technicality. Mr. HOWE. We shall. (The document follows:) APPLICATION OF PuBLIC LAw 84-801 Public Law 84-801 requires agencies to submit five-year manpower and cost projections in proposing or reporting on legislation which, if enacted, will entail an estimated annual expenditure of appropriated funds in excess of $1 million. HR. 15067, the proposed Higher Education Amendments of 1068, authorizes only "such sums as may be necessary" for fiscal year 1970 and succeeding fiscal years. Since the amount "necessary" for the programs will be determined annually in the course of acting on the budget and appropriations, the Administration did not propose specific amounts When it submitted the legislation. In our investigation of the application of P.L. 84-801, we have found that we should be submitting such estimates along with the proposed legislation. This will be done in the future. We have provided cost estimate tables for HR. 15067 to be inserted at an earlier point in the hearing record. These projections represent merely the best estimates of the Administration, based on current assumptions. They do not represent the Administration's position on future programs or budgetary. requirements. Mrs. GREEN. I must say I like the recommendation and the proposals you make. I wish we had enough money to put them into operation. It does concern me to start new programs in the field of higher educa- tion at the same moment we are, cutting so sharply existing programs. Have you given any though to the impact on our undergraduate institutions of the returning GI's who will now have the GI bill which wlll enable them to go to college ~ PAGENO="0133" 127 Mr. HOWE. I think that the projections that we hive used in looking at added space for higher education, which 1 think is wha't you are talking `ibout, have taken into considei ation the expansion of Federal aid programs of all kinds. If you are bringing up the question of the `reductiOn' :jfl facilities proposed in the corning year's budget, I think the best way to describe th'tt effect to you, and Mi Muirhead can give you some more detail, is to say th'it that reduction both this year as a cost saving item and next year as an appropriations item-will have the effect of delaying by 2 years our 10-year projection for providing adequate space for higher education. This will be the actual effect of it. So that n e will reach the objective that we have been seeking in our projects over a 10-year period, but we willreach them 2 years later. Mrs GREEN Can you give me the assurance that will be the case or will you request only a small percentage again next year.? Mr. HOWE. I can't give you the assurance but I can express an intention to try to move in that directjon. Mrs. GREEN. The authorization for the grants for undergraduate and graduate facilities in titles I and II is $1.05 billion;: is that correct? Mr. MUIRHEAD. Yes. Mrs. GREEN. You are requesting $75 million for fiscal year 1969. Mr. HowE. In actual appropriation funds. Mrs. GREEN.' That seems to ine~ Mr. Q.UIE. For a total of what obligational authority? Mr. HOWE. The loan authority- Mr. QUIE. Not loan authority. You have requested a $7,5 million ap- propriation but you also have something in the pipeline on grants. Mr. HOWE. We are transferring some funds to come from this year's cost savings program into next year's obligational authority so that our obligational authoi ity for next year will be how much, Mr. Muirhead? ` . .. . . . . , . . . , . Mr. MUIRHEAD. The obligational authority for next year will be $375 million `including titles I, II, and III of, the Higher Education Facilities Act which, of course, includes the loan program. Mrs. GREEN. Leaving out. the loans'? ` Mr. MUIRHEAD. Leaving out the loan program of $150 million,,the total would be $225 million. Now, that obligational authority cOmes, of course, from t.he cost reduction that was effected this year and will be carried over to next year. Perhaps to put `this into a context that we could respond to, our 10-year projections that the Commissioner referred to a moment ago had anticipated an annual level of support in the facilities program of $650 million in both 1968 and 1969.~ That, of course, included titles I, II,. and III. The cost reduction in 1968 `postponed' `the obligation of one-third that amount until fiscal year 1969. So that now, rather than having funds available at an annual level of $650 million in 1968 and in 1969, we will have committed in 1968 $450 million `and $375 million in fiscal year 1969, a `net reductioii over the 2 years of funds available for construction purposes . of $475 million. PAGENO="0134" `128 Mrs. GREEN. This does mean that in the following year there will not be money in the pipeline; it will all be used up; so the impact will be greater than in 1970 and 1971. Mr. HowE. The actual dip in buildings will come in 1971, this being a 3-year pipeline, approximately. Mrs. GREEN. I would also like to place in proper context a letter from the Educational Coordinating Council in Oregon on the com- munity colleges and they make reference to the advice that they have apparently received from HEW on the one-third cut. The total project cost estimates $34 million; the Federal share of the project as they were led to believe would be $13,849,000. But instead `the funds available to Oregon under the present pro- posals by hEW will be $903,381 or 5.8 percent for community colleges. Then in 4-year institutions, with the total project cost estimates of $18 million, the Federal share of $6 million, and the actual funds available, $2 million, or 39 percent of what they planned. Now, what does that do to enrollments in Oregon and if the ex- perience of the GI bill after World War II is any criterion or any in- dication of what we can expect we are going to have a lot more coming in than earlier projection figures. Mr. HowE. I don't understand the percentages there, this 5 and 39 percent of what they planned. I think a realistic percentage figure to cite would be really the percentage that will be available of what would have been built if the normal Federal program had operated. Whatever they had planned might have been astronomical, but the regular Federal program with- out cuts would not necessarily have taken care of it. So, I don't fully understand those percentages. The only answer I can give you to your question is that we are going to reach this objective of providing adequate facilities and that we are going to have a time delay of approximately 2 years as a result of these actions. We believe that we have made the right decision in taking the additional funds we have available and putting them into immediate, present, this-year needs. The budget focuses on student services and teacher-training serv- ices and these kinds of human resource services as compared to the facilities program which we believe can withstand this 2-year delay but which has a very special impact on inflationary problems. Faced with difficult decisions of this kind, we believe this is a sen- sible decision to make. Mrs. GREEN. I notice that major cuts are recommended in the Fed- eral Impact and the Higher Education Facilities Act-two programs which are fairly popular in Congress. Do I assume that there would not be strong opposition by the ad- ministration if Congress in its wisdom saw fit to increase these ~ Mr. HowE. Well, the administration is never opposed to the wisdom of the Congress. Mrs. GIi~EN. You would not oppose an increase? Mr. HowE. We believe that the budget we have presented should be enacted as presented. PAGENO="0135" 129 Mrs. GREEN. What would be your reaction if we, as I think there is some merit to the suggestion of getting these new programs on the books-if we wrote in a proviso for all of the new programs that they not be funded until existing programs are fully funded? Mr. HowE. I would regard that as a step backward. I think that these new programs have great hope for students and very great hope for higher education institutions. I think that to attempt to legislate appropriation action in this fashion really removes from the administration and from the Appro- priations Committees the duties they have to plan for appropriations. It would seem to me that that would result in less good planning for the use of funds. It would `also deny the opportunity to students and to higher education institutions to benefit from programs that are very `hopeful. I would hope you would not do that. Mrs. GREEN. So that we would not be interfering with your appro- priations we could certainly provide that the programs not be au- thorized until 1971. Mr. MITIRHEAD. Madam Chairman, because the very largest cut in the higher education programs has come in construction, it might be helpful if we were to provide for the committee an analysis of the impact of that cut and what might happen under several options. What might happen, if, for example, expenditures for facilities were restored to the planned level, let us say in 1970 or in 1971, so that you could assess the impact of this cut on the `accomplishment of the goal embodied in the Higher Education Facilities Act. That legislation has set as its goal, the closing of the gap, if you will, between the volume of facilities, needed to meet higher education enrollment and the con- struction capacity of the colleges `and universities. We had hopefully planned :to `achieve that objective by 1973. The program which had been laid out would have closed that gap, with the planned expendi'tures, by 1973. If we could provide for you now information that would indicate what the state of affairs will be in 1973 as a result of this cut `and `how much longer it might take to fully close the gap-which was `the original intention of the act-then I think you might have the řhoices before you. (The analysis referred to follows:) ANALYSIS OF THE IMPACT OF REDUCED HIGHER EDUCATION FACILITIES ACT FUNDING LEVELS IN FISCAL YEARS 1968 AND 1969 As a result of reductions due to overall budget ceilings, a total of $450 million has been authorized for new obligations in fiscal year 1968 under the Higher Education Facilities Act. The requested program levels for fiscal year 1969 total $325 million. Earlier Office of Education projections had assumed total new obligations under the Higher Education Facilities Act at a level of $650 million in both fiscal year 1968 and fiscal year 1969, tapering off gradually each subsequent year through fiscal year 1973. On the basis of the original assumption, it was estimated that the academic fa- cilities quantity gap, which apparently reached maximum severity in the fall of 1967, would be progressively reduced to manageable proportions by the end of fiscal year 1973. As estimated originally, the situation in the fall of 1973 would have been about as follows: PAGENO="0136" 130 A remaining shortage of needed academic facilities totaling about 32 mil- lion gross square feet, or about S square feet for each of the 7,038,000, full- time equivalent students expected to be enrolled at that time; or Expressed anothei way a shortage of space equal to adequate capacity for about 211,000 full-time students. - Assuming that funds are made available at the levels originally projected for fiscal': years 1970 through 1973,, the. long-range effect .of the fiscaJ~ year 1968 and 1969 reductions will be to change the estimated situation in the fall of 1973 to- . A remaining shortage of needed academic facilities totaling about 65 million gross square feet, or about 10 square feet per full-time equivalent student; A shortage of space equal to adequate capacity for about 436,000 full- time students. In other words, the estimated effect of the reductions will be construction of about 33'million square feet less of academic facilities, thus providing capacity for about 220,000 to 225,000 fewer full-time students. The projected effect of the, program reductions,' however, is placed in perspective by a comparison with the situation which existed when the Higher Education Facilities Act was first funded, and the situation which existed in the fall of 1967. * Estimated deficiency in number of student places Estimated ` ` deficiency in gross squ feet ` are Per student Total Fall of 1964 Fall of 1967 Fall of 1973 after reductions ` Fall of 1973 as originally projected 599,000 1,073,000 436,000 ` 211,000 . 22 30 10 5 90,000,000 161,000,000 65, 000,000 32,000,000 ` Actually, `new construction commitments assisted by the Higher Education Facilities Act were highest in the years in which the academic facilities quan- tity gap was the greatest. However, because availability of completed facilities inevitably lags two or three years after `the `Federal commitments, the, largest Federal (Higher Education Facilities Act) contribution toward reducing the gap' is projected for the two fiscal years in which substantial funding reductions are indicated (1968 and 1969). Figure I and Tables I, II, and III provide detailed information regarding the basis by which the impact of the Higher Education Facilities Act has been esti- mated, both according to' earlier funding projections `and with the reductions indicated for fiscal years 1968 and 1969. Table I illustrates the estimated relationships among amounts of program funds committed, total cost of facilities for which new commitments are niade~ and the cost of facilities completed with Federal participation. Table II trans- lates the dollar values of facilities completed into gross square feet constructed and impact of completed square footage on reducing the academic facilities quantity gap. Table III converts the square footage data into student enrollment capacity, as "places" for full-time students, on the basis of a generally accepted overall planning factor of 150 gross square feet of academic space per full-time equivalent student. (This is about the space-to-student ratio that existed in the Fall of 1958, before the massive enrollment growth experienced during the nineteen-sixties.) The data presented are the best available. They have been carefully and systematically developed on the basis of a series of Office of Education surveys and experience to'date in the Higher Education Facilities Act programs. They do, however, represent projections from a base inventory of college facilities which is about ten years ,old. (An adequate updated inventory should become available about one yeai from now) Estimates of future square feet corn pleted are `based on a factor for modest annual increases in' the development cost per square foot, but costs have been increasing at a faster rate in recent months. ,~ ` The' data obviously' are subject to the limitations inherent in broad statis- tical averages and long-range projections. Many colleges are better' off and PAGENO="0137" 131 many others are much worse off than the a~ eu ages inthc~tte Over the long teim costs may increase more or l~ss rapidly than projected, and enrollment growth may be faster or slower than projected. Nevertheless a few generalizations seem to be beyond question (1) the quan tity gap in academic facilities grew larger in the early years of the Higher Edu cation Facilities Act because the Act came along three years later than needed to prepare for the enrollment bulge; (2) if the Higher Education Facilities Act is continued at the projected levels beginning in fiscal year 1970 (but without restor- ation of the FY 1968 and FY 1969 reductions) the quantity gap will be gradually reduced below its current level, although the gap remaining in 1973 would be larger than is considered desirable; but (3) if the reduced levels are sustained beyond 1969 the quantity gap. will again begin to grow substantially. The earlier Office of Education goals for the Fall of 1973 could be reached one year later, by the Fall of 1974, if the $200 million reduction for Fiscal Year 1969. (plus a 10 percent increment for increased costs) is added to the projected amount ($632 million) for Fiscal Year 1970, and the $275 million reduction from earlier projections for Fiscal Year 1969 (plus 10 percent) is added to the projected amount ($608 mililon) for Fiscal Year 1971. Two other qualifications on the validity of these projections should be noted. First, they include a substantial, though slightly moderated, continuation of the current high levels of non-Federal effort. (In this conneëtion, non-Federal effort has generally followed a cyclical pattern consistent with State biennial appro- priations of funds for plant expansion.) How well this effort may continue to be sustained by the colleges and the State and local governments is perhaps subject to some question. Second, the statistics deal only with need in terms of quantity of space, and leave untouched the question of quality of existing space. The extent and nature of a possible quality gap should become clearer after updated inventories and comprehensive planning projects are completed in the next two or three years. The academic facilities problem is not yet solved, but substantial progress is now being made and will continue to be made in the immediate future, even with the fiscal year 1968 and 1969 redtictions in Federal funds for academic facilities. The presently planned Federal funds will not, of course, come close to meeting all the needs expressed. With carefully defined criteria for determining priorities however, they should be able to meet all the truly critical needs in the immediate future. In the meantime, widespread activities for research and analysis now under- way and planned for the near future, should provide a much more clearly defined estimate of the situation within the next two or three years. TABLE 1.-RELATIONSHIPS AMONG HEFA PROGRAM FUNDS COMMITTED, ESTIMATED COST OF BUILDINGS FOR WHICH COMMITTED, AND COST OF BUILDINGS COMPLETED WITH HEFA ASSISTANCE [In millions of dollarsj Total cost of buildings Fiscal year Total HEFA program for which new HEFA funds committed funds commitmonts were made Total cost of new buildings completed with HEFA assistance - 1965 $392.1 $1,272.0 1966 626.8 2,140.0 1967 710.7 1,701.0 1968' 650.0 1,625.0 19682 450.0 1,125.0 1969 1 650. 0 1,625. 0 1969 375. 0 937. 5 19701 632.0 1,580.0 19702 1971 1 608. 0 1, 520. 0 1971~ 1972' 595.0 1,487.5 19722 1973 1 586. 0 1, 465. 0 19732 1974 586. 0 1, 465. 0 $106.1 299.2 723.0 1,538.2 1,528.2 2, 031. 1 1,952. 3 1,753.9 1 389 5 1,685. 1 1,157.0 1,583.9 1,377.6 1, 532. 7 1,527.7 1, 493. 9 1 Estimated on basis of original target leVels, fall 1967. 5 Reduced estimates, reflecting reductions in fiscal years 1968 and 1969 levels, assuming original target levels unchanged for fiscal years 1970 through 1973. PAGENO="0138" Full-time Academic Academic Quantity gap2 Academic facilities Academic year equivalent facilities facilities completed enrollment' needed available' (thousands) Tota I' Per student3 Totals Assistance I 1958-59 2,658 398,700 404,400 None None 1963-64 3,693 553,950 498,859 55,091 15 28,114 173 1964-65 4,112 616,800 526,978 89,822 22 32,034 2 880 1965-66 4,667 700,050 559,007 141,043 30 41,282 8,121 1966-67 5,052 757,800 600,289 157,511 31 59,554 19,374 1967-68 5,472 820, 800 659,843 160,957 30 71, 502 40, 029 Original projection4 659,843 160,957 30 76,330 40,497 1968-69 5,808 871,200 731,345 139,855 24 57,822 49,170 Original projection 736,178 135,022 23 64,222 51,852 1969-70 5,919 887,850 789, 167 98,683 17 66, 206 33.649 Original projection 800,395 87,455 15 73,521 42,947 1970-71 6,135 920,250 855,373 64,877 11 49,814 26,943 Original projection 870,521 49,729 8 55,318 39,608 1971-72 6, 411 961,650 905, 187 56,463 9 50,991 30. 847 Original projection 928,839 32,811 5 56,629 35,694 1972-73 6,723 1,008,450 956,178 52,272 8 34,275 32.999 Original projection 985,464 22,986 4 38,062 33,214 1973-74 7,038 1,055,700 990,453 65,247 10 51,976 30,926 Original projection 1, 023, 526 32, 174 5 51, 976 30,926 I Thousands of gross square feet. 2 Based on overall average planning factor of 150 gross square feet of academic facilities per FTE (full-time equivalent) student. I Gap per student in gross square feet. `Original projection means before fiscal years 1968 and 1969 reductions. Original levels were $650,000,000 for both years Full-time equivalent Opening Number of student places provided student deficiency by added facilities 2 enrollment in number of - -- increase student Total HEFA assistded places 2 1964-65 419 1968-66 1966-67 385 1967-68 420 Before cut3 1968-69 336 Before cut 1969-70 - 111 Before cut 1970-71 216 Before cut 1971-72 276 Before cut 1972-73 312 Before cut 1973-74 315 Before cut 1974-75 299 Before cut 599 214 19 940 275 54 1,050 397 129 1,073 477 267 1 073 509 270 932 385 328 900 428 346 658 441 224 583 490 286 433 332 180 309 369 264 377 340 206 216 378 238 349 228 220 150 254 221 436 347 206 211 347 206 388 (`) (4) 163 (4) (4) 132 TABLE Il-ESTIMATED IMPACT OF THE HIGHER EDUCATION FACILITIES ACT OF 1963 ON THE ACADEMIC FACILITIES QUANTITY GAP TABLE Ill-COMPARISON OF ESTIMATED ENROLLMENT INCREASES WITH ESTIMATED NUMBER OF ADDITIONAL STUDENT PLACES PROVIDED BY ADDITIONS IN ACADEMIC FACIL1TIES' Academic year I All figures represent thousands of students, rounded to nearest 1,000. 2 Based on overall average planning factor of 150 gross square feet per full-time equivalent student. `Before cut means as previously projected based on original target levels of $650,000,000 HEFA funds in fiscal year 1968 and fiscal year 1969. ` Not estimated. PAGENO="0139" 133 F1'zfl~6 I' Ut~U~t~ EDVc~crto~J FAC1LIr,~5 AcT FuuoS, VALuE OF FACILITI~5 COflni~r'TEQ, Av~'b V,4wE OP __________________________ COt1pL~~(p r,~cu~1iEs, AS Łcrstirn~b `w~~* AW~ ~,J,THouT REDu~t, p~.o6RM1 LEvEL.5 F~'~ ______________________________ PY ~ Ai~O Pi i1~1 _________ * % ~OO MHLt~II ~ * ~ ~.i ri~ r~s~ (k `~ ~ ~W ~~iiii ~ 2 / ~ f1~5 17~ 17C7 ~j~g IIC? I~7o 1111 i'~iia 1173 CL. r3i~t. DC, Mr. MnIRHEAD. It seems to me that, of course, the reduction is hurt- ing and we are hearing about it. But it aiso seems to me that he col- leges and universities may very well find that these reductions in the years immediately ahead will be reflected not so much in closing the door to college admissions for young people as in having additional numbers of young people housed in faôilities that are not as good as they should be, that are not of the standard the Higher Education Facilities Act had hoped to achieve-~ Mr. GIBBONS. May I interrupt at that point? I think we have to look at this realistically, too. I would wish that we could put up the money. On most campuses that I visit there is always room for greater utilization of physical facilities. I am talking about LEGEND 1uTAL HEFP~ FuWD~ ~ Cairn I rr~o E~1It1~YEO Te.rAL co~r op FAcs~t~iE~ Co,in,rTED E'~1D1ATfD TOTAL eooT .~`.` OF CoilI'LETEO F~CIL*TII5 ~ GAP fl~ ~yf) ~/f~ r~~' PAGENO="0140" 10 J. 0. longer workweaks and longerworkdays and greater efficiency of the use of student stations. While I hate to put the universities in~ a tighter hind, I think that we have to really take a look at greater utilization of facilities. That is the problern.~Most of the universities are still operating on a 5-day week `ind they `ue not operating hte in the e~ienings We still h'ive `in impact of students ~n the Fill ind `i chop off in the wmter spring, `tud practically 25 pe cent utiliz'thon of oui f'icilities in the siunmertime. I think these are luxuries that perhaps we at this time can't afford and we need to tighten our belts not only in some of the ways that are being done in other programs but in this. In the long run-I would hate to hilosophize this way-but it may be good for universities and students. I notice checking enrollments in Florida institutions that in the fall quarter or semester the student enrollment is about 10 or 20 percent higher than it is in the spring. In the summer, it is only operating at about 25 percent of its capacity that it used in the fall. They still are not using Saturdays, evenings, and so forth for facili- ties. I don't know how many student stations are unused even in the fall semesters. Mr. HowE. Mr. Gibbons, may I make a brief comment? I agree with you entirely. I made a speech on this subject to a group of men who are responsible in the States for administering the Higher Education Facilities Act when they met in Raleigh, N.C., a short while ago. It was not well received by them. I am sure there are some institutions that are run very efficiently and it is difficult, as always, to generalize. I am sure that the higher education institutions have not disciplined themselves on the use of facilities and it is important to do this. When I look at the fact that the Federal Government is now provid- ing about 23 percent of the operational cost of all higher educatipn in the United States and that that percentage is likely to rise over the next 10 years, I think this question is going to be raised more and more, and quite appropriately raised. Mrs. GR~N. Maybe it would be appropriate for institutions of higher education to do a study of the utilization of the Rayburn Building and the HEW building. Mr. GIBBONS. I would be glad to start with my office. Mr. HOWE. I will match the HEW building against the Rayburn Building in that study. Mrs. GREEN. You know, I hope that the Office of Education is not going on the record here that we don't have full utilization of facili- ties. These words will be played back if the war ever ends. Mr. GIBBONS. I think it is obvious. We either overuse the facilities in the fall or we underuse them the rest of the year. If you check student enrollments, and I am sure you have, you will see that there is a high crest in the fall, in the whole fall semester or fall quarter. In the sunirner or spring, right after Christmas, it jumps way down. By the summertime, all during the months of that better than two-thirds of the year, there must be a vast underutilization, just because registrars `ullow people to enter at a ceitain rate in the fall PAGENO="0141" 135 If they told them they could not come until the winter semesters or winter quarter or something like that, we could adjust to some of these things. It won't be too tough. Mr. QUIE. It sounds like we are all enamored by the experience of Parsons College in the use of facilities. I know too, that on my own farm I use my combine much more during one time of the year than I do other parts of the year. Mr. GIBBONS. People don't mature as corn does. Maybe they do out in your part of the country. We have even learned to plant oranges so that they come in at different times of the year so you don't pick them all the same day. Mr. QrnE. I don't know how you can bring the students in through- out the year, the ones who are going to fail or drop out for one reason or another. We don't have a new program to prevent them from failing. Mr. GIBEONS. That is not the issue. The issue is the number of people who apply in the fall. It is a tradition in America, and I believe in tra- dition, but there are some times when we have to look at these things from `t diffeient point of view I would say registrars can say we can use these facilities after Christ- mas and after Eastertime at a much greater rate than we are using them. We would also get a better use of the brains that instruct here. We are either overloading them vastly in. the fall and wasting them in the spring or something is wrong. Mr. HowE. Madam Chairman, could I make one comment? Mrs. GREEN. Yes, Mr. Howe. Mr. HowE. I would not oppose a study and I have much agreement with some of the things Mr. Gibbons is saying, but I would throw into the conversation a sort Of warning. It would be a great mistake in my view for the Federal Government to come up with any sort of formula about how higher education institutions ought to be organized. Mr. GiBBoNs. I agree. Mr. HOWE. There is a great diversity of views about the nature of higher education and about the way it should be run. I think we have to leave primarily to institutions this question of how efficient they shall be and encourage them to address that question responsibly. But there are going to be institutions which will believe that their greatest strength and their greatest service will be provided by having a 2-to-i faculty-student ratio. There will be other institutions that will have some other kind of belief about the nature of education and the nature of instruction. I just want to be careful that in mounting any studies we don't cre- ate a pressure for sameness but rather we create an idea that within an institution's image of itself that it seek efficiency, not~ that there is some overall idea of what everybody ought to be. Mr. GIBBONS. When you think of the dormitories that sit idle in the summer and when you think of all of the other physical capacities that we are contributing some part to, there is a good argument that the universities can look at this capacity particularly at a time of shortage. I don't say that there ought to be any Federal pressure. There ought not to be any Federal lockstep type of arrangement. I think realis- tically we have to admit that they have not doneall they can do. PAGENO="0142" 136 Mrs. GREEN. On this point I think it might be helpful if we include in the record a study on the Utilization of College and University Facilities. I therefore ask unanimous consent that this report be in- cluded in the hearings. UTILIZATION OF COLLEGE AND UNIVERSITY FACILITIES A BASIC ECONOMICS ISSUE The efficiency and intensity of utilization of facilities at colleges and univer- sities is an important issue today for the most basic economic reasons. Higher education facilities constitute an important component of capital investment in the Nation's economy, a portion which expanded rapidly in recent years with substantial infusions of Federal funds to supplement already massive financial support being undertaken by most of the States. State and local funds, as well as the Federal funds, are at the same time called upon to meet vast and wide- ranging urgent social needs and are scarce in relation to the demands. It is therefore imperative that these funds be wisely invested-in facilities which are most urgently needed and which will pay dividends in the form of intensive use as long as possible into the future. At the institutional level, resources also are scarce by comparison to needs. Funds invested in unessential buildings are not available for urgently needed increases in salaries, materials and equipment. As each building is added to a campus, the institution becomes committed to its use in lieu of a building it might have preferred to add, or to have designed differently, at some time in the future. These are obvious truths with obvious implications. One implication is that new buildings should be constructed only when and where they are most needed. A second implication is that buildings being con- structed today should be planned and designed with extra care and competence to provide as much flexibility as possible for adjusting to shifting needs of the institution. Such flexibility involves both the ability to shift sizes and shapes of interior spaces and configurations of built-in, equipment and the abiilty economi- cally to incorporate present and probable innovations in instructional technology. In many instances, long-range economies can be improved by designing the build- ings to facilitate the inčorporation of additional floors or wings. UTILIZATION GENERALLY NEEDS IMPROVEMENT Although critics of higher education and of public support for higher education tend to exaggerate and to oversimplify their case, it is nevertheless true that many institutions utifize their instructional facilities very poorly, in terms of hours per week, weeks per year, or similar indicators. Even institutions-the growing majority-which are working to improve their utilization acknowledge that they have yet to achieve what is possible and desirable in most instances. But the goal of maximum utilization is not as simple to achieve as frequently assumed. In many instances, any substantial increase in utilization of existing classrooms is difficult to achieve for a variety of reasons. Some of these reasons are explored later in this paper. Data presented below illustrate the fact that the range in intensity of utili- zation among different institutions is excessively wide. Again, as discussed later, there frequently are good reasons for this. For example, an institution which operates a progressive instructional program for an expanded curriculum on a campus which is over 100 years old can hardly be expected to match the utili- zation rates of an institution operating the same program in a brand new campus designed to fit today's program. UTILIZATION EAS BEEN GETTING MORE ATTENTION Early in the twentieth century a few institutions systematically began to study their utilization of academic space, but the subject generally was neglected until during and after World War II. In recent years, partly because of the economic realities cited earlier, the attention to space utilization has been in- creasing rapidly, and the related methodology and technology have been ex- panding at a correspondingly rapid rate. PAGENO="0143" 137 A manual by lohn Dale Russell and Tames I. Doi, sponsored by the American Association of Collegiate Registrars and Admissions Officers, (AACRAO), is a milestone in the development of "space utilization" technology. This contribu- tion, published in 1957, has come to be referred to generally as the "Russell- Doi" study.1 The Russell-Doi manual was published at a time of expanding interest in utilization studies and undoubtedly did much to stimulate increased activity in this field. A follow-up study on normative data about utilization, published th 1980, illustrated the dramatic increase in activity. more institutions made space utilization studies during the two-year period between 1956 and 1958 than during the six-year period between 1950 and 1956, and the number of colleges planning to undertake such projects increased more than threefold.2 "Comparison of the returns of the two surveys also shows a large increase in the number of privately controlled institutions making space utilization studies. Of the 233 institutions reporting space utilization studies in the 1956 survey, publicly controlled colleges and universities were definitely in the majority. Most of these studies had been made in connection with statewide surveys of higher education. The Dyrness survey of 1958 shows that 261, or 57 percent of the 457 institutions reporting either having made a space utilization study or planning to make one where privately controlled." ~ The authors ~f the 1960 study also ~on'cluded that: (1) ". . among degree- granting institutions of higher education, those with large enrollments make more efficient use of their instructional facilities than do those with small en- rollments . . . ;" and (2) " . . . among degree-granting institutions, privately controlled institutions use their instructional space about a's efficiently as do publicly controlled institutions of comparable size. There appears to be sonie difference in efficiency, but the degree of difference does not justify a `separate set `of norms of publicly and privately controlled institutions of comparable size groups."4 Many of the utilization `studies reported in the AACRAO sponsored studies were "one-shot" affairs, some of which were repeated from time to time but ~n no fixed sechdule. However, an increasing number of institutions and State sys- tems of `higher edu~ati~n `have been establishing `both continuing sy'stem's for evaluation of facilities utilization and need's, and standards for evaluating utilization `and planning new facilities. Much additional attention to utilization undoubtedly has been `stimulated also by the guidelines for administration of Title I of the Higher Education Facilities Act of 1963, under `which attention to utilization of existing instructional and library facilities `is a required consideration in determining relative priorities of projects t'o be approved. Tb's requirement is discussed `at greater length later in this paper. Several promising developmental `activities relating to facilities utilization have been sponsored and supported by Federal agencies. The National Science Foundation `recently published a report of a project on `development of com- prehensive information systeius for institutions of `higher education.5 One part of the report provides a proposed system for room-by-room in- ventory of facilities and a critical evaluation of methods and concepts relating to utilization studies. The principal contribution `of this project may be that it emphasizes the importance of `looking at facilities in the framework `of a total information system which interrelate's facilities to other aspects of the manage- ment of a university. A second project was the "Cooperative Research Interinstitutional `Space Project" (CRISP), financed by the Office :of Education and being carried out by the University Facilities Research Center at the University Of Wisconsin. The objective of this project was to develop a sophisticated syntem for maintaining a continual inventory of all types of facilities `by funeti'on `and current assign- ment, and for using the detailed information in the system for maximum effi- 1 Russell, John Dale, and James I. Del, Manual for Studies of Space Utilization in Colleges and Universities, 1957. 2 Doi, James I., and Keith L. Scott, Normativd Data on the Utilization of Instructional Space in Colleges and Universities, July 1960, page 1. Ibid, page 2. Ibid, pp. 12-13. Systems for Measuring and Reportsng Tue Resources and Activities of Colleges and Universities. National Science Foundation NSF 67-15. PAGENO="0144" 138~ ciency~ in utilization of existing facilities~ and programming for new facilities needs.6 Small institution'~ with limited admin~strative staffs may have difficulty in implementing the kinds of systems developed by these projects. For this rca- son, and because of a need for coordination of Office of Education Surveys with State Commiesions compi ehen~ive planning activities and institutional data systems, the Office of Education sponsored an intensive cooperative effort to develop standard facilities terminlogy. The result of this effort, Facilities Classifications and Inventory Procedures for Institutions and aS'tate Agencies, was published by the Office of Education in August 1967. This system is the common basis on which future Office of Education surveys and State Commis- sion comprehensive planning studies are being developed. As a result of these developments, a nationwide data base for analysis of academic facilities utilization, as well as for better long-range planning, is now in the process of development. A committee of representatives of State. higher education facilities commis- sions and expert consultants is presently working with the Division of College Facilities to develop proposals for comparable utilization analyses, based on the comparable classifications and inventory procedures now being placed in use. The objectives of. this project are to provide helpful methods for use by small as well as large institutions and to improve and strengthen the priority stand- ards dealing with utilization in State plans for Title I of the Iflgher Education Facilities Act. SOME IMPROVEMENTS HAVE BEEN TAKING PLACE Historical shries data on utilization of instructional facilities (or any other type of college facilities) are difficult to find. The number of hours per week which classrooms and laboratories were used were reported for 1960 in the Doi-Scott publication on normative data.7 The same indicator for public in- stitutions was reported in a survey by the Arkansas Commission on Coordina- tion of Higher Education Finance, for 1965.8 Both studies obtained sufficient returns to be considered generally representative of the situation for the year studied. A comparison of the results is shown in the following table: AVERAGE WEEKLY ROOM USE (HOURS) IN PUBLIC COLLEGES AND UNIVERSITIES General classrooms instructional laboratories 1960 1965 1960 1965 Low Average High 13. 0 20.2 34.0 12.8 26.3 38.0 5.2 15.8 28.6 8. 8 18. 3 34.0 Note: In round figures, comparison of these 2 studies indicates that as a group, institutions of higher education'haci increased their average use of general classrooms by about 30 percent between 1960 and 1965, and~their average~use of instructional laboratories by about 16 percent. - These rough data, however, are little cause for complacency. The average use of classrooms and laboratories remains below the level that should be ex- pected, and roughly half of the institutions studied are using such facilities fewer hours than the average. In addition, hourly use of classrooms does not reflect the degree to which the student stations in those classrooms are used when classes are scheduled there. Also, classrooms and laboratories represent sub- stantially less than half of the facilities operated in most institutions. Not much 6Willinm B. Fuller, Director, Higher Education Facilities Planning Board of Regents of the University of the State of New York presented an interesting illustration of the "Systems" approach to facilities planning being developed by the CRISP project, in a paper on "New Developments in Institutional Studies" presented at the 1066 Working Conference of State Commissions for Higher Education Facilities. Dr. Fuller's example is attached as Exhibit C in this paper. Dol and Scott, op. cit., pp. 4-5. S Cook. Id. Olin, "A National Survey: Inventory and Utilization of space In Universities and Colleges." unpublished paper presented at the 1966 Working Conference of State Commission for Higher Education Facilities. Dr. Cook Is Assistant Director of the Arkansas Commission on Coordination of Higher Educational Finance. PAGENO="0145" 13f~ comparative information on the use of other types of facilities has been de- veloped thus far. In reporting the results of the survey on 1965 utilization, the Assistant Direc- tor of the Arkansas Commission commented: "It can be seen from the average and mean reported that few institutions are presently utilizing available space at the acceptable number of hours pei~ week. Although this is not the reason for a college and university existing, the question can certainly be raised as to whether the public and those who support private education should not expect better utilization and in turn, less demand for construction and equipment monies." Continued improvement in utlli~ation of facilities would be essential even if funds available were expected to meet the needs of anticipated enrollment in- creases. All current projections, however, estimate that even massive increases in facilities spending will take many years to reduce or eliminate the existing facilities "gap." Thus, both the increased spending and significant improvements in utilization are needed to provide for increasing enrollments. REQUIREMENTS FOR MAXIMUM UTILIZATION Maximum utilization for higher education facilities would require all of the~ following elements: 1. Perfect matching of institutional locations, programs, and capacities with student population interests and locations. 2. Operation of all institutions on a full 12-month schedule, with full attendance. in all 12 months. 3. Scheduling of classes at least on Saturday mornings as well as in morning and evening hours in all institutions. 4. Perfect matching of the number and sizes of classes with the number and sizes of classrooms. 5. Complete flexibility for schedule-makers to assign classes to classrooms, and other instructional activities to appropriate areas, according to maximum effici- ency rather than to the prerogatives of particular departments or indiyidual~ faculty members. This list is incomplete, because other factors also would enter into maximum use of research and general administration facilities, for example. Obviously, maximum utilization is not feasible on a complete nationwide basis. Business and industry do not make maximum use of their facilities either, of course. However, an analysis of these five items is helpful in highlighting both the problems and the limitations affecting utilization in specific instances, and the areas whera. effort might best be directed in working for a substantial improvement in the intensity of utilization of higher education facilities. 1. Matching institutions and offerings with need and demand.-From time to~ time studies are reported which indicate that "there is no classroom shortage." Figures are quoted to show that existing institutions could have accommodated so many additional students sub~tantially in excess of their capacity. Such reports sometimes are distorted because they are based on rough estimates by institutions as to their capacity to enroll additional students had they received the additional applications. There is a considerable element of truth, however, in what is. reported. In essence, this situation is somewhat like the employment siJtuation, where employment and unemployment both may be reported to rise or decline in the same month, or like the busine~s world in which some businesses or industries fail, or operate substantially under capacity, while others have more business than they can handle and operate on double shifts. Thus, colleges established or existing in areas where college-age population is not high may have more difficulty filling their facilities, unless they offer a unique program for which a sufficeiit number of students are willing to travel and to pay the price required. Even an. institution located in a population center may have difficulty operating efficiently if it costs too much to attend, or offers programs of inferior quality or of interest to fewer students than it hasprovided the capacity to enroll. In a changing world, it is reasonable to expect a certain amount of misalignment of institutions and student demand just as much as to expect misalignments of supply and demand in the marketplace. However, such misalignments, resulting in less than maximum utilization, can be minimized by sound and careful planning for the es~ablish-~ ° Cook, op. cit. 92-371-68-pt. 1-1O PAGENO="0146" 140 ment, expansion, or modification of both institutions and individual programs offered by institutions. Another aspect of supply and demand iS related to the balance of the facilities which an insti~tution has in its inventory. It is fairly obvious that an institution's enrollment is limited by the number of students who can either commute easily to its campus, or be accommodated in its dormitories or nearby off-campus hous- ing. Many institutions could handle more students and classes without expanding classroom facilities, but must limit enrollment growth until they are able to expand dormitory facilities. In other instances, an institution may have more than enough classrooms and a resulting low weekly utilization rate, but be reluctant to expand its enrollments because its laboratory or library facilIties are already overcrowded. The problem, and it is an extra-difficult one for smaller institutions with scant financial resources, is one of maintaining balance in the mix of facilities which it has and develops. Frequently, as a result, a growing institution may look good one year and bad the next in indicators of its use of any particular type of facility. This difficulty too, however, can be minimized by high- quality planning on the part of the institution. One element in such planning is coordinated phasing of the development of different types of facilities. Another element is flexibility in the design of facilities, making it poSsible to use given areas temporarily for one purpose and convert such areas :to other uses as enrollment reaches planned levels. 2. "Year-round iitilization."-Another frequent cliche is that "year-round sched- uling" would solve most of the existing facilities shortages, or at least would re- duce them substantially. To a rather limited degree, there is truth also in this point-of-view. An increasing number of institutions are finding benefits in going to a "Quarter system" involving four equal terms during the year. Theoreti- cally, the "trimester system" involving three ftll semesters during the year would be most efficient. However, many of the institutions which have tried the trimester system have experienced difficulties with it and some already have reverted to conventional semester or quarter system schedules. Problems involved in so-called "year-round" schedules relate to the times at which most entering students prefer to begin their enrollments and to the extra operating costs involved in offering a full semester schedule in the summer when enrollments tend to be substantially lighter. As in all physical plants, a certain amount of "down time" for repairs, renovations, and maintenance opera- tions is required. Nevertheless, many of the problems may be solved with good planning and coordination, and it is tikie that many smaller institutions ef- fectively close down during the summer months. The possibility of more intensive utilization of facilities during the entire year should continue to be the subject of study, experimentation, and encouragement. 3. Longer schoolS-day and week.-One of the greatest differences in the current scheduling practices of institutions is in the number of hours in the day and week during which classes are scheduled. It is quite likely that much of the recent increase in average weekly classroom and laboratory use is a result of increasing numbers of colleges breaking long-standing traditions and beginning to schedule classes in the late afternoon, early evening, and on Saturday. In doing this, the institutions frequently have to contend with resistance on the part of students and faculty members whose work habits and traditions are upset by such changes. 4. Matching facilities with program and enrollrnents.-One of the most serious obstacles to intensive utilization of facilites is that the existing structures on a campus no longer match the characteristics of the instructional program offered by the institution. Many older institutions have a large inventory of middle- sized classrooms and a shortage of large lecture facilities and small seminar rooms. Recent innovations in program have resulted in an increase in need for such facilities. As a result, while average hourly room use increases, a much smaller portion of the available student stations are utilized when classes are held in larger classrooms. The result is that a large amount of usable instruc- tional area goes unused much of the time. A college that is expanding rapidly can cope with this problem to some extent by concentrating on large and small rooms in the new facilities which it builds, although location problems limit their ability to do this. Both rapidly expanding institutions and those which are more nearly static in enrollments can accomplish a great deal in many instances by major renovations of existing buildings to create more flexible areas and to adjust the nature of the facilities to current program needs. PAGENO="0147" 141 Facilities inventories and utilization studies provide the information neces- sary to analyze and plan for needed changes in the nature of the existing facil- ities. in some instances, of course, it is more economical merely to continue to utilize existing larger classrooms with classes which could meet in much smaller areas. The point at which the cost of operating partly used facilities exceeds the cost of converting or replacing such facilities varies in different instances, and is a point which frequently is overlooked in the management of colleges and universities. Another aspect of this problem results from the tendency for college curricu- lums to become more complex and to involve an increasing percentage of courses which require specialized types of facilities not readily usable on a general basis by other types of courses. One approach being tried by a few institutions is to reevaluate the requirements for specialized facilities for some of the basic courses in specialized fields. As increasing use is made of new~ educational technologies programmed through especially-designed and highly-automated facilities, an increasing portion of the total instructional program may appropriately be sched- uled in such facilities at a very intensive rate of utilization. Existing institutions can benefit from such innovations, of course, only at the cost of a considerable investment. In some instances, the educational philosophy of the institution and the prohibitive costs involved relative to size of enrollment will mitigate against such a development. 5. Fleaibility for sehedule-rnakers.-Typically, if one individual has the respon- sibility to schedule all classes in available facilities, higher utilization ratios are obtained than in cases where certain facilities are reserved to particular depart- ments or particular faculty members. Much is made of the resistance to effective scheduling which results from such traditions, but this problem appears to exist only in a minority of smaller, more tradition-oriented institutions. Increasing use of "systems" approachesin scheduling classes, together with the pressures of increased enrollments, should continue to break down the efficiency obstacles resulting from reservation of areas to various departments and individuals. UTILIZATION STUDIES ARE MANAGEMENT STUDIE5 Physical plant is one of the basic resources of an institution of higher educa- tion, and studies of the utilization-or management-of physical facilities are much like other types of management studies (e.g., "organization" studies or "procedure" studies). A wide range of approaches may be appropriate, depend- ing upon the purpose to be served, from comprehensive inventories of the com- plete campus coupled with evaluation of campus-wide utilization practices, to very limited and intensive analyses of quality and utilization of one type of facility where an immediate and acute problem may be involved. Different ap- proaches are required in evaluating the efficiency of utilization of different types of facilities. For example, while a combination of weekly room use and percent of student station use is used for classrooms and laboratories, "utilization" of library facilities frequently is expressed in terms of square feet per full-time- equivalent student, and percentage of the student body which can be seated in the library at one time. (Innovations in the methods of instruction may well make some of these traditional approaches less applicable in the future.) While such indicators are very useful in evaluating the effects of scheduling practices, they do not in themselves serve to improve utilization. At a fairly unsophisticated level, improved utilization may result from an inventory of existing classrooms and laboratories which, when compared with the proposed class schedule, makes possible a better matching of classes with instructional areas of the proper size. Methods of making facilities inventories and utilization studies sit this level of sophistication are amply described in the Russell-Doi manual referred to earlier, and will not be described here. In essence, the improvement uf space utilization on a particular campus can come about only by the application of diagnostic management procedures to the situation on that specific campus. Factors in such a diagnosis should extend not only to what is to be done and how that can best be fitted into the existing facilities, but also to an evaluation of whether inodificaitions of what is to be done are needed in order (where program objectives and philosophy permit) to more effectively utilize existing. facilities, and to an evaluation of whether any existing facilities should be either abandoned as unsuitable or modified to make them more suitable. PAGENO="0148" 142 Principal benefits from well-planned space studies usually are: (1) improve- ments in the utilization of existing space; (2) elimination of unnecessary or "bad" space; (3) better pidnuing and programming for new facilities; and (4) the development of data which help to justify and sell. the need for construction of additional facilities. Full benefits may be derived in most instances only by the establishment of a continuing system which includes provision for: (1) constantly updating an inventory of existing facilities and their patterns of utilization; (2) systemati- cally scheduling the use of the facilities for maximum feasible utilization; and (3) evaluating the need for changes in existing space and construction of added space in the light of carefully-defined evaluations of program changes and projected enrollment increases. Various forms of such a system increasingly are employed in the vast majority of the larger, more complex institutions and would prove beneficial in many smaller institutions with dynamic and complex instructional programs. The use of such an approach in planning for new institutions of higher education is widespread, and permits the construction of a lower ratio of instructional facilities by comparison with planned enrollments. The use of a very sophisticated computer program to "fly" the schedule ahead of time (before designing the buildings) is claimed to have resulted in dramatic savings in the planning for a new campus for the Community College District of St. Louis. LEADERSHIP BY STATE AGENCIES Much of the leadership for improved utilization, and for sound planning to provide only what is needed, when and where it is needed has been pro- vided by State coordinating or governing boards for higher education. Such leadership has tended to have weight behind it in those States where the co- ordinating or governing board has been the agency by which institutional budgets are approved or screened. It has included the establishment of space "factors" or allowances for new construction, both on a general institutional basis related to enrollment projections, and with regard to allowances for amounts of space by type of facility and program area. In some instances, the State agencies have established utilization standards or targets for institutions. The experience of California in this regard provides an interesting insight into the difficulties experienced in reaching projected targets. A 1055 California study recommended certain levels for weekly room use and student station use. Ex- perience led to approval of lower targets and subsequent recommendation in a 1960 study of still lower targets, as illustrated in the following table :10 UT ILIZATION TARGETS IN CALIFORNIA Classrooms Laboratories Weekly room use Student station (hours) use (percent) Weekly room use (hours) Student station use (percent) 1955 study recommended State colleges adopted 1960 Master plan recommended 36 67 30 75 30 60 24 25 20 80 85 80 Note: These shifts represent realistic adjustments based on experience in a State which has put strong emphasis on improving the utilitzation of academic facilities in its public institutions of higher education. The adjusted targets remain substantially higher than the general average reported for institutions throughout the Nation, as cited earlier in this paper. In some instances, State coordinating boards also are beginning to provide leadership by conducting statewide studies and surveys of utilization and provid- ing technical assistance in the conducting of facilities inventories for individual iflStjtUtiOfl5.~ In many instances the agencies designated to be State commissions for Title I of the Higher Education Facilities Act of 1963 also are the State coordinating 10 "A master Plan for Higher Education in California," published by the California State Department of Education, Sacramento, 1960. 11 An excellent recent example is A Space Utaltzation Study for Five State-Supported South Carolina Colleges and Universities directed by Harold Dahnke for the South Carolina Advisory Committee on Higher Education. PAGENO="0149" 143 boards for higher education. A few of the newly establishedState commissions for Title I also began early to conduct inventories and utilization studies and to provide technical consultation to individual institutions in this area. In all instances, the State plansfor Title I provide for consideratioii Of utiliza- tion of existing facilities in determining~prioi~ities for approval Of; applicatiOns submitted under the College Construction Gran;t Program provided by Title I. This emphasis is required by the Commissioner's regulationsfor the program, but many States have indicated their recogtiition of the impOrtance of utilization by placing substantially mOre than the required amount of weight upon this factor for prioritypurposes. As a result, many institutionswhich previously had done little in this area (and in some instances lacked even an inventory of their exist- ing facilities) are being motivated to pay attention to improvement of their utilization practices. lEADERSHIP BY PROFESSIONAL GROUPS AND PRIVATE AGENCIES ~l iie ii roortant contiibution of the Ameiican Association of Collegi'tte Regis trars and Admissions Officers, in sponsoring the Russell-Doi study and manual, was described earlier in this paper. The Russell-Doi study was financed in part by AACRAO funds and in part by funds from private foundations interested in education. Outstanding leadership and stimulation in another area has been provided by the Educational Facilities Laboratories, headed by Harold B. Gores. The EFL has sponsored a number of experiments and pilot projects aimed at improving both the quality of instruction and the levels of utilization by design of ecluca- tional facilities for the programs of tomorrow rather than those of yesterday. The EFL, through a continuing series of exceptionally well-written and artisti- cally executed publications, has been the principal influence for dissemination of ideas and concepts which need to become second nature to those who plan and make decisions about the development of facilities for institutions of higher educ'stion The revolutionary thrust of the 0 EFL's leadership is beautifully illustrated in a publication entitled Bricks and Mortarboards, which dwells at length on the best available examples of forward planning for classrooms, laboratories, li- braries, dormitories, and campuses as a whole, as well as the best available examples of renovation of existing structures as a sometimes desirable alterna tive to new construction. The possibilities for improving utilization by0 the design of new and remodeled facilities, as well as the importance of 0 incorporating the best that is knou n about ne~ technologies and patterns of instruction are set forth in this publication in a manner which is nearly impossible to improve upon: "To meet pressing demands, campus space of all kinds-instructional, labora- tory, residential-must be designed for maximum convertibility. Old-style dormi- torie'~ must give way to housing that will make space foi learning and amenities as well. Planners and designers, focusing on basic college -purposes, must pay more heed to the social and psychological needs of the student, to more reward- ing interaction between student and teacher, to the relative claims of solitude and community to prrn ide a vigorously intellectual social climate Colleges must pio~ ide instructional space of the greatest possible flexibility It should meet needs ranging from the large lecture to individual study, and it should be readily convertible. Movable walls for year-to-year conversions, operable walls for im- mediate change will be the rule, not the exception, in instructional buildings. "Flexibilty means many0 things. No college should brandish this stylish archi- tectural catchword as a cure-all. Sound planning requires each college to think through the kind of flexibility that fits its particular character, expansion plans, and scientific orientation. Every Institution must calibrate change and innovation with its own scale of values and foreseeable needs. UTILIZATION "Closely bound up with the need for a flexible campus is the need for full utilization of campus space, time, people, and things. Flexible buildings mean that space can be readily adapted to use by large groups or small, depending on instructional needs College space must do double or triple duty Space for mdi vidual study will be provided in libraries or residence or in instructional buildings, or in all three." 12 0 12 Educational Facilities Laboratories, Inc., Thick anJ ]Iortarboarcls, New York, 1964, p. 165. PAGENO="0150" 144 IMPORTANCE OF COMPREHENSIVE PLANNING As indicated earlier in this paper, sound planning is an absolutely essential prerequisite to any substantial nationwide improvement in the utilization of higher education facilities. This includes planning on the very broadest scale, so that new institutions will be added and existing institutions expanded in loca- tions where enrollment growth is going to occur, and that such expansion of en- rollment capacity will be based on the kinds of instructional programs which are going to be needed in the future rather than what has been done in the past. It alao includes detailed forward planning for the development of facilities on in- dividual campuses, so that the facilities to be modified or added will provide for the program needs of the future rather than the past at each specific campus and so that additional construction will be undertaken only to the extent required after existing facilities are utilized at the highest feasible level. Under Title I of the Higher Education Facilities Act, funds are now being provided for grants to State commissions to carry out (directly or by contract with institutions or other agencies) "comprehensive planning to determine the construction needs of institutions." Four million dollars for this purpose was ap- propriated in each of the Fiscal Years 1967 and 1968. The same amount has been requested for Fiscal Year 1969. The grants supported by these funds are serving to strengthen existing activities of some State agencies and to stimulate the initia- tion of activities by the remainder, which will markedly improve the quality of the planning done on both statewide and on an institutional basis, and in some instances on a regional basis. LEADERSHIP BY THE OFFICE OF EDUCATION From the beginning the regulations for the administration of Title I of the Higher Education Facilities Act, required that a portion of the total weight in the State plan priority systems must deal with utilization of existing facilities. The degree of emphasis which the State commissions have placed upon utilizatoin is summarized in Exhibit B. In order to monitor the overall effect of utilization practices in institutions applying under Titles I and III of the Act, a general indicator was developed and incorporated in the application forms for these two Titles. This indicator the "capacity/enrollment ratio," does not deal with the utilization of particular types of instructional facilities, but it does provide a general index of the relationship between the program load at a particular campus (a combination of the student enrollment and the type of program) and the amount of available space in fucilities directly related to the instruction of students. The "capacity/enrollment ratio" expresses the amount of assigna~ble area in instructional and library facilities per clock hour of instruction provided at the institution as of the fall term of the school-year. Definitions of instructional and library facilities and capacity/enrollment ratio used in the application forms are set forth in Exhibit A of this paper. This ratio is, in a broad sense, an indicator of the intensity of utilization of all types of instructional and library facilities at the institution. Conversely, it may be considered also as an index of the relative adequacy of the existing inxiructional and library facilities at the institution. Data on capacity/enrollment ratios for institutions receiving grants under Title I for the first two years of the program have ~eeii analyzed. The results are as follows: CAPACITY/ENROLLMENT RATIOS 0 F INSTITUTIONS WHICH RECEIVE D TITLE I GRANTS Section 103 1 Section 10 4 2 Fiscal year Fiscal year 1965 1966 Fiscal year 1965 Fiscal year 1951 1st quartile Median 1. 33 1. 55 1. 92 2. 39 2.33 3. 07 2.34 3. 18 3d quartile 3.00 3. 15 4.00 4. 2Q Public community colleges and public technical institutes. 2 Institutions of higher education other than publiccommunity colleges and public technical institutes. PAGENO="0151" 145 As shown in the table, the capacity/enrollment ratios for both categories of institutions were slightly higher in 1966 than they were in 1965. This is a result of two factors. First, the construction of additional facilities will tend to raise the ratio for institutions whose facilities previously were inadequate and which are now bringing the ratio of facilities to enrollments into a more reasonable relationship. Second, since the available funds in 1966 were almost double those in 1965, State commissions were able to fund a larger portion of the total number of applications which they received and, in a few instances, to recommend grants for all eligible applications received. The result in 1966, was that more grants went to institutions which were relatively well off by comparison with the total community of institutions. Based on experience *to date, certain tentative conclusions may be drawn. Community colleges with less than 1.75, and other institutions with ratios of less than 3.00 square feet per clock hour probably are providing instruction of an inadequate quality because of overcrowding or a lack of certain essential types of facilities or a rounded program. (in very rare instances the institution may be an urban one with exceptionally high utilization due to unusually high enroll- ments in evening courses.) Community colleges with ratios above 3.5, and other institutions with ratios above 5.0 probably are not utilizing their total instruc- tional and library facilities as intensively as they could (although special circumstances and types of programs do justify a higher ratio in some instances, particularly institutions having unusually high proportionate enrollments in graduate programs or extension and continuing education. programs). During the coming several years, the required emphasis on utilization should result in a substantial narrowing of the range in the capacity/enrollment ratios of institutions which receive grants under Title i. At least two additional years of experience will be required to determine if this effect is in fact being realized. At the same time, as institutions begin to participate in the program on a repeat basis, it should be expected that a substantially lower number of institutions will be reporting ratios below the levels indicative of grossly inadequate instructional and library facilities. Tentative Office of Education plans to work for improvement of utilization of higher education facilities include the following: 1. Continuing the required priority emphasis on utilization under Title I of the Higher Education Facilities Act. and inclusion of utilization as an important consideration in such priority systems as may be developed under Title III of the Act. 2. Continued emphasis, in liaisonwith the State Commission, on the refinement and improvement of utilization indicators utilized in State plans for Title I. 3. Emphasis on utilization studies as part of the projects supported by grants for comprehensive planning. In addition, the comprehensive planning activities are expected to result in future construction of better-planned facilities which will directly result in more efficient utilization than has been possible in the past. ExHIBIT A HIGHER EDUCATION FACILITIES ACT DEFINITIONS 1. "Instructional and library facilities" means all rooms or areas used regularly for instruction of students, for faculty offices or for library purposes, and service areas (such as storage closets, projection booths, balance rooms, dark rooms, locker and shower rooms, and private toilets) which adjoin and are used in conjunction with such rooms or areas. A room intended and equipped for any such purposes should be counted in the appropriate category regardless of the building (e.g., administration building, library building, or classroom building) in which it is located. (45 OFR 171.1(b) (1)) 2. "Capacity/enrollment ratio" means the ratio of (1) the square feet of assignable area of instructional and library facilities (as defined in sub- paragraph (b) (1) of this section to (2) the total student clock-hour enrollment, at a particular campus of an institution. For purposes of this definition, "student clock-hour enrollment" means the aggregate clock hours (sometimes called con- tact hours) per week in classes or supervised laboratory or shop work for which all resident students (i.e., students enrolled for credit courses on the campus) PAGENO="0152" c1~j ~ ~fl~i ~CD ~ ~1 0Cb~ P1)C 00 ~w B p ~ ri~ ~°rD (~ C)B0 B~~i C) , ~ ~ca ~ B ~ H~1 H ~r~;4 ~ a t~j ~ 00~~ ~ ~. E~; CflCi-2 00 a ~ 0 CJ2C CD C)~~ CD- ~ ~-~B ~ ~< QaCDB ~a ~ ~ a B LTj H B H 0 N) N) - - N) ~ N) r~ N) N) N) - N) N) N) N) N)N) N) N) N) N)N) N) N) N) N) ~ N) N) N) N)N) N) N) N) N) C- N) ~N)N)cDN) ~ ><>~ <<><><: ><><: ><><><>~><><: ><~ N) ~ N) N) N) N) N) N) N) N) N) N) N) N) N) N) N) ~ ~ N) N) N) N) N) N) N) N) N) ~C- N) N) N) N) N) N) N) N) N) N) N) N) N) N) N)N) N) ~ ~ ~ ><~ i C- C/) C,, C, C/C C, PAGENO="0153" 147 Input.-The faculty of the chemistry department have provided the computer with the following data: 1 Chemistry 101 requires 3 periods (hours) of lecture each week with a maximum of 750 students and a minimum of 250 in a section 2 One period (hour) each week is assigned as a quiz period with a maximum pf 25 and a minimum of 15 students in a section. 3 The laboratory requirements for Chemistry 101 are 6 periods (6 hours) with either 2-3 hour periods or 3-2 hour periods of a maximum of 60 and a minimum of 40 students per section. Output.-The computer provides the information that 1,000 students will be scheduled into 2 lecture sections, 50 quiz sections, and 20 laboratory sections. Input.-The administration provides the policy for staffing the course as follows: 1. The lecture portion will be taught by an Associate Professor as a full load. 2. The quiz sections will be administered by teaching assistants. Each teaching assistant will handle 10 quiz sections as one-half load. 3. The laboratory sections will be supervised by instructors with the assistance of graduate students acting as laboratory assistants. The instructors handle 10 sections as a full load and the laboratory assistants handle 4 sections as one-half load. Outpitt.-The computer states a need for one full-time equivalent associate professor, 21/2 FTE laboratory assistants, 21/2 full-time equivalent teaching assist- ants and 2 FTE instructors. Inpvt.-The administration has developed, with the cooperation of the faculty, the following space standards and space modules: 1. Lecture halls of more than 300 students will be planned at 12 assignable square feet per station and assigned a minimum of 30 hours per week. 2. Freshmen Chemistry laboratories will be planned at 40 assignable square feet per student station (including service areas) and will be assigned a minimum of 40 hours per week. 3. Small classrooms will be used for quiz sections. A classroom of 25 student stations will be planned at 16 sq. ft./ss and will be assigned a minimum of 36 hours per week. 4. Faculty will be assigned individual offices allowing 140 assignable sq. ft. Chemistry faculty will also be allowed 300 assignable sq. ft. for research purposes. 5. Teaching assistants will be allowed 120 assignable sq. ft. per FTEfor office space and provided no research space. 6. Instructors (not classified as faculty) will be allowed 200 assignable sq. ft. for office and research purposes per FTE. 7. Laboratory assistants are not provided with office space. They do develop space for research purposes as graduate students. 8. Library space is developed through an allowance of assignable sq. ft. per student clock hour. 9. Administrative space is computed as 10 percent of the total space required. Output.-The computer shows the following needs expressed in assignable square feet: Square feet ~ lecture hall for 600, at 12 sq. ft./ss 1, 440 3 Chemistry labs for 60, at 40 sq. ft./ss 7, 200 1.4 Classrooms for 25, at 16 sq. ft./ss 560 1 Faculty office, at 140 sq. ft 140 1 Faculty Research space, at 300 sq. ft 300 2'/2 Teaching assistants office, at 120 sq. ft 300 2 Instructors office and research space, at 200 sq. ft 400 Laboratory assistants offices Libiary space at sq ft per clock hr 10 000 Subtotal 20 340 Administrative space, 10 percent 2, 034 Total 22, 374 22374 assignable sq ft times 1 67 equals 37365 gross sq ft 37,365 gross sq. ft. times $30 sq. ft. project cOst equals $1,120,950 or $1,120 per student enrolled in Chemistry 101. PAGENO="0154" 148 SPACE FAO1~OES 4,000 student clock hours in 2,000 sq. ft. in lecture halls and classrooms equals 5. 0,000 student clock hours in 7,200 sq. ft. in labs equals 1.2. 10,000 student clock hours in 20,340 sq. ft. of instructional and library space equals a capacity/enrollment ratio of 203. Mr. HowE. A very interesting speech by Dr. Allen Pifer of the Carnegie Corporation in part'addresses itself to this subject, which has already caused some very constructive thinking in institutions of highereducation. Mr. Quis. Isn't the big reason you are reducing money for construc- tion of facilities the same reason that the President proposes for re- ducing the amount spent for highways? He wants to cool off the economy. Mr. Howu. I think it is partly in response to that. I think it is in response to the request by Congress for economy because the Congress does not speak with one voice on the enthusiasm for expenditures that is being expressed here to some extent. There is clearly a response from the administration to direct this budget in the direction requested by the Congress and by significant congressional leadership so that various economic problems can `be met and so that a tax bill can be passed. Mrs. GREEN. I will have to say, if `the gentleman will yield, it cer- tainly impresses me that the cuts are made in those areas where you are pretty sure that Congress is going to come back and raise them. Mr. QIJIE. Sort of like proposing cutting appropriations for the school milk program. I don't know who is going to take money away from their institutions for construction. Mr. Howu. I think you will find running through the budgets of many Federal agencies is this effort to slow expenditures on capital items. This is not generally an effort to second-guess anyone by expect- ing these cuts to be restored but, rather, a responsible effort to reach the problems of the economy. Mrs. GREEN. I, for one, think that the new programs ought to be looked at very carefully, not that they are not good programs, but if we are going to have economy it seems to me there would be great cynicism across the country and in the education community to cut proven and needed programs and at the same moment start new pro- grams, however worthy they might be. Mr. HowE. I think there is another view: that we are simply placing in being here, with these new programs, real opportunities for the world of higher education in the years ahead. We are funding them on a small basis to get them started but as additional funding possi- bilities do become available, these programs will represent a much broader base of legislation on which to mount those added appropria- tions. They can be extremely significant for higher education. I think I would argue that it is very important for higher education to have these opportunities in being, even though funded in the be- gining on a relatively low basis. Mrs. GREEN. You are asking for a 5-year extension of programs and for forward funding. As I am sure you are aware, in the Conference Committee on ESEA, the automatic extension provision was knocked out. PAGENO="0155" 149 It seems to me it might be helpful to you and to the Congress, that you express your views on this, why you request authority for the automatic extension. Mr. HOWE. At this point, I would very much like to do that. (Mr. Howe's views follow:) NEED FOR AUTOMATIC EXTENSION OF THE HIGHER EDUCATION Acr JUSTIFICATION FOR THE PROVISION IN SECTION 1006 OF H.R. 15067 As is now generally recognized, the effective utilization of Federal support to education has been adversely affected by uncertainties about the level and timing of Federal funding. The impact of such uncertainties is particularly critical dur- ing the period immediately before and after an authorization is scheduled to expire. Consequently, although there are a number of measures which can be taken to improve the funding of educational programs, it would be especially desirable to provide that appropriations would be authorized for one additional yearin the event that extension legislation has not been enacted by the last year of the then current authorization. Problems associated with short-term authorizations and late funding were discussed in detail by the Special Subcommittee on Education, chaired by Repre- sentative Green, in its study of the United States Office of Education. In response to this report, Secretary John Gardner, at the direction of President Johnson, appointed a special Task Force on the timing of key Federal actions affecting educational programs receiving grant support. This Task Force study underscored the necessity to recognize the requirements of the complex Congressional authori- zation and appropriation cycle but to reconcile those requirements with the requirements of the cycles of Federal, State and local (school and college) implementation. Short-term program authorizations present a basic funding problem. The Appropriations Committee only includes within the regular appropriation bill for the Department of Health, Education and Welfare programs for which there is legislative authorization. If the authorization for a program is scheduled to expire before the upcoming fiscal year, legislation extending the program is gen- erally not enacted in time for the program to be included in the regular appro- priation bill. Since a subsequent supplemental appropriation is required, funds are often not available until October or November-substantially after the academic year has already begun and many months after the budget planning process has generally been completed. When institutions of higher education are confronted with late extensions of expiring legislation-and therefore late appropriations-the resulting compres- sion in the time schedule for utilization of Federal funds produces a number of undesirable consequences: 1. Initiation of new or expanded programs is delayed until well into the school year when they cannot produce the most effective programmatic results. 2. Program accomplishments fall short of initial expectations because the institutions are not able to utilize fully and most effectively funds which are not available until after the school year has begun. 3. Institutions are not able to estimate accurately the matching funds they will need to budget to take advantage of Federal programs. 4. Careful evaluation of Federally assisted programs is hampered by the lateness of available information concerning the nature and effectiveness of educational improvements which such assistance has made possible. Both the present Chairman of the House Appropriations Committee, Mr. Mahon, and his predecessor Mr. Cannon, have attributed this problem not to the appropriations process, but to the lack of program authorizations. In 19413, Mr. Cannon spoke on the House floor in response to newspaper criti- cism of delays in the appropriation bills. He stated: "* * * The reason [for the delay} is a very simple one and is both statutory and j~nrliamentary. The Committee on Appropriations cannot appropriate a dol- lar-and no official of the Government can spend a dollar until its appropriation and expenditure is authorized by law." PAGENO="0156" 150 Mr. Mahon echoed these sentiments during the last session of Congress, in explaining the need for a resolution to authorize continuing funds until the remaining appropriation bills are enfieted when he said that: "* * * The Committee on Appropriations generally is ready to present these bills but since we are lacking authorizations, * * * we are not in a position, un- der the rules, to present the bills to the House. "* * * There will probably be, as always, a closing supplemental bill. We can- not say when it will come to the floor, but it will consist vary largely of items deferred from earlier appropriation bills for lack of legislative authorization at the time those bills were reported." With the increasing flow of Federal money, the number of Federal educational support programs has grown and with this growth the number of cases of late extension and authorization have also increased. Both the Elementary and See- ondary Education Act and the Higher Education Facilities Act illustrate the time lags that occur. In the ease of the Elementary and Secondary Education Act, the original Act authorized appropriations only for fiscal year 1066.. Approved in April 1065, supplemental funds were not appropriated until late September of that year, and allocations were not made by the Office of Education until one month later-half a year after most school budgets were completed. Extension of the Act the following year was not completed until November, more than four months after the original expiration date. Funds become available to local school districts in mid-November, again more than 6 months after the completion of typical school budgets. In the case of the Higher Education Facilities Act, the original 1963 Act au- thorized appropriations for fiscal years 1964, 1965, find 1966. Because the Act was passed so late in the year, no funds were appropriated until fiscal year 1965. Almost $64 million of the first year's appropriation lapsed. Though the Act expired at the end of June 1966, it was not extended until November 1966. Funds appro- priated for. fiscal year 1967 were not available until November 1966. Unless affirmative action is taken to preclude its recurrence, the same circum- stance will occur in the ease of the Higher Education Act. This law was enacted in November 1965, and supplemental funds for most programs authorized under the Act were not available until that month, well into the school year. One title of the Act (Title III) was authorized for only one fiscal year; it expired at the end of June 1966, and was not extended until November 1966. Virtually the entire Act is scheduled to expire this June. $738 million has been included in the 1969 President's Budget for the Office of Education for amounts associated with programs which expire at the end of June1968: Higher Education Act $403, 000, 000 National Defense Education Act 335, 000, 000 Total 738, 000, 000 With authorizations still uncertain for FY 1969, there is currently some doubt whether the appropriations subcommittees will hear the administration's budget request for expiring programs. If "automatic extension" legislation had been in effect, there would be no question about the appropriations committees review- ing OE budgets in the normal course, rather than possibly in supplemental requests. The heavy workload of Congressional legislative and appropriation commit- tees makes it questionable whether legislative authorization and appropriations can be speeded up to any appreciable extent. Nor would it be desirable to attempt to curtail or inhibit the thoughtful process of evaluation attendant to extensions of authorization for expiring programs. The best solution, we believe, is to pro- vide for orderly program development and continuity while allowingthe authori- zation and appropriation process to proceed at its normal pace through the pro- vision of the Higher Education Amendments of 1968 which call for an automatic extension for one year. Under this provision, all expiring provisions would be extended for one year at the same authorization level if the Congress did not complete action on the programs. This automatic extension provides a bridge between expiring legislation and extension legislation and enables the programs to function smoothly until Congressional action on extension is completed. It also enables the Appropriations Committees to provide funds in a timely fashion, rather than in the Supplemental request process, knowing that its appropriations will be required for authorized programs. PAGENO="0157" 151 Mrs. GREEN. One other question in, relation to the pçoposals which you are making for disadvantageclchildren. Haverford College is running a program providing for a fifth year; of undergraduate work. Would your recommendations provide grants for that kind of program? Mr. HOWE. As long as it was operated by }Iaverford College. Mr. MOORE. Yes, ma'am. Mrs. GREEN. I would also ask unanimous consent tO place in the record at the time, a chart showing administration appropriations re- quests for fiscal years 1968 and 1969 in the various titles. (The information follows:) ESTIMATED FUNDING OF HIGHER EDUCATION PROGRAMS, FISCAL YEAR 1968-69 [In thousands of dollarsj 1968 1968 1969 1969 Existing or revised programs 1967 appropri- estimated 1968 appropri- estimated carryover ation obligations carryover ations obligations request Educational opportunity grants pro- gram 1,427 140,600 133,027 9,000 140,600 149,600 Talent search 4, 000 4, 000 8,500 8, 500 College work-study program 139,900 134, 300 5, 600 139,900 145, 500 National defense student loan pro- gram 193,400 187,400 193,400 193,400 Federal capital contribution (190, 000) (184, 000) (190, 000) (190, 000) Loans to institutions (2,000) (2,000) (2,000) (2,000) Teachercancellation (1,400) (1,400) (1,400) (1,400) Guaranteed loan program (total) 30,453 43,600 32,295 77,400 109,695 Higher education 50,621 Interest and fees - (40,000) (41,758) `(95,195) Computer services 1(2,000) Advances (8,863) 1(12,500) Vocational education (6,048) Interest (3,600) (4,470) Advances (1,578) Graduate fellowship program 86, 600 86,600 86,600 86, 600 Prospective teacher fellowship pro- gram 12,500 12,500 15,160 15,160 Institutional assistance grants ` 7, 500 7,500 11,000 ` 11,000 `Graduate facilities program 577 `50, 000 33, 000 17,577 8, 000 25, 577 Developing institutions program 30, 000 30, 000 35,000 35, 000 Education Professions Development Act, title V-E (including HEA, VI-B) 2,500 2,500 15,000 15, 000 Grants for undergraduate facilities____ 7, 452 400, 000 274, 452 133, 000 67, 000 200, 000 Sec. 103 ` (100,000) (67,000) (33,000) (34,000) (67,000) Sec. 104 (7,452) (300,000) (207,452) (100,000) (33,000) (133,000) State administrative expenses and planning 7,000 7,000 7,000 7,000 Loans for undergraduate and graduate construction 100,000 (2) 150,000 50,000 100,000 150,000 Participation sale insufficiencies 2,625 2,625 4,975 4,975 Equipment grants program 14, 500 14, 500 14, 500 14, 500 Land grant colleges 14, 500 14, 500 14, 500 14, 500 Program support3 0 1,320 1,320 New programs: Specia~services fordisadvantaged students 15,000 15,000 Grants to strengthen graduate education 10,000 10,000 Increase in cost of education allowance 10,000 10,000 Networks for knowledge 8, 000 8, 000 Education for public service 5,000 5, 000 1 Combined garanteed loan program for fiscal year 1969. 2 I-lEAF-Ill lending leveel, $200,000; including $100,000 carryover from 1967 appropriation and $100,000 from partici- pating sales. a Funds for evaluation and consultants. PAGENO="0158" 152 Mrs. GREEN. Unless there are other questions, the committeei will stand adjourned until February 19th, and this afternoon there will. be an executive session, informal, off-the-record discussion of the un- plications of the current draft-policy on graduate education. (The complete text of Mr. Howe's formal statement follows:) PREPARED STATEMENT BY HON. HAROLD HOwE II, U.S. CoMMIsSIONER OF EDUCATION Madame Chairman and members of the subcommittee, a year ago I appeared~ before this Subcommittee in support of H.R. 6232, the Higher Education Amend- ments of 1967. Title V of that bill became Public Law 90-35, the Education Professions Development Act of 1967. The remainder of. the proposal-the early extension and technical amendments to the National Defense Education Act of 1958 and the Higher Education Act of 1965-was not reported to the full Com- mittee. Today I appear in support of H.R. 15067-the Higher Education Amendments of 1968. Much of this proposal is already familiar to the Subcommittee, as it is identical in many instances to HR. 6232. Again, I urge the extension for 5 years~ through Fiscal Year 1973, of two of the most important pieces of Federal assist- ance to higher education-the National Defense Education Act and the Higher Education Act. This year, however, my support for such extension is even more urgent, as the provisions of both laws expire at the end of this fiscal year.. This Subcommittee is no stranger to the problems caused by the disparity in the Federal fiscal year and the academic year. School administrators from all levels of our educational system and from all parts of the country testified on the problems they bad faced with late and erratic Federal funding, during this Subcommittee's study of the Office of Education. The first report issued during your study stressed the urgency of a revised pattern of Federal funding, as necessary for sound educational planning. Basic to the stability of support which educational institutions seek is the early extension of program authorizations. That you have scheduled this hearing so early in the session reflects the Subcommittee's concern for this problem. If pro- gram authorizations are extended at this time, colleges and universities across the country will have assurances that such programs will continue past this coming June and a basis for planning for the 1968-69 academic year. I will not repeat my lengthy testimony of a year ago, detailing the accomplish- ments of the NDEA and the Higher Education Act and describing each technical amendment. Rather, I would like to introduce supplementary information for the record at this point. The provisions Of H.R. 15067 differ from those of HR. 6232, insofar as the extensions and technical amendments to existing titles are concerned, in only a few instances. For example, title VI of NDEA would be extended 5 years, through Fiscal Year 1973, like the other titles we propose to extend. In addition, technical amendments would be made to the recently passed Education Professions Development Act of 1967. Most important of these would be an amendment to Part B, allowing State education agencies to use a portion of their allocated funds to support projects which they would administer directly. The Higher Education Facilities Act of 1963 would be extended for 5 years~ through Fiscal Year 1974. In addition, the proposed Higher Education Amendments of 1968 would make several substantive changes in existing financial aid programs and would au- thorize a series of new programs and titles: Title III of the Higher Education Act would be amended by the addition of a new Part B-Improvement of Graduate Programs-and by an increase in the cost of education allowances accompanying Office of Education fellow- ships; Title IV of the Higher Education Act would be amended by the addition of a new Part C-Special Services for Disadvantaged Students; A new title IX-Networks for Knowledge-would encourage the sharing of educational resources among colleges and universities; and A new title XII-Education for the Public Service-would authorize a pro- gram of institutional grants and graduate fellowships designed to improve the preparation of young men and women who seek careers in Federal, State, and local governments. PAGENO="0159" 153 I will discuss each of these proposals in some detail at a later time. I would first like to describe the proposed combined student aid program, which the President has called the Educational Opportunity Act of 1968. EDUCATIONAL OPPORTUNITY ACT OF 1968 This year marks the tenth anniversary of the National Defense Education Act of 1958 and the landmark student loan program contained therein. During that 10 year-period, additional programs for student aid have been added to create a comprehensive, federally supported, package of student aid made up of loans, direct grants, and work-study grants. In a 10-year span the number of partici- pating institutions in these student aid programs has doubled, from 1,100 to 2,200. The dollar amount of funds provided to students has increased tenfold, from $59 million in loans in the first full year of the NDEA loan program to an estimated $510 million this year in the three parallel programs of NDEA loans, student employment, and Educational Opportunity Grants. The number of stu- dents served by these programs has increased nearly sevenfold over the 115,000 borrowers in the first year of NDEA student loan `activity. Such developments should not be measured in terms of Federal dollars alone. These 2,200 institutions of higher education also administer an amalgam of in- stitutional, State, and private student aid programs estimated at in excess of $550 million for the current year. When combined with the 1967-68 Federal pro- grams, undergraduate student assistance alone exceeds $1 billion. Of more recent establishment and in a somewhat different context than the three college-administered programs is the Guaranteed Student Loan Program. The major objeOtive here is to provide long~term deferreil-payback commercial loans to assist middle-income families in offsetting the increasing cost of higher education. Administrative arrangements are centered on State loan guarantee agencies, with the Federal government providing an interest subsidy for students whose adjusted family income is less than $15,000 per year. The growth of this program has been equally phenomenal. The number of State guarantee agencies has increased from 17 in 1965 to 35 in 1967. Additionally, in five other States, work is now underway in both executive and legislative de- partments on the creation of State loan authorities, leaving only 10 in which action is yet to be taken. Despite rising costs of money and consequent upward pressures on interest rates, more than 700,000 loans at the 6 percent simple in- terest rate, totaling two~thirds of `a billion dollars, have been made between November 1965 and December 1967. Against this backdrop of growth and development, let me outline the direction and purpose of the Administration's 1968 proposals for modification and con- solidation of these programs into the Educational Opportunity Act: First, to move effectively toward the overall goal of providing "educational op- portunities beyond secondary school `to all our youth that desire such oppor- tunities and can benefit from them." This is to be accomplished, at least in part, by providing "substantial assistance to students" so that "no student of ability will be denied an opportunity to develop his talents because of financial inability to meet basic higher education costs." Second, in the three college-based programs, to achieve a measure of consólida- tion and, in so doing, to achieve greater flexibility and convenience at the in- stitutional administrative level. Third, within this consolidated framework to retain the major objectives and program characteristics already established. Fourth, in the Guaranteed Student Loan Program, to clarify the role of the State as `the key administrative element and to indicate more clearly the State responsibility for continuing provision of part of the guarantee funds. Fifth, in the context of `the re-insurance proposals, to provide a second adjust- ment period to allow States an opportunity to modify existing legislation or, as the case may be, constitutional provisions in order to establish the re-insurance program. Parenthetically, let me emphasize `that the Administration's position has been and continues to be that of supporting and maintaining `the central role of the State guarantee agency in this program. The current utilization of direct Federal insurance in 17 States is simply an interim device until such time as the guaran- tee function can be established in the State itself Key. recommendations for changes in the collegé-baséd program are as follows: PAGENO="0160" 154 1. There, will be a single appropriation item for Federal capital in the Na- tional Defense Sti~dent. Loan fund and for the College. Work-Study Program with a 90-10 Federal institutional matching ratio, and a single appropriation for the Educational Opportunity Grant Program which does not require program matching funds. 2. The fund distribution pattern would be altered from the three separate al- lotment formulas, which differ in each program, to a national poOl funding basis with a limitation that no State could receive more than 12˝ percent of any single appropriation. 3. There will be a provision that during any year an institution may transfer not to exceed 20 percent of the Federal money allocated for any one program to another. At the Commissioner's discretion, this 20 percent level would be ex- ceeded in an emergency situation. This would provide a much-needed authority for institutions to rebalance their programs during the year. 4. A $1,000 per annum maximum would be `set on an Educational Opportunity Grant award to any one student and the present $800 maximum and the manda- tory $200 award for students in the upper half of the class in the prior year would be eliminated. 5. The annual ceiling on NDEA loans to undergraduates would be elevated to $1,500 as a reflection of cost increases over the past 10 years. 6. For all three programs, there would be a common requirement for continua- tion of institutional expenditures in its own student aid program, to replace the two different and separate authorities in the existing EOG and Work-Study Programs. 7. In place of the varied pattern of administrative overhead allowances pres- ently contained in the loan and work-study programs, a common maximum of 3 percent of the total Federal funds granted to an institution would be provided with an overall maximum of $125,000 per year to any single institution. 8. An overall student financial aid advisory council is proposed to replace the four separate advisory committees contained in the present statutes. 9. It is the intent of the Administration to accomplish uniform forward financ- ing of these programs beginning with Fiscal Year 1970. The consolidation of these three programs authorized under a single part A of title IV also allows us to request a program authorization extension of 5 years commencing in 1970. To cover the interim year, Fiscal Year 1969, single-year extensions are requested for title II, NDEA, and for titles IV-A and IV-C of the Higher Education Act of 1965. The 6-year request, if granted, would for the first time provide the Nation's colleges and universities with a firm, permanent operating base and would elimi- nate the confusion and uncertainity which institutions are facing at the present. THE GUARANTEED LOAN PROGRAM The basic objectives for the Guaranteed Student Loan Program are- To provide a program of long-term loan assistance to all post-secondary students, with Federal interest benefits provided for most of them; To provide that the program should be operated by State agencies, the function of the Federal Government should be to assist the States to do a good job-through payment of a portion of the interest on behalf of eligible students and through the use of Federal credit to help provide the necessary backing for the loans; To provide the lenders with an adequate return so as to encourage their active participation; To provide the lenders with maximum assistance-from the colleges, the States, and the Federal government-through interchange of information, a minimum of paperwork, and the establishment of common procedures; and To see that colleges are involved to the extent of providing full and ade- quate information to the lenders. Prior to the passage of the Higher Education Act, guaranteed loan programs were in operation in 17 States. Recognizing that legislation would likely be needed at the State level, the Congress provided a two-year interim period and encouraged the development of adequate State programs by authorizing Federal advances of "seed money" to establish or help strengthen the reserve fund of the agencies. The Act further provided that if a State would not be able to PAGENO="0161" 155 establish such a program during any year, the Office of Education could contract with a nonprofit private agency to do the job. In the event that neither approach would provide students reasonable access to loans, the Congress authorized a stand-by program of Federal insurance. Since November of 1965, guarantee agencies have been created in 18 additional States, bringing the total of State-based programs to 35. In the remainder of the country and' in those States that did not provide for students attending college out-of-State, the Office of Education contracted with United Student Aid Funds, Inc., to administer the program. Twelve of the State agencies further contracted with USAF to operate their program. However, the reserve funds of t7 States were not sufficient to enable continua- tion of their operation, and the Federal Insured Student Loan Program has been established on an interim basis in order to continue the loan guarantee function until such time as the States' reserves can be increased. Madam Chairman, at this point I will ask my colleagues to give you a brief visual presentation to clarify the picture I have just presented of the different kinds of participation characterizing the several States. In order to promote the continuation of existing State guarantee agencies and to encourage the development of adequate State programs where none now exist, we are proposing that the Act be amended to provide for what has come to be called Federal "reinsurance" of loans guaranteed by State agencies. Under this proposal, the Commissioner would be authorized to reimburse an agency for 80 percent of claims paid by that agency to the lender when a loan went into default. As the agency would be responsible only for payment of only 20 cents on the dollar, this would have the effect of multiplying the guarantee capacity in the State's reserve fund by a factor of four. This would be consistent with current Federal fiscal policy of using Federal credit rather than dollars. However, in order to involve the States further in sharing the funding `require- meats of such a program and in order to strengthen further the reserve funds of these agencies, we are proposing an additional $12.5 million in seed money, to be matched on an equal basis by State appropriations. To make the program more attractive to the lenders and the guarantee agen- cies, especially with a view to increasing the return to the lenders and reducing the paperwork and complexity of the program to' all concerned, we are recom- niending the following amendments: 1. A system of application fees, each fee not to exceed $35 per year, to be paid to the lender for each loan made, and a single conversion fee when all loans for a given student are converted to an installment basis. Lenders assure us that at the present rate of 6 percent simple interest, these loans are a losing proposition and that they cannot continue forever on this basis in the long run. 2. Merger of the National Vocational Student Loan Insurance Act into the Higher Education Act. The present two Acts have resulted in parallel paperwork and duplicate effort for all parties concerned. Merging the two Acts will do much to streamline the program and provide readier access to students in vocational education. 3. At the option of the lender, the Commissioner may defer payment of Federal interest `benefits until the loan is paid in full, at which time they will be paid in a lump-sum with interest. This would further reduce the paperwork of the lender's billing the Office of Education throughout the life of the loan, as well as solve his problems of separating the 3 percent paid by the student froni the 3 percent paid by the government. Additional proposals include: 1. Encouraging the State agencies to defer repayment by students for periods of service in the military, Peace Corps, and VISTA or for students' w-ho have left school but return as full-time students. For such periods of deferment, the government would pay the lenders the full 6 percent interest rate on behalf of the student. 2. Increasing available lending funds so that certain pension funds can be made eligible lenders under the program, and so that savings and loan associa- tions can be permitted to make vocational loans, in the same way they can make guaranteed loans. 3. Making the program consistent whether the loans be State or privately guaranteed or federally insured. There are now differences with respect to maximum amounts of individual loans, assurances of installment obligations and minimum amounts of installment repayment. 02-371----GS-pt. 1-11 PAGENO="0162" 156 4. Extending provision for Federal interest benefits for 5 years, through Fiscal Year 1973. Finally, we propose that authorizations for the federally insured program be extended 2 years, through Fiscal Year 1970. Although there are now 35 State agencies and although several new agencies are under consideration in the remaining States, it is certain that a State program will not be established in every State by June 30, 1968. Additional action needs to be taken by the legis- latures in a number of States, some of which have no scheduled session until next year. Additional changes wifi probably be required in some existing State programs before the reinsurance system can be adopted or appropriations made for the matching requirement of additional seed money. If the Federal program is permitted to lapse on June 30, as it would without the extension we propose, it is highly likely that loans will not be available for the next academic year for students in a number of States, some of which already have access to the Federal program. Although the re-insurance proposal may make it unnecessary to continue the Federal insurance, it may take a period of time before regulations and procedures can be established and the program made operative. In order that the administration of the program may continue through existing State agencies, even when it is the federally sponsored program, we propose a final change that would authorize the Federal Government to contract for the issuance of Federal insurance to an existing State agency. In 4 of the 17 States (New Jersey, Hawaii, Indiana, and Vermont) where the Federal insurance is now operative, the majority of the paperwork and contact with lenders is being administered through the State agency, but with the final issuance of the insurance commitment being made by one of the nine Office of Education regional offices. The change we are requesting would enable a State official to perform this task. Thus, these amendments in the Part A and B programs of title IV of the Higher Education Act, covering as they do the four major student financial aid programs operated by the Federal government, will provide a responsive and sensitive mechanism through which institutions of higher education, State agencies, and the Federal government may jointly strive toward the day when nO qualified student who desires a program beyond high school will be denied that opportunity because of economic disadvantage or family background. IMPROVEMENT OF GRADUATE PROGRAMS The purpose of this new program is to broaden and strengthen the institutional base for high-quality doctoral programs in the nation. The program is aimed specifically at those institutions with already established doctoral programs not generally considered to be among the top doctoral producers of the country, but with a demonstrated capacity for high quality work in a limited range of fields. Adoption of the program will strengthen the institutional capacity of American graduate education to produce qualified individuals for research and teaching, and will greatly increase the accessibility of graduate centers of excellence to the rapidly expanding number of American students expected to enroll in advanced programs of graduate training. During the past decade, undergraduate enrollments in American higher educa- tion have doubled; graduate enrollments have increased two and a half times. With this numerical growth has come a rising level of educational aspiration, so that today more than two-thirds of all undergraduates indicate their intention to continue their formal education in post-baccalaureate graduate and profes- sional programs. One consequence of this demand has been a great shortage of qualified faculty for both graduate and undergraduate instruction. A recent survey (1967) sent to university presidents in 150 institutions indicates that this faculty shortage is expected to persist in most fields at least into the mid-seventies. And if higher education through the first two years of college is to be made accessible to all qualified American youth, the anticipated shortages will become even more acute. Already the nation's burgeoning junior and community colleges are experiencing difficulty in finding qualified staff, and their needs for additional faculty have been estimated in a recent study to total 100,000 by 1975. In addition to the demand generated by an expanding system of higher education, the need for graduate trained men and women on the part of other sectors of American society is also expanding at unprecedented rates. In 1962, PAGENO="0163" 157 the Gillhland report cited 11 major objectives of national policy, ranging from economic progress and military security to the exploration of space and improve- ments in medical and environmental health. In the judgment of the committee, the achievement of all of these required "a concerted program for expanding the Nation's capabilities in graduate education and training." 1 The Education Professions Development Act will provide one resource for meeting these problems. As appropriations under it expand beyond the additional $52 million the President has requested for Fiscal 1969, it will become the major instrument for helping graduate education meet the requirements of education itself. But there is another and equally significant need-the need to strengthen the institutional base of graduate education So that a larger proportion of gradu- ate study is characterized by excellence in its service to all aspects of the Ameri- can society and economy. The proposed program for the strengthening of graduate education is designed to meet these need~. We envisage a program of institutional grants. For the indi- vidual graduate school, grants would be gradually increased for several years, followed by diminishing Federal support, during which time the institution will take up the slack through the use of its own resources. Grants under this program would be available for the following purposes: (1) The establishment, expansion or improvement of courses of study leading to the Ph. D. or equivalent degree; (2) The addition of faculty, or the up-grading of existing faculty; (3) The acquisition of curriculum or research materials appropriate to the fulfillment of the activities in clause (1) above; (4) The establishment or improvement of administrative procedures or services in doctoral programs either within the institution or in cooperative arrangements with other institutions at the doctoral level. Grants would not be available for the construction of buildings or traineeship support of students; and no portion of the grants could be used for the support of sectarian religious training or purposes. As envisaged, the plan does not duplicate other federal programs designed to support advanced level training. Other related federal programs are designed either to advance substantive research, or to support individual students. The present program, however~ is aimed at institutional expansion and improvement, and seeks in this achievement the best way of enlarging and improving advanced educational opportunity of high quality. The universe of institutions of primary eligibility for this program comprises about 100. Ineligible would be those top quality institutions generally conceded to be among the leaders in American graduate and professional education. Institu- tions ranking at the lowest end of the scale in doctorate production would be accorded a lower priority in eligibility, because of the limited contribution they could make to a significant expansion of highly trained individuals. This leaves 95 to 100 middle-range institutions which would be accorded top priority for grants. The precise number Which will receive grants cannot be predicted exactly because each applicant would have to justify its request by the merit of its indi- vidual proposal, its past record, and the realism and quality of its plans for improvement. We would plan to administer these grants in a fashion to give enough funds to each institution to bring the leverage for a change in the quality of its program. As in other GE programs, panels of experts will appraise the merits of all apr~lications submitted, within the broad policy directives deter- mined by the Advisory Council on Graduate Education. INCREASE IN COST OF EDUCATION ALLOWANCE Also included in the proposed new part to improve graduate education are amendments to Title IV of the NDEA and Title V-C of the Higher Education Act which would provide flexibility in determining the amount of the institutional cost of education allowance accompanying fellowships awarded under these authorities. At present, institutional allowances for the NDEA Graduate Fellowship Pro- gram and the programs of Fellowships for Prospective and Experienced Ele- mentary and Secondary School Teachers and Related Educational Personnel are statutorily set at $2,500, or an amount not to exceed $2,500, less tuition and non- 1 Meeting Manpower Needs in Science and Technology, a Report of the President's Science Advisory Committee, Dec. 12, 1962, pp. 1-3. PAGENO="0164" 158 refundable fees for each Fellow enrolled. For all other Federal fellowship pro- grams, however, the institutional allowances are not set by statute, but by ad- ministrative action. The institutional allowances for all but these two programs can thereby be established at amounts which are not only comparable but which are consistent with appropriation levels, type and level of graduate program, and actual institutional costs of education. Amending Section 525 of the Higher Education Act and Section 404 of the National Defense Education Act to permit the institutional allowances to be set at amounts comparable to those of other Federal fellowship programs would provide: (1) the means to establish a greater degree of consistency among all Federal fellowship programs; and (2) the flexibility to increase allowances, appropriations permitting, to more adequately meet the actual institutional costs of education. The desirability of providing comparability or consistency among Federal fellowship programs should be evident. The need for a more flexible au- thority to allow a higher level of institutional support should also be evident in view of the increasing costs of higher education. Au available evidence shows that the present $2,500 institutional allowance by no means covers even the present institutional costs of graduate education. That the difference between the allowance and the actual cost of education is steadily increasing reinforces the need to provide for this authority now-as we seek a five-year extension of the NDEA Graduate Fellowship Program and several technical corrections in the Education Professions Development Act. In speaking of the economic problems of higher education several months ago, McGeorge Bundy noted that "with the tools now available, we cannot really prove our case." The truth of this statement is nowhere more obvious than when seeking hard data concerning the costs of graduate education, but there is agreement on one fact: graduate education is expensive. One private university, estimating that its direct and indirect costs related to undergraduate study are $3,000 per student, estimated that its costs per grad- uate student are one and a half to three `times that much. Most institutions, how-ever, cannot even estimate these costs-some noting that they realize they w-ill have to begin doing so, while others state that it will never be possible to isolate the `costs of graduate education from the total costs of higher education. One finds the same varied picture when looking at State formuias for the support of the `different levels of higher education. In an attempt to base `State support on a recognition of `the essential differences in the expenditure requirements of various levels of study, the Ohio Board of Regen'ts recommended per full time equivalent student institutional support ranging from $350 for `lower division, to $1,000 in upper division, to $4,800 in Ph.D. programs for 1967-69. Most other States, while merely noting that the costs graduate education are higher than those for undergraduate education, ~sould probably be in agreement with a 1965 report of the Ohio Board of Regents: "It is a fact of long-standing recognition among university administrators that medical education and graduate study `are the two most expensive instruc- tional activities of a university's operations. The exact order of magnitude of this expense varies from institution to institution. But we would not be ~ar fron~~the mark if we say that graduate study at the Ph.D. level and medical education require public support in `a public university about ten times that re- quired for the average array of undergraduate courses." One State higher education commission reflected that this was the minimum difference between undergraduate and graduate education costs in its report of recommendations on institutional approprations requests, going a's high `as a 25-to-i ratio in some fields of study. When w-e note that present institutional expenditures per full time equiva- lent student average $1,506, and are projected to increase to $1,670 five years from now-and th'at these averages are weighted by the fact th'at graduate stu- dents comprised only 13.5 per cent of total opening resident enrollment this past fall-it is readily apparent that graduate education is expensive. It is also apparent that the present $2,500 institutional ailowances does not cover the actual eosts of education. We recognize that colleges and universities compete for the NDEX Graduate Fellowships, as well as those provided under the Education Professions Development Act, but we are also aware that this is often a competi- tion for institutional deficits. One obvious way to fulfill the purposes of this part- to improve graduate education-is to provide the means of assuring that the receipt of fellow-ship allocations will not always he a losing proposition for our colleges and universities. PAGENO="0165" 159 Without knowing the exact cost of graduate education, we are convinced that the present $2,500 cost of education allowance is at least $1,000 too low. The Administration, therefore, proposes to move toward a $3,500 cost of education allowance for all Federal fellowship programs beginning with Fiscal Year 1969. We will be proposing the $3,500 figure for afl new Office of Education-sponsored fellowships beginning next fall if this new flexible authority is granted. This would mean that within 3 years all fellowships new and `continuing would be covered by the higher figure. While this will not turn our colleges and universities into profitmaking orga- nizations, it should add a degree of equity to our support and ease somewhat the burden on these institutions. SPECIAL SERVICES FOR DISADVANTAGED ST UDENTS The Disadvantaged Student During the last decade, a number of economic, social, and cultural factors have combined to bring to the forefront of public `attei~tion the condition of the poor and disadvantaged in our Nation. These disadvantaged families have in common such characteristics a.s depressed economic status, low social status, inferior educational achievement, tenuous or no employment, confined participation in community organizations, and limited ready potential for upward mobility. In many instances, they are further handicapped by the attitudes of others toward their ethnic or racial status. Many of these socially disadvantaged either live in isolated rural poverty areas, or are concentrated, in ever increasing numbers, in the inner city of our metropolitan centers. Children living under those depressed economic, social, and cultural circum- stances, have acquired from their families and peers attitudes, motivations, and values different from those of the community at large. Furthermore, it is widely acknowledged that these students often receive inferior elementary and second- ary education. For example, the Panel on Education Research and Development has reported: "By all known criteria, the majority of urban and rural slum schools are failures. In neighborhood after neighborhood across the country, more than half of each age group fails to complete high school, and 5 percent or fewer go on to some form of higher education." (Zaeharias, 1964). As a result of these `conditions, in ~ch'ool these children show disproportionately higher rates of academic retardation, social maladjustment, behavioral distur- bance, and physical disability than the more financially fortunate students. However, this apparent academic and `social handicap of disadvantaged stu- dents has nothing to do with intellect or potential. Although statistical informa- tion currently available is inadequate, existing compensatory practices demon- strate that many of the academic and other `deficiencies `characteristic of the disadvantaged student can be overcome. Imaginative and innovative programs can make the difference between a college graduate and a college dropout just as they `can in high school. Several examples of programs successfully providing special compensatory `services for disadvantaged college students are as follows: During 1966, the "Berkeley Education Opportunity Program" was set up with the objective to provide mas~ive amounts of aid to disadvantgaed students in three key areas: Admission to the university, `a'll the financial support necessary to attend college, and the academic assistance needed to remain in college. Some 175 `disadvantaged students, primarily from minority groups, most of whom under normal circumstnaces would probably not have attended any college, were ad- mitted to the institution. Of these 175 students, 12 percent were dismissed for continued poor grades, and an additional 12 percent left for personal reasons other than finance. (The dropout rate of 24 percent compares favorable with the 25 percent ratio of `all s'tudents usually not continuing after the freshman year at the university.) However, by the third quarter of the,school year, the remain- ing students' were performing as well as, or better' than, regularly admitted students. During 1966, a demonstration program was initiated at Antioch College to determine the plausibility and success tha't may be expected of a program that focuses on counseling and remediation techniques for the disadvantaged college students in a highly competitive academic climate. Students whose performance in high school and on standard intelligence or achievement tests gave little in- dication of success at Antioch, were supported by financial aid, counseling, and tutorial assistance. The program has been remarkably successful. Of the original PAGENO="0166" 160 38 students, all high risk in terms of attrition and academic success, 36 are still enrolled. One of the two dropouts has transferred to a nearby state college. At West Virginia Institute of Technology, it was determined after review of the 1965-66 records of 63 freshmen from low income (Appalachian) homes that 36 of 57 percent were not making satisfactory academic progress. While their records showed academic potential to achieve, they did not know how to use their academic abilities. In addition to their educational difficulties, these students generally suffered a "cultural shock" often resulting in withdrawal of the students from college. Consequently, during 1966 a project designed to identify techniques and pro- cedures to help college students from culturally deprived homes to deal con- structively with the problems encountered in the college community was under- taken. The assistance given to these students primarily involved supplementary counseling services, including academic remedial and social adjustment counsel- ing as well as parental involvement through home visits by the counseling staff. These efforts created an atmosphere that stimulated the following successes: 1. The grade point average of 2.00 for the project students compared to an average of 1.73 for the total freshman class. 2. The attrition rate of 5 percent of the project students compared to 13 percent for the total freshman class. It becomes apparent that the disadvantaged can achieve academic success, but to do so he needs specialized assistance designed to expose and stimulate his latent, unrecognized abilities. PAST AND PRESENT EFFORTS TO ASSIST THE DISADVANTAGED STUDENT In recent years colleges and universities have focused increased attention on disadvantaged Students. Feeling the need to involve themselves with contemporary problems and also recognizing the value of a diverse Student body, institutions of higher education have accelerated their~ efforts to identify and to enroll students from disadvantaged backgrounds. As a result of institutional efforts and ac- tivities conducted under Federal programs, an ever increasing number of disad- vantaged students is attending colleges and universities. One of the great chal- lenges facing these institutions is to insure that the academic careers of these students will be rewarding and succesful. However, up to this point in time, too littie emphasis has been placed on pro- viding needed academic and other assistance necessary to help the disadvantaged student stay and succeed in his college career. Relatively few colleges and uni- versities, in terms of the need, have thus far developed compensatory programs and most of those that have are serving very small numbers of disadvantaged students. For example, a survey conducted in 1964 of compensatory practices among institutions of higher education indicates that of 610 institutions respond- ing, 386 or 63 percent reported they bad no compensatory programs of any kind, although many indicated they hoped to be able to provide such special services in the future. The need for remedial programs and special services for disadvantaged stu- dents has also been~ recognized by both institutions of higher education and non-profit educational organizations in their proposals to the Educational Talent Search Program. The following statements illustrate the concern raised by these institutions and organizations: A spokesman for Oakland University of Rochester, Michigan, states that, "Our experience with specially admitted,~ disadvantaged students has been that ad- mission and financial barriers can be overcome without too much difficulty, but that these students need considerable help once they have been enrolled. It is our hope that we can receive the necessary funds under Talent Search legislation to provide the support our project students need to survive in a demanding educational program." The University proposes to continue a program, initiated in cooperation with public schools and the business and professional community, to admit more disadvantaged, under-achieving students for the fall of 1968. The students will be given the necessary financial aid; participate in pre-college community and study skills programs that will focus on reading, study and writing tasks which the participants will face as freshman students; and receive continued skill development during the academic year. A counseling program also will be provided to help the participants adjust to university life and to achieve "self-direction." PAGENO="0167" 161 Mid-Appalachia College Council, Inc., an inter-state consortium of 13 private liberal arts institutions of higher education and a present contractor with the Educational Talent Search Program, has presented for over a year a pene- trating and convincing story to allow its activities to include remedial services. The Project Director of the Mid-Appalachian Youth Education Opportunities Project emhasized in his report that the fulfillment of the objectives of Talent Search in this region requires more than the encouragement of the enrollment in college of students who have recently graduated from high school. Students from some of these remote high schools enter college unprepared to meet the competition of students who have gone to larger high schools, and who have graduated from secondary schools in the more populous centers. The fact is that their reading comprehension is far below average, so far, indeed, that they cannot keep up with their fellow students in freshman courses requiring the reading and understanding of the English language. It can be shown that some high school graduates in this region have a vocabulary of 1,000 words or less. As a result, these students have little or no chance of surviving in college, and most of them drop out during their freshman year. While the Educational Talent Search Program staff was responsive to the needs of these students, realizing that "Talent ~carching" in itself is insufficient, no affirmative answer for summer remediation programs could be given. As the Honorable Carl D. Perkins has indicated-"The waste of talent resulting from the inability of thousands of Appalachian youngsters to continue their education in college is both terrible and unconscionable. I have little patience with people who bellow about the waste of money on one hand, but on the other are quite complacent and unmoved by the waste of human talent and potential that goes on all around them. I cer- tainly hope that Talent Search can do something to impress upon people just what a dreadful waste this is." These quotations from Oakland University of Rochester, the Mid-Appalachia College Council, and the Honorable Carl 0. Perkins underscore the fact that getting disadvantaged students into college and arranging for adequate financial aid are only two components of an effective institutional assistance program. A necessary arid complementary element is to provide special compensatory serv- ices designed to correct their deficiencies such as low reading ability, low general school achievement, low interest and motivational level, poor health status, etc. Without such concentrated efforts, the student will remain marginal in his performance, and it is of no benefit to the student, the college or society if he enrolls only to drop out within `the first year or two. RELATED FEDERAL PROGRAMS Several Federal programs are now in existence which provide greater oppor- tunity for needy and disadvantaged students to enter college. Student aid pro- grams authorized under the National Defense Education and the Higher Educa- tion Act are now providing financial assistance to many thousands of disadvan- taged students. Two programs in particular, are noteworthy: the Educational Opportunity Grants Program, which provides financial assistance to academically qualified high school graduates of exceptional need to enable them to attend college, and the College Work-Study Program, which provides for part-time employment for students attending institutions of higher education who are in need of earnings to pursue their course of study. The Educational Talent Search Program seeks to identify, through a program of grants and contracts to institutions and other educational agencies, talented students from disadvanteged backgrounds and to encourage them to enter or re-enter higher educaitoin. The Upward Bound Program is a pre-college program, operated largely by colleges and universities, for poverty high school students. It is designed to remedy poor preparation and motivation in secondary school, and thus increase the student's chances of enrolling in college. The proposed program would complement the Federal programs already in existence and would in effect, increase their effectiveness, by providing the neces- sary additional special compensating services to the disadvantaged student after he has been admitted to college and assure that he will succeed in his academic career. DESRCIPTION OF PROGRAM It is the purpose of this proposal to me~t the need for special services to the disadvantaged student so that he can readily adjust to his new environment and PAGENO="0168" 162 academic life, and at the same time to encourage the college to attempt new solutions and to search for new educational techniques which are especially suited to the needs of the disadvantaged student. It is our belief that, as these techniques are further developed, colleges will willingly admit a larger proportion of students they now regard as academic risks and find ways to make them successful. Emphasis would also be placed on programs designed to encourage students from disadvantaged backgrounds to pursue graduate and professional education by: (1) identifying capable students with aspirations to attend graduate school, and (2) providing counseling and guidance services to prospective graduate students concerning opportunities available to them. Effective in the fiscal year ending on June 30, 1069, the Special Services for Disadvantaged Students Program, as a part of the Higher Education Amend- ments of 1968, would provide assistance to institutions of higher education and other public and private nonprofit organizations and agencies for the develop- ment and maintenance of student personnel service programs to assist disad- vantaged students in completing their undergraduate education and in encour- aging able students to undertake graduate studies. The Commissioner of Education would be authorized to make grants to plan for and to implement student personnel service programs, and to award contracts to provide support for the operations of demonstration projects of exemplary student personnel practices. Funds would be available for the development and operation of comprehensive guidance, counseling, placement, and other student personnel services, including tutoring programs to remedy academic deficiences, and to enable persons to remain in higher education programs. The program would be authorized for five years through fiscal year 1973. For fiscal year 1969, $15 million in appropriations is being requested, and such sums as may be necessary to attain the objectives of this program for the next four fiscal years. NETWORKS FOR KNOWLEDGE As the costs of providing a higher education continue to rise, our Nation's colleges and universities are increasingly developing cooperative arrangements among institutions, as a means of providing high quality education to the great- est number of students. The "knowledge explosion" of the past few years coupled with the vast increase in the number of materials available, have made it almost impossible for even the wealthiest university to afford extensive specialized library collections in all the areas its faculty and students might Wish to investi- gate. It has also become extremely difficult to maintain a faculty fully competent in all the major areas Of concentration. Less affluent institutions may even experi- ence difficulty in maintaining an adequate collection of basic library resources and minimum levels of faculty coverage of subject areas. Similarly, in an age of growing student enrollments, hand-processing of col- lege fiscal and student records is costly and inefficient. Yet many colleges cannot afford-and do not need-a computer on a full-time lease or purchase basis. Again, cooperative arrangements among a group of institutions, each utilizing a central computer for the processing of student and fiscal records, might prove efficient and economical. A recent study made by the Office of Education showed the existence of nearly 1,300 consortia between institutions of higher education across the country. These cooperative arrangements involved as few as two colleges and as many as eighty or more. They covered everything from faculty and student interchanges to curriculum planning and centralized data processing. Such inter-institutional cooperation must be encouraged if we are to insure that college students receive the best possible education. A new program-Networks for Knowledge-would become title VIII of the Higher Education Act. designed to encourage such resource-sharing among insti- tutions of higher education. Emphasis would be placed on the stimulation of arrangements whereby institutions of higher education would share technical and other educational facilities and resources, while maintaining institutional identities. The Commissioner of Education would be authorized to make grants to institutions of higher education to support the planning and operation of such sharing agreements. In certain instances, grants might be made to other established agencies and organizations, including professional organizations or academic societies-for example, for the development of a common program in PAGENO="0169" 163 a special subject field to be used in computer-assisted instruction, the subject- matter professional association might be the most effective grantee. Funds could `be used for development and operation of a series of inter- institutional arrangements: Collection and sharing of curricular materials and information on modern curricular `advances: This could take many form's, `such as creation of a cur- riculum `clearinghouse, for a geographic region or `a specific subject-matter area. An institution which had conducted in-depth research into a facet of instruc- tional content or technique could share i'ts findings with ether interested colleges and universities. Needless duplication in curriculum development could `be avoided, if institutions were aware of the curricular materials available to them. I)evelopment of effective systems of processing and maintaining financial and student records: Multi-institutional arrangements for standardization or simpli- fication of record-keeping could prove extremely beneficial to a number of our colleges and universi'ties. Perhaps such a simplified system could be combined with a centralized data processing facility, for which each participant would be assessed a pro rata share. Joint use of facilities such `as `classrooms, libraries, or `laboratories: Library networks, providing access to collections of materials in the possession of a number of institutions: Some institutions of higher education have already established library consortia to reduce the costs of maintaining specialized library collections in a large number of fields. However, in the main su'ch consortia have consisted of colleges large enough and wealthy enough that ea'ch would have `a specialized, expensive library to "contribute" to the system. Federal assistance~ to a multi-institution library network might assure that the poorer institutions-those who need the most to share library resources-would be able to participate. Establishment and joint operation of closed-circuit television facilities: Such TV networks would allow institutions to share their faculties by wire and could result in improvement of quality while limiting `costs. Planning and operation of electronic computer networks: Sharing of a single centralized computer by a number of institutions can cut' the costs to any single institution significantly, while still providing sufficient computer-time for proc- essing of financial or `student records, student course work, or transmission of library `or other materials, or providing a resource for faculty res~arch. The scope of the computer's use, as part `of an educational network, would be limited only by the imagination of the group of institutions proposing the project. Exchange of faculty on a ~art~time or full-time basis: Less wealthy institu- tions may not be able `to afford-or use-the full-time services of a distinguished professor. Again, sharing `would enable more schools and more students to benefit from a single faculty member's knowledge. For Fiscal Year 1969, it is requested th'at $8 million be authorized to be appropriated for resource-sharing programs, with such sums as might be neces- sary for the next four fiscal years. Funds are not to be spent for providing capital equipment, `library resources, or other assets to a single institution. These are intended, instead, to pay the costs of transmission or other changes incident to establishing `a network. EDUCATION FOR THE PUBLIC SERVICE I would now like to turn `briefly to title XII of the Higher Education Amend- ments-the Education for the Public Service Adt. it is designed to support graduate education for the public service through grants and contracts to insti- `tutions of higher education and `to authorize a new program of `fellowships on the graduate level for young men and women preparing for a career in Federal, State, or local government. It builds on past accomplishments of the Congress, which has enacted a varied and diverse list of fellowships, grants, and awards to help offset `critical shortages in different career fields. In the years between 1946 and 1966, the total number of government employees in the United States rose from 5,595,000 `to 10,871,000. In 1946, the Federal gov- ernmenlt employed 2,254,000 employees, `while 3,341,000 were employed by State and local governments. In 1966, the statistical breakdown `consisted of 2,564,000 Federal employees, with 8,307,000 individuals `working for State and local govern- ment's. The mnanpower demands of these governments are expected to reach 12 million by 1975. PAGENO="0170" 164 This growth in the number of public service personnel is impressive. Un- fortunately, improvement in the qualification's of these personnel has not kept pace with the growth in the demand for the services they provide. Only 24 universities sponsor programs for executive development for mid-career public officials. Golleges and universities do not come close to meeting the need for educational opportunities for persons interested in public service careers, or person's desiring to update their professional competence. Title I of the Education for the Public Service Act would authorize the Sec- retary of Health, Education, and Welfare to make grants or contracts with institutions of higher education, and with other designated public or private agencies in special circumstances, assisting them in preparing graduate or pro- fessional students to enter the public service. It would also allow grants or con- tracts for research, development, `and demonstration projects of improved methods of educating graduate students. Grants would be equitably distributed through- ou't the country, among institutions able to use the funds effectively. Preference would be given to programs designed to meet an urgent national need. Title II of the Act would provide financial assistance in the form of graduate fellowships. These fellowships, up to 3 years in duration, would be awarded to students preparing for careers in public service, to encourage more persons to pursue public service careers. Obviously the program envisioned by the Education for the Public Service Act cannot fill the enormous manpower needs of our Federal, State, and local govern- ments over the next decade. However, it can contribute significantly to assuring a supply of highly-trained men `and women who intend to make a career of government service. I realize that my preseilta'tion of `the past two days has covered a large number of programs, old and new. My colleagues and I would be happy to answer any questions you might wish to ask. Mrs. GREEN. Thank you very much, Commissioner Howe, and Mr. Muirhead, Mr. Moore, and Dr. Alford, and Dr. Huitt. (Whereupon, at 12:20 p.m., the committee recessed, to reconvene on Monday, February 19,1968.) PAGENO="0171" HIGHER EDUCATION AMENDMENTS OF 1968 FRIDAY, FEBRUARY 9, 1968 HoUsE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D.C. The subcommittee met, pursuant to recess, in room 2261, Rayburn House Office Building, at 10 :05 a.m., the Honorable Edith Green (chairman of the subcommittee) presiding. Present: Representatives Quie, Erlenborn, Esch, Gibbons, and Hathaway. Also present: William F. Gaul, associate general counsel for the full committee, and Charles W. Radcliffe, minority counsel for edu- cation. Mrs. `GREEN. The subcommittee will come to order for the further consideration of the Higher Education Act of 1968, H.R. 15067. This morning we are turning our attention to that part of the legislation having to do with graduate education and the administra- tion's recommendations in regard to graduate education. We have felt on the committee that we could not make wise judg- ments on these recommendations `on graduate education until we `had more information about the current draft policy and how it might affect our graduate `schools and, therefore, on behalf of the committee, I certainly want to express my deep thanks to Jack Morse and to Dr. Pusey, who is no stranger to this committee, Dr. Trytten, and to Dr. Shannon, for coming this morning and helping us get the inform'ation whioh `we need in order to make the judgments that we must make. Dr. Pusey, I understand you are on a very tight sdhedule and need to catch a 12 o'clock plane, so we will try to hurry along. Dr. Trytten, `we are also grateful to you. I think you are recognized as one of the experts in the field of manpower needs, and have been an adviser in previous times of international crisi's on draft policy. I think I am going to turn to you, Mr. Morse, to `start this panel and let you suggest the way in which we should proceed. STATEMENTS OP DR. NATHAN M. PUSEY, PRESIDENT, HARVARD UNIVERSITY; JOHN P. MORSE, DIRECTOR, COMMISSION ON PED- ERAL RELATIONS, AMERICAN COUNCIL `ON EDUCATION; DR. MERRIAM H. TRYTTEN, SPECIAL CONSULTANT TO THE PRESI- DENT OP THE NATIONAL ACADEMY OP SCIENCES; AND DR. WILLIAM G. SHANNON, ASSOCIATE EXECUTIVE DIRECTOR, AMER- ICAN ASSOCIATION OP JUNIOR COLLEGES Mr. MORSE. Thank you, Madam `Chairman. I think the easiest way to get into this, would be to start with some figures on what the draft pool of eligible men, age 19 to 26, looks like. For these figures, we are indebted to Mrs. Betty Vetter, a colleague of Dr. Trytten"s, who has worked for many, many months developing these figures. (165) PAGENO="0172" 165 I suppose no one has an exact and precise set of figures, but everyone I know of-and I think this includes those in the Pentagon-believe these are as accurate figures as eanbe derived. Before moving into the figures, let me say that the situation under current regulations and current policies for the induction of men into the Armed Forces is to induct the oldest first from among those who do not have deferments for one reason or another. It is necessary to keep that fact in mind to have these figures mean anything. In looking at these figures, let me put in a second proviso: As of June 30, the Selective Service Act, at the present time, and the Presi- dent's Executive order issued last June 30, will end all deferments for those who are now in the first year of graduate study and all defer- ments for those who are completing their work for an advanced degree, and will provide no deferments for students getting their bachelors' degrees this June. Obviously, in general, those are the oldest men in the draft pool. After making allowance for veterans and those going into the vari- ous ~neciical areas which will continue to have deferments and making allowance for 25-percent disqualification because of physical disability, we end up with a total pooi of 226,000 bachelor-degree recipients and first-year graduate students who will lose their deferments. The esti- mate that we have been working on has been that there would be between 300,000 and 400,000 men called lip for the fiscal year beginning July 1. I was informed by the Defense Department last evening that the projected draft call is 240,000. This is a lower figure than we had anticipated, but I must assume that it is right. In either case, it doesn't make any difference whether it is 240,000 or 350,000 so far as these older men are concerned. They will all be the first to be called. The net effect of the situation, therefore, is that under current regu- lations and current procedures the first year of the graduate and professional schools and the second year of the graduate and profes- sional schools will be greatly depopulated and there will be in them only physically disqualified men, those over the age of 26, those who have already served in the Armed Forces, and women. Moving from those figures to some rather specific estimates, I might say that a month or 6 weeks ago we wrote all of our members saying that we felt, though there are other possibilities and various alterna- tives available to both the President and the Congress, that one eventuality that must be considered is that there will be no change whatever in the current procedures. In suggesting that, I suggested ways by which they might estimate what their potential enrollment in their graduate schools might be for next year. I might say that Mrs. Vetter, working on her own with the graduate deans, is asking them to do a similar survey so that they will have a cross-check on this. You have before you the estimate of two institutions, one of which is Washington University in St. Louis. This estimate is broken down by different schools within the university and I think if I run down the first column, which is the graduate school of the School of Arts and Sciences, the figures in the other columns will be meaningful to YOU. - The estimate for next year's enrollment in the Graduate School of Arts and Sciences would have been, without regard to the draft, 900 PAGENO="0173" 167 men. I should point out this is strictly male enrollment. Women are not included in these figures. It would have been 900 men, of whom 300 would have been first-year graduate students and 225 would be second- year graduate students. The rest would be already enteringtheir third year and their fourth year of graduate study and these men are de- ferred until they complete their work for a degree. So there is a po- tential of 525 students in their first 2 years of the Graduate School of Arts and Sciences. The university estimates 131 of them would be physically disqualified. It estimates that 53 of them would be either veterans or over the age of 26 and that would lead to 341 who would be eligible for the draft. In other words, 64.9 percent of the potential first 2 years of graduate students in that particular school would be likely to be drafted in the following 12 months. You will note that the figures are fairly comparable for all of the other schools with the exception of business. The reason seems to be that graduate schools of business are populated by men who have often put in 2 or 3 years of work before they decide to go on for professional study. It is probable, too, that if the Graduate School of Arts and Sciences were split apart, the number likely to be drafted from the School of Science would be considerably higher than that from the Schools of Humanities and Social Sciences, largely because engineers and scien- tists intend to go on immediately to graduate study whereas those in the nontechnical fields tend to enter graduate school later. Another way of looking at this is by noting some estimates sent to me by Indiana University. You will see that its total enrollment this year, in the first 2 graduate years, I judge, is 7,851. The enrollment this year is 7,851 students, of whom 2,300 are women, 365 are veterans, 600 are over the age of 26, and 1,125 it estimates would be physically disqualified. So that in this year's graduate schoolthere is a potential of 4,390 who would be able for one reason or another to stay on, but 3,461 would be subject to call under selective service. Now, the university had projected an enrollment increase of 10 per- cent for next year. This would bring it a total of 8,600 full-time grad- uate students. Of these, 4,900, it estimates, would be able to enter for one reason or another. The rest would be likely to be called. One result of this, at the present time, the university gives teaching and research assistantships to roughly 40 percent of all its graduate students. If the drop in graduate enrollment tha.t the current situation would suggest comes about, it would have to appoint at least 75 per- cent of all its graduate students to such assistantships and conceivably more, because one of the facts of the situation is that while the law discontinues graduate deferments, it guarantees undergraduate de- ferments, provided the student requests it, so that there can be nOthing but an increase in the undergraduate enrollment, while the graduate enrollment is cut sharply. This leaves a staggering problem for many institutions, particularly the universities which rely on their graduateS students to handle a great many of the recitation and all of the labora- tory sections of the first 2 years of work. I am almost through, and I might say I hope you will stop me at any time if there are questions. One other problem relating closely to the concerns of this committee which I would like to bring up, though I have no conceivable solution to it at the moment, is this: Right now the universities and, indeed, PAGENO="0174" 168 various agencies of the Federai Government, such as the National Science Foirndation, are making their selections for fellowships, Fed- eral fellowships, for this coming fall. These include national defense fellowships, which were created by this committee, the NSF fellow- ships, and National Institutes of Health fellowships. The pattern for these is to award the student a fellowship to pay his living expenses and to provide a fee for the cost of education to the institution which he enters. This "cost of education" fee, in general, is $2,500 per year. These fellowships will be announced in most instances on the 1st of April. The student is required to accept or reject it the 15th of April. If he accepts it and decides to enter graduate school, there is no way for him to tell whether he will be able to finish the year. If he is called up or indeed, if he enlists, I think there is no one who would not argue that that fellowship ought to be put on ice for him. It certainly should be there waiting for him when he comes back from service. The problem is that the institutions are committed to faculty and to facilities to teach these students and at least part of the cost of teach- ing them and providing academic space for them is underwritten by the "cost of education" grant. So if this fellowship is put on ice for him until he returns, presumably the "cost of education" grant will be too, and the institutions will be left with staggering deficits. As I say, I think everyone would insist that, merely because a youngster is called up or enlists, there would be no reason to discon- tinue his fellowship and award it to someone else. It has to be there waiting for him when he comes back. There are various solutions to these problems, if you think these are problems, that are available both by legislation and by Presidential directive, and we would be glad to get into these things, these possible alternatives, if you are interested. Mrs. GREEN. Thank you, Mr. Morse. I suggest we call on Drs. Pusey and Trytten first and then return to undergraduate education in a few minutes, Dr. Shannon, i that is satisfactory. Dr. SHANNON. Yes. Mrs. GREEN. You understand the problems in the technical schools and, believe me, we are not overlooking those at all. Dr. Pusey, do you want to add some comments here? Dr. PUSEY. Thank you, Mrs. Green. I would like to speak both as the president of Harvard and as one of the officers representing the Asso- ciation of American Universities. I will try, as president of Harvard, to speak specifically about the Harvard situation, but in the general remarks I make I will be speaking for the Association of American Universities. I am sure I don't have to remind this commitee what the Association of American Universities is, other than to recall that all of the major State universities and major private universities are banded together-the ones that have the chief responsibility for grad- uate education. A very substantial part of all the graduate work is done in the 40 or so universities that belong to this association. This group spent quite a little time in its meeting last fall talkino~ about this problem and I think each of them is deeply concerned~ They would be concerned about the effect on their institutions if nothing is done to correct the legal situation as it exists at the mo- ment, but I think also we are generally concerned aUout the eifect on higher education generally. PAGENO="0175" 169 It seemed to us, and I think it does to most people who look at this problem, that if we proceed under the existing regulations, it is not really in anyone's interests-I doubt that the military would prefer to have the whole quota taken from the one or two age groups and it is certainly not in the interests of the universities, and if it is not in their interests, I think one can make the case that it is not in the nation's interests either. From the point of view of the universities, I think the major worry was and is just uncertainty. We are all right now in the business of planning our organization and budgets for next year and it is very important to know how many students we are going to have in the various graduate and graduate professional schools, to know how many teachers we will have and all the rest of it. There is also the important matter of what income we are going to have and this is another source that is a worry to all of us. I think we are, beyond that, worried for another reason and it is this: That most of the teachers in colleges and universities, by neces- sity, must come out of graduate schools-~hiefly the graduate schools of arts and sciences, although one can make the case for law schools and business schools and schools of that kind too. The future teachers are the graduate students and of course, they are terribly important while in graduate school because they are con- tributing to the education of the current crop of undergraduates through holding positions of teaching fellows and so on, and they are serving their time of practice, or novitiate. If nobody interferes to correct the situation, what we would be faced with is not a percentage decrease in graduate students spread over the whole graduate school, but a complete cutoff of a continuing process. That is, there would be no one student or practically no students entering the graduate school next fall, other than the women and the ones that are 4-F, and another category not mentioned by Mr. Morse, which should be men- tioned, of course-foreign students, because there are a lot of them involved too. Setting those aside, we would lose the entering class in the graduate schools next fall and the group that were there last term would also be taken, so that we would have a hiatus of 2 years-the first 2 years in graduate school. This cuts down the available supply of teachers for undergraduates, but it also cuts off the continuing process of producing teachers for other colleges and universities in the years to come, and I think this is something that the country ought to think about very, very seriously. Another thing, you would have to live and work in a university to know that you just can't separate these things really, year by year. A graduate student comes in and forms associations with older graduate students, they learn from each other, they contribute to the education of people below them, and it spreads through this whole business so that if you stop that process you are really taking out some of the nourishing forces for the whole enterprise. I think it could not help but be a very serious weakening of graduate instruction. I think that one ought to keep in mind that we would be stopping the flow of the supply of teachers at a time when undergraduate enrollments need more teachers than we have ever had before and that is one of the very serious things to worry about. PAGENO="0176" 170 Now, I would like to talk specifically for a moment about how this would affect Harvard as we see it. We have been studying this for some time. Our figures are not yet complete, so that I can't give you the figures as exactly as the figures have been presented for Wash- ington University and Indiana, but our picture is something like this. We have a number of different graduate schools. All of our professional schools are at the graduate level. Now, certain of these are not involved in this consideration at all-medical schools, dental schools, schools of public health, the divinity school and, for quite a different reason, our Kennedy School of Government, because the average age of students there is 31. We really come down to about four of our schools, or faculties, that would be seriously affected. I do have the figures for our graduate school of business and our graduate law school. The business school would expect an enter- fig class of approximately 700 next fall. There are in each year a number of older men a.nd veterans so it wouldn't be a complete erasure of that class by any means, but we think it would be cut down by about a third or more. The really serious problem. I think, is another unfortunate aspect of the present law, that these people don't know next summer whether or not they are going to be called, or drafted in the following year. So it is possible that a lot of them would just stay out who otherwise would start, but then there is the misfortune of the group who do start and who get pulled out during the course of the year. And the faculty committee that has been studying this in the business school would expect something like 80 people to be pulled out in the course of 12 months, with their careers interrupted. You can imagine the difficulty for the institution in regard to dormitories, teaching assign- ments and all the rest. The law school admits an entering class of about 540 and its guess is that perhaps closer to a half-that is, it could be reduced by close to a half, although it might be that the school would keep its enroll- ments fairly high by making some compromise at the level of quality or something of the student group admitted. This is a financial prob- 1cm it would have to wrestle with, as well as an intellectual one. I think the faculty at Harvard where you can see the difficulty most clearly is the Graduate School of Arts and Sciences. That school, which admits all the people who are going to be candidates for the Ph. D. degree in a great many different fields and from whose numbers, as in all graduate schools of the other universities, will come not only the teachers, but a considerable number of the research scientists, social and otherwise, and the scholars in the humanities of the future. We have admitted a group of about 900. Maybe 700 of these would be men and, again, a number of them would be there because of age, because they are veterans, because of being 4-F, and because a number ~f foreigners are in the group too. But there would be a substantial cutback in the size of that group, and the loss to the country would be, at least, the loss by postponement of people who were going to go on to become teachers and research scientists. it does seem to us, for a lot of reasons, that there ought to be some way to not have the draft quota filled entirely by this year's senior class and the first-year group of graduate students, but to spread that quota over the age group in such fashion that we wouldn't have this PAGENO="0177" 171 devastating cutting off of the continuing process that ought to be thought of as a sort of an ongoing dream. That is essentially what I wanted to say, Mrs. Green. Mrs. GREEN. Thank you, Dr. Pusey. Dr. Trytten. Dr. TRYTTEN. Much of what I might have said has been said. I think I would like to make a few points, however. I might say, first, that I have here a set of the statistics which Mr. Morse referred to. Mrs. GREEN. By way of identification, Dr. Trytten, you were the adviser on draft policies in World War II and the Korean war? Dr. TRYTTEN. I was involved in World War II as an officer of the National War Manpower Commission, dealing with particularly physicists so that I had some little experience there. I was, however, the chairman of the group which developed the student deferment policy which went into effect in approximately 1950 in the Korean episode. Mrs. GREEN. Thank you very much. Dr. TRYTTEN. We have been interested in it for other reasons over the years, in manpower matters, as you probably know, at the academy, and also in connection with the Scientific Manpower Commission. I was saying that I have these statistics and if you desire we can leave those to be incorporated in the record. Mrs. GREEN. We would like to have them and without objection they will be made a part of the record at this point. (The statistics follow:) ACE COMMISSION URGES Foun STEPS To MEET PROBLEMS OF DRAFT LAW The Council's Commission on Federal Relations, meeting in Washington this week, urged the adoption of four steps to meet projected problems in the field of graduate study created by the new draft law. Commission Director John F. Morse emphasized that the commission does not favor broad deferments by spe- cial category for graduate students, but that it recommended to high government officials the adoption of steps that would subject such students to the draft on an equitable basis. Commission studies show that, under the new draft law, which eliminates all deferments of graduate students except in certain medical fields, graduate school enrollment next year will be limited in the first two years to women, veterans, men physically disqualified, and those over 25 (see Bulletin; Vol XVI, No. 35). The four steps were drafted by the commission under the chairmanship of Indiana University President Elvis Stahr and are as follows: 1. That for the immediate future a prime age group (age 19) be desig- nated as first to be inducted and that those past age 19 without military service and not entitled to deferment be treated as if they were 19. The order of call within this pool would then begin with the oldest first, by month and day of birth. 2. That legislattion be introduced to provide a random selection system as a long-range solution. 3. That deferments in additional fields of graduate and professional study be provided only in narrow and critically needed specialities such as metallurgy, for example, if there is a severe shortage in that field, rather than in the broad field of the physical sciences. 4. That local boards be urged to postpone the induction of students and teachers classified I-A until the end of the term in which they are studying or teaching. By term is meant a quarter, a semester, or a trimester-not an academic year. There also were these other developments this week: A Federal interagency committee completed its review of essential activities and critical occupations used in the Selective Service System in granting defer- ments. Its report was sent to the National Security Council which, under the 92-371-68-pt. 1-12 PAGENO="0178" 172 draft law, can identify fields of study which should be deferred in the national interest. NSO recommendations may be made public sometime this month. The Department of Defense issued a draft call for January of 34,000 men, all of whom will go into the Army. The Department predicted higher draft calls throughout the 1968 calendar year, but declined to be more specific. A Defense Department spokesman pointed out, however, that calls will be higher than in 1967 because "the draft build-up begun in 1965 has run through its two-year cycle." Thus, the calls in 1968 may approach the total of 364,680 who were drafted in 1966. "But," the spokesman said, "we don't know what the re-enlist- ments will be, and we don't know what the volunteer rate will be. This is one reason we issue calls only on a monthly basis." (Total draft calls in calendar year 1967 were 218,700.) The total available draft pool for Fiscal Year 1969 (July 1968 through June 1969) is expected to be 1,090,000 men, according to figures compiled this week by Mrs. Betty Vetter, executive director of the Scientific Manpower Commission. Mrs. Vetter emphasized that her data were based on current information, includ- ing the llmitation of graduate study deferment to medical and allied fields only. Following are her projections: Prein- Draft Total duction pool pool 405, 000 Male baccalaureates, 1967-68: Deduct: Overage and part time 55, 000 Divinity students ~ 000 To graduate school in medical fields 12, 000 Veterans 10,000 Occupational deferment 18, 000 Fathers in Ill-A before June 30, 1967 26, 000 To OCS and Reserves 50, 000 Volunteers 30,000 Subtract: 25-percent disqualified 199, 000 149, 000 144, 000 First-year full-time graduate students, first registered for graduate study in 1967-68 school year 50, 000 Deduct: To graduate school in medical fields 11,000 Veterans 6,000 Fathers in Ill-A before June 30, 1967 7,000 To occupational deferment 25, 000 Reserves 2,000 93,000 Subtract: 25-percent disqualified 24, 000 69, 000 95,000 Male master's degrees: Deduct: Part-time students otherwise deferred 48, 000 To occupational deferment 20,000 Continue toward Ph. D. in medical fields 10, 000 (These three groups also include 7,000 veterans and 4,000 fathers.) In reserves 6,000 11,000 Subtract: 25-percent disqualified 3, 000 8,000 20,000 Ph. D.'s granted: Deduct: Occupational deferment 10, 000 Overage, fathers, part time, etc 10, 000 College graduates subtotal 226,000 1,880,000 Men born in 1949: Deduct: Voluntary enlistment 360, 000 Students 684,000 College students 670, 000 High school students 90, 000 In special schools 51, 000 Deduct: Drop out of school 70, 000 Part time 40,000 Reservists 15,000 Fathers 2,000 Deferred (fathers, agriculture, etc.) 126, 000 Rejected by local board without examination 100, 000 610, 000 Subtract: 45-percent disqualified 274, 000 336, 000 880,000 Men age 20-26, available but not previously drafted: Deduct: Volunteers (during next 10 months) 350, 000 Draftees (during next 10 months) 220, 000 Add: From l-Y 30,000 School dropouts (net qualified) 28, 000 1948-born who become 19 (net qualified) 160, 000 528, 000 Total available draft pool 1, 090, 000 PAGENO="0179" 173 ŁFFECT OF 1967 CHANGES IN STUDENT DEFERMENT UNDER SELECTIVE SERVICE IN GRADUATE AND PROFESSIONAL (POSTBACCALAUREATE) SCHOOLS, EXCEPT MEDICINE AND DENTISTRY, WASHI NGTON UNIVERSITY Graduate Male enrollment School of Arts and Sciences Law Busi- ness Engi- neering Social work Fine arts Archi- tecture Total 1968-69 estimated (under pre-1967 selec- tive service provisions) 900 1st year 300 2d year 225 Subtotal 525 tess estimated 25 percent physically dis- qualified 131 Subtotal 394 Less veterans and over 26 (percent vary- ing by school) 153 Selected for service (drafted) 341 Percent of 1st and 2d years drafted 64. 9 250 325 435 100 10 60 2, 080 100 62 195 100 145 109 50 40 5 3 24 20 819 559 162 40 295 74 254 63 90 22 8 2 44 11 1,378 -343 122 `16 221 274 191 125 68 19 6 11 33 `5 1,035 -183 106 147 166 59 5 28 852 65. 4 50 65 65 62. 5 63. 6 61. 8 110 percent. 2 25 percent. Dr. TRYTTEN. I would like to comment on one of the points made by Dr. Pusey with respect to the impact on the graduate population of the interruption and to point out that this is particularly serious in certain fields where youth is so important. The productivity of the graduate student when he comes out is a function of his age, especially in many of the fields which require a high degree of continuity. So that the impact for some of these fields would be quite substantial in view of the interruption. I might also add that it is a little unrealistic to think in terms of a 2-year interruption for service abroad, even if the level of present military action is not eselated, because of t.he uncertainty involved in this whole situation, the uncertainty of when the inthviduai goes in has an effect on his commitment to his field. He is uncertain. He may or may not start. If he does start, there is a possibility of being cut off. There is also the fact that when he comes out of the service he is not necessarily in step with the academic stream. He may come out, let's say, in October, and if he is fortunate enough to get into graduate school it will probably be the following February at the beginning of the term. These things add up to several months beyond the 2 years of actual service. This is important, I think, in terms of what President Pusey said with respect to the supply of teachers in the future. It isn't only the teachers who are graduate assistant teachers now, but the teachers for the enrollments to come. Figures were recently issued, today or yesterday, issued from the Government indicating the extent of in- crease in enrollment in the next 5 years, for example. There is to be about a 25-percent increase in undergraduate enrollment. It is the teachers for this group that are now being developed in the graduate schools. With respect to another matter, let us suppose that some change could be made, such as suggested by President Pusey, in which the calls might come from various age groups of that kind. Much of this im- certainty would still remain because the calls then would come and PAGENO="0180" 174. the individual would not know whether he was going to be called now or 2 months or 3 months from now, or more. My principal point is, even if one goes to a more random selection, the individual, if he does elect to enter graduate school and take a chance on finishing the year, if he is drafted, he is no longer protected as he is this year with a 1-SC. That is, if he is called, he must leave immediately and go. This is one part of the uncertainty which clouds this situation and which will increase the effect on the overall effective- ness of the graduate student. I think for the present that is all I need to say. I am sure many of these things will come up in the questioning period. Mrs. GREEN. If I understand the policy now, all deferments for graduate students end as of June 30 and that means that all of the graduate students in the first and second year would be transferred to the 19-year-old class. Is that right? Mr. MoRSE. At the moment they would not be transferred to the 19-year-old class. As -of now they would be at the top in order of induction -because they would be older. If the President should designate a so-called prime age group which is provided for in the new act, then those who lose their defer- ments would be treated as if they were 19. That is provided for in the act, but it requires first a designation by the President of the prime age group to be inducted. So, -as of now it is the oldest first, by chronological age. I should say that not all graduate students will lose their defer- inents. Those who actually enrolled in graduate school prior to June 30, 1967, are allowed to continue graduate studies until they complete t-heir degrees or, in the case of the Ph. D. program, at- the end of 5 years. They lose their deferment -at the end of 5 years if they haven't received their Ph. D. degrees. They are limited to 1 more yea-r for masters. Mrs. VETTER. There is no guarantee for the people in their second, third, or fourth year. It will be u-p to their local boards, but they wi-Il be considered for further deferment to complete their degree. Mr. HATHAWAY. What is our o-bjective here? Is it to all-ow the - graduate students to complete their ed-ucation a-nd then be draft-ed regardless -of a-ge? Say they start before they are 26 and they end up when they are 28; or, is the objective to grant immunity to student-s until they are through altogether? Mr. MOT~SE. Dr. Trytten was quite instrumental in the development of the student deferment policy as it pertained to the Korean war. We in the American Council on Education at that time strongly supported the idea that it was in the national interest to defer both under- graduates and graduate students until they had completed their work for a- degree, but with this one extremely import-ant proviso: that, at the end of their study, they shoińcl be just as vulnerable or just as subject to call as th-ose who did not go to college. This we very strongly stated in 1950 when the deferment policy was first instituted. Between the Korean period and Vietnam, the Defense Department determined it did not wish to induct anyone over the age of 26 -and this is what really destroyed the concept of graduate deferment. I PAGENO="0181" 175 think no one would defend the idea that by spreading out or lengthen- ing one's graduate program, one might thereby escape obligation for military service, and yet that is what began to happen and this was a kind of race on. the part of some students, undoubtedly, to prolong their studies until they passed their 26th birthday, at which point they were home free. I don't know anyone who would defend that as a policy, but that is what was happening and that is the reason why the Congress-I think quite understandably-decided to eliminate this haven. Am I correct, Dr. Trytten? Dr. TRYTTEN. I think you have stated it correctly. I would only call attention to the fact that there was a quality basis for the selection for deferment in the programs which developed in the Korean period. The individual had to demonstrate certain basic abilities and prog- ress in his field so there was an effort to include thebuilt-in feature. Mr. HATHAWAY. If we are going to draft them anyway when they are through graduate school, isn't this going to hurt the argument I)r. Pusey was making, that you are going to stop the flow of teach- ers? What difference does it make whether you draft them before they go to graduate school or afterwards? You are not going to have the flow. Dr. PUsEY. I think there is a great difference between taking rela- tively modest numbers out of seven different age groups than taking the whole of two age groups because it is a flow and, like a stream of water, when you cut it off, you cut it off and it takes a long while to get it set up and going again. I think the plea most of us are making is to find some way to take from seven groups rather than one or two. We are not asking for penn- ament immunity for anybody. We are trying to keep graduate educa- tion going with the least disturbance because the health of it is im- portant. Mr. HATHAWAY. So if we had either a percentage allotment among the seven age groups, or a more random selection, we would be better off a.s far as your point is concerned? Dr. PUSEY. That is right. Mr. HATHAWAY. In other words, it would take a lesser number? Dr. PUSEY. Yes. Then there is one other point that I think someone has to find the answer to: I think there has to be some provision that a person who begins a semester may finish that semester because otherwise he is pmbling his money for tuition, or the institution is, and lots of people just won't go so we will get a much worse situation. So if we could have that guarantee, that you can finish a term at any rate, and then take them from seven age groups, I think that would work. Mrs. GREEN. Would you yield? Mr. HATHAWAY. Yes, Madam Chairman. Mrs. GREEN. Would you develop at this point the alternatives that you see, Dr. Pusey? You talk about the seven age groups. Now, if you would go into that a little bit more and also the alternative that I understand is being proposed, we would appreciate it. Dr. PUSEY. There are people in the room who know more about this than I, hut I have heard it suggested that the military itself would PAGENO="0182" 176 prefer to have people from the seven age groups, 19 through 26, and that the local draft boards would make the selection on the basis of the percentage of the people who are subject to the draft at each age group~ the percentage that that is to the whole group. Now, this would seem to me to be a reasonable way to go about it so that the dislocation would be spread through the whole of this group and would not fall just on one particuar age, which seems to me unfair to them, among other things. But if you did it that way and did not have some pro- vision that they could not be called every month where they were, I don't think it would work, either. But if a student could finish a term and then go, I think that then young people would not stay out of college and graduate school for fear of losing their money or feeling that the odds were against them. I think the two things have to go together to get a workable program. I hope I have made that clear. Mr. HATHAWAY. I think Mrs. Green also wanted your elaboration on the point of the other system of a more random selection, such as when a graduate student finishes, then the President sets a priority age group, say 19, and he is considered as if being 19 but he is drafted only in accordance with his actual birth date in that group. So that if he was born January 1, he is going to be one of the first to go, but he is scattered amongst all the other 19-years-olds, so it would take a lesser percentage than if you take the older ones first based on their actual age. Do you want to comment on that? Mr. MonsE. Yes. If you will look at the figures that we first looked at at the beginning of this session, you will see that for the coming fiscal year there is an eligible pool of over 1 million men. Now, with the figure given us last evening by the Defense Department of 240,000 to be called, you can see that under a random system of any kind one out of four would be called. So presumably your graduate schools would be depopulated by one-quarter and so would your 19-year-old age group. But under the current conditions, with a pool of 1,090,000 you would take 226,000 graduate students in this year's class of seniors, leaving virtually no call for those who are younger. Now, if you went into any kind of random system at the end of the coming fiscal year, this pool of 1,090,000 would move out of the way, so to speak, and another pool of probably about a million to 1,100,000 men would come into place. So this year's pooi would be probably no longer vulnerable to the draft except in a case of greatly stronger mobilization or all-out mobilization. Mr. Qura. `Will the gentleman yield? Mr. HATHAWAY. Certainly. Mr. QuiR. If you use those seven categories and a person, we will say, is in the 23-year-old group now, the next year, of course, he would move out of that group but wouldn't he be over in the 24-year-old group then and, therefore, be subject to one-fourth of the draft? Mr. MORSE. Yes. I think that is probably right. Mr. Quis. At the end of 4 years he goes in. Mr. MORSE. I am not quite sure, Mr. Quie. The fact is that we have got about four to five times as many people eligible for the draft in every way, as the current demands of the armed services are stated, as they need. Now this is likely to-I shouldn't say that because I don't PAGENO="0183" 177 suppose anybody can predict-but the pooi of draft eligibles gets larger every year because of the birth rate. So assuming a stable military call, a smafler and smaller percentage of men are likely to serve. That is the quandary we are in. Mr. QmE. But you get a fresh supply of bodies in the 19-years-olds each year. Mr. MORSE. Yes. Mr. QUIB. But the 19-year-old becomes 20 years old and the 20- year-old becomes 21 years old, so that they go over into the next group. It seems to me at the end of 4 years they are picked up then, or 5 years or whatever is the case. Mr. MORSE. I think I may need some help on this. Mr. Q1IIE. Unless you are working toward infinity as one-fourth of the amount that is left over. Mr. MORSE. Yes, but the thinking has been on any kind of random selection system that the only way it will work is first to designate a prime age group, and everyone assumes that to be 19. Then once in his career, when a student loses his deferment, he is for 1 year treated as if he were age 19. That is his time of greatest liability. If he is not called at the end of that year he presumably does not continue to stay in the 19-year-old pool. Mr. QuIE. I see. So then the second year, the only ones you would be dealing with would be the graduates of undergraduate schools or ones with baccalaureate degrees. Mr. MORSE. You would be dealing with the new 19-year-olds and all `those who in that year ran out of a student deferment. Mr. QUIE. So you would not be dealing with 1- or 2-year graduate school people after the first year? Mr. MORSE. No. Each year there would be an addition to the 19-year- old pool of those w~ho ceased to have a student deferment. Mr. QUIE. The first year, those who ceased to have a student defer- ment are not only the ones who have graduated from some 4-year institutions but those who finished their 1 year of graduate work? Mr. MORSE. Right. Mr. QUIE. And' all of that pool, that will be going on beyond the baccalaureate degree? Mr. MORSE. That is right. Mr. QUIE. But the second year all of those who have either been picked or `they have been lucky enough to have been selected- Mr. MORSE. Right. Mr. QuIE (continuing). So that means the year after would be just those who finished their baccalaureate degree? Mr. MoRSE. Right; plus the 19-year-olds. Mr. QuIE. Plus the 19-year-olds. Dr. TRYrrEN. The figures would look about like this: There are 336,000 that would be in the pool from the 19-year-olds and there would be somewhere, I suppose, in the same bracket 226,000 of those emerging from the 2-S deferment. So the chances of being picked up the next year are considerably higher for those who are coming out of college because there would be 226,000 plus 336,000 available in those two groups and it would be almost one out of two, or something like two out `of five, chance of being picked up for the college graduate. PAGENO="0184" ~178 Mr. QrnE. But of th6se 226,000 only 149,000, according to the figures you have, were male baccalaureates. Mr. MORSE. Physically qualified male baccalaureates, yes. Mr. QUIE. `The ~gure of those who get thrown into the 19-year-olds who are not actually 19-year-olds would drop back into that 149,000, if you had the same figures each year. Mrs. GREEN. I do not understand the 149,000 and the 226,000. Dr. TRYTTEN. The 149,000 is the college graduate contingent of those who would drop into the pool. The rest of them come out of first-year graduate SChOOl and so on. Mr. QrIE. 69,000 in the first-year full-time graduate students, and 8,000 in the male master's degrees? Mr. TRYTTEN. Right. Mrs. GREEN. Do I understand if we follow the present policy that the college graduate is going to have much better chance of being drafted than if he has not gone to college? Dr. PUSEY. If we follow the existing policy and he were physically fit, he would almost certainly be drafted. Dr. TRYrrEx. Most certainly. Dr. PUSEY. So there would be no one in the group available for the first year of graduate school, and also those who were in first year of graduate school this year would go, so there would be no second-year graduate students. This is a temporary phenomenon, but it would be a disaster for next year. Mrs. GREEN. Wouldn't it last more than 1 year? Dr. PUSEY. It would take a long while to get, the thing started up and going, but if we went on to this other basis where all the ones who had enjoyed deferment went into a constructive 19-year-old group and a new group became 19 and they drafted from that, it would take away the uncertainty of a person living under it for 5 or 6 years. I think that would be a workable program thereafter. Mr. QrnE. You are right under present policy without an Executive order, however. Mr. ERLENBORN. Will the gentleman yield? Dr. TRYTrEN. Could I ask Mrs. Vetter to comment on that point? Mrs. GREEN. Yes. Why don't you come up to the table and join us here. Mr. ERLENBORN. Would you yield for just a moment? I think we should develop that point. Mrs. VETTER. The time we are talking about is really a 2-year plan in which for the first year the call would be by the seven age groups. If ou see the numbers you have there in front of you, you are calling from a pooi of about 1 million men. If you invoke a prime age group provision for the first year you would be calling from a pool of about half that size because you would eliminate the bottom number, the `528,000 down there. The new law says the prime age group must consist of men horn in a caTendar veer plus those who have dropped back from 2-S or 1-SC. This would give you a group of only about 500,000 from which to draw the call and would let escape, if you wilL scot free, that pool of 528,000 men who will be between 20 and 26, will be eligible for the draft but will not have served. It would eliminate these. There- fore, the p1 an they are talking about would for the first year call by seven age groups to pick up men from all these groups. PAGENO="0185" 179 This bottom group down here are the college dropouts, people who were deferred in fatherhood and then were divorced, people who have been deferred for agricultural reasons and lost the deferment, or deferred in occupational deferments, 2-A; all of these people are now available and would be in the pooi for this 1 year. Then the theoreti- cal plan is that the following year it would move to the prime age group provision which would mean that these same men would not be as liable again as they are this year. The prime age group would then consist of the men completing the baccalaureate, the men who have dropped out of school but have been in 2-S since June 30, 1967, when the new law took effect but have lost, their student deferments, plus all the available men from, probably at that point, men born in 1950. A prime age group cannot by the law that is passed be 19-ear-olds; it must be men born in a calendar year and, under present provisions, whatever call is made by age group, prime age group, or as it now stands, must be oldest first within the pool. Mrs. GREEN. Mr. Erlenborn. Mr. ERLENBORN. If you would yield for just a moment, I would like to develop this point. You are talking about a plan that has not yet been adopted? Mrs. VETTER. That is true. Mr. ERLENBORN. The present provision is the oldest in chronological age will be drafted first? Mrs. VETTER. Yes, sir. Mr. ERLENBORN. If there is no change in this, if no new plan is adopted, it would mean that, each year, those who had lost their student deferment by graduating from undergraduate school would be the oldest in chronological age. Mrs. VETTER. Yes. Mr. ERLENBORN. And would be drafted? In other words, without any change in the draft law, if no new plan is adopted, we will be drafting the entire eligible group of graduating seniors every year. Mrs. VETTER. That is true. Dr. TRYTTEN. Plus those in the graduate school. Mr. VETTER. Which we will have for only 1 year. Mrs. GREEN. So this would be true for every year if we continue under current policy? Mrs. VETTER. Yes. Dr. PUSEY. Except you will not have any first year graduate schools after that. Mrs. GREEN. Yes, but it would be your college graduates? Dr. PUSEY. Yes. Mrs. GREEN. You would still be putting a military premium on college graduates. As you said, you would be sure to go. Mr. ERLENBORN. If you would yield further, I would just like to make the comment that this would seem to give us the best educated army in the world and I am not certain that this is going to be in the best interests of the country. The uncertainty that faces the grad!uate schools today would seem to me to lead them to a policy of admitting women. the halt, and the lame. Dr. PUSEY. And the foreign born. Mr. ERLENBORN. And the foreign. PAGENO="0186" 180 Mrs. GREEN. May I have 10 minutes at this point on "the women, the halt, and the lame"? Mr. ERLENBORN. I would be happy to yield to you. Mr. EsoH. Madam Chairman. Mrs. GREEN. Yes. Mr. ESCH. I think it is inconsistent that we have reached February 9, 1968, before we have done anything about this. It is my under- standing, and please correct me if I am wrong, that this can be done under present statute. It is conceivable that the problem can be relieved under the present statutory rule by regulation or by the President's determinaion. I think we need to demand immediate clarification of the situation. If need be, Congress should act. I would like to emphasize I think it is very unfortunate we have reached this point, especially in light of the fact that graduate programs are based on projections of enrollment figures and registration figures which are made at this time of the year. Both institutions and individuals are left completely in doubt. Mrs. GREEN. Would you like your thne back? Mr. HATHAWAY. Just one question to clear up this prime age group situation. This would mean in effect, then, that a person who is going to be subject to call, assuming that the manpower needs do not increase in the service, he is going to be subject to call either when lie is 19 or after he has lost his classification. Mrs. VETTER. Yes. Mr. HATHAWAY. So would you leave open the option, too, for a person who is 19 and in college to let himself be allowed into this group and take his chance at that time so that lie would not have to take the chance later on? Dr. TRYTTEN. That is true now. Mr. HATHAWAY. So you are only in once. Dr. TRYTTEN. If he does not elect the 2-S deferment he is eligible. Mr. HATHAWAY. Under this new system, if he gets by that first grab, he is not called, then he goes on to graduate school and gets student deferment, he would not be put back into the group. Mrs. VETTER. No, sir, he has no protection ; you are mistaken. If he stays out a year at 19 on the assumption mentioned, then goes back to school, he will have to request a 2-S deferment in order to do it. If he requests a 2-S at any point he immediately throws himself back into the penalties of 2W-S, which are dropping back into a prime age group, and the other penalty of all students, he may not be deferred for fatherhood. Mr. HATHAWAY. We should take care of that situation, too, to make it fair. Mrs. VErIER. Yes. Mr. HATHAWAY. Thank you. Mrs. GREEN. Congressman Quie. Mr. Qur~. Would it be possible for a 19-year-old who has had 1 year of college to ask his draft board not to give him a 2-S rating and stay on 1-A, and if his birth date is December he has a pretty good chance of being skipped and he goes right on to college and has no problem? Mrs. VErPER. That is right. As an undergraduate he also has further protection; if he elects to take his chances and stay in 1-A, he cannot PAGENO="0187" 181 be given 2-S without requesting it. If he takes his chance and stays in 1-A and is ordered in, he has the protection of 1-SO, which has been removed for graduate students. That is what the whole problem is. The 1-SC is the statutory deferment for students, which is granted once only, and now only to undergraduates, to a student ordered for induc- tion while in the school year, and it is good to the end of his school year and allows him to complete so he knows he won't be throwing away his time and tuition. But this provision has been removed for graduate students under the new law. A new student who has requested and received a 2-S deferment after June 30, 1967, and who has com~- pleted a baccalaureate degree is no longer eligible for a 1-SO. So this protection for the student who will not be called perhaps as well as for the one who will go, is eliminated for the graduate student, but it is still there for the undergraduate, and the 19-year-old would be well advised to use it that way, I would think. Mr. EscH. Would you yield? Then there is discretion with the local boards. Part of the problem is it not, is that there is inconsistency as between local boards? Some local boards still grant these just on a local basis; am I correct in that? Mrs. VETTER. There is really no discretion in this for the local boards. They are required to draft the oldest available man and to defer only men who have requested the student deferment. But the 1-SC is statutory and must be provided to the undergraduate, under the proper conditions. Mr. QUIE. Is this going to work, if nothing is done with an Executive order? Is that the present setup? Mrs. VErI'ER. Yes, sir. Mr. QUIE. So that. a 19-year-old who gets by the draft in calendar year 1968 is off free; is that right? Mrs. VE~rrER. Well, he drops-if we go into a prime age group sys- tem he would then drop down into the next order. Mrs. GREEN. Let's talk just about the present now. Mrs. VETTER. At the present time it would not make any difference. The order of call now is oldest first, 19 to 26. So the older he got the more subject he would be to call. Mr. Qrni~. In other words, even if he got by his 19th year and 1-A and still was not picked up? Mrs. VETTER. He would be more likely to be picked up. Mr. QUIE. So there is no dropoff in age? Mrs. VETTER. Not unless the prime age group system were involved. Mrs. GREEN. I would like to ask one question, Dr. Pusey. What is the supply and demand in terms of college teachers now? Dr. PUSEY. Well, it varies from subject to subject. I think in general it is fair to. say. that. there is a real . shortage and in view of the in- creased undergraduate populations that come along and the larger numbers of the eligible group that go on to college, that we are moving toward a time when they are going to have these massive enrollments everywhere, I think it is just a desperate situation. That is one of the reasons I tried to make the point I did, that to interrupt the flow of the training of college teachers would be one of the things least in the national interest I think anybody could do. That seems tobe the situa- tion we have blundered into. PAGENO="0188" 182 Mrs. GREEN. Before you leave, Doctor, at the present time we defer medical and dental students? They are subject to draft until age 35 but they are deferred to complete their education; is that correct? Would ~ on defer if we go into other `tltei nati~ es-who t~is~ o ~n judg ment about special categoriesof deferment? Dr. PUSEY. I am personally strongly opposed to the extension of categories for deferment and I believe I am correct in saying that most people in the university world are. The categories presumably would be in the natural sciences, the mathematics, engineering. We have enough trouble in university communities now with rivalry and con- tention, not to have it acerbated by some kind of a legislative situation saying that these are in the national interest and those are not. I per- sonally would make the case that humanities are as much in the na- tional interest as anything else, but I would hope that they would treat all graduate studies alike. I think that is the only sensible way to do this. Mrs. GREEN. What if they were all subject to the draft until 35 years of age, after college deferment, wouldn't this erase the present problem? Mrs. \`ETrER. It already has. The law says that students will now, anybody who has been deferred in 2-S or 1-SC after the law took effect, will have no magic line at 26. His cutoff now comes at 35. This has already been taken care of. Any student in 2-S this year already has lost the 26 line. Dr. TRYTrEN. Excepting that the Armed Services may decide that they would not prefer to have people over 26. Dr. PUSEY. They don't want them over that age. Dr. TRYTrEN. It is not the law, it is the preference of the military establishment. Mrs. GREEN. I thought it was this 26 that was creating the problem presently. Mrs. VETTER. It was, before the law changed, but the law changed that to 35. Mrs. GREEN. As of last year. Mrs. VETTER. But only for students, not for everybody else. Every- body else is free and clear at 26. But for students, t.hey will at any point that they cease to be deferred drop back into the prime age group up to 35. There is no cutoff. Mr. HATHAWAY. I take it from your testimony that if we allow the student to complete a term, that as far as the individual student is concerned it does not hurt him to have to go away for two years and come back? Or do you think it does? Dr. PUSEY. I think you would have to answer that in each individual case. Some young men would be terribly upset and others would not. Some mature under the process. I do not think you can have a general rule under that. But I think the national service needs people and I think we have to try to find an equitable way to provide them. This would seem to me to be the way to do it.. Mr. HATHAWAY. You don't know from your experience at Harvard whether or not that is so? Dr. PUSEY. I think it is a mixed bag. There is a kind of person who will not come back then to scholarship if his career is interrupted and PAGENO="0189" 183 he will be lost permanently from us. There `is another kind of fellow who will come back and just run true to form and maybe gain from the experience. I think it is six of `one and a half a dozen of another. Mr. HATHAWAY. It doesn't make any difference- Dr. PUSEY. I think it makes a great `deal of difference for the in- dividual but I don't see how you can have a general rule. Mr. QuIE. You say that in the national interest you `should not designate certain `of the graduate schools `as being more important than others. What `about the military interests? Is the military looking for some people who finish graduate school in certain areas? Dr. PUSEY. Yes. I think that is a logical and possible approach. If the military could be very preci'se and say they need a particul'ar kind of engineer or a particular kind of mathematician, this ought to have priority; but just to take all mathematician's and not take t'he people in `other fields, say in Chinese literature which may be much more important for the country now, that is what I think is invidious and should be `avoided. If they can be precise, yes. Mr. QUIE. Have you noticed any special interst in the military to try to secure enlistment of graduates of your graduate school? Dr. PUSEY. Well, we have `a `situation, for example, where specialized recruiting goes on `in the law school. They come and get people for the Judge Advocate's branch, and they should. Then, of course, there is a high percentage of people graduating from the medical. school who are going to be in military service and serve as doctors. That makes good sense to use them that way. So again I think if there are precise ueeds that can be identified, why, then they `should figure in this equation somehow. Mrs. GREEN. `Are there any other questions to Dr. Pusey? One `final one: `What effect d'oes it have on the young man, this period that we are going through, trying t'o plan his career? Dr. PUSEY. I think the uncertainty is very bad for him, and it is just as bad for the institutions. I would like, if I may say a final word for the institutions. It is a fact th'at we don't know really what to expect for next year that is causing our greatest `difficulty. If this could be clarified and we knew what the rules of the game were going to be, then we would have t'o do our `best to a'dju'st, one way or the other. I think it has been made clear that if we go ahead under exist- ing policy, the difficulties for the institutions are going to be enormous. I think the difficulties for a special group of young men, this year's college seniors, are going to be multiplied out of any fair proportion. I think these young men `have to know. They have no idea of whether they can go on to graduate school next yea'r or not. I think they need a clear `answer as to what their percentage `chances are going t'o be and they `ought to get it fairly soon. Mrs. GREEN. In time, this is extremely urgent. Dr. PUSEY. Wehadhoped, many `of us, that this would be cleared up last December. I think it ought to be cleared up immediately. Mrs. GREEN. Thank you very, very much, Doctor. Dr. PUSEY. Thank you for the chance to come. Mr. ESCH. I just w'ant to clarify `one or two things, if I might. I wonder if the President is aware of this situation. PAGENO="0190" 184 Mr. MORSE. We have every reason to think so. We have been in fairly close touch with Mr. Cater on the White House staff, and Mr. Cater assures us that the President is aware that there is a problem. Mr. ESOH. And I am correct that the situation could be alleviated by Executive order? Mr. MORSE. It certainly could be alleviated by Executive order. Whether that would provide the best system, I think we could all discuss at some length. But certainly the Armed Services Committee has indicated that it believes the President has ample authority to resolve this problem by the designation of a prime age group. Mr. EscH. I wonder why the President has not acted. I wonder whether tue President or General Hershey is in charge `of the country. I think this is a serious matter and I would like to know the reason why he hasn't acted. I think the country would like to know, the young men would like to know, and I think the colleges and univer- sities would like to know. Mrs. GREEN. Dr. Trytten, for my education, would you outline to me your recommendations in the Korean war? What do you think the best draft policy is in terms of the national interest and in terms of the colleges and universities and young people? Dr. TRYTTEN. You are asking two questions. Let me take the first one, what the program was at that time. Let me say that the universities at that time were in a somewhat different position but perhaps not too much different. They had lived through World War II, which very severely strained the institutions financially and in many other ways. So that the drafting of students in any great numbers at that time would have been very disastrous for the institutions, perhaps even more so than at the present time. The question really was this, that you are going to make inroads into the college population, and how do you go about it? What kind of princi- ples should apply? There was appointed to consider this by General Hershey a series of committees which elected to work as one committee. It was that committee that I was chairman of. It came up eventually with a scheme which would authorize student deferment on the basis of two criteria. One of them, a criterion of quality which would be determined by a test to be given, an aptitude test. That was actually done by the Educational Testing Service in Princeton which administered the test to several hundred thousand students who elected to undergo this. The other criterion was the standing of the individual in his classy where he rated. He had to be in the upper percentile. I have forgotten now the exact percentile because they differed for the graduate and undergraduate students. So it was a double criterion that was applied. If the individual satisfied either of those criteria, the local board was empowered or was advised to defer him. It was in effect, and quite well accepted, I think, by the educational community, but of course the crisis was a much shorter one, and con- sequently after a year or two the draft calls became so low that it more or less passed out of active use. Now, with respect to the present situation, I think it is somewhat different. I am not sure that the same situation would apply here,. partly because of the attitude on the college campuses: The fact that PAGENO="0191" 185 these people in the student bodies have not taken to this idea at the present time. General Hershey did actually, I believe a year and a half ago or so, start thinking in this direction but the reactions on the campuses, and so on, were inimical to this kind of thing: The fact that the faculty did not want to be a part of the determination of whether a person should go to the military services or not. So that this was not well re- ceived as an idea at that time. Whether the present situation would change their minds or not, I do not know. Actually, I do not know what I would recommend at this time be- cause the situation is so different and the nature of the present conflict, the reactions to it create a wholly different psychological situation within which policy must be developed. It may be that perhaps the best thing to do at this time is to move in some direction along the line that Jack Morse has talked about here of some kind of a random selection. What I really would like to see, but I suppose it is quite unrealistic, is a moratorium for a year on induction of graduate stu- dents to give us time to really think about this and come up with a sounder basis for mobilization for military manpower. Mrs. GREEN. If I understand you, all three of you are in agreement that if the present policy continues the graduate of a college or uni- versity or a first- or a second-year graduate student is almost certain to be drafted. Mrs. VETTER. Yes. Mr. MORSE. Yes. Dr. TRYT~EN. That is right. Mrs. GREEN. One hundred percent, every one of them. Then am I also correct that the policy today is in exact reverse of what you had in the Korean war? You said then that you deferred on the basis of quality and if they were in the top percentile, but now it is exactly reversed: If you have finished college or capable of going on to gradu- ate work, you are sure not to be deferred. Dr. TRYTTEN. A complete lack of rational relationship between the undergraduate student deferment and the graduate student. They just are two different philosophies. Mrs. GREEN. Are you in agreement with the others? I think they used the word "devastating" to our national policy. Dr. TRYTTEN. Oh, yes. Mrs. GREEN. Are there other questions here before we turn to Dr. Shannon? We have another problem here with the undergraduate. Dr. Shannon, would you explain what happens to people that are not candidates for a degree? Dr. SHANNON. Yes. Thank you, Madam Chairman. I am pleased to have this chance to publicly express our views be- cause we have been working for over 6 months now in sort of a sense of quiet desperation trying to get some attention from the White House to this particular problem which faces us. The new Selective Service Act provides through the regulations of General Hershey's office a 1-A deferment for students in the occupa- tional field-2-A; pardon me-2-A deferment. PAGENO="0192" 186 This is as against 2-S deferment for students who are aiming for the baccalaureate degree. But there is a great deal of uncertainty about the 2-A deferment, because as of this time the National Security Coun~ cii, which is supposed to designate the critical areas, has not done so, at least has not set up a new slate of critical areas so that the student who is aiming for a technician's job after a year or 2 years in a junior college is not sure whether his deferment is going to hold up while he is a student. The law calls for a deferment of students until they reach 24 years of age, until they drop out of the program for some reason, or until they attain the baccalaureate degree. It seems to us that the present regulations are not a correct interpretation of the law. They seem to be an interpretation which is slanted toward the baccalaureate student but giving a rather discriminatory approach, using a discriminatory approach to the 2-A student or to the occupational student. This has caused a great deal of uncertainty on the part of the students. They do not know what fields they might engage in. In a sense, it puts the pressure on the student as to whether or not it is advisable to enter the baccalaureate program because there is practically an assurance of 4 years of draft deferment. This can create an unnatural situation in the community college where, for many years now-and in the technical institutes-we have been trying to encourage students to go to the technician field and the occupational world, take their training, and then go out into the manpower pool which at the present time is depleted of many of the persons that we need for our industry and technology. Now, we have tried, as I said, over the past 6 months to get a reinterpretation of the regulations. We have met with General Her- shey and his staff. We had met with persons from the White House. We have tried through the Office of the Commissioner of Education to achieve this objective but we have been unsuccessful thus far. WTe have had interest expressed by many Congressmen and others in this par- ticular cause, but this is our first chance to state our case publicly except for a press release which went out a month ago and which received very favorable response from the colleges and from the press itself. Editors around the country were quite sympathetic with this point of view, but thus far we have not been able to achieve or to obtain any change in the regulation. I would like to come back to the point Dr. Pusey mentioned about teachers and the relationship of their problem in the undergraduate institution and graduate institutions. Last year 74 new community col- leges were opened up. We see a tremendous increase ahead in enroll- ments from 1.6 million this year to about 3 million within 5 or 6 years. WTe need many, many teachers. One estimate is that we need 100,000 full-time teachers within the next 7 or 8 years, we need the same num- ber of part-time teachers. Now, most of the junior colleges require or call for or recommend that a teacher have a master's degree in the sub- j ect niatter, plus some additional graduate work. If the graduate schools are going to have their flow of students cut off in anyway, the flow of teachers to the junior colleges will be severely impaired. This is of particular concern to us as these colleges are multiplying in number and like amoebas, splitting up into multica.mpus students, and thou- PAGENO="0193" 187 sands of students who would not otherwise have a chance to go to col- lege are crowding around these campuses all around the country The students who are particularly affected by the selective service regula tions at the present time number about 500,000 This would include students in the technical institutes In the 4 year institutions also which have these technician programs and in the junior colleges and community colleges, as well as business schools around the country. There are 900 junior colleges at present. There are several hundred of these other types of institutions. So we are concerned here with a great number of students and many, many institutions across the country. This particular pattern or, rat'her, policy of the Selective Service in differentiating between the occupational student and the baccalau- reate student, which we think again is not along the intent of congres- sional action, his some insidious effects in that it tends to separate out the students whom we have been trying to encourage to get into the occupational field, indicating to them that this is just as valuable an area of work in society as is the work of the history professor or the artist, et cetera. We are trying to keep the doors open in our colleges so that students can return after they have had a job `and upgrade themselves, `but thi's type of second class citizenship stamp on the occupational student is a very demeaning one in many respects. At the same time, the policy is a discriminatory one in that many of the students attracted to the community colleges come from the lower `and minority groups. These `students have tended to move into the occu- pational field. So if your policy tends to lean in that direction and take most of those students, then this automatically becomes a discrimina- tory pattern of operation. We have seen its effects across the coun'try. We do feel, to come back to what Mr. Esch `w'as asking before, we do feel that `tn administrative decision or ~dministrative action could correct the situation We believe that there is leeway in the l%w to allow for this type of correction. We do not believe that Congress intended that the policy of 20 years' standing should be modified to the extent that it has been modified. Beyond these points there is `a tremendous amount of discrepancy between the operation of the various board's, the S~lective Service boards. We have differences as `between States `and within States. In the State of Ohio, to illustrate some students `have received a 2-TA deferment automatically, some have received a 2-S. In `the case of one student who moved from Ohio to a Kentucky college, was given an Ohio designation, whereas the `student in the same classroom was given a Kentucky designation which was Ontirely different. There wa's no sense to that. We have seen instances where draft boards have given studen'ts the 2-A deferment even when they are in the baccalaureate program. There seems to be no consistency across the country. This has been `a tremendously upsetting thing to the colleges, the adminis- trators, especially to the students. Mr. ERLENBORN. If I might just make a comment at this time. The variation in what the draft boards do is' not necessarily as `widespread as between States. In my own home county we have two draft boards. At least up until recently, one draft board, serving the eastern part of the county, felt that anyone in graduate school, if they were not study- 92-371-68-pt. i-i3 PAGENO="0194" 188 ing to go on to be a physician or dentist, should not receive a defer- ment, so they were being drafted. The board in the western half of the county gave deferments to anyone in graduate school. So this has been an intolerable situation where, with getting a deferment depended on whether you lived in the eastern or western half of the county. Dr. SHANNON. I have asked Mr. Gaul to pass out to the comniittee members, Madam Chairman, a copy of a document entitled "AAJC Approach," which is an editorial appearing in the latest issue of "Jun- ior Colleges" over the signature of Dr. Gleazer, our executive director. This explains pretty much the situation as I have explained it here. We are hopeful that some ohange will be made in the policy. We do know that Congressman Patman has introduced an amendement but, as far as we know, we are not sure what the s~hedule for that particu- lar amendment is. It attempts to achieve the objectives, as I have out- lined them here, of some change or modification in the Selective Serv- ice Act itself. But we feel that there are many implications here for manpower development thst should be looked at very carefully. For example, the Vocational Education Act attempts to encourage people to enter the very fields which are being discriminated against in this policy. We know many of the antipoverty programs reach out to the students who are being discriminated against in these institutions now under the policy. So on down the line. I noticed in the release sent to us just yesterday from HEW that there is a new high priority given to health programs in community colleges. Many of our students en- rolling in these programs would be subject to a great deal of uncer- tainty and then perhaps to call should any of the areas they nre engaged in not be classified by the National Security Council as essen- tial to the national interest. Persons in police science, electronic tech- nician work, in all sorts of business fields are completely uncertain now as to what direction they might take in their own career development. So we see this effect right down to the student level when he is work- ing with his counselor, when he is talking to his parents about what career he ought to select. We see the uncertainty here being a tremen- dously damaging kind of thing. We would hope that this committee and the Congressmen here would help us obtain a correction in the policy. Mrs. GREEN. Thank you, Dr. Shannon. I see Dr. Warlow, executive secretary of the American Association of University Professors. Dr. Warlow, do you want to add anything? I know of the concern of your organization. Dr. WARL0w. No, thank you. And I am not the executive director, Madam Chairman; I am just a staff associate. I am listening. Mrs. GItm~N. Fine. Are there any other questions now? Mr. Qmn. Yes. I would like to ask Dr. Shannon a question. If we went to the system of having seven categories now being suggested, taking the oldest in each category, would this pretty well take care of your problem; that is, the problem in the junior colleges? Dr. SHANNON. There would have to be, to correct this particular situation, a consideration by the Selective Service that students were students as long as they were enrolled full time in the colleges. PAGENO="0195" 189 If the system as suggested is applied, I am not sure how it would really work if the occupational groups are given a different classifica- tion from that given the baccalaureate. Mr. QUIE. They have as `good a `chance as some of the 19-year-olds. Dr. SHANNON. The 2-A and 2-S students are `both sub~ect'to' th'e draft till 35. Mrs. VETTER. To the age 35' liability, but not to the penalty. Dr. SHANNON. They are subject until age 35. Mrs. VErTER. This is the reason they are placed in 2-A. The law does not provide for vocatiOnal students. I think it was meant to. I am sure the people who wrote it intended that it should. It is the law itself which specifically states that men shall be deferred in 2-S until reaching age 24, dropping out or receiving a baccalaureate. Men who are not in the baccalaureate program, therefore, are just omitted-I think `by error when they wrote the law. They had no protection at all, and General Hershey sent out a directive to the local boards saying: "Defer these men in 2-A. They can't be deferred in 2-S as the law stands." At least this is his interpretation, and I understand this. I do not see any difference in it. He did not want them drafted. I do not look upon a `2-A deferment as `anything less `than a 2-S, because that is the classification of all our scientists and engineers who are deferred when they get through. The important part of it is that in one way what General Hershey was trying to do was to say that the student who is to be deferred for 4 years to get a baccalaureate must accept the penalties of the student deferment, and there are two, and they are severe. The student who is going to be in school for only 2 years obtaining a technical level degree, a 2-year degree, should not have to suffer the same penalties as the boy who is deferred for 4 years. Therefore, let us defer them in 2-A, and there they will be safe. It is true the National Security Council can at any time change the list of critical occupations, the list of essential activities. It also, of course, has authority to change the list of deferments for graduate study. It has not done any of these things. I think it as likely that they will change the occupational deferments' as the educational deferments, which is almost nil at this point. Mrs. GREEN. You think it is almost nil? Mrs. VETTER. Yes, I do. I think they will not take any action unless some pressure is applied to see that they do. Mr. Qtrre. I just wanted to finish on this. If a person is in 1-A until he is 19 years of age, of course it would be a problem for him if his birthday was in January. Other than that, he would not have any troubles at all. If you stay in 1-A and get past `that age, therefore you would not be subject to call. Mrs. VETTER. It is only if the prime age group is invoked. They are not in 1-A. They are in 2-A, which is deferable. They are in an occu- pational deferment rather than a student deferment. Mr. QuIE. His problem is taken care of then. Mrs. VETTER. His problem is taken care, of, yes, because he will be drafted. If he stays in 1-A, he will be drafted, provided `he is available. Mr. QuLE. They are talking about seven categories. PAGENO="0196" 190 Mrs. VETTER. This would not protect him if he stayed in 1-A. Mr. ESCH. I think, Madam Chairman, we are at the heart of the matter pertaining to the vocational students. First of all, as evidenced by some t.estimoi~y here, the 2-A classification will not be clarified in any way in terms of needed occupational skills. At least, we have no evidence that such clarification will be forthcoming. So, there is con- fusion as to what is a necessary occupational area under 2-A. There is confusion with local boards as to what we mean when we put a person in 2-A who is going to a technical school and, therefore, there is con- fusion among the young people we are trying to help the most. It is inconsistent that within the last month or two we have had emphasis placed upon need for vocational and technical training and that we are, at the same time, discriminating against those people who are taking technical and vocational training. I believe it was not the intent of Congress to discriminate in any way against those who are in community colleges and involved in technical training. We must have an immediate clarification. Mr. MORSE. I would not disagree with Mrs. Vetter, because when- ever I do, I find I am wrong, and in this particular instance I believe it fair to say that the legal counsel for Selective Service does interpret the law as Mrs. Vetter described, but that there is a considerable body of legal opinion in HEW and I believe in the Attorney General's Office that the law could be read at the present time to provide a 2-S defer- ment for those students who are not in a baccalaureate program, be- cause one of the criteria outlined in the Draft Act is that a student is subject to call when he ceases to pursue a full-time course of study, and in that phrase there is not mention of the baccalaureate degree. None of us here is a lawyer, but I do know there is dispute among the lawyers a.s to the meaning of that law. Mrs. GREEN. We are talking in terms of protection. I do not know ~vliether that is the right term. As I understand it, the technical student or the student who is not enrolled to get a degree has more protection than the college graduate or the freshman and sophomore graduate student. Is that not right? Mr. MORSE. Sure. Mrs. GREEN. They have no protection. They are in. Dr. SuANN0N. Assuming that the National Security Council does not declare some particular fields in the national interest and others not. We have no ass~u~ance w~hatsoever that students of police science or business courses, many of the engineering-related or health fields, will be in these particular areas. There is a great deal of uncertainty. We have not been given any assurances by anyone that they will even be considering this. Mrs. GREEN. I understand that, and I agree with it. For the benefit of Congress, do any of you people at the table know if a recommendation has been made? Has the National Security Coun- cil made a recommendation, to the best of your knowledge? Mrs. VETTER. Not officially, at any rate. Mr. HATHAWAY. Dr. Shannon, would you go along with having 2-A considered the same as 2-S and taking the recommendations being made by the other people testifying here that then they would come into some sort of random selection for the draft, which it is estimated means one of four would be called? PAGENO="0197" 191 Dr. SHANNON. Yes, sir, we believe that the students ought to be treated equitably across the line, without any regard for the particular field they are in at the moment. One of the problems we face is that the students change their mind in the first 2 years. A student may begin in an occupational field and transfer to the baccalaureate or begin in the baccalaureate and transfer to 2-A. There are obstacles in the transfer process which we are trying to work out with the draft boards, but here again, you are working with 4,000 boards. Mrs. GREEN. Are there any other questions? I wonder if we might have an executive session. Dr. SHANNON. I want to mention I brought along Dr. John Mallon and Mrs. Anne Trosch of our staff, who are working on a survey of the effect of Selective Service policy on colleges and students, and we will be glad to make information from that survey available if you would like to have it. Mrs. GREEN. We will look forward to hearing you on the entire edu- cational bill, too, Dr. Shannon, and at that time perhaps it will be helpful. Dr. TRYTTEN. Mention was made of the assessment of the effect on graduate schools being carried out by the Council of Graduate Schools and by Mrs. Vetter. When that comes in, I presume you would be in- terested in having it. Mrs. GREEN. We would very much like to have it. You have some figures you are going to leave us now. My sincere thanks to you, Mrs. Vetter, for your help, and to Mr. Morse, Dr. Trytten, and Dr. Shannon. If we may go into an executive session. (Whereupon, at 11 :40 a.m., the subcommittee proceeded in executive session.) PAGENO="0198" PAGENO="0199" HIGHER EDUCATION AMENDMENTS OF 1968 TUESDAY, FEBRUARY 20, 1968 HOUSE o~' REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D.C. The subcommittee met at 10:15 a.m., pursuant to recess, in room 2261, Rayburn House Office Building, Hon. Edith Green (chairman of the subcommittee) presiding. Present: Representatives Brademas, Gibbons, Burton, Quie, Reid, Erlenborn and Esch. Present also: Representative Meeds. Staff members present: William F. Gaul, associate general counsel, and W. Phillips Rockefeller, minority research specialist. Mrs. GREEN. The subcommittee will come to order for the consider- ation of H.R. 15067, The Higher Education Amendments of 1968. This morning we are going to turn our attention to title XII of the bill, the part which is known as the Education for the Public Service Act. This morning we are glad to welcome again Dr. Ralph Huitt, and accompanying him is Donald Simpson, the Assistant Secretary for Administration in the Department of Health, Education, and Welfare. Mr. Simpson, it is my understanding that you have a statement and you are going to lead off. Is that correct? Mr. SIMPSON. That is correct. Mrs. GREEN. Fine. You may proceed as you wish. STATEMENT OF HON. DONALD F. SIMPSON, ASSISTANT SECRETARY FOR ADMINISTRATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE; ACCOMPANIED BY HON. RALPH. K. HUITT, AS- SISTANT SECRETARY FOR LEGISLATION; PRESTON VALIEN, DEPUTY ASSOCIATE COMMISSIONER, BUREAU OF HIGHER EDU- CATION, OFFICE OF EDUCATION; AND WARD' STEWART, DIREC- TOR, FIELD SERVICES, BUREAU OF HIGHER EDUCATION, OFFICE OP EDUCATION Mr. SIMPSON. Thank you very much. I am happy to have this opportunity to testify further to Commissioner Howe's statement in support of title XII, the Education for the Public Service Act, as contained in H.R. 15067, the Higher Education Amendments of 1968. Permit me, Madam Chairman, to introduce my colleagues. Immedi- ately on my left, Dr. Preston Valien, Associate Deputy Commissioner, (193) PAGENO="0200" 194 Bureau of Higher Education, and Dr. Ward Stewart, Director of Field Services in the Bureau of Higher Education. Mrs. GREEN. We are delighted to have Dr. Valien and Mr. Stewart, both. Mr. SmrPsoN. The need for this legislation has become increasingly urgent and is well-documented. In 1962, the Municipal Manpower Commission in its report, "Gov- ernmental Manpower for Tomorrow's Cities," documented the critical shortage of able administrative, professional, and technical manpower in State and local government. Since then, a number of reports, including the reports of the Com- mittee for Economic Development on "Modernizing Local Govern- ment To Secure a Balanced Federalism (1966)" and "Modernizing State Government (1967)," the Bureau of Labor Statistics publica- tion, "Manpower in State and Local Governments, 1965 and 1975," and the report of the Presidential Task Force on Career Advancement have thoroughly substantiated this view. The Bureau of Labor Statistics now estimates that, between 1965 and 1975, State and local governments will need to recruit an addi- tional 2.9 million new administrative, professional, and technical per- sonnel-key staff required to perform increasingly complex and tech- nical governmental services. (This flgui'e excludes needs for new teachers.) Although the Federal Govei'nment's requirements for new adminis- trative, professional, and technical personnel are not as large, it also needs ot recruit a substantial number by 1975-900,000. This demand stems not only from the large numbers who will be retiring in the next 10 years, but also from the growth and increasing complexity of our society, its expanding urbanization and suburbani- zation, and the rapid technological and economic change in all of our social institutions. Additional and more highly educated personnel are required for provision of the expanded services demanded of Government in developing educational opportunity at the highest and lowest levels; protecting our people, industries, and natural resources from the rav- ages of environmental pollution; raising our standards of housing, health, and economic opportunity; preventing individual and family degeneration; rehabilitating the physically and mentally disabled; improving our systems of transportation; and training large segments our our population for jobs and careers ranging from semiskilled factory workers to research scientists. Another index of the growing demand for more and better public servants is reflected in the growing Federal, State, and lOcal invest- ment in these programs. Over the past 10 years, State and local expenditures have risen by $30 billion-from $57 billion to $87 billion per annum, including the Federal contribution from grant-in-aid programs. The latter totaled more than $15 billion in 1967. By 1975, the total outlay (local, State, and Federal grants) is expected to be~ approxi- mately $128 billion. 1 To insure efficient application of these public funds, well-educated and creative planners and managers must be developed for all levels of government. PAGENO="0201" 195 For example, new types of personnel are needed to plan and admin- ister new multipurpose programs at State and local levels, such as regional economic or resource development projects, model cities and neighborhood centers programs. The combination of skills needed successfully to plan and carry out such programs requires great sophistication concerning our govern mental, economic, and social institutions and system. But, unfortunately, there are all too few places where such educa- tion can be obtained at the present time and all too little effort is bemg made to recruit and educate students for entry into these challenging new careers. Legislative responses: To help meet this need, President Johnson, in his March 17, 1967, special message to the Congress on "The Quality of American Government," recommended two legislative proposals- companion bills-the Education for the Public Service Act and the Intergovernmental Manpower Act. Together, these bills would provide a vjtal and much-needed impetus to increasing the number and quality o~ traine4 personnel in locai, State, and Federal service. Together, the two bills would support education prior to entry into public service and training following entry on duty in State an4 local govermnent service. Fellowships could be provided for up to 3 years of graduate-level training, as well as for short courses offered either by un~vers~ties or Government-operated training programs. While we are not commenting on the proposed Intergovernmental Manpower Act today, we also strongly endorse that bill as recom- mended by the Civil Service Commission. With respect to HEW's part of the assignment-the Education for the Public Service Act,~-President Johnson has said: This legislation has a single clear goal: to increase the number of qualified students who choose careers in government. Title XII would do this by substantially improving and extending the educational resources of our universities to develop, expand, and improve education for the public service, primarily at the graduate level. Grants under the act would support training and retraining of fac- ulty for public service teaching and research, development and testing of new approaches to curriculum content and teaching methods, orga- nization of special short-term or regular session advanced study insti- tutes for those preparing to practice their basic professional, adminis- trative, or technical skills in the public service, and development and teaching of public affairs as part of other programs leading to grad- uate degrees. And, through fellowships, it would provide interested students with the financial means whereby they could afford to pursue this interest. We believe that the proposed Education for the Public Service Act would fill a need not now met by the different and highly specialized educational assistance programs. The bill would focus on the demands for planners, managers, and providers of governmental services and those involved in legislative processes who are required to have both an extensive knowledge of PAGENO="0202" 196 systems and procedures unique to public service and an understanding of the way Government works. It would also provide an "overlay" of graduate study in public affairs and public administration for those persons whose professional training is in law, engineering, medicine, education, architecture, or in one or another of the academic disciplines needed for planning and administering an extensive range of professional, scientific, and tech- nical goverumentai programs. First, the bill could be used to establish strong regional centers for general public service study or for one or another of its functional specialties. These centers could, for example, offer programs in such fields as public works management (already such a program is underway at the University of Pittsburgh); the training of science administrators (five such programs have been started with funds from NASA but more are needed); management of environmental pollution control activities; education of city and county managers; organization and administration of antipoverty programs; and special multidisciplinary programs in the fields of economic, social, and physical urban develop- ment. Such centers could well involve consortiums of two or more universi- ties located in adjacent areas, capitalizing on the specialized resources of each. Second, studies could be undertaken to determine the optimum mix of 2-year, 4-year, graduate and professionally educated staff. Man- power shortages can be partially alleviated through more effective use of scarce and highly educated personnel. Reassignment of those por- tions of their work not demanding their highest skills to subprofes- sionals and technicians probably offers one of the most efficient and most individually satisfying ways for upgrading Government service. Third, grants could be used to support research and investigation into the kinds of educational programs most useful to State and local governments and the best methods for providing them. In the field of public administration, for example, there is wide belief among local, State and Federal administrators that many of the courses offered in the universities are not as relevant to the problems of con- temporary government as they should be. Fourth, experiments and demonstrations in curriculum combinations and specialized educational programs among many widely different academic disciplines are needed for the development of modern govern- ment managers, most of whom are drawn from technical, professional, or scientific disciplines. Such experiments and demonstrations could well include study more relevant to the real problems of government through use of practi- tioners as guest lecturers, adjunct professors, or field work directors. These might include judges, social workers, city managers, tax, heaith, and welfare officials, transportation authorities, State and local budget directors, legislators, councilmen and civic leaders. There would also be advantage in developing field experience as a requirement for a graduate degree in many programs where it is not now included. Fifth, studies could be undertaken, and demonstration projects tried, to develop and test better integrated graduate and undergradu- PAGENO="0203" 197 ate programs. Education for public service at graduate levels should be geared to either undergraduate or graduate courses in one or another of the major professions or technical specialties. For example, economists seeking public careers might be given con- centrated graduate education on public economic policy, resource allo- cation among government programs, application of econometrics to urban problems, and so forth. Sixth, there is real need for research, experimentation and mno- vation in methods for preparing teachers in graduate programs in public affairs and public administration. How can professors best keep abreast of rapidly changing govern- mental and managerial systems and procedures? Are there advantages to frequent interchange of teachers, research- ers and practitioners in the fields of public service? How can such programs best be organized, utilizing both the prac- tical work experience available in government service and the scholar- ship and detachment available on the campus? I could go on with this list, but the items mentioned give ample illustration of both the need for and possible avenues toward better education for the public service. I do not want to imply by this listing that the bill would give any stimulus to fragmentation in teaching and research related to public affairs. Quite the opposite-the present compartmentalized efforts within our universities need to be brought together in new organiza- tions or coordinated programs just as all governments are coordinating their attacks on the stubborn problems of poverty, disease, ignorance, disability, and unemployment among all levels and among a variety of agencies. The authorizations for graduate fellowships in part B of th& bill, like the improvement grants and contracts authorized in part A, are also needed to satisfy unmet needs among the existing programs of Federal support' for graduate or professional education. Primary emphasis under this bill should be given to potential public service employees trained in the social s:ciences, law, and other fields which now receive little or no Federal aid but from which many of the most urgently needed program and staff personnel must be drawn. Among such disciplines are economics, sociology, political science, history, the behavioral sciences, law, and architecture. But there is `also a need for graduate public service educatiOn as an "overlay" for other fields. ` Such Federal assistance would `provide another ~ear On top of the basic professional, scientific, or technical preparatiOn. These programs would help produce people' prepared for more efficient and' effective practice of their profession in govëriinent `employment~ The emphasis which various disciplines should receive in terms of opportunity for graduate public service educsition will vary both by numbers needed~ by governments and the duration of the `fellowship. In some instances, relatively short courses of a month or two or even up to one `academic year may be adequate. In others, 3 years~ of graduate instiuction will be needed. F~r examiile, expert opinioti~be- heves ~that civil engineers seeking public service" careers should `have `it le'ist a full year's study in public finance, public administration, PAGENO="0204" 198 the interrelationships of physical, ecOnomic, and social planning, and similar courses. Lawyers seeking public service careers may need relatively short courses. Political scientists, students of public administration, econo- mists and sociologists seeking new solutions to such old and difficult problems as excessive fragmentaton of local government, more equi- table tax bases for competing jurisdictions, more effective local policy- making and better planning, organization and execution of local gov- ernment services, and so forth, could well profit from a full 3 years' graduate education-the maximum authorized in the bill. The education for the Public Service Act together with the Inter- governmental Manpower Act, if enacted, could contribute greatly to the quality of administration in State and local governments. The emphasis on development of modern personnel practices and training to meet the needs of rapidly expanding and changing govern- ment services is of particular merit to those `of us in Federal agencies administering grant programs. WTe are, of course, fully dependent on the quality of State and local personnel for the achievement of the great national purposes embodied in the Federal grant programs, which you in the Congress have helped to erect. Thank you, Madam Chairman. I would be happy, together with my colleagues, to discuss any questions the committee may have. Mrs. GREEN. Thank you very much, Mr. Simpson. *As I understand it, your recommendation and the administration recommendation is that this act along with the Intergovernmental Manpower Act go into effect in fiscal year 1969. Mr. SIMPsoN. That is correct. Mrs. Gnn~x. I don't find myself in disagreement with anything you have said and I think the goal is noble and the need is very, very great. But I have real' trouble in resolving the conflict between the current draft policy which is going to take all of the college graduates, and all of the first- and second-year graduate students, and the recommen- dation for a new graduate program to try to lure more people into areas where there is an obvious shortage of highly trained people. How do we reconcile this? On the one hand the Government says, "We don't want you in college, you can't stay there, sorry, brother, you are going to be drafted." And on the other hand we say we desperately need more highly trained people so we will give grants to institutions, we will give fel- lowships to individuals, we will pay stipends to try to lure more people into these areas which are neglected. How do you resolve that very obvious conflict? Mr. Smn?soN. I think I would have to agree with you, Madam Chair- man, it is an obvious conflict. I would hope we could find some method, in consideration of these two national policies, to resolve that conflict. If, indeed, we pursue the policy of priority draft of all college graduates and graduate students- Mrs. GREEN. And the priority draft is the current policy. Mr. SIMPsoN. It is the current policy. It will have a sharp impact on this program and on all of our graduate education programs of the Federal Government without any question. PAGENO="0205" 199 On the other hand, I would hope that we could start with this bill. I think the bill is 10 years late in coming. We urgently need it. We could start at least with the development of the programs which badly need to be developed in our graduate schools and in the interrelation- ship of curriculum at the graduate level and the undergraduate level. From all that I read and from all that I experience ~n employing peo- ple coming out of the relatively few schools of public administration and public affairs that we have at the present time, there is much need for more and more improvement in the kind of training and the extent of training for public affairs that is given in our universities today. I do not know that I can add anything. Do you have anything you can add to that? Mr. Hui~. I would say simply that even in wartime we have to go ahead planning, we have to ~o ahead starting things. There will be some graduate students. If this is worth dOing I don't think ~e ought to put it off 2 or 3 years simply because there is a war on. I recognize the conflict that you mentioned and Mr. Simpson does. Mrs. Gm~N. If this is worth doing and I think it is too, I am in complete agreement with the purpose of the bill and everything that you have said, but if it is worth doing, isn't it worth considering a change in the draft policy which defeats the purposes for which this legislation is designed? Mr. HtITT. All I can say, Madam Chairman, is that you have brought your case to the wrong court. I cannot do anything about that. Mrs. GREEN. I want you to know I will bring it to any court that is available, even the court of appeals. Mr. REID. Madam Chairman, on the same point. Mrs. GREEN. Yes, Mr. Reid. Mr. REID. I will merely add I am in 100-percent agreement with our chairman on this. I would merely ask you what is HEW prepared to do vigorously, privately or publicly, to deal with what many con- sider to be a catastrophic judgment with regard to our graduate students? This is not a time, it seems to me, for silence by HEW. Presumably you do not wholly concur with the announcement this past weekend and I would be very much interested to know what you are prepared to do about it. Mr. Huirr. I think, Mr. Reid, we ought to wait on the departmental policy made by the people who are charged with that. I do not think I should shoot from the hip this morning. Mr. REID. I can only add that Dr. Pusey and a nuthber of others have called attention to it. I would call to your attention a letter in the New York Times this morning. I do not think any serious educator feels that the present policy will not have relatively catastrophic impact not alOne on grad- uate programs but equally on graduate students teaching in undergrad~ uate programs. What is your sense of concern and urgency about it, speaking per- sonally, if not officially? Mr. Htrirr. I have a very great sense of concern about it. After all, I have spent 20 years as a graduate professor. This problem hits me about as close to home as it does anyone. PAGENO="0206" 200 I think, at the same time, it is not possible for me, in this job, to speak as an individual. I think I must let the proper people in HEW do the things which they will want to do. I don't think, in a word, it is proper for me this morning to make a statement for HEW. Mr. Thom. Do you think HEW will be making a statement? Mr. Huirr. I cannot say, Mr. Reid. Mr. REm. I can only urge you to press strongly for something that I am sure is consistent with what you would like to see. Mr. Hurr'r. That I will do. Mr. REm. Thank you. Madam Chairman. Mrs. Gm~EN. I have one question on the bill. On page 111, part B, section 1211, is the procedure for selecting the fellowships to be the same as in the NDEA, the allocations made to the college and university and the college and university chooses the individual who is to receive it? Mr. SmrrsoN. That is correct. Mrs. GREEN. Congressman Quie, do you have questions? Mr. QuIE. Yes, I do. First, where do you get the information on the $87 billion per an- num now from State and local investment? 1J had the occasion yes- terday of working some of these figures and for 1965 and 1966 the State and local expenditures were $95 billion, according to the U.S. Bureau of the Census in the Department of Commerce, and this was a chart book on "Governmental Finances and Employment for 1967." I am always interested when the Federal Government comes up with different figures. Mr. SIMPsoN. I believe, sir, these figures were taken from the report of the Committee for Economic Development in its report on "Mod- ernizing State Government." Mr. Qun~. CED? Mr. SIMPsoN. Yes. Mr. QIME. What year is that? Mr. SIMPSON. 1967. The report was published in 1967. Mr. Qun~. That would be for the same year or do they have all the figures? Mr. SIMPSON. May I check that and put it in the record for you? Mr. Qiirs. It could be that they used the year of 1964-65 which would make the difference. Mr. SIMPSON. That could be, yes. Mr. QuIE. How much money do you expect to spend in this pro- gram if you get it from the Congress for succeeding fiscal years? I see you have $10 million for the first one for your seed money. Mr. SIMPSON. We have not, of course, got any clearance on this from the Bureau of the Budget, but in our own projections we would see, after $10 million for the first year, a substantial jump, particularly in the fellowship money, in the second year to a total, under part A and part B, of almost $26 million. Then it would go on up for the third year. The part A,~ improvement grants, would level off at $10 million from the second year on. The funds would go up again on the doubling of fellowships to 1 "Manpower In State and Local Governments 1965 and 1975" tT.S. Department of Labor, Bureau of Labor Statistics, 1966. Refers to fiscal year 1965. PAGENO="0207" 201 the third year to about a total of $41 million in the program and then level off there. Mr. ERLENBORN. Would you yield at that point? Mr. QmE. Yes, I will yield. Mr. ERLENBORN. In one of the earlier hearings I asked for a memo from the counsel for HEW as to the application of the law, the num- ber of which I have forgotten at the moment, which requires that when new programs are suggested and bills are introduced they be accompanied with an estimate of the cost over the next succeeding number of years. This was not done as to this title or other titles of this bill. I wonder if our subcommittee has received a memo from the counsel for HEW. Mrs. GREEN. No. Mr. ERLENBORN. My point is that I think the law requires that such estimates be given along with the bill, and this was not done. Mr. SIMPsoN. I can enter into the record sir, the statement that I was just reading from here but I should emphasize that this has not been cleared by the Bureau of the Budget. Mr. ERLENBORN. Are you familiar with the law I have reference to? Mr. SIMPSON. Yes, I am. Mr. ERLENBORN. Why was it not complied with when this bill was filed? Mr. SIMPSON. That I cannot answer, sir. Mr. ERLENBORN. I thank the gentleman. Mr. Quu~. You mentioned that the bill is to establish strong regional centers for general public service study. How many centers are you going to have? We all of a sudden became aware of the establishment of centers after it is an accomplished fact. I would like to know what your plans are. Are they going to coincide with the regional education laboratories or the R. & D. centers? Or will you have a new grouping of regions? Mr. SIMPSON. I think what we had in mind here is the relatively small amount of money that would be available under the part A grants and contracts for improvement. We have a difficult thing of weighing a relatively few number of centers, yet we want to get a geographical distribution. The bill requires a geographical distribution in making the money available for developing centers for this kind of education. At the same time, we want to be sure that they are strong centers, that there is a high quality of program developed within them. We have no preconceived notions as to just what kind of regional pattern would emerge. We would hope that in the administration of the bill, if enacted, we would be able to locate, on a dispersed basis around the country, at least 15 or 20 regional centers that could serve the needs. When we look at some of the information we receive about the needs of State and local government for trained personnel, particularly for generalists in the field of public administration, we have noted that in a number of areas of the country, and .1 think the southwest is a case PAGENO="0208" 202 in point, there are very few schools offering a graduate program in public service or public administration training. It will not be possible, with the relatively small amount of money available, to be able to put such a center in every State, but perhaps where the States have common problems physical resource develop- ment is one such common problem we could develop a center that would capitalize on thO special expertise in the faculty of several uni- versities in an adjacent area. Thus we could establish quite a number of good, strong regional educational centers that could offer both general preparation for public administration or training in a spe- cialized field. Mr. QUiE. As I understand you, the centers would operate more akin to the B. & D. centers which have been assigned special subjects or areas in which to conduct their research work i~ather than the re- gional educational labs whiôh are really generalists to take in anything. Mr. SIMPSON. I would hope some would be generalists and some would be both. In the University of Kansas, there is a good training program for the education and development of city and county man- agers, and it draws from all over the Midwest. I would consider that a strong regional center for that kind of generalist training would be use~ul in several areas of the country. On the other hand, you might find that it would be wise to develop in one of the Rocky Mountain State universities a special curriculum for resource development, the administration of conservation pro- grams something of this nature, where in schools other than the school of public. administration they would have an expertise that could be brought together in a special program for the development of ad- ministrators of those kinds of government programs. Mr. Qurs. What is it about public service in general that needs a special program now and the expansion of the centers? I know people in private industry are short of planners and the kind of individua~Is we are speaking of here. They are in education although I ilnagine education would also be considered as a public service, and therefore, probably would qualify under this. M~. Smrpso~. No. The bill specifically provides that this program should be used for the support of education where there are not now other programs. Education as a field has a number of support pro- grams at the present time. Mr. QtrrE. Then the University of Kansas could not get any support because it already has one on- Mr. SIMPsoN. Nb, where there is training for the public service, they could. I was thinking of the field of education programs, per se. They are not excluded but the bill suggests that the Secretary should give particular emphasis to those areas in which there is not now avail- able any Federal support for higher education. Your analogy with business is a very good one, really, because we have a great many more and better organized schools of business ad- ministration in this country than we have schools of public adminis- tration. The two fields are in many ways comparable but with the special problems of public administration, the lack of numbers of schools, the difficulty of recruiting people into public administration, and the PAGENO="0209" 203 difficulty of finding financial support for graduate education in the field of public administration, a lot of the better students who might well go into the field of public service instead go to sc~hools of business administration or to other graduate schools where support is available because it is not available in this particular field. Mr. Qtm~. What do you mean where support is available? Mr. Si~rpso~. Available from Federal assistance. Mr. Qun~. Why is it not available from Federal assistance at the present time? I know there is a specialized one for public service but is there not a general enough authority already so that we will say the same assistance could be given a prOgram of training in public services? Mr. Snr~soN. There are many different Federal programs for as- sistance for training and for graduate education but they are mission- oriented. Very often that mission is quite narrowly defined. There are few, if any, that give the kind of general support where a graduate student can select the field that he wishes to pursue in his graduate education. This bill fills a gap in that it does provide for general support for public service education. There are two kinds of programs authorized. One is the development of generalist-people like city managers, county managers, the management intern types we have in the Federal Government, or the development of the "assistants to" concept where you are training generalists in urban administration or county govern- ment administration. Then on the other hand, we need what I refer to in the statement as an "overlay" of training in public administration and public affairs for people profesionally or technically trained in another field who are going into government service but who would be far more effective practitioners of their profession if they knew more about government and how government works. Mr. HUITT. May I comment, Mr. Quie? Mr. Qtru~. Yes. Mr. HUITT. I think there is another kind of student that is not mentioned here who will not be a city manager or any Other kind of professional who has chosen a field. He is the sort of generalist who may become a staff member to a Congressman, a mayor or a governor. He may work on a staff like mine or may actually run for offic~ him- self. He knows he wants to get into public affairs but he is not sure he wants to be a public administrator. These students come to professors all the time. They say "What can I do?" At the present time, they go into law, which means they spend 3 years taking training, some part of which is relevant, much of which is not. Or they can become graduate students and become a Ph. D. The problem with a Ph. D. is that it is a research oriented degree. It is frequently process-oriented or behavioral oriented. To a lot of people who take Ph. D.'s in political science, for instance, public policy is just an output. They don't care what the public policy is at all. To this person ~ho ~vants tO get some training, some kind of master's degree, let us say, or some kind of program setup w hich will acquaint him with the system, its problems and with the problems of policy, can be very useful. 92-371-68-pt. 1-14 PAGENO="0210" 204 Now you say, why do you need some kind of special thing to get people to do this? Well, professors are not the most likely to change of any group in the country. There has to be some kind of incentive. So far as the kids are concerned, there has to be some visibility to this program. You have to be able to say here is a public affairs course that gets you into a certain kind of life. There has to be some recruitment for it. After all, the graduate department recruits all over the country just like a professional football team. If you don't have somebody trying to get students for this kind of thing, then they will go into political science or economics. Again, the student needs first job assistance. I know in the DepartS ment of Political Science we will take care of students for their jobs- get them teaching jobs. The attitude of most graduate professors is, that if a kid goes into public service he has been lost-you have wasted your time on hum I don't know of anybody who is trying to get kids started in a job of this kind. So I would say this is the ideal use of a categorical grant. You recognize the need. You encourage somebody to do something about it. You get him started. In due time I should think a program like this could be phased out and it could be handled in the ordinary operations of the university. What you try to do now is to get some people to do something which they have not been doing, which is to set up an interdisciplinary kind of approach with the idea they will turn people out for public life which I think is a noble act. Mr. QuIE. Do you think we ought to get the idea established well enough in 5 years so that we could phase it out? Mr. HIUITT. I would hate to set a time ahead of time. Mr. Qun~. If you don't, it will last forever. it will probably last forever, anyway. Mr. Hui~. No. I think the record of our department shows that we try to move away from categorical approaches-categorical grants-to general programs such as we have done in health and such as I hope we will do in higher education in time, where we will give help to institutions without its being categorical. It seems to me that the purpose of the categorical grant is short- run-to encourage people to do some things that they are not now doing. Mr. Quim I know you are trying to phase out of the Higher Education Act-the academic facility acts-evidently by your recommendation. Are there other areas of special training that are not being recog- nized as public service or is this the one now that needs the most help? Mr. SmirsoN. I think it is the most urgent one, sir. That is the constant plea you hear from administrators in the Federal Govern- ment as well as those in State and local, an urgent need for trained, highly educated personnel. For example, a circular came across my desk the other day from the New York State Health Department. They were looking desperately for an assistant commissioner in the administrative office to do plannmg for them under the new Compre- hensive Health Planning Act. This kind of talent requires a very broad knowledge of public health administration, plus the kmd of skills m cost-benefit analysis one gets PAGENO="0211" 205 in the basic study of economics. They were circularizing the whole country, apparently, trying to find that kind of talent. Mr. QuIll. Do any States have programs of this nature, either fel- lowship or assisting the training centers? Mr. SIi~rpsoN. I think there are one or two State legislatures that do provide funds to their own State universities for the development of curricula in the field of public service but they are much too small for the need. Mr. QuIll. Could you find out what they are doing, the amount of program expenditures and all? Mr. SIMPsON. I will be glad to do that. (The information requested follows:) The most current, comprehensive information on State support for public service education dates from 1961. Most State universities and a number of private universities (e.g., Harvard, Princeton, Syracuse, Pittsburgh, Southern California) do offer some degree of financial assistance to able but needy gradu- ate students who are seeking to prepare themselves for careers in the public service. However, the U.S. Office of Education is unaware of any earmarked State support for institutional or curriculum development in the field. Aside from these programs operated by and through the universities, the State of New York conducts what is probably the only program operated directly by a State government. This is the Herbert H. Lehman Graduate Fellowship program conducted by the Regents Examination and Scholarship Center, State Education Department, Albany, New York, which awards some 90 fellowships annually. A description of this program will be found in Fellowships in the Arts and Sciences, Tenth Edition, 1967-88, American Council on Education, p. 35. A copy of the 1961 Office of Education survey, Graduate Study in Public A dministration is attached. Mr. QuIll. Just in round numbers, it seems to me, that of the total money expended in domestic programs the Federal Government comes up with about two-fifths and the local and State governments about three-fifths. So they must have the financial wherewithal to do this. They can't be as close to being broke as we are. How about private foundations? Are there many private foun- dations that do work in this way? Mr. SIMPsoN. There are a few but not really very much that are doing work in the field of public affairs training, public administration training. Mr. QmE. I was thinking of the Bush Foundation inMinnesota as one which has funded that sort of thing. Do you have information on who the private foundations are? Mr. Hmrr. The Eagleton Foundation did a lot of that through Rutgers University. The Ford Foundation for a number of years financed the National Center for Education and Politics. I think we should make a listing of the foundations. Mr. Quri~. You could make a listing and include some explanation of what they are doing. When you laid out this program I hope you benefited from the experience of private programs and State programs rather than just walking on the Mall and coming up with another idea. (The information requested follows:) The Foundation Directory (third edition, 1961) published by the Russell Sage Foundation, lists only three foundations active in the field of public administra- tion, six in the field of citizenship, and ten in the field of government. The number of foundations listed as active in the following closely related fields are: Civic PAGENO="0212" 206 improvement-3; coirnnunity planning-7; law-5; and political science-4. The amount of foundation assistance available specifically in support of graduate edu- cation for the public service, however, is extremely limited, since few, if any, of the foundations are engaged in the direct operation of graduate fellowship pro- grams of this nature. Some of the best-known related programs that have been conducted with foun- dation help in the past include the Southern Regional Training Program in Pub- lic Administration, the Congressional Fellowship Program of the American Po- litical Science Association, and the Eagleton Foundation program at Rutgers University. Among the principal foundations that have been concerned generally with strengthening and improving the public service through education would be in- cluded in the following: The Carnegie Corporation of New York. The Danforth Foundation. The Samuel S. Feis Fund. The Ford Foundation. The Government Affairs Foundation. The Hayes Foundation. The McKinsey Foundation for Management Research, Inc. The Rockefeller Foundation. The Rockefeller Brothers Fund. The Russell Sage Foundation. The Twentieth Century Fund, Inc. Mr. Hurvr. I think there is plenty of precedence for this. I mentioned the program in practical politics the Eagleton Foundation has. The American Political Science Association offers congressional fellow- ships which have had a profound effect not only on staff work on the Hill, but also on the teaching alout the Congress of the United States in `the colleges and universities of the land. So there has been a good deal done on this by private people. Mr. Qurn. Probably on some Congressmen, too. What do you plan on for the stipends you are going to pay these fel- lows? I see that is wide open on this bill. Mr. SIMPsoN. The plan is to pay the same as we are paying on most of the higher education support programs. For the first year it would be $2,000 stipend plus a small dependents' allowance. This would move up, I think, in $200 or $400 increments in the second and third years. Mr. QrnE. Could you put this in the record? Mr. SIMPSON. Yes; we will put this in the record. Mr. Qu~. And the ~tiperid for the dependents. How about the insti- tutiOn itself? Mr. Smn'soN. There is support for the institution for each individual th'it would be enrolled under this program The amount that I think Commission~r iIo~ve mentioned the Other day that the Office of Educa- tion would put in for thi~ i~ $3,500 per student, per year. (The information requested follows:) lstyear 2dyear 3d year Basic stipend $2, 000 $2, 200 $2, 400 Dependent's allowance 600 600 600 Institutional support 3,500 3,500 3, 500 Estimated academic year total 6, 100 6, 450 6, 800 Summer stipend 400 400 400 Dependent's allowance 120 120 120 Estimated sumdiercost 520 , 550 580 Estimated total costper yearper student_ 6,620 7, 000 7,380 Note: Estimates based on past experience with NDEA title IV fellowships. Average number of dependents is estimated to be 1 for the 1st year, 1~ for the 2d year, and PA for the 3d year. PAGENO="0213" 207 Mr. Qun~. Those are all the questions I have, Madam Chairman. Mrs. GREEN. Congressman Gibbons? Mr. GIBBONS. I think you have an interesting idea. I want to explore it a little more. How many finished products each year would you turn out? Mr. SIMPSON. On the fellowship program we would hope, if we could start with the full $10 million authorization, we would turn out some- where between 800 and a thousand per year and then gradually in- crease that up to 3,000 or 4,000 per year. Mr. GIBBONS. What do you think the national need is in this year? The 3,000 or 4,000 would be all under your 5-year projection. What period of the national need is that? Mr. SIMPSON. I think it would make a substantial contribution to the national need but by no means meet the national need. Mr. GIBBONS. Do you mean less than 50 percent or more than 50 percent? Mr. SIMPSON. I think it would be less than 50 percent in terms of the need. Mr. GIBBONS. Those people who would receive the fellowships would come from two categories. One would be from college students who just went on and continued their education. Then they would also be from, let us say, people who had gotten out in the field and gotten a little rusty and needed some upgrading. How would you divide this? Mr. SIMPSON. That second category as you described it is in the other bill, the `Intergovernmental Manpower Act. In it there is a pro- vision of grants to State governments to award fellowships for training after people had been employed. Mr. GIBBONS. So these are all- Mr. SIMPSON. These are all preentry-type fellowships. Mr. GIBBONS. You don't go back and take any rusty ones that come up? Mr. SIMPSON. No; that is in the other bill. Mr. GIBBONS. Couldn't some of this work be done under a coopera- tive education program? Would it not be a good idea to let some of these college students get out and get a little practical experience along with their training? Mr. SIMPSON. I think that is an excellent idea. It would be authorized in the contracts authorized in part A. Particularly the idea of intern- ships appeals to me. I would like very much for our graduate schools in public adminis- tration and public affairs to develop cooperative work relationships with governments in the area where they place these people in in- ternships. Mr. GIBBONS. Internships got a kind of nasty connotation around Congress a couple of years ago. They seemed to be a little too relaxed and really not businesslike enough. I am talking a~bout a cooperative education program where a student goes out and `gets an actual hard job to do it, and does it. Mr. `SIMPSON. That is what I mean by interuships. Mr. GIBBONS. The internships we had around here `were sort of drifting, people wandering around. PAGENO="0214" 208 Mr. SIMPSON. Let me talk of my personal experience. I majored iii political science and public administration both in my college and graduate work. In the little college I went to the college ran the bureau of municipal research and the municipal personnel system. Under the guidance of the head of the department, and some of the faculty in the department, we were assigned to city jobs. I worked in the city assessor's office and I worked awfully hard on assessment problems in city government. It was a very practical and a real work experience in which one learned a great deal about tax problems, the administration of taxes at the local levels of government. This is the kind of thing I think we need much more of. There is altogether too little of it done. Mr. GIBBONS. I agree with you. You talk about the regional centers. About how many regional cen- ters do you think you would establish under this program? Mr. SIMPSON. It is very difficult to know until we see the applica- tions that come in from the universities. I would suspect that in the first year of the program we would have to start rather slowly and we might have only 15 or 20 such regional, centers. We might in addition to that, where there are particularly appeal- ing, from the point of merit, innovative programs being started, sup- port others that would not necessarily be regional centers. Where there are good programs and there are some experiments with cur- riculum being made, maybe with other professional schools or other graduate departments in the university, support what I call this overlay kind of training to prepare technical specialists for public service. Mr. GIBBONS. I have been looking for a type of skill that would be applicable to both the business and public service. Would it not be better if people were trained together? Mr. SIMPSON. Some universities are experimenting with this as you know. They are combined into schools of administration, as they are sometimes called, where they are giving curricula in `business admin- istration and in public administration. There is a good deal of interchange in the content of the instruction given in such graduate schools. On the other hand, there are very specialized courses that relate to governmental service as distinguished from `business. Marketing is a major problem, for example, in the graduate curriculum in busi- ness administration. This is not a prOblem in governmental adminis- tration. Mr. GIBBONS. Don't you think a governmental person `ought to have some-particularly a college level person, that goes right straight from college to governmental service, ought to have some exposure to these problems that the profit end of our society has? Mr. SiMPSON. Very much so. I could not agree more. The teaching of management in our graduate schools of business admimstration has many elements which are directly applicable to the principles of man- agement in government administration. Mr. GIBBONS. But the whole problem of the economy-making profit is something that every governmental administrator ought to have some appreciation of and formal training in `that area if he is going PAGENO="0215" 209 to make qualitative decisions about how much of this should be done in the public sector, and how much should `be done in the private sector. Mr. `SIMPSON. He definitely needs to have that understanding, I agree. Mr. GIBBONS. Would it not be a good idea to encourage these ad- juncts of schools of business administration rather than separate programs? Mr. SIMPSON. I would like to see further experimentation on the idea of combined schools of administration with certain curricula out- lined for those who want to pursue a career in business administra- tion, but `within the same school other curricula for those who want to pursue a major in public administration. Mr. GIBBONS. Do you think you could do this under this act? Mr. `SIMPSON. I think we could. Mr. GIBBONS. That being your view, you would attempt to try to do that rather than to try to set up separate schools where the students might be isolated? Mr. 5I~p5Q~* I think we need to do bOth. I think we need to do some experimentation with both approaches. Mr. GIBBONS. I often find people in business have very little under- standing of `government and vice versa. There is a tendency to. over- specialize in colleges. Mr. SIMPSON. That is correct.. You probably know of the Brook- ings Institution seminars, short seminars, they give, to business leaders and government leaders jointly reviewing their administrative problems. Mr. GIBBONS. That is all I `have. Mrs. GREEN. `Congressman Reid. Mr. REID. Thank you, Madam Chairman. I would like to ask just one general question both of Assistant Sec- retary Huitt and Assistant Secretary `Simpson touching on an earlier point here. I increasingly feel like I am living like Alice in Wonderland' these days. I have no question on the validity of your program or the articulate character of your presentation or~ indeed, the need. But I do have very strong, serious questions on another point. First, we seem to be starting a program for which there may be no students. Second, if we have students there is a very real question w'hether we will `have any funds, which leads me to the third question. I, for one, have felt very strongly that the administration was making a serious mistake in cutting education as drastically as it is now cutting it and in its lack of attention to urban crises and so forth. My question, therefore, is this: Is it wise to start a new program when we have cut, according to the administration request, higher education facilities by five-sixths, title I of elementary and secondary by 54 percent, and other programs? And the scale of priorities, is there any reasonable prospect that we will either have students or funds and is this a priority that should be started now unless it can be fully supported particularly when we are cutting back on a wide range of other programs? PAGENO="0216" 210 I know this is a difficult question but I think increasingly we are witnessing a situation where the administration is starting programs and then drastically cutting them back in almost every area. This does not lead one to have total reassurance about a new program. Mr. SIMPsoN. I think my only answer to your question, Mr. Reid, is that even a little bit of money, relatively, to get started with this program would do a lot of good in terms of beginning the buildup of graduate education in a field that is terribly in need of it. You talk about urban problems. I could not agree more. I think the greatest problem we will have in the Federal grant programs, let alone the problems that the cities themselves have, and I am referring here to the neighborhood center programs and model cities programs, is finding the. planners and the administrators. These are the people who can bring together in a proper balance, in accordance with the priority needs within the city (and these have to be city people), an efficient and effective program for overcoming the further decay and decline of the inner city. It is so urgent that even if we start such training in only a dozen or 20 places we have made a tremendous net gain in this country. I am sure that while the war is on, the program will have to start slowly. But maybe that will make for the best buildup in our univer- sities in preparation for the kind of graduate education needed for the problems of cities and State governments. Mrs. GREEN. Will the gentleman yield? Mr. R~En. Certainly. Mrs. GREEN. I would like to add a footnote on this Alice in Wonder- land situation. In the war on poverty and in the model cities program it seems to~ me that governmental policy is to turn the program over to ~~the poor" and this means if you wear a white shirt or have gone to college you don't qualify to administer the program. So why should we train administrators if this is th&case? Mr. SmrrsoN. It had been true, I think. But in the amendments that were made, if I am corrct now in recalling this, in the Economic op- portunity Act this past year, we put back the regular leadership struc- ture at the local level of government in both planning and adminis- tering the antipoverty programs. Mrs. Gm~N. The OEO guidelines do not indicate this. Mr. SIMPsoN. There is a need to have the beneficiaries of the pro~ gram involved in the planning and in the administration, but that, in turn, makes all the more important that we do have expert administra- tors working side by side with them to make the program work effec- tively. Mrs. GRm~N. But the struggle of those people who want to get con- trol of the program is only for the paying jobs. Mr. SmirsoN. This is true. Mrs. GIu~N. So they disqualify the highly trained administrator. Mr. SnnsoN. I really hope that there will emerge out of this a bal- ance of trained administrators in the career service working side by side with the leaders and the poor so that together they can have pro- grams that are effective and that are truly responsive to the needs of the poor. PAGENO="0217" 211 * Mr. Huir~. M~y I say One thing in regard to Mr. Reid's question? Two points, sir: I believe, in the first place, we do need to go ahead even if there is a war going on We need affirmation in a time like this This is kind of like the question of whether you should have a child when a war is going on I had my first child when I was in the N ivy and it was good to me to think that there would be a republic after the war There are things to be done and you go ahead This is a small enough amount of money so that it h'is the virtue th'it you cannot cut it drastiôally. It is not big enough to cut drastically. Secondly, I think to support Mr. Simpson's point, a little bit of en- couragement and help in this field will go a long way because this kind of thing is beginning to catch on anyway In Wisconsin, for instance, under the prodding of the Republican Governor, the department of political science has started a program of this kind-a separate department. There are other schools that are moving in that direction. So this is a case, I think, where a little bit of seed money will bring a big harvest. Mr. REID. I certainly thank you, Mr. Simpson and Secretary Huitt, for your answers which I think are fair and to the point. Clearly we do need many more public administrators. There is a shocking shortage of urbanists and they are badly needed. Let me turn the question back once more, Secretary Huitt. I think what disturbs me i~ not what you say but the whole drift of the present administration. We seem to not worry about public works. We have, not the largest bill, but one of the largest ones in our history. We are going ahead with supersonic aircraft even though we are not permitting Americans to travel very much. No real cut in farm subsidies; $4 billion for high- ways. You could mention others, or one might differ over where you could cut. But what disturbs me is `that there seems to be a lack of awareness downtown of the high importance of educatiOn. The one thing we must not cut back is education. Could you coin- ment as to what can be done, in your judgment, to change the priorities to focus on the imperative needs here? What can you do and what can the Congress do.? I think there are many of us who will support education but it makes it awfully difficult if we fight for a program and the next year you come up here and you slash it to ribbons, not by your direction, I am well aware. But is there not some way we can more clearly poiiit oi~t the priorities of education and that this is not the time to cut it by 50, 60, 80 percent, or whatever the figure is? What can you say that will reassure this committee on this point ~ Because I would have to say that I think the administration's assessment of priorities is very faulty as regards education. Mr. }Irnrr. I think all I can say is that I am in the job and this is administration that I like most because my priorities are very much the same aS yours. Withm the administration we push our priorities. The President has the task ultimately of deciding what priorities there shill be for the executive branch in the message and in the budget that it sends up Now I cannot suggest what you can do, but in this partnership, COn- gress certaiuly is not without resources. When we bring recominenda- PAGENO="0218" 212 tions here, they are as recommendations and Congress does with them as it can. Mr. REID. Do you see any concern at the top level of our goverrnnent that we are seriously cutting education? Mr. Hurrr. Yes, sir; I think that there is. I think the President cares very much about this. I think he has a record as a supporter of educa- tion and heaith which is surpassed by no President in my time. I think the President is very deeply concerned about these matters. Mr. REm. Why do you by five-sixths the higher education and ele- mentary and secondary education by 54 percent? I agree that the President has fought hard for these programs but he has not fought as hard to support; them. Mr. Hurrr. I am not privy to all the things that the President takes into account. I am a participant in this, too. I am partial as you are. I have a set of values which goes this way. He has the job ultimately of deciding the priorities. Mr. REII). I do not want to pursue the question any further. I appre- ciate the sensitivities of it. Do you think it is wise public policy, war or no war, to start these education programs which I think have merit, and then a year or 2 years later cut them on the order of 50 to 80 percent? Mr. Huia'r. I have no comment on that, Mr. Reid. Mr. REID. Thank you, Madam Chairman. Mrs. Gnsi~. Congressman Burton. * Mr. BrurroN. I could save a lot of time by merely incorporating the remarks of my learned colleague from New York, Mr. Reid. I share all of his concerns. I have read some of this material with interest. I shall probably sup- port the program, but I suspect little is going to be done in the antici- pated future in this area whether or not we authorize the legislation. Mr. SIMPSON. I think, sir, that I can only comment on that the same as I have earlier to Mr. Reid. In this field a little goes a long way toward starting us down the right rond in the development of programs in our universities for training for public service which is a great need. I hope that if we can get the bill enacted and get the authorization on the books, we can then proceed to squeeze out as much of the resources as possible within the priorities. Mr. BURTON. Is this the first time that the legislation has been requested? Mr. SIMPSON. Yes. Mr. BURTON. After 7˝ years of Democratic administrations and a couple of hundred years of the Republic, at what point in time did it become obvious that there was a need that was not being met? Why was not the general authority requested in one or another of the ple- thora of education legislation that previous Congresses have passed. Mr. SnnsoN. I am not sure that I can answer that except to say that I think the problems of highly educated and highly skilled adminis- trators of public programs have been highlighted and exacerbated perhaps in the last couple of years with the extensive growth in pro- grams that are designed to provide more educational opportunity, bet- ter health conditions, better transportation, antipoverty programs and the like, which have been enacted particularly in the 88th and 89th Congresses. PAGENO="0219" 213 This has put a strain on govermnental services, plus the strain that has dveloped upon our cities and upon State government for an in- creasing number of services in more recent years. When you think about problems like water pollution and air pollu- tion control, the breakdo~wn of transportation in our metropolitan areas, and so forth, all of the local governments, State governments and the Federal Governments have reacted to them. This is largely accountable for the very large growth of government in recent years. Mr. BURTON. Madam Chairman, I do not need more time. I think this is going to be essentially a wheelspinning operation for the fore- seeable future. As I say, I probably will vote for it because I am for mother, coun- try, God and flag, and education, but I am not going to go to bed to- night thinking I have struck much of a blow for democracy. Mrs. GREEN. I wonder at this point in the record, Dr. Huitt, if I could ask you to provide the committee with a list of all of the fellow- ships that are available from other departments and agencies that would be closely related to this new proposal. (The information requested follows:) The m~ost cloSely related fellowships supported by the Federal Government are those offered under the authority of PL 88-560, the National Housing Act. Title ~rJII, Part II authorizes fellowships for which $500,000 were appropriated for FY 1908. 97 fellowships have been awarded for this academic year in the following fields: City and regional planning 63 Urban public administration 13 Urban affairs (political science) 9 Housing and uthan renewal 4 Urban sociology 4 Urban Law 2 Real estate and urban development 2 Total 97 Other fellowship programs for public service are much more categorical, aiming at specific professions. Thus, the Office of Education can award fellowships to train school administrators; the Public Health Service, hospital administrators, community health specialists, air pollution experts, and public health officers. Congressman Erlenborn. Mr. ERLENBORN. I wonder if the program contemplated here would have any relevance to the preparation of people to go into Foreign Service under our State Department? Would this be encompassed within public administration? Mr. SIMPsoN. This would be included within the bill. I think there are availa~ble other programs, Federal assistance programs, for area studies, for language studies, and for other fields that are directly related to preparation for the Foreign Service. As the bill directs, we must take these programs into account in ad- ministration of this bill. I would think that that kind of support would have a lesser priority than would support for the normal func- tions of city and State government. Mr. ERLENBORN. The authorization requested here is $10 million for fiscal 1969. That is for both part A and part B? Mr. SIMPsoN. That is correct. PAGENO="0220" 214 Mr. ERLENBORN. Can you tell us what breakdown there will be in the allocation of those funds between part; A and part; B for fiscal 1969? Mr. SIMPSON. Yes, I thiith I can. For part A, the granth and cont:racts for strengthening schools would be $4,600,000. Tinder part. B, fellowships, it would be $5,400,000. Mr. ERLENBORN. I haven't lived through the legislative birth of Elenientary and Secondary Education Act and its funding and putting it into operation. It leads me to ask this question: What sort of time- table do you foresee for the passage of this authorization, the passage of the appropriation, the drafting of your guidelines and then the be- ginning of the awards of contracts, grants, and fellowships? Mr. VALIEN. Of course, it would depend to some extent when the legislation is passed. I do want to make one point, though, that I thiuk is relevant, and I think it has been alluded to but probably has not been emphasized. That is that speaking on behalf of the higher educa- tion institutions, for example, I think it is important for them in order to be able to plan to know some of the dimensions and details of pro- posed Federal program support so that it seems to me that it is very difficult, even after legislation has been passed, but certainly almost im- possible before it has been passed, for education institutions to begin to plan as to how they would respond to programs of Federal support. Mr. ERLENBORN. Let me ask this question: If this legislation is passed and the appropration is passed, let us say hopefully by the 1st of August., which might be a. legislative miracle if it could be done that quickly, do you think, really, that you then will be prepared to grant $5,400,000 worth of fellowships for the school year beginning the 1st of September? Dr. VALITEN. I doubt that. As you know, many of our programs are funded on a forward financing basis. Under our NDEA scholar- ship we make the award around the middle of November or the 1st of September for the next school year. Mr. ERLENBORN. Are you telling me that the $10 million that would be authorized in this act could be appropriated this year and then actually spent the following year in fiscal 1970? Mr. SDIP50N. There is a provision in the bill that the authorization would be available for 2 years. Mr. ERLENBORN. That is in this particular bill? Mr. SIMPSON. Yes, sir. Mr. ERLENBORN. Does that apply also to the appropriation? Mr. SmtrsoN. No. Mr. ERLENBORN. In other words, do you have to spend the $10 mil- lion before June' 30, 1969? And are you going to, as we saw in ele- mentary and secondary education history, hurry up and spend the $10 million before the year runs out? Mr. SmIrsoN. The provision on appropriations in the bill reads that "funds appropriated for the fiscal year ended June 30, 1969, shall be available for obligation during that year and the succeeding fiscal year." Mr ERLEI~ BORN I see So th'~t the $10 million would not h't~ e to bespentinfiscall969? Mr. SIMPsoN. That is correct. PAGENO="0221" 215 Mr. ERLENBORN. It could be carried over to 1970? Mr. SIMPsoN. That is correct. Mr. ERLENBORN. I would hope that you would oonternpl~te not awarding fellowships probably until the fall of 1969 since it must take some time for the schools to gear up for accepting students in this course of study. I would hate to see the sort of waste we had. in th~ Elementary and Secondary Education Act where funds became available in the middle of the sdhool year and were spent hastily just because they were avail- able and authority was going to run out by the end of the school year. Is this what `you really contemp1ate-~---that the fellowships would not be awarded for the school year beginning in the fall of this year but would be awarded for the following year? Mr. SIMPsoN. I think that would be highly likely, given that time- table. Mr. ERLENBORN. I have no further questions. Mrs. GREEN. This would be true of all of the fellowship programs in the Higher Education Act of 1968? It is my understanding that you would like to announce the granting of the fellowships in April. Mr. SIMPSON. Yes. Mrs. GREEN. So that if this time schedule were to be followed you would really need very prompt action on the bill on the Senate side as well as the House? Mr. SIMPsoN. That is correct. Mrs. GREEN. Congressman Brad'emas. Mr. BRADEMAS. Thank you, Madam `Chairman. I have just a quick comment or two, Mr. Simpson. I, for one, am very glad to see this kind of legislation coming before us because I think one of the chief headaches that we are facing `in our country today is getting first-class people to operate at `the State, local, and regional levels of government. As a matter of fact, perhaps in response to Mr. Burton's observa- tion, I put in a bill called the Public Service Education Act some months before the President's' bill and, Madam Chairman, without objection, I would like to insert my bill with some comments on it at this point in the record following my questions. Let me ask you this question, Mr. Simpson: What are the main pro'blems that you see in getting first-class people to work in local and State government? Is it a question of poor salaries? Is it a question of inadequate educa- tional opportunities, which is what this bill, as I understand it, is addressed to? Or are there otheT factors? `To `what extent, in other words, does this bill make a difference? Mr. SIMPSON. I think poor salaries is a `factor in it. I d'o not want to say that it is not. Much has to be done with salaries and fringe benefits in local government, particularly. On the other hand, it is true that the lack of educational opportunity and competition from opportunity `for :f8llowships for graduate edu- cation available in other fields has meant the schools of public admin- istration' `at the present time are getting few students in number `and of a `lesser quality than are going into the other fields that are better financed. PAGENO="0222" 216 More than that, there are few students who really know the oppor- tunities that are available in govermnent service. I am one who thinks you have to appeal beyond salaries for people to go into the public service. There has to be another appeal made to students. I think students are highly susceptible to such appeals. I don't think we make nearly enough of them at the present time. This relates to the prestige that government service carries, generally. This has been commented on in the reports, for example, of the Committee for Economic Development, on Modernizing State and Local Governments which goes into this at some length. We need to do a variety of things which will open opportunity as this bill provides, that will raise salaries, that will raise the prestige of government service. I have spent my lifetime in government service. I can certainly say that the jobs are fascinating, the challenge of public service is tre- mendous, whether it is public service in administrative work or public service in the political arena. But I recall back in the days when I was in graduate school, most of the people in the particular school of public administration I attended were much more interested in going into research and teaching than they were in government service. I do not know the reasons for that. I think somehow we emphasize the thing to do is to get a Ph. D. and go and write books on gov- ernnaent. Mr. GIBBONS. Ph. D.'s and people like that do not have to read in. the newspapers about the mistakes that they make all the time. There are all kinds of things that keep people out of public service. Mr. Hmrr. May I make a comment, Mr. Brademas? I think edu- cation is needed on both sides in a thing like this. A lot of college students don't know what the public service is like and a lot of State~ and local units of government don't know what first-grade help c.ould. do for them. Where the private foundations, about which we were talking awhile ago, have put people into these jobs, the usual result is that the people in government discover that they can't get along without them. The people who do this kind of work like it. I will cite an example. The Ford Foundation sent some research people into the Wisconsin Legislature. They gave each party leader- ship one as an example in each house. When the Ford money was gone the State appropriated money for those people. It is a process of grading-up the expectations and the needs of the State and local people and at the same time making kids acquainted with what is to be found in this kind of work. Mr. BIt~&DEMAs. I have talked with some mayors who were newly elected in some cities in my State last year. In one city in particular,. the problems are so enormous I will not recite its name. This man is swimming in a sea and may drown unless he gets some first-class, very intelligent, very qualified and capable and honest people to help him. He is going to have to repair to some private foundation or other to try to bail him out, otherwise, he is going to capsize. I will make one other comment and then I will stop, Madam Chairman. . It seems to me we completely delude ourselves if we thmk the Fed-~ eral system is going to survive at all, which I think everybody wants PAGENO="0223" 217 it to do, if we don't in some way : attract first-class young men and women to workin government at every: level, local and State as well as National. I think this bill responds to only part of the problem, but by pro- vidmg better educational opportunities it may be very helpful (The bill and comments referred, to by Congessman Brademas follow:) [From the Congressional Record, Apr. 6, 1967] EDUCATION AND THE PUBLIC SERVICE: THREE PROPOSALS To STRENGTHEN STATE, Loc~i, AND FEDERAL GOVERNMENT Mr. BRADEMAS. Mr. Speaker, I am pleased to join the distinguished chair- man of the House Education and Labor Committee, Congressman CARL PERKINS, of Kentucky, in introducing two imaginative legislative proposals designed to strengthen government at the State, local, and Federal levels: H.R. 8175, the Education for the Public Service Act, and H.R. 8234, `the Intergovernmental Man- power Act. These bills are similar in purpose, if not in all details, to HR. 5989, my own Public Service Education Act which I introduced on February 22, 1967. These three proposals will establish a series of programs to strengthen govern- ment at all levels by providing government employees significantly expanded opportunities for study, training, and intergovermnenal `exchanges which will significantly enhance their abilities as public servants. H.R. 5989. THE PUBLIC SERVICE EDUCATION ACT Mr. Speaker, the genesis of the Public Service Education Act lies in a concern I am sure that all of us in this body share; it is that the genius of the American constitutional system lies in our reliance on effective government at all levels, local, State and regional, as well as Federal. The federal system, with its many powers, sometimes overlapping, sometimes distinct, has been called a great laboratory for social experiment. Federalism has encouraged a diversity of solutions to the many problems with which the American people have wrestled throughout our history. RESPONSIBILITIES OF STATE AND LOCAL GOVERNMENT But the American brand of federalism implies that State and local, as well as regional goveruments are all viable partners in the pc~litical system. The social laboratory cannot be directed from Washington alone if it is truly to be a force for diversity. So we must set ourselves to the task of revitalizing government at all levels. The Public Service Education Act, by enabling all levels of govern- ment to attract and train able men and women for public service, will provide a vital tool in renewing the capacity of State, regional, and local government to participate creatively in the federal system. PROBLEMS OF GOVERNMENT The problems we face today in our States, our cities and metropolitan areas are growing with extraordinary swiftness. Their complexity is staggering. Con- sider even a brief list of the difficulties we must overcome in the years ahead: We must rebuild the inner cores of our cities, indeed entire cities. We must reclaim the streams and rivers from their increasing pollution. We must insure that the very air we breathe is safe for human life. We must reestablish confidence in the integrity and ability of our legal system to maintain a just order and to prevent the loss of property and life. For many of our young people, we must work to make the schools of our country centers of intellectual and community activity, not cells where they wait until ready for employment, military service, or the ranks of the aimless un- employed. We must establish in practice' what we have so long preached-that every American is entitled to an equal opportunity to the opportunities afforded by a true and open society. We must provide a level of medical and other social Services consistent with the great riches which our economy continues to produce in astonishing abun- dance. PAGENO="0224" 218 Mr. Speaker, I could go on to list still more tasks which face us as a Nation. But the point is clear: we have much to do and government at all levels-local, State, regional, and Federal-will play an important role in helping us acconi- push what we must. Yet no government has deeper knowledge, greater foresight, or richer imag- ination than the men and women who do its necessary work. It is because we need more than ever before the most able and well-educated public servants we can get that I have introduced H.R. 5989, my Public Service Education Act of 1967. PROVISIONS OJ? PUBLIC SEI~VICE EDUCATION ACT The Public Service Education Act of 1967 is a three-pronged measure aimed at attracting talented persons to government at all levels, but chiefly at the State and local level. This measure can help produce more and better men and women for government not only in Washington, D.C., but in Maine and California and Indiana, in towns and cities and counties across the Nation. The Public Service Education Act of 1967 seeks to improve the quality of government through three main lines of approach: support for graduate study at colleges and universities by those who plan to pursue careers in public service; fellowships for university study and inserviCe training for those now in govern- ment at the local, State, regional, and Federal levels; grants to institutions of higher education to strengthen their capacity to meet the demand for more and better education for the public service. Let me outline the major aspects of the bill. First. Fellowships for persons who plan to pursue careers in the public ser- vice: This bill will help to attract more talented young people into careers in local, State, regional, and Federal Government by providing fellowships for up to 2 years of graduate study for persons intending to follow public service careers. The bill authorizes $46 million for a total of up to 3.750 fellowships over the next 5 years. The fellowships are for graduate study in public administration and public affairs at colleges and universities in the United States. As part of the fellowship programs, colleges and universities will be encour- aged and enabled to arrange internships in State, local, and regional government, much as we in Congress and the executive branch now arrange during the summers foroutstanding college students. Towns and cities all over the country like South Bend, Mishawaka, Michigan City, Plymouth, and La Porte in my own district; county governments, or States like Indiana could employ able students of public administration during their summer vacations. Both the student and the local or State government would benefit greatly from these internships, as the experience with student internships here in Washington has shown. Second. Opportunities for further education for those already in public service: The Public Service Education Act will enable men and women now working for State and local governments, as well as for the Federal Govern- ment, to improve their professional qualifications by graduate study and through short-term, inservice training. State and local government: For example, city administrators, State water pollution experts, police officers, and a wide variety of other public officials could attend the best colleges and universities in the country to catch up on the newest techniques in their fields. Or they might attend inservice institutes designed to bring new knowledge and information from the classroom into city hall and the statehouse. Under this part of the measure, States will receive Federal grants to enable State and local government personnel to do graduate work or participate in in- service courses. The bill authorizes $85 million over 5 years for such programs. Federal Government: A similar measure, although contained in a separate title of the bill, will provide some 3,200 graduate fellowships for Federal em- ployees similar to the fellowships proposed for local, State, and regional per- sonnel. Present authority for graduate study by Federal employees is no framed to encourage its fullest use by Government agencies nor is it focused squarely on public administration. The Public Service Education Act is intended to correct these deficiencies. The proposed act also establishes: a system of sabbatical leaves for čareer Federal employees in the supergrade category, somewhat like the. practice of periodic sabbaticals common for American college and university teachers. Under the sabbatical system in the bill, these high-level employees would be eligi- PAGENO="0225" 219 ble to apply for 1 year of study, reading or research out of every, 7 years of high Federal service. Many of the eligible might choose to pursue formal academic programs, but they should have an opportunity for the kind of individual study which has proved so valuable in academic life. Third. Grants to colleges and universities: The act provides grants over the next 5 years to colleges and universities to develop the strongest possible pro- grams in public administration and public affairs. We need the best people ob- tainable in the public service and, we `cannot expect institutions of higher edu- cation alone `to shoulder the financial burden of producing them. The bill establishes a `5-year $70 million program of grants to participating colleges and universities to assist them in meeting the demands for more and better public servants. It is intended that at the `end of a 5-year grant, the university should expect and would be prepared to sustain the program without further Federal support unde'r this act. Mr. Speaker, we cannot afford tO staff Government programs involving the expenditure of millions, sometimes billions of dollars, with `less than the ablest and most highly trained men and women. That is why what we sow `in the Public Service Education Act can `reap such a rich harvest in the improvement of gov- ernment in the United States. ` VALUE OF PUBLIC `SERVIcE' As an American o~ Greek ancestry, I am acutely aware that my forebears knew well and appreciated fully the value of public service. In ancient Greece, to `which we look for'inspiration even today, the ideal of public service was a lofty one. Indeed, a man was judged by the character and quality of `his public life and his contribution `to the shared experiences of the city. I look to the day when public service `at all levels will be as honored in this cou'ntry as it was in the Greece of Pericles `and to the time ~when we, can acknowledge with even greater pride than we do today, the intelligence, ability, knowledge, and con- tributions of those who choose to serve in government, from the township to the highest levels of our Federal Government. The Public Service Education Act, I think, can help us reach that goal. My own Public Service Education Act, HR. 5989, `and both President Johnson's proposals differ somewhat ,in scope and detail. But a com'mon thread of concern for improving the quali'ty of government at all levels runs through the three bills. , Let me summarize `briefly the major facets of the Education for the Public Service Act, HR. 8175, and the Intergovernmental Manpower Act, H.R. 8234- both proposed by President J'ohnson today. PRINCIPAL PROVISIONS OF H.R. 8175-EDUOATION FOR THE PUBLIC SERVICE A~T1'- PROPOSED BY PRESIDENT JOHNSON Mr. Speaker, this bill would establish in the Department of Health, Education, and Welfare a program of institutional grants and graduate fellowships designed to attract young men :and women to public service in a'ny branch `of State, local, or Federal government, and to improve, education for .such service. The bill would authorize $10,000,000 `to be appropriated for the first fiscal' year, and `such sums as might be necessary for the `next 4 fiscal years. Title I of the bill would authorize the Secretary of Health, Education,' and Welfare to make grants to or contracts with institutions of higher educatiOn- and other designated public or private agencies in special `circumstances-to assist them in preparing graduate `or professional `students to enter the public service, or for research into, or development or demonstration of improved methods of educating students-including `students at the undergraduate level- for the public service. Grants or contracts would be equitably distributed throughout `the United States among institutions `that will be able to use the funds effectively, except that preference could be given to programs designed to meet an urgent `national need. Title II of the bill would authorize the Secretary to award fellowships, not to exceed three academic years in duratiOn, for graduate or professional study for persons who plan to pursue a `career in public `service. Fellowships would be equitably distributed throughout the United States among institutions of higher education `that have, or are developing, prOgrams `of high quality in- 92-371-68-pt. 1-15 PAGENO="0226" 220 tended to educate persons for the public service or which contribute to the meet- ing of a significant and continuing need in the public service, except that prefer- ence could be given to programs designed to meet an urgent national need. The fellowships would carry a stipend consistent with prevailing practices under comparable federally supported programs, and a payment to the institution of $2,500 per academic year. The Secretary would be authorized to establish an advisory committee to advise him on matters of general policy arising in the administration of the act. Mr. Speaker, this proposal is similar to titles I and IV of my own Public Service Education Act, H.R. 5989. PRINCIPAL PROVISIONS OF II.R. 8234-RNTERGOVERNMENTAL MANPOWER A(Yr- PROPOSED BY PRESIDENT JOHNSON Mr. Speaker, this bill would provide Federal financial and other assistance to State and local governments to train and improve administrative personnel. Under this proposal, Federal agencies would be authorized to admit State and local employees to training programs for Federal employees, as well as to initiate special training programs for State and local employees who administer Federal grant programs. The Civil Service Commission would be authorized to make grants covering up to 75 percent of the cost to assist State and local governments to establish and carry out comprehensive in-service training programs and to strengthen personnel administration. H.R. 8234 would also facilitate intergovernmental cooperation by providing authority for temporary exchange assignments of Federal employees to State and local governments, and of State and local employees to the Federal Govern- ment. The Civil Service Commission would also be authorized to make grants to State and local governments to provide fellowships for graduate study for em- ployees selected by State and local governments for further training. Mr. Speaker, under unanimous consent I would like to insert in the RECORD four documents which will help to clarify further the purposes and content of the similarities and differences between these interrelated proposals for im- proving the quality of American government: first, excerpts from the text of President Johnson's message on "The Quality of American Government," which he transmitted to Congress on March 20, 1967; second, H.R. 8715, the President's proposed Education for the Public Service Act; third, H.R. 8234, the President's proposed Intergovernmental Manpower Act; fourth, HR. 5989, my own Public Service Education Act. (The documents follow:) "THE QUALITY OF AMERICAN GOVERNMENT"-ExCERPTS FROM THE MESSAGE OF PRESIDENT JOHNSON TO CONGRESS ON MARCH 20, 1967 THE PUBLIC SERVICE Government is personal. It is as compassionate and vibrant-or as ineffectual and spiritless-as the men and women who shape the laws, who make the decisions, who translate programs into action. Andrew Jackson once said that the duties of all public offices were "plain and simple." We have journeyed far since then. Today's public servant-at all levels of government-is a servant of change. He works to make the American city a better place to live. He strives to increase the beauty of our land and end the poisoning of our rivers and the air we breathe. In these and countless other ways he seeks to enlarge the meaning of life and to raise the hopes and extend the horizons for all of us. The work to be performed in the years ahead will summon trained and skilled manpower in quantities-and quality-we have never needed before. Within the federal government, we are making careers more attractive. Since I became President, I have proposed and you in the Congress have approved pay increases in each of the past 3 years for federal workers, raising salary levels by an average of 12%. The new Executive Assignment System begun last year will re-shape the upper civil service SO that talent is readily recognized and excellence is fully rewarded. PAGENO="0227" 221 Later in this session of Congress, I shall submit additional proposals to enable the government to attract and retain the public servants it needs. But nowhere is the magnitude of government manpower greater-and the accompanying challenge more critical-than at the State and local levels. Con- skier the following: -Between 1955 and 1965 employment in State and local governments increased from 4.7 million to 7.7 million, or four times the rate of growth of employment in the economy as a whole. -By 1975, State and local government employment will grow to more than 11 million. -Each year, from now through 1975, State and local governments will have to recruit at least one quarter of a million new administrative, technical, and professional employees, not including teachers, to maintain and develop their programs. -One out of every three of the Nation's municipal executives, and one out of every two municipal health directors will be eligible for retirement within the next 10 years. -There will be 2 vacancies for each new graduate of a university program in city and regional planning. These statistics show that States and local governments are flourishing as they never have before. But they also contain a clear signal that in the chain of Federal-State-local relationships, the weakest link in *the emerging shortage of professional manpower. We can strengthen that link, or later pay the price of weakness with inefficient government unable to cope with the problems of an expanding population. I believe we should take positive action now. I recommend two legislative proposals to improve the quality of government in the years ahead-the Public service Education Act of 1967 and the inter- governmental Manpower Act of 1967. My fiscal 1968 budget includes $35 million for these proposals: -$10 million for the Public Service Education Act, and -$25 million for the Intergovernmental Manpower Act. These measures are demanding. They will require the support of Congress, the Executive Branch, State and local governments, and colleges and universities and private organizations. 1. The Public ~Service Education Act of 1967 [now Educational for the Public ,9ervice Act] This legislation has a single clear goal; to increase the number of qualified students who choose careers in government. The measure would authorize the Secretary of Health, Education, and Welfare to provide fellowships for young men and women who want to embark on the adventure of government service. It would provide support to universities seeking to enrich and strengthen their public service education programs. This financial assistance can be used to support a broad range of activity including: -Research into new methods of education for government service; -Experimental programs, such as study combined with part-time public service; -Plans to improve and expand programs for students preparing for govern- ment careers; -Training faculties, establishing centers for study at the graduate or profes- sional level, conducting institutes for advanced study in public affairs and administration. 2. The Intergovernmen~~~ Manpower Act of 1967 This legislation is designed specifically to deal with the varied manpower needs of State and local governments. It would authorize the Civil Service Commission to: -Provide fellowships to State and local government employees. -Make grants of up to 75% to help State and local governmen~~ develop and carry out comprehensive training plans and strengthen their personnel adminis- tration systems. PAGENO="0228" .222 It would allow federal agencies to admit State and local employees to federal training programs, and to provide additional assistance for those employees who administer federal grant-in-aid programs. Across America, many men and women of skill and vision work in State houses and city halls. Their knowledge and experience can help us. And we are prepared to bring the special experience of federal employees to the local level. The Intergovernmental Manpower Act would allow federal workers to take assignments in State and local governments for periods up to 2 years, with full protection of job rights and benefits. In addition, the federal agencies would be able to accept State and local employees for assignments of equivalent periods. The proposal. I believe, fills a vital need. The mutual interchange of ideas and perspectives will benefit all echelons of government. TEXT OF EDUCATION FOR THE PUBLIC SERVICE ACT, H.R. 8715 A BILL To establish in the Department of Health, Education, and Welfare a program of grants and fellowships to improve the education of students attending institutions of higher education in preparation for entrance into the service of State, local, or Federal governments, and to attract such students to the public service, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Education for the Public Service Act". TITLE I-GRANTS AND CONTRACTS TO STRENGTHEN AND IMPROVE EDUCATION FOR THE PUBLIC SERVICE SEC. 101. The Secretary of Health, Education, and Welfare (hereafter in this Act referred to as the "Secretary") is authorized to make grants to or contracts with institutions of higher. education, or combinations of such institutions, to assist them in planning, developing, strengthening, improving, or carrying out programs or projects (a) for the preparation of graduate or professional stu- dents to enter the public service or (h) for research into, or development or demonstration of, improved methods of education for the public service. Such grants or contracts may include payment of all or part of the cost of programs or projects such as- (1) planning for the development or expansion of graduate or profes- sional programs to prepare students to enter the public service; (2) training and retraining of faculty members; (3) strengthening the public service aspects of courses or curricula lead- ing to a graduate or professional degree; (4) establishment, expansion, or operation of centers for `study at the graduate or professional level (but not including payment for construction or acquisition of buildings) (5) conduct of short-term or regular session institutes for advanced study by persons engaged in, or preparing to engage in the preparation of students to enter the public service; (G) carrying out innovative and experimental programs of cooperative education involving alternate periods of full-time or part-time academic study at the institution and periods of full-time or part-time public service; and (7) research into, and development of, methods of training students or faculty, including the preparation of teaching materials and the planning of curriculum. The Secretary may also also' make grants to other public or private nonprofit agencies and organizations, including professional and scholarly associations, or contracts with public or private agencies or organizations, to carry out the purpose of this section when such grants or contracts will make an especially significant contribution to attaining the objectives of this section. APPLICATION FOR GRANT OR CONTRACT; ALLOCATION OF GRANTS OR CONTRACTS SEC. 102. (a) A grant or contract authorized by section 101 may be made only upon application to the Secretary at such time or times and containing such in- PAGENO="0229" 223 formation as he may prescribe, except that no such application shall be approved unless it- (1) sets forth programs, activities, research, or development for which a grant is authorized under section 101 and describes the relation thereof to any program set forth by the applicant in an application, if any, submitted pursuant to section 203; (2) provides for such fiscal control and fund accounting procedures as may be necessary to assure proper disbursement of and accounting for Federal funds paid to the applicant under this section; and (3) provides for making such reports, in such form and containing such information, as the Secretary may require to carry out his functions under this section, and for keeping such records and for affording such access thereto as the Secretary may find necessary to assure the correctness and verification of such reports. (b) The Secretary shall allocate grants or contracts under section 101 in such manner as will most nearly provide an equitable distribution of the grants or contracts throughout the United States among institutions of higher education which show promise of being able to use funds effectively for the purposes of section 101, except that to the extent he deems proper in the national interest the Secretary may give preference to programs designed to meet an urgent national need. (c) (1) Payments under this section may be used, in accordance with regula- tions of the Secretary, and subject to the terms and conditions set forth in an application approved under subsection (a), to pay part of the compensation of students employed in public service, other than public service as an employee in any branch of the Government of the United States, as part of a program for which a grant has been approved pursuant to this section. (2) Departments and agencies of the United States are encouraged, to the extent consistent with efficient administration, to enter into arrangements with institutions of higher education for the full-time, part-time, or temporary em- ployment, whether in the competitive or excepted service, of students enrolled in programs set forth in applications apprOved under subsection (a). TITLE TI-PUBLIC SERVICE FELLOWSHIPS SEC. 201. The Secretary is authorized to award fellowships in accordance with the provisions of this title for graduate or professional study for persons who plan to pursue a career in public service. Such fellowships shall be awarded for such periods as the Secretary may determine but not to exceed three academic years. ALLOCATION OF FELLOWSHIPS * SEC. 202. The Secretary shall allocate fellowships under this title among institutions of higher education with programs approved under the provisions of section 203 for the use of individuals accepted into such programs, in such manner and according to such plan as will most nearly- (1) provide an equitable distribution of such fellowships throughout the United States, except that to the extent he deems proper in the national interest the Secretary may give preference to programs designed to meet an urgent national need, and (2) attract recent college graduates to pursue a career in public service. APPROVAL OF PROGRAMS SEC. 203. The Secretary shall approve a graduate or professional program of an institution of higher education only upon application by the institution and only upon his finding- (1) that such program has as a principal or significant objective the education of persons for the public service, or the education of persons in a profession or vocation for whose practitioners there is a significant and con- tinuing need in the public service as determined by the Secretary after such consultation with other agencies as may be appropriate; (2) that such program is in effect and of high quality, or is readily put into effect and may reasonably be expected to be of high quality; (3) that the application describes the relation of such program to any program, activity, research, or development set forth by the applicant in an application, if any, submitted pursuant to section 102; and PAGENO="0230" 224 (4) that the application contains satisfactory assurance that (A) the institution will recommend to the Secretary, for the award of fellowships under this title, for study in such program, only persons of superior promise who have demonstrated to the satisfaction of the institution a serious intent to enter the public service upon completing the program, and (B) the institu- tion will make reasonable continuing efforts to encourage recipients of fellowships under this title, enrolled in such program, to enter the public service upon completing the program. STIPENDS SEC. 204. (a) The Secretary shall pay to persons awarded fellowships under this title such stipends (including such allowances for subsistence and other expenses for such persons and their dependents) as he may'deterniine to be con- sistent with prevailing practices under comparable federally supported programs. (b) In addition to the amounts paid to persons pursuant to subsection (a), the Secretary shall pay to the institution of higher education at which such person is pursuing his courses of study an amount equivalent to $2,500 per academic year, less any amount charged such person for tuition and nonrefundable fees and deposits. FELLOWSHIP CONDITIONS SEc. 205. A person awarded a fellowship under the provisions of this title shall continue to receive the payments provided in section 204 only during such periods as the Secretary finds that he is maintaining satisfactory proficiency and devoting full time to study or research in the field in which such fellowship was awarded in an institution of higher education, and is not engaging in gainful employment other than employment approved by the Secretary by or pursuant to regulation. TITLE Ill-GENERAL PROVISIONS DEFINITIONS SEC. 301. As used in this Act- (a) The term "State" means a State, Puerto Rico, the District of Colum- bia, the Canal Zone, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands. (b) The term "institution of higher education" means an educational institution in any State exclusive of an institution of any agency of the United States, which (1) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or. the recognized equivalent of such certificate, (2) is legally authorized within such State to provide a program of education beyond secondary education, (3) provides an educational program for which it awards a bachelor's degree or provides not less than a two-year program which is acceptable for full credit toward such a degree, (4) is a public or other nonprofit institu- tion, and (5) is accredited by a national recognized accrediting agency or association approved by the Secretary for this purpose. For purposes of title I, such term includes any school which provides not less than a one-year program of training to prepare students for gainful employment in a recog- nized occupation and which meets the provision of clauses (1), (2), (4), and (5). For purposes of this subsection, the Secretary shall publish a list of nationally recognized accrediting agencies or associations which he deter- mines to be reliable authority as to the quality of training offered. (c) The term "public service" means service as an officer of employee in any branch of State, local, or Federal Government. (d) The term "academic year" means an academic year or its equivalent as determined by the Secretary. (e) The term "nonprofit" as applied to an institution, agency, or organiza- tion, means an institution, agency, or organization owned and operated by one or more nonprofit corporations or associations no part of the net earnings of which inures, or may lawfully inure, to the benefit of any private share- holder or individuaL COORDINATION OF FEDERAL ASSISTANCE SEC. 302. In administering this Act. the Secretary shall give primary emphasis to the assistance of programs and activities not otherwise assisted by the Depart- PAGENO="0231" 225 ment of Health, Educaton and Welfare, or by other agencies of the Federal Government, so as to promote most effectively the Act's objectives. METHOD OF PAYMENT Sac. 303. Payments under this Act may be made in installments, and in advance or by way of reimbursemex~t, with necessary adjustments on account of over- payments or under payments. LIMITATION SEC. 304. No grant, contract, or fellowship shall be awarded under this Act to, or for study at a school or department of divinity. For the purposes of this section, the term "school or department of divinity" means an institution or department or branch of an institution whose program is specifically for the education of students to prepare them to become ministers of religion or to enter upon some other religious vocation or to prepare them to teach theological subjects. UTILIZATION OF OTHER AGENCIES SEC. 305. In administering the provisions of this Act, the Secretary is author- ized to utilize the services and facilities of any agency of the Federal Government and of any other public or nonprofit agency or institu4ion, on a reimbursable basis or otherwise in accordance with agreements between the Secretary and the head thereof. FEDERAL CONTROL OF EDUCATION PROHIBITED SEC. 306. Nothing contained in this Act shall be construed to authorize any department, agency, officer, or employee of the United States to exercise any direc- tion, supervision, or control over the curriculum, program of instruction, admin- istration, or personnel of any educational inStitution, or the selection of library resources by an educational institution, or over the content of any material developed or published under any program assisted pursuant to this Act. AUTHORITY TO ESTABLISH ADVISORY COMMITTEE SEC. 307. (a) The Secretary may without regard to the civil service and classi- ficaThion laws, appoint a committee to advise him on matters of general policy arising in the administration of this Act. Members of .the Committee, who are not in the regular full-time employ of the United States shall, while attending meetthgs or conferences of the Committee or otherwise engaged in the business of the Committee, be entitled to receive compensation at a rate fixed by the Secre- tary, bust not exceeding $100 per diem (or, if higher, the rate specified at the time of such service for grade GS-19 in 5 U.S.C., §. 5332), including travel time, and while so serving on the business of the Committee away from their homes or regular places of business, they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized the 5 U.S.C., § 5703, for persons em- ployed intermittently in the Government service. REPORT SEC. 308. The Secretary shall include in his annual report to the Congress, a report of activities of his Department under this Adt, including recommendations for needed revisions in the provisions thereof. APPROPRIATIONS SEC. 309. There are authorized to be appropriated $10,000,000 for the fiscal year ending June 30, 1968, and such sums as may be necessary for each of the 4 succeeding fiscal years, to carry out the purposes of this Act. Funds appropri- ated for the fiscal year ending June 30, 1968, shall be available for obligation pursuant to the provisions of this Act during that year and the succeeding fiscal year. TEXT OF INTERGOVERNMENTAL MANPOWER AcT-HR. 8234 A BILL To improve intergovernmental cooperation and grant-in-aid program adinnistration; to assist State and local governmenit in strengthening their staffs by improving personnel administration and extending merit principles PAGENO="0232" 226 and by providing support for training of public employees; to permit temporary assignments of personnel between Federal and State and local governments; and for other purposes Be it enacted by the Senate and the House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Intergovernmental Manpower Act of 1967." GENERAL DECLARATION OF PoLICY SEC. 2. The Congress hereby finds and declares a national interest in- (1) improving the quality of pubiic administration at all levels of govern- ment, particularly in connection with programs that are financed in whole or in part from Federal appropriations; (2) strengthening the capacity of State and local governmeuts to deal with complex problems confronting all levels of government; (3) aiding State and local governments in training their professional, administrative, and technical employees and officials; (4) aiding State and local governments in developing systems of personnel management that are responsible to the goals and needs of their programs, effective in attracting and retaining capable employees, and based on merit principles; and (5) facilitating temporary assignments of personnel between levels of government. SEC. 3. The authorities provided by this Act shall be administered in such man- ner as to recognize fully the rights, powers, and responsibilities of State and local governments. TITLE I-TRAINING AND DEVELOPING STATE AND LOCAL EMPLOYEES DECLARATION OF PURPOSE SEC. 101. The purpose of this title is to strengthen the training and development of State and local government employees and officials, particularly in profes- sional, administrative, and technical fields. ADMISSION TO FEDERAL EMPLOYEE TRAINING PROGRAMS SEC. 102. (a) In accordance with such conditions as may be prescribed by the head of the Federal agency concerned, a Federal agency may admit State and local government employees and officials to agency training programs established for Federal professional, administrative, or technical personnel. (b) Federal agencies are authorized to receive payments from, or on behalf of, State and local governments for the costs of training provided under this section, and to enter into agreements with them for this purpose. The head of the Federal agency concerned may waive all or part of such payments. Payments received by the Federal agency concerned for training under this section shall be credited to the appropriation or fund used for paying the training costs. (c) The Commission may use appropriations authorized by this Act to pay the additional developmental or overhead costs that are incurred by reason of admittance of State and local government employees to Federal training courses and to reimburse other Federal agencies for such costs. TRAINING OF PERSONNEL ENGAGED IN GRANT-IN-AID PROGRAMS SEC. 103. (a) Any Federal agency administering a program of grants or finan- cial assistence to State or local governments may- (1) establish, provide, and conduct training programs for State and local employees and officials who have responsibilities related to the federally aided program, and, to the same extent provided in section 102(b) of this Act, receive or waive payments for such training and credit any such pay- ments to the appropriation or fund used for paying the training costs; and (2) authorize State and local governments, from the grants or financial assistance when so provided in appropriation or other acts, to establish, con- duct, provide, and support training and education programs for their em- ployees and officials who have responsibilities related to the federally aided program, including internship, work-study, fellowship, and similar programs PAGENO="0233" 227 if approved by the Federal agency concerned, provided that full-time, grad- uate-level education supported under this subsedtion shall be consistent with provisions made for Government Service Fellowships under section 106 of this Act. (b) The State or local government concerned shall- (1) in accordance with eligibility criteria prescribed by the Federal agency concerned, select the individual employees and officials to receive education and training in programs established under this section; and (2) during the period of the education or training, continue the full salary of the employee or official concerned and normal employment benefits such as credit for seniority, leave accrual, retirement, and insurance. GRANTS TO STATE AND LOCAL GOVERNMENTS FOR TRAINING SEC. 104. (a) If training is not adequately provided for under grant-in-aid or other statutes, the Commission is authorized to make grants to State and general local governments for up to 75 per centum of the cost of developing and carrying out training and education programs for their professional, administrative, and technical employees and officials. Such grants may not cover costs of full-time graduate-level study, provided for in section 106 of this Act, or the costs of the construction or acquisition of training facilities. The State and local government share of the cost of developing and carrying out training and education plans and programs may include, but shall not consist solely of, the reasonable value of facilities and of supervisory and other personal services made available by such governments. (b) A grant authorized by subsection (a) of this section may be made to a State on application to the Commission at such time or times and containing such information as. the Commission may prescribe. To be approved, the appli- cation must meet requirements established by this subsection unless any require- ment is specifically waived by the Commission. Such grant to a State, or to a general local government under subsection (c) of this section, may cover the costs of developing the program set forth in the application. The program set forth in the application must- (1) provide for designation, by the Governor or chief executive author- ity, of the State office that will have primary authority and responsibility for the development and administration of the program at the State level; (2) provide, to the extent feasible, for coordination with relevant training available under or supported by other Federal Government programs or grants; (3) provide for training needs of the State government and of local gov- ernments in that State; (4) provide, to the extent feasible, for intergovernmental cooperation in employee training matters, especially within metropolitan or regional areas; and (5) provide assurance that the making of a Federal Government grant will not result in a reduction in relevant State or local government expendi- tures or the substitution of Federal funds for State or local funds previously made available for these purposes. (c) If, within one year from the effective date of the grant provisions of this Act, a State has not submitted and had approved an application for a program grant providing adequately for training of employees of local governments within the State, the Commission may consider and approve applications for grants authorized in subsection (a) of this section from those general local governments, or a combination of such governments, that serve a population of 100,000 or more. To be approved, a general local government application for a program grant must meet requirements similar to those established in subsection (b) of this section for .State applications unless any requirement is specifically waived by the Commission. The Commission may- (1) waive, at the `request of a general. local government, the one-year waiting period provided under subsection (c) of this section unless the State concerned declares, within ninety days from the effective date of the grant provisions of this Act, an intent to. file an application for a program grant that will provide training for employees of the general local government; and (2) make grants to a general local gOvernment, or a combination of such governments, serving a population of less than one hundred thousand if it finds that such grants will help meet essential needs in programs of national PAGENO="0234" 228 interest and will assist general local governments experiencing problems that result from their location in an area of rapid urbanization, in a metropolitan area, in a transportation corridor, or in a similarly critical area. GRANTS TO NONPROFIT ORGANIZATIONS Sno. 105. (a) The Commission is authorized to make grants to nonprofit organi- zations to pay up to 75 per centum of the costs of providing training to profes- sional, a4lministrative, or technical employees and officials of State or local governments if the Commission- (1) finds sufficient State and local government interest in the proposed program to warrant Federal financial support; and (2) approves the program as meeting such requirements as may be pre- scribed by the Commission in its regulations pursuant to this Act. (b) The nonprofit organization must be- (1) a national, regional, statewide, or metropolitan organization repre- senting member State or local governments; (2) an associa~tion of State or local public officials; or (3) an organization primarily engaged in offering professional advisory, research, development, or other services to governments or making profes- sional studies designed for the improvement of public administration. GOVERNMENT SERVICE FELLOWSHIPS SEC. 106. (a) The Commission is authorized to make grants to State and general local governments to support programs approved by the Commission for providing government service fellowships for State and local government personnel. The grants may cover- (1) the necessary costs of the fellowship recipient's books, travel and transportation, and such related expenses as may be authorized by the Commission; (2) reimbursement to the State or local government for not to exceed one-fourth of the salary of each fellow during the period of the fellowship; and (3) payment to the educational institutions involved not in excess of $3,000 per academic year for each fellow less any amount charged the fellow for tuition and nonrefundable fees and deposits. (b) Fellowships awarded under this section may not exceed two years of full- time graduate-level study for professional, administrative, and technical em- ployees. The regulations of the Commission shall include eligibility criteria for the selection of fellowship recipients by State and local governments. (c) The State or local government concerned shall- (1) select the individual recipients of the fellowships; and (2) during the period of the fellowship, continue the full salary of the recipient and normal employment benefits such as credit for seniority, leave accrual, retirement, and insurance. COORDINATION OF FEDERAL PROGRAMS SEc. 107. The Commission, after consultation with other agencies concerned, shall- (1) prescribe regulations covering the training for State and local em- ployees and officials provided for in this title, including requirements for coordination of and reasonable uniformity in such training programs; (2) coordinate the training support given to State and local governments under authority of this Act with training support given such governments under other Federal programs; and (3) make such arrangements, including the collection and maintenance of data on training grants and programs, as needed to avoid duplication of programs providing for training and to insure consistent administration of related Federal training activities. TITLE TI-STRENGTHENING STATE AND LOCAL PERSONNEL ADMINIS- TRATION DECLARATION OF PURPOSE Sr,c. 201. The pur~~ose of this title is to assist State and local governments to strengthen their staffs by improving their personnel administration. PAGENO="0235" 229 IMPROVING BASIC PERSONNEL SYSTEMS SEc. 202. (a) To the extent he determines to be practicable, the President is authorized in programs that are financed in whole or in part from Federal funds and as a condition for the grant of such funds, to require State and local govern- ments to provide for their employees systems of merit personnel administration. For this purpose, the President may establish appropriate standards consistent with such merit principles as- (1 ) recruiting, selecting, and advancing employees on the basis of their relative ability, knowledge, and skills, including open consideration of quah- fled applicants for initial appointment; (2) providing equitable and adequate compensation; (3) training employees, as needed, to assure high-quality performance; (4) retaining employees on the basis of the adequacy of their performance, correcting inadequate performance, and separating employees whose inade- quate performance cannot be corrected; (5) assuring fair treatment of applicants and employees in all aspects of personnel administration without regard to political affiliation, race, color, national origin, sex, or religious creed; and (6) assuring that employees are protected against coercion for partisan political purposes are prohibited from using their official authority for the purpose of interfering with or affecting the result of an election or a nomina- tion for office. (b) Nothing in this section or in seeti~n 203 or 204 of this Act, however, shall be construed to authorize any agency or official of the Federal Government to- (1) exercise any authority, direction, or control over the selection, assign- ment, advancement, retention, compensation, or other personnel action with respect to any individual State or local employee whose employment is in compliance with the established standards; or (2) require the application of such standards to educational institutions or school systems. STATE GOVERNMENT AND STATEWIDE PROGRAMS AND GRANTS Sno. 203. (a) The Commission is authorized to make grants to States for up to 75 per centum of the cost of developing and carrying out programs or projects to strengthen State and local government personnel administration and to fur- nish needed personnel administration services to local governments in that State. (ib) A grant authorized by subsection (a) or this section may be made to a State on application to the Commission at such time or times and containing such information as the Commission may prescribe. To be approved, the applica- tion must meet requirements established by this subsection unless any require- ment is specifically waived by the Commission. Such grants to a State may cover the costs of developing the program or project set forth in the application which most- (1) provide for designation, by the governor or chief executive authority, of the State office that will have primary authority and responsibility for the development and administration of the approved program or project at the State level; (2) provide for personnel administration based on merit principles for State government employees of the office designated under paragraph (1) of this subsection unless, in the case of projects of limited scope, it is determined to be impracticable by the Commission, and for those State government employees who are affected by the program or project and who are engaged in the administration of federally aided programs, if not otherwise covered by merit standard requirements in Federal statutes and regulations or by Presidential action under section 202(a) of this Act; (3) provide for certain personnel administration improvement needs of both the State government and the local governments in that State, including State personnel administration services for local governments; (4) provide assurance that the making of a Federal Government grant will not result in a reduction in relevant State or local government expendi- tures or the substitution of Federal funds for State or local funds previously made available for these purposes; and (5) set forth clear and practicable actions for the Improvement of such aspects of personnel administration as- PAGENO="0236" 230 (A) expansion of the coverage of State and local employees under existing merit standards, the establishment of merit standards where they do not now exist, and the further improvement of existing systems based on merit principles; (B) establishment of statewide personnel systems to meet the needs of urban, suburban, or rural governmental jurisdictions that are not able to provide sound career services, opportunities for advancement, ado- quate retirement and leave systems, and other career inducements to well-qualified professional, administrative, and technical personnel; (C) making of State grants to local governments; (D) assessment of State and local government needs for professional, administrative, and technical manpower, and for the initiation of timely and appropriate action to meet such needs; (E) improving one or more major areas of personnel administration, such as recruitment and selection, training and development, and pay administration; (F) research and demonstration projects to develop and apply better personnel administration techniques, including both projects conducted by State and local government staffs and projects conducted by colleges or universities or other appropriate nonprofit organizations under grants or contracts; (G) improving the recruitment, selection, assignment and develop- ment of handicapped persons, women, and members of disadvantaged grOups whOse capacities are not being utilized fully; (H) achieving the most effective use of scarce professional, adminis- trative, and technical manpower; and (I) intergovernmental cooperation in personnel administration, with respect to such matters as recruiting, examining, pay studies, training, education, personnel interchange, manpower utilization, and fringe benefits. LOCAL GOVERNMENT PROGRAMS AND GRANTS SEC. 204. (a) The Commission is authorized to make grants to general local governments, or combinations of such governments, that serve a population of 100,000 or more, for up to 75 per centum of the cost of developing and carrying out programs and projects to strengthen the personnel administration of such governments. Such grants may be made only if, within one year from the effective date of the grant provisions of this Act, a State has not submitted and had approved under section 203 of this Act an application for a grant providing ade- quately for assistance in strengthening the personnel administration of local gov- ernments within the State. (b) A grant authorized by subsection (a) of this section may be made to a general local government on application to the Commission at such time or times end containing such information as the Commission may prescribe. To be ap- proved, the application must meet requirements similar to those established in section 203(b) of this Act for a State application for a grant unless any require- ment is specifically waived by the Commission. Such grants to a general local government may cover the costs of developing the program or project set forth in the application. The Commission may- (1) waive, at the request of a general local government, the one-year waiting period, unless the State concerned declares, within ninety days from the effective date of the grant provisions of this Act, an intent to file an application for a grant that will include the local government; and (2) make grants to general local governments, or combinations of such governments, that serve a population of less than one hundred thousand if it finds that such grants will help meet essential needs in programs or proj- ects of national interest and will assist general local governments experienc- ing problems that result from their location in an area of rapid urbanization, in a metropolitan area, in a transportation corridor, or in a similarly critical area. INTERGovERNMENTAL COOPERATION IN RECRUITING AND EXAMINING SEC. 205. (a) The Commission may join, on a shared-costs basis, with State and local governments in cooperative recruiting and examining activities under such procedures and regulations as may jointiy be agreed on. PAGENO="0237" 231 (b) The Commission also may, on the written request of a State or local government and under such procedures as may be jointly agreed on, certify to such jurisdictions from appropriate Federal registers the names of eligible per- sons. The State or local government making the request shall pay the Commission for the costs of performing the service as determined by the Commission, and such payments shall be credited to the appropriation or fund from which the expenses were or are to be paid. TECHNICAL ASSISTANCE SEC. 206. The Commission may furnish technical advice and assistance, on request, to State and general local governments seeking to improve their systems of personnel administration. The Commission may accept payments, in whole or in part, for the costs of furnishing such assistance from the State or lOcal govern- ments to which furnished. All such payments shall be credited to the appropria- tion or fund from which the expenses were or are to be paid. INTERSTATE COMPACTS SEC. 207. The consent of the Congress is hereby given to any two or more States to enter into compacts or other agreements, not in. conflict with any law of the United States, for cooperative efforts and mutual assistance (including the establishment of appropriate agencies) in connection with the development and administration of personnel and training programs for employees and officials of State and local governments. TRANSFER OF FUNCTIONS SEC. 208. (a) There are hereby transferred to the Commission all functions, powers, and duties of- (1) the Secretary of Agriculture under section 10(e) (2) of the Food Stamp Act of 1964 (7 U.S.C. 2019(e)(2)); (2) the Secretary of Labor under- (A) section 3 of the Act of June 6, 1933 (29 U.S.C. 49b) ; and (B) section 303 (a) (1) of the Social Security Act (42 U.S.C. 503(a)- (1); (3) the Secretary of Health, Education, and Welfare under- (A) sections 134(a) (6) and 204(a) (6) of the Mental Retardation Facilities and Community Health Centers Construction Act of 1963 (42 U.S.C. 2674(a) (6) and2684(a)(6fl; (B) section 303(a) (5) of the Older Americans Act of 1965 (42 U.S.C. 3023 (a) (5)) (C) sections 314(a) (2) (F) and (d)(2)(F) and 604(a) (8) of the Public Health Service Act (42 U.S.C. 246(a) (2).(F) and (d) (2) (F) and 291d(a) (8)) ; and (D) sections 2(a)(5), 402(a) (5), 503(a) (3), 513(a) (3), 1002(a)- (5), 1402(a) (5), 1602(a)(5), and 1902(a) (4) of the Social Security Act (42 U.S.C. 302(a) (5), 602(a) (5), 703(a) (3), 713(a)(3), 1202(a)- (5), 1352 (a) (5), 1382(a) (5), and 1396a(a) (4)) ; and (4) any other department, agency, office, or officer (other than the Presi- dent) under any other provision of law or regulation applicable to a program of grants-in-aid that specifically requires the establishment and maintenance of personnel standards on a merit basis with respect to the program; insofar as .the functions, powers, and duties relate to the prescription of personnel standards on a merit basis. (b) The Commission shall- (1) provide consultation and technical advice and assistance to State and local governments to aid them in complying with standards prescribed (A) by the Commission under subsection (a) of this section or (B) by the President under section 202(h) of this Act; and (2) make investigations and advise Federal agencies administering pro- grams of grants or financial assistance as to compliance with the standards and recommend the taking of such action as the Commission considers will most effectively carry out the purpose of this title. (c) So much of the personnel, property, records, and unexpended balances of appropriations., allocations, and other funds of any Federal agency employed, PAGENO="0238" 232 used, held, available, or to be made available in connection with the functions, powers, and duties vested in the Commission by this section as the Director of the Bureau of the Budget shall determine shall be transferred to the Commission at such time or times as the Director shall direct. (d) Personnel standards prescribed by the Commission under subsection (a) of this section and section 203(b) (2) of this Act shall be consistent, to the extent practicable, with standard.s prescribed by the President under section 202(a) ~f this Act. (e) Personnel standards prescribed by Federal agencies under laws `and regu- lations referred to in subsection (`a) of this section shall continue in effect until modified or superseded by standards prescribed (A) by the Commission under subsection (a) of this section or (B) by the President under section 202(a) of this Act. (f) This section shall become effective sixty days after the date of enactment of this Act. TITLE Ill-MOBILITY OF FEDERAL, STATE, AND LOCAL EMPLOYEES DECLARATION OF PURPOSE SEC. 01. The objective of this title is to provide for the temporary assignment ~of personnel between the Federal Government and State and local governments. AMENDMENTS TO TITLE 5, UNITED STATES CODE SEc. 302. (a) Chapter 33 of title 5, United States Code, is amended by inserting the following new subchapter at the end thereof: "SUBCHAPTER VI-A55IGNMENTS TO AND FROM STATES "~ 3371. Definitions. "For the purpose of this subchapter- "(1) `State' means- "(A) a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, ~ind a territory or possession of the United States; and "(B) an instrumentality or authority of a State or States as defined in clause `(A) of thi's paragraph (1) and a Federal-State authority or instrumentality; hnd "(2) `local government' means- "(A) any political subdiVisiOn, instrumentality, or authority of a State or States as defined in clause (A) of paragraph (1) ; and "(B) any general or special purpose agency of such ~. political sub- dIvision, instrumentality, or authority. "~ 3372. General provisions. "On request from or with the concurrence of a State or local government, and with the consent of the employee concerned, the head of an executive agency may arrange for the assignment of- "(1) an employee of his agency to a State or local government; and "(2) an employee of a State or local government to his agency; for work of mutual concern to his agency and the State or local government that `he determines will be mutually beneficial to both. The period of an assignment under this subchapter may not exceed two years. However, the bead of an executive agency may extend the period of assignment for not more than two additional yctrs. The President may prescribe regulations for the adminis- tration of this subchapter. "~ 3373. Assignment of employees to State or local governments. "(a) An employee of an executive agency assigned to a State or local govern- ment under this subchapter is leemed. during the assignment, to be either- "(1) on detail to `a regular work assignment in `his agency; or "(2) on leave without pay from his position in the agency. An employee assigned either on detail or on leave without pay remains an em- ployee of `his agency. The Federal Tort Claims Act and any other Federal tort liability statute apply to an employee so assigned. The supervision of the duties PAGENO="0239" 233 of an employee on detail may be governed by agreement between the executive agency and the State or local government concerned. "(b) The assigmnent of an employee of an executive agency either on detail or on leave without ~ay to a State or local government under this subchapter may be made with or Without reimbursement by the State or local government for the travel and transportation expenses to or from the place of assignment and for the pay or supplemental pay or a part thereof, of the employee during assignment. Any reimbursements shall be credited to the appropriation of the executive agency used for paying the travel and transportation expenses or pay. "(c) For an employee so assigned and on leave without pay- "(1) if the rate of pay for his employment by the State or local govern- ment is less than the i~ate of pay he would have received had he continued in his regular assignment in the agency, he is entitled to receive supplemental pay from the agency in an amount equal to the difference between the State or local government rate and the agency rate; "(2) he is entitled to annual and sick leave to the `same extent as if he had continued in his regular assignment in the agency; and "(3) he is entitled, notwithstanding other statutes- "(A) to continuation of his insurance under chapter 87 of this title, and coverage under chapter 89 of this title or other applicable authority, so long as he pays currently into the employee's life insurance fund and the employee's health benefits fund or other applicable health bene- fits system (through his employing agency) the amount of the employee contributions; and "(B) to credit the period of his assignment under this subchapter toward periodic step increases, retention, and leave accrual purposes, `and, on payment into the civil service retirement and disability fund or other applicable retirement system of the percentage of his State or local government pay, and of his supplemental pay, if any, that would have been deducted from a like agency pay for the period of the assign- ment and payment by the executive agency into the fund or system of the amount that would have been payable by the agency during the period of the assignment with respect to a like agency pay, to treat (notwithstanding section 8348(g) of this title) his serv~ice during that period as service of the type performed in the agency immediately before his assignment. However, an `employee or his beneficiary may not receive benefits referred to in subparagraphs (A) `and (B) of this paragraph (3), based on service during an assignment under this subchapter for which the employee or, if he dies without making such an election, his beneficiary elects to receive benefits, under any State or local government retiremen,t or insurance law or program, which the Civil SerVice Commission determines to be similar. The executive agency shall deposit currently in the employee's life insurance fund, the employee's health benefits fund or other applicable health benefits system, respectively, the amount of the Government's contributions on account of service with respect to which employee contributions are collected as provided in subparagraphs (A) and (B) of this paragraph (3). "(d) (1) An employee so assigned and on leave Without pay who dies or suffers disability as a result of personal injury `sustained While in the performance of his duty during an assignment under `this subchapter shall be treated, for the purposes of subchapter I of chapter 81 of this title, as' though he were an employee as defined by section 8101 of this title who had sustained the injury in the per- formance of `duty. When an employee (or his dependents in case of death) entitled by reason of injury or death to benefits under subchapter I of ch'apter 81 of this title is also entitled to benefits from a State or local government for the same injury or death, be (or his dependents in case of death) shall elect which benefits he will receive. The election shall be made within one year after the injury or death, or such further time as the Secretary of Labor may allow for reason- able cause shown. When made, the election is irrevocable unless otherwise provided by law. "(2) An employee who elects to receive benefits from a State or local govern- ment may not receive an. annuity under subchapter II of chapter 83 of this title and benefits from the State or local government for injury or disability to himself covering the same period of time. This provision does not- PAGENO="0240" 234 "(A) bar the right of a claimant to the greater benefit conferred by either the State or local government or subchapter III of chapter 83 of this title for any part of the same period of time; "(B) deny to an employee an annuity accruing to him under subchapter III of chapter 83 of this title on account of service performed by him; or "(C) deny any concurrent benefit to him from the State or local govern- ment on account of the death of another individual. "~ 3374. Assignments of employees from State or local governments. "(a) An employee of a State or local government who is assigned to an execu- tive agency under an arrangement under this subchapter may- "(1) be appointed in the executive agency without regard to the provisions of this title governing appointment in the competitive service for the agreed period of the assignment; or "(2) be deemed on detail to the executive agency. "(b) An employee given an appointment is entitled to pay in accordance with chapter 51 and subchapter III of chapter~ 53 of this title or other applicable law, and is deemed an employee of the executive agency for all purposes except- "(1) subchapter III of chapter 83 of this title or other applicable retire- ment system; "(2) chapter 87 of this title; and "(3) chapter 89 of this title or other applicable health benefits system unless his appointment results in the loss of coverage in a group health benefits plan the premium of which has been paid in whole or in part by a State or local government contribution. "(c) During the period of assignment, a State or local government employee on detail to an executive agency- "(1) is not entitled to pay from the agency; "(2) is deemed an employee of the agency for the purpose of chapter 73 of this title, sections 203, 205, 207, 208, 209, 602, 603, 606, 607, 643, 654, 1905, and 1913 of title 18, section 638a of title 31, and the Federal Tort Claims Act and any other Federal tort liability statute; and "(3) is subject to such regulations as the President may prescribe. The supervision of the duties of such an employee may be governed by agreement between the Executive agency and the State or local government concerned. "(d) A State or local government employee who is given an appointment in an executive agency for the period of the assignment or who is on detail to an executive agency and who suffers disability or dies as a result of personal injury sustained while in the performance of his duty during the assignment shall be treated, for the purpose of subchapter I of chapter 81 of this title, as though he were an employee as defined by section 8101 of this title who bad sustained the injury in the performance of duty. When an employee (or his dependents in case of death) entitled by reason of injury or death to benefits under subchapter I of chapter 81 of this title is also entitled to benefits from a State or local government for the same injury or death, he (or his dependents in case of death) shall elect which benefits he will receive. The election shall be made within one year after the injury or death, or such further time as the Secretary of Labor may allow for reasonable cause shown. When made, the election is irrevocable unless otherwise provided by law. "(e) If a State or local government fails to continue the employer's contribu- tion to state or local government retirement, life insurance, and health benefit plans for a state or local government employee who is given an appointment in an executive agency, the employer's contributions covering the state or local government employee's period of assignment, or any part thereof, may be `made from the appropriations of the executive agency concerned. "~ 3375. Travel expenses. "(a) Appropriations of an executive agency are available to pay, or reim- burse, a Federal or State or local employee in accordance with- "(1) subchapter I of chapter 57 of this title, for the expenses of- "(A) travel and per diem instead of subsistence to and from the assignment location; "(B) per diem instead of subsistence at the assignment location during the period of the assignment; and "(C) travel and per diem instead of `subsistence while traveling on official business away from his designated post of duty during the PAGENO="0241" 235 assignment when the head of the executive agency considers the travel in the interest of the United States; "(2) section 5724 of this title, for the expenses of transportation of his immediate family and of his household goods and personal effects to and from the assignment location; "(3) section 5724(a) (1) of this title, for the expenses of per diem allow- ance for the immediate family of the employee to and from the assignment location; "(4) section 5724(a) (3) of this title, for subsistence expenses of the employee and his immediate family while occupying temporary quarters at the assignment location and upon return to his former post of duty; and "(5) section 5726(c) of this title, for the expenses of nontemporary storage of household goods and personal effects in connection with assignment at an isolated location. "(b) Expenses specified in subsection (a) of this section, other than those in paragraph (1) (C), may not be allowed in connection with the assignment of a Federal or State or local employee under this subchapter, unless and until the employee agrees in writing to complete the entire period of his assignment or one year, whichever is shorter, unless separated or reassigned for reasons beyond his control that are acceptable to the executive agency concerned. If the employee violates the agreement, the money spent by the United States for these expenses is recoverable from the employee as a debt due the United States. The head of the executive agency concerned may waive in whole or in part a right of recovery under this subsection with respect to a State or local government employee on assignment with the agency. "(c) Appropriations of an executive agency are available to pay expenses under section 5742 of this title with respect to a Federal or State or local employee assigned under this subchapter." (b) The analysis of chapter 33 of title 5, United States Code, is amended by inserting the following at the end thereof: "SUBCHAPTERVI-ASSIGNMENTS To AND FROM STATES "Sec. "3371. Definitions. "3372. General provisions. "3373. Assignments of employees to State or local governments. "3374. Assignments of employees from `State or local governments. "3375. Travel expenses." REPEAL OF SPEOIAL AUTHORITIES SEC. 303. The Act of August 2, 1956, as amended (7 U.S.C. 1881-1888), except that the Secretary of Agriculture may continue to make arrangements for the temporary assignment of employees with land-grant colleges or a college or university operated by any State or local government subject to the provisions of this title, and section 507 of `the Act of April 11, 19~5, Public Law 89-10, 79 Stat. 51 (20 U.S.C. 867), and section 314(f) of the Public Health Service Act (42 U.S.C. 246 (f)) (less applicability to commissioned officers of t'h'e Public Health Service) are hereby rei~ealed. SEC. 304. This title shall become effective sixty days after the date of enact- ment of this Act. TITLE IV-GENERAL PROVISIONS DECLARATION OF PURPOSE SEC. 401. T'he purpose of this title is to provide for the general administration of titles I, II, and IV of this Act (`hereinafter referred to as "this Act"), and to provide for the establishment of certain advisory groups. DEFINITIONS SEC. 402. For the purpose of `this Act- (1) "Commission" means the United States Civil Service Commi's'sion; (2) "Federal `agency" means an executive department, military depart- ment, independent establishment, or agency in `the `executive `branch of the Government of the United States, including Government owned or con- trolled corporations; (3) "State" means a State of `the United States, the District of Colum- bia, the Commonwealth of Puerto Rico, and a territory or possession o'f 02-371-68-pt. 1-16 PAGENO="0242" 236 the United States, and includes interstate and Federal-interstate agencies but does not include the governments of the political subdivisions of a State; and (4) "local government" means a city, town, county, or other subdivision or district of a State, including agencies, instrumentalities, and authorities of any of the foregoing and any combination of such units or combina- tion of such units and a State. A "general local government" means a city, town, county, or comparable general-purpose political subdivision of a State. GENERAL ADMINISTRATIVE PROVISIONS SEc. 403. (a) Unless otherwise specifically provided, ;the Commission shall administer this Act. (b) The Commission shall furnish such advice and assistance to State and local governments as may be necessary to carry out the purposes of this Act. (c) In the performance of, and with repeat to, the functions, powers, and duties vested in it by this Act, the Commission may- (1) issue such standards and regulations as may be necessary to carry out the purposes of this Act; (2) consent to the modification of any contract entered into pursuant to this Act, such consent being subject to any specific limitations of this Act; (3) Include in any contract made pursuant to this Act such covenants, conditions, or provisions as it deems necessary to assure that the purposes of this Act will be achieved; and (4) utilize the services and facilities of any Federal agency, any State or local government, any other public or nonprofit agency or institution, on a reimbursable basis or otherwise, in accorda~nce with agreements between the Commission and the head thereof. (d) In the perfomance of, and with respect to the functions, powers, and duties vested in it `by this Act, the `Commission- (1) may collect information from time to time with respect to Stata and local government training programs and personnel administration ira- provement programs and projects under this Act, and make such informa- tion available `to interested groups, organizations, or agencies, public or private; (2) may conduct such research and make such evaluation as needed for the efficient administration of this Act; and (3) shall include in its annual report, a report of the administration of this Act. (e) The provisions of this Act are not a limitation on `existing authorities under other statutes but are in addition to any such authorities, unless otherwise specifically provided in this Act. `REPORTING REQUIREMENTS SEc. 404. A State or local government office designated to administer a pro- gram or project under this Act shall make reports and evaluations in such form, at such times, and containing such information concerning the status and application of Federa'l funds and the operation of the approved program or project as the Commission may require, and shall keep and make available such records as may be required by the Commission for the verification of such reports and evaluations. REVIEW AND AUDIT SEc. 405. The Commission, the head of the Federal agency concerned, and the Comptroller General of the United `States, or any of their duly authorized representatives, shall have access, for the purpose of audit and `examination, to any book's, documents, papers, and records of a grant recipient that are pertinent to the grant received. TERMINATION OF GRANTS SEc. 406. Whenever the Commission, after giving reasonable notice and op- portunity for bearing to the State or general local government concern'ed, finds- (1) that a program or project `has `been so changed that it no longer com- plies with the provisions of this Act; or PAGENO="0243" 237 (2) that in the operation of the program or project there is a failure to comply substantially with any such provision; the Commission shall notify the State or general local government of its findings and no further payments may be made to such government by the Commission until it is satisfied that such noncompliance has been or will promptly be, cor- rected. However, the Commission may authorize the continuance of payments to those projects approved under this Act which are not involved in the non- ~omp1iance. ADVISřRY GROUPS SEc. 407. (a) The following advisory groups are authorized to he established under this Act: (1) The President may appoint, without regard to the provisions of title 5, United States Code, governing appointments in the competitive service- (A) an advisory council to study and make recommendations con- cerning standards of merit personnel administration for personnel systems of State and local governments; and (B) an advisory committee on intergovernmental manpower policy composed of representatives of th~ Federal Government, State and local governments, institutions of higher education and other educa- tional and training organizations, professional organizations, employee organizations, and the general public, to advise on matters of general policy relating to this Act. (2) The Commission may appoint, without regard to the provisions of title :5, United States Code, governing appointments in the competitive service, such advisory committee or committees as it may determine to be necessary to facili- tate the administration of this Act. (b) Members of the advisory council or of `the advisory committees who are not regular full-time employees of the United Star~es, while serving on the busi- ness of the council or committees, including travel `time, are entitled to receive compensation at rates not exceeding the per diem rate for GS-18; and while so serving away from their homes or regular places of `business, members may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code, for individuals in the Government service employed intermittently. APPROPRIATION AUTHORIZATION SEC. 408. There are authorized to be appropriated, without fiscal year limita- tion, such sums as may be necessary for the fiscal year ending June 30, 1968, and for each of the four succeeding fiscal years, to carry out the programs authorized by this Act. REVOLVING FUND SEC. 409. (a) There is established a revolving fund, to be available without fiscal year limitation, for financing training and such other functions as are authorized or required to be performed by `the Commission on a ~eimbursable basis by this Act and such other services as the Commission, with the approval of the Bureau of the Budget, determines may be performed more advantageously through such a fund. (b) The capital of the fund shall consist of any appropriations made for the purpose of providing capital (which appropriations are hereby authorized), and such unexpended balances of appropriations or funds relating to the activities transferred to `the fund and the fair `and `reasonable value of such stocks of supplies, equipment, and other assets and inventories on order as the Commis- sion may transfer to the fund, less `the `related liabilities, unpaid obligations, and * accrued annual leave of employees who are transferred to the activities financed by the fund at its inception. (c) The fund shall be credited with- (1) reimbursements or advance `payments from available funds of the Commission, other Federal agencies, State or local governments, or other sources for supplies and services at rates which will approximate the ex- pense of operations, including the accrual of annual leave, the depreciation of equipment, and `the net losses on property transferred or donated; and (2) receipts from sales or exchanges of property `and payments for losses or damage to property accounted for under the fund. PAGENO="0244" 238 (d) Any unobligated arid unexpended balance in the fund that the Commis-~ sion determines to be in excess of amounts needed for Its operations shall be deposited in the Treasury as miscellaneous receipts. LIMITATIONS ON AVAILABILITY OF FUNDS FOR COST SHARING SEc. 410. Federal funds made available to State or local governments under- other programs may not be used by the State or local government for cost-sharing purpoSes under grant provisions of this Act. State or local government funds used for cost sharing on other federally assisted programs may not be used for cost sharing under grant provisions of this Act. METHOD OF PAYMENT SEC. 411. Payments under this Act may be made in installments, and in ad- vance or by way of reimbursement, as the Commission may determine, with necessary adjustments on account of overpayments or `underpayments. EFFECTIVE DATE OF GRANT PROVISIONS Sec. 412. Grant provisions of this Act shall become effective one hundred and: eighty days following the date of enactment of this Act. TEXT OF PUBLIC SERVICE EDUCATION Acr-H.R. 5989 A BILL To establish fellowships to enable persons in or planning a career in public service at the local, State, or Federal level to pursue graduate programs of education in public affairs, public administration and other related fields; to provide support for the development and strengthening of graduate level programs of public administration and public affairs at institutions of higher education; to provide support to State and local governments for the improvement of public service through short-term train- ing programs for State and local government personnel; and for other purposes Be it enacted by the Senate and House of Representatives of the United States~ of America in Congress assembled, That this Act may be cited a-s "Public Service Education Act". TITLE I-PUBLIC SERVICE FELLOWSHIPS STATEMENT OF PUIIPOSE SEC. 101. The purpose of this title is to improve the quality of government by providing fellowships for graduate study to persons who plan to pursue a career in public -Service in government at the local, State, regional or Federa1~ level. For the purpose of this title, the term "career in public service" means a career as an officer or employee of a local or State government, a regional gov-- ernmental organization established under a compact approved by the Congress of the United States, or the United States, in an executive, administrative or* similar position which requires special competence in the fields of public affairs and public administration, including those which require qualifications in tech- uuical or professional fields. FELLOWSHIPS AUTHORIZED SEc. 102. (a) The Commissioner is authorized to award not to exceed 750 fellowships during the fiscal year ending June 30, 1968, and each of the four- succeeding fiscal years, for up to two years of graduate study leading to a post- baccalaurhate degree for persons who are pursuing or plan to pursue a career in public service. Such fellowships shall be awarded as provided in sections 1O3~ and 104 of `this title and for such periods as the Commissioner may determine, but not to exceed 24 months. (b) In addition to the number of fellowships authorized to be awarded by sub- section (a) of this section, the Commissioner is authorized to award fellowships equal to the number previously awarded during any fiscal year under `this title* but vacated prior to the time to the end of the period for which they were awarded; except that each' fellowship awarded under this subsection shall be for such period of study, not in excess of the remainder of the period for which the fellowship which it replaces was awarded, as the Commissioner- may do-- termine. PAGENO="0245" 239 ALLOCATION OF FELLOWSHIP SEc. 103. The Commissioner shall, in consultation with the Advisory Council on Public Service Education, allocate fellowships under this title to institutions `~" of higher edu~ation with programs approved under the provisions of section 104 (a) for the use of individuals accepted for study a program in accordance `with such standards and priorities as he shall prescribe by regulation. APPROVAL OF PROGRAMS SEc. 104. The Commissioner shall approve a graduate program of `an inStitu- tion of higher education for purposes of this title only upon application by the institution and only upon his finding- (1) that `sučh program will substantially further the objective of improv- ing the quality of education of persons who are pursuing or intend to pursue a career in pablic Dervice. (2) that such program is of high quality and either is in effect or readily obtainable and (3) that only persons who demonstrate a serious intent to pursue or to continue a career in public service will be accepted for study in the program. In approving the applidati'on of institutions the Commissioner shall give pref- `erence to those which are carrying on or have arranged for internship programs for the benefit of persons `pursuing `fellowships under this part. (b) The Commissioner is `authorized to obtain the services of experts and `consultants in accordance with section 3109 of title 5, United States Code, to advise him With respect to the ma'king of grants and contracts and the approving of programs under this title. Experts and consultants employed pursuant to this `subsection may be `compensated or so employed `at rates not in excess of $100 per diem, in'cluding travel time, and may be allowed `while away from their homes or regular pla'ces of business, travel expenses (including per diem in lieu of sub- sistence) as authorized by section 5703, of title 5, United States Code, for persons in Government service employed intermittently. STIPENDS `SEe. 105. (a) Each person awarded `a fellowship under this title shall receive :a stipend of $2,500 for the first `academic year of study, `and $3,000 for `the see- ~ond `such year, plus `an additional amount of $000 for each such year on a'obount of ea~h of his dependents. Where a person awarded a fellowship under this title for Study' at `an institution of higher education pursues `his studies `as a regularly enrolled student at such institution d'ui~ing periods outside `of the regular sessions of the graduate prograni of th'e institution, the Commissioner may make `appro- priate adjustments in his stipeads and allowances for dependents. (b) In addition to amounts paid to perSon's pursuant to subsection (`a) there shall'be paid to the institution of higher educa'tion at which each `such person is `pursuing his `course o'f `study $2,500 per academic year, lbss any amount `charged suc'h person for `tuition `and n'onrefun'dable fees aild deposits. (c) In addition to `the `amount's paid pursuant to' suthseëtion's (a) `an'd (b) of `this section, the `Commissioner may pay to institutions of higher education which carry on or arrange internship programs `at the State, local hr regional level of :government for the benefit of persons pursuing fellowships und'er thiS part an `amount up to $100 per week, for a period not to exceed ten weeks `during each year of fellowship study, for ~a~h fellowship holder `who participates in `such `an internship `prograni. Such `a'm'outs shall be `used to `defray `any sal'ary paid to `fellowship `h'olders `participating in an intership program by t'h'e parti'cij~ating State, loCal or `regional `governmental agen'cy. LIMITATION `SEe. 100. (`a)~ No fellowships `shall `be awarded und'er this title for Study at a `school `or department of `divinity. For purposes of this section the `term "school `or department of `divinity" means an `institution or `department or `branch' of an ~institution whose program is specifically for the~education of students `to prepare them to become ministers of religion or to' enter upon some other religious voCa- tion or to prepare them to teach theological subjects PAGENO="0246" 240 FELLOWSHIP CONDITIONS SEC. 107. A person awarded a fellowship under the provisions of this title shall continue to receive the payments provided in section 105(a) only during such periods as the Commissioner finds that he is maintaining Satisfactory proficiency and devoting full time to study of research in the field in which such fellowship was awarded in an institution of higher education, and is not engag- lug in gainful employment other than such part-time employment in teaching,. reserach, or similar activities related to his training, or as `a participant in au internship or cooperative education program, as has been approved by the Commissioner. APPROPRIATIONS SEC. 108. There are hereby authorized the. appropriatkms to carry out this title, $4,500,000 for the fiscal year ending June 30, 1968; $8,500,000 for the fiscal year ending June 30, 1969; $11,000,000 for the fiscal year ending June 30, 1970,. and each of the two succeeding fiscal year; and such sums for the fiscal year ending June 30, 1973, as may be necesSary to enable persons who have been. awarded fellowships prior to July 1, 1972, to complete their study under such. felh~wshipS. TITLE 11_EDUCATIONAL IMPROVEMENT FOR FEDERAL OFFICERS~ P~wr A-FELLowsHIPs FOR FEDERAL OFFICERS SEC. 201. Chapter 41 of title 5, United States Code, is amended by adding at the end thereof the following: "S. 4119. Award of fellowship to employees. "(`a) During the fiscal year ending June 30, 1968, and each of the four succeed- ing fiscal years, the Civil Service Commission shall carry on a program under which it awards fellowships to employees for one year of graduate study at non- government facilities which are institutions of higher education. "(b) To be eligible for a fellowship uader this section an employee must (1) be in grade 11 to 15, inclusive, of the General Schedule under section 5332, or be employed in `a position of comparable responsibility, as determined by the Commission, and (2) be selected by the agency in or under which employed. (c) Of the fellowshiPs awarded under this section, not less than 60 per centum: shall be for study in postbaccalaureate programs concentrating in the social sciences and which will enhance the effectiveness of Federal executives, adminis- trators, managers, and others on the general supporting staffs of agencies. The remainder of such fellowships shall .be awarded for postbaccalaureate programs concentrating in the sciences, engineering, or other professions to allow Federal professional employees to expand and update their professional knowledge. "(d) The number of fellowships awarded under this section shall not exceed the following percentages of those eligible in the fiscal year ending: Per cei~tum 1. June 30, 1968 25 2. June 30, 1969 3. June 30, 1970 75 4. June 30, 1971 1. 5. June 30, 1972 1. The number eligible shall be determined by the Commission in accordance with the requirements of part (b)(1) of this section. "(e) The Civil Service Commission shall pay each non-Government facility at which a fellow is pursuing his course of study under this section the sum of $2,500 for each such fellows, less any amount charged such person for tuition and nonrefundable fees ~nd deposits. "(f) The head of an agency shall, as authorized by section 4109(a) (1), pay all of the pay (except overtime, holiday, or night differential pay) of `an employee of the agency pursuing a fellowship awarded under this secitOn. The head of an agency shall not make any payments under section 4109(a) (2) which would constitute a duplication of a payment under subsection (e) of this section. Each agency which makes expenditures under section 4109 (a) (2) on account of em- ployees awarded fellowships under this section shall be reimbursed in full for such expen~ditures by the Civil `Service Commission." SEC. 202. (a). The analysis at the beginning of cha~ter 41 of title 5, United States Code, Is amended by adding at the bottom thereof the following: PAGENO="0247" 241 "4119. Fellowship training." (b) Section 4106(a) (1) of `such title is amended by inserting before the period the following: ", but the number of man-years of training for an agency shall not include fellowship training under section 4119". (c) `Section 4112(a) of such title is amended by inserting `after "this chapter" the following: "(other than section 4119)". PART B-SABBATICAL L~&vEs SEc. 211. Ohapter 63 of title 5, United States Code, is amended by adding at the end thereof the following new section: "~ 6325. Sabbatical leaves. "(a) During the fiscal year ending June 30, 1968, `and each of the four succed- ing fiscal years, the Civil Service Commission Shall cari~y on a program under which it authorizes one year sabbatical leaves at full pay for employees as defined in section 2105. "(b) To `be eligible for a sabbatical leave under this section such an employee must (1) be in grade 16 to 18, inclusive, of the General `Schedule under section 5332, or be emptoyed in a position of comparable responsibility, as determined by the Commission, (2) have been such an employee for not less than six years, and (3) have been employed for n~t less than three years in a grade not lower than grade 16 of such `Schedule, or in a position of comparable responsibility, as determined by the Commission. "(c) An emtployee shall be selected for a sabbatical leave `on the basis of appli- cations `submitted by him showing a plan Which he intends to purSue for a one- year program of graduate level Study, travel, reading research, `or a combination thereof. Such an application shall include an estimate of the expenses involved in carrying out the plan. Upon the examination `of such application's, each agency shall select those of its employees to be given a sabbatical leave on the basis of the extent it is anticipated enhancement of the employee's effectiveness and of the overall benefit to the Government. During the period of hi's fellowship, no employee shall engage in any substantially gainful employment or activity other than a's a Federal en~ployee. The number of employees in or under an agency who may be given a sabbatical leave in any year shall be determined by the Civil Service Commission. "(d) The Civil Service Commission shall pay the cost incurred by an employee in carrying out his approved plan, e~cept that such payments shall not exceed $10,000, exclusive of the pay of such employee and, where the plan provides for full-time `study by the employee at any institution of higher eduOation, such institution shall be paid $2,500, less any amount charged the employee for tuition and nonrefundable fees and de~osits. Where less than full-time study is provided for the Commission shall reduce the payment to the institution by an appropriate amount." TITLE Ill-IMPROVEMENT OF EDUCATIONAL QUALIFICATIONS OF STATE AND LOCAL GOVERNMENT OFFICIALS PART A-PUBLIC SERVICE FELLOWSHIPS FOR STATE AND LOCAL OFFICIALS AUTHORIZATION OF APPROPRIATIONS Szc. 30. For the purpose of enabling the United States Civil Service Com- mission (hereinlafter referred tO as the "Commission") to m'ake grants to States under this title, there is authorized to `be appropriated for the fiscal year ending June 30, 108, the sum of $3,000,000; for the fiscal year ending June 30, 1969, the sum of $6,000,000; for the fiscal year ending June 30, 1970, the sum of $11,000,- 000; for the fiscal year ending June 30, 1971, the sum of $15,000,000; for the fiscal year ending June 30, 1972, t'he `sum of $20,000,000. ALLOTMENTS TO STATES Szc. 302. (a) From the sums appropriated under section 201 or any fiscal year, the Oo'mthission shall reserve such amounts, but not in excess of 2 per centum thereof, as it may determine and shall `allot such `amount among the Common- wealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands according to their respective needs for assistance under this part. From the remainder of such sums, the Commission PAGENO="0248" 242 shall allot to each State an amount which bears the same ratio to the amount of such remainder as the product of- (A) the population of the State, and (B) the State's salary index (as determined under paragraph (2), bears to the sum of the corresponding products for all the States. (2) The "salary index" for a State shall be 100 per centum less the product of (A) 50 per centum and (B) the quotient obtained by dividing the average salary paid in the United States to State and local employees eligible for a fellowship under this part by the average salary paid to such employees of the State. The determination of the salary index for a State shall be made by the Commission on the basis of the most recent Satisfateory data available to it. For the purpose of this section, (1) the term "United States" means the 50 states and the District of Columbia, and (2) the term "State" does not include the Common- wealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands. (b) The amount of any State's allotment under subsection (`a) for any fiscal year which the Commission determines will not be required for fiscal year shall be available for reallotment from time to time, on such dates, during such year as the Commission may fix, to other States in proportion to the original allot- ments to such States under subsection (a) for that year, but with such pro- portionate amount for any of such other States being reduced to the extent it exceeds the sum the Commission estimates such State needs and will be able to use for such year; and the total of si,~ch reductions shall `be similarly reallocated among the States whose proportionate amounts were not so reducecL Any amount realloted to a State under this subsection during a year from funds appropriated pursuant to section 301 shall be deemed part of its allotment under subsection (a) for such year. STATE PLANS SEc. 303. (a) Any State which desires to receive grants. under this part shall submit to the Commission a State plan, in such detail as the Commission deems necessary, which- (1) designates a single State agency to act as the sole State agency for administration of the State plan; (2) sets forth a fellowship program under which- (A) the State agency will award fellowships for one year of graduate level study at institutions of higher education, (B) fellowships will be awarded only to employees of the State, or of a political subdivision of the State, whose duties are generally compara- ble to those of Federal employees in grades 11 to 15, inclusive, of the general schedule, under section 5332 of title 5, United States Code, (C) not less than 60 per centum of the fellowships will be awarded for study in graduate programs concentrated in the social sciences and desIgned to enhance the effectiveness of State and local executives, ad- ministrators, managers, and general supporting staffs, and that the re- mainder of such fellowships will be awarded for graduate programs concentrating in sciences, engineering, or other professions and designed to enable scientists, engineers, and other professional employees to ex- pand and update their professional knowledge, (D) the persons awarded fellowships may elect to pursue their fellow- ship programs at any instiution of higher education in a State which wIll accept them, (B) persons granted fellowships will be paid their full salaries during the period of their study, and will be reimbursed for necessary trans- portation expenses and the expenses of the movement of their households, incident to the pursuit of their fellowships, (F) the institution of higher education at which each fellow attends will be paid a supporting grant of $2,500 per annum for each fellow in attendance, less any amount charged such fellow for tuition and non- refundable fees and deposits, (G) the selection of fellows will be based on the needs of the State, as set forth in the State plan, or on the, basis of the relative qualifica- tions of the applicants as determined by standards and methods set forth in the State plan, (H) provision is made for obtaining theparticipation of local govern- ment officials in the program, PAGENO="0249" 243 (I) provision is made for providing reasonable opportunity for both State and local public service personnel to be awarded fellowships, (3) sets forth such fiscal control and fund accounting procedures as may be necessary to insure proper disbursement of, and accounting for, Federal funds paid to the State under this part; and (4) provides for making such reports, in such form and containing such information, as the Commission may reasonably require to carry out its function under this part, and for keeping such records and for affording such access thereto as the Commission may find necessary to assure correct- ness and verification of such reports. (b) The Commission shall approve any State plan and any modification thereof which complies with the provisions of subsection (a). PAYMENTS TO STATES SEC. 304. From the amounts allotted to each State under section 302 the Com- mission shall pay to that State an amount equal to the amount expended by the State in making the payments required by section 302 (a) (2) and (F). Such pay- ments may be made in installments, and in advance or by way of reimbursement, with necessary adjustments on account of overpayments or underpayments. PART B-GRANTS TO STATES FOR SHORT-TERM EDUCATION AND TRAINING AUTHORIZATION OF APPROPRIATION SEC. 311. For the purpose of making grants to assist in the establishment and carrying out of more comprehensive programs of short-term, in-service training for State and local government officials, there is authoriZed to be appropriated for the fiscal year ending June 30, 1968, the sum of $10,000,000 for the fiscal year ending June 30, 1969, for the fiscal year ending June 30, 1970, and each of the two succeeding fiscal years, the sum of $10,000,000. ALLOTMENTS TO STATES SEC. 312. (a) From the sums appropriated for carrying out this part for any fiscal year, the Commission shall reserve such amount, but not in excess of 2 per centum thereof, as it may determine and shall allot such amount among the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands according to their respective needs for assistance under this part. From the remainder of such sums, the Commission shall allot to each State an amount which bears the same ratio to such remainder as the population of that State bears to the population of all. the States. The population of a State and of all the State shall be determined by the Commission on the basis of the most recent satisfactory data available to it. For purposes of this subsection the term "State" shall not include the Commonwealth of Puerto Rico, Guam, American Samoa,ithe Virgin Islands, and the Trust Territory of the Pacific Islands. (b) The amount of any State's allotment under subsection (a) for any fiscal year which the Commission determines will not be required for such fiscal year shall be available for reallotment from time to time, on such dates during such year as the Commission may fix, to other States in proportion to the original allotment to such State under subsection (a) for that year, but with such propor- tionate amount for any of such other States being reduced to the extent it exceeds the sum the Commission estimates each States needs and wilibe able to use for such year; and the total of such reductions shall be similarly reallotted among the States whose proportionate amounts were not so reduced. Any amount reallotted to a State under this subsection during a year from funds appropriated pursuant ~o section 311 shall not be deemed part of its allotment under subsection (a) for such year. STATE PLANS SEC. 313. (a) Any State which desires to receive grants under this part ~hall submit to the Commission a State plan, in such detail as the Commission deems necessary, which- (1) designates a single State agency (which may be the State agency designated for purposes of part A) to act as the sole State agency for ad- ministration of the State plan; PAGENO="0250" 244 (2) provides for establishing and carrying out programs of short-term education or training (including specialized extension courses, management and executive development seminars, and full-time intensive programs of study) such programs to be carried out through contracts or other arrange- ments with public or nonprofit educational institutions; (3) provides for obtaining the participation of local governmental officials in carrying out the program; (4) provides reasonable opportunity for both State and local public service personnel to receive education and training; (5) sets forth such fiscal control and fund accounting procedures as ma~V be necessary to assure proper disbursement of, and accounting for, Federal funds paid to the State (including any such funds paid by the State to any other public agency) under this part; and (6) provides for making such reports, in such form, and containing such information, as the Commission may reasonably require to carry out its func- tions under this part, and for keeping such records and for affording such access thereto as the Commission may find necessary to assure the correctness and verification of such reports. (b) The Commission shall approve any State plan and any modification thereof which complies with the provisions of subsection (a). PAYMENTS TO STATES SEC. 314. From the amounts allotted to each State under section 312, the Com- mission shall pay to that State an amount equal to one-half of the amount ex- pended by the State in carrying out its State plan. Such payments may be made in installments, and in advance or by way of reimbursement, when necessary ad- justments on account of overpayments or underpayments. PART c-ADMINISTRATION OF STATE PLAN; JUDICIAL REVIEW ADMINISTRATION OF STATE PLAN SEc. 321. (a) The Commission shall not finally disapprove any State plan submitted under this title, or any modification thereof without first affording the State agency administering the plan reasonable notice and apportunity for a hearing. (b) Whenever the Commission, after reasonable notice and opportunity for a hearing to such State agency, finds that- (1) that the State plan has been so changed that it no longer complies with the provisions of section 303 (a) or 313 (a), as the case may be, or (2) that in the administration of the plan there is a failure to comply sub- stantially with any such provisions, the Commission shall notify such State agency that the State will not be regarded as eligible to participate in the program affected until the Commission is satisfied that there is no longer any such failure to comply. JUDICIAL REVIEW SEC. 322. (a) If any State is dissatisfied with the Commission's final action with respect to the approval of its State plan submitted under section 303 (a) or 313(a), as the case may be, or with its final action under section 321(b), such State may, within sixty days after notice of such action, file with the United States Court of Appeals for the Circuit in which such State is located a petition for review of that action. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Commission. The Commission thereupon shall file in the court the record of the proceedings on which it based its action as provided in section ~112 of title 28, United States Code. (b) The findings of fact by the Commission, if supported by substantial evi- dence, shall be conclusive; but the court, for good cause shown, may remand the case to the Commission to take further evidence, and the Commission may there- upon make new or modified findings of fact and may modify its previous action, and shall certify to the court the record of the ftrther proceedings. Such new or modified findings of fact shall likewise be conclusive if supported by substan- tial evidence. (c) The court shall have jurisdiction to affirm the action of the Commission or to set it aside, in whole or in part. The judgment of the court shall be subject to PAGENO="0251" 245 review by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28, United States Code. TITLE TV-ASSISTANCE TO INSTITUTIONS OF HIGHER EDUCATION FOR IMPROVEMENT OF PUBLIC AFFAIRS AND ADMINISTRATION PROGRAMS. AUTHORIZATION FOR GRANTS SEC. 401. The Commissioner is authorized to make grants to institutions of higher education to assist them to carry out comprehensive programs, not to exceed five years in duration, to expand or improve the graduate education in public affairs and public administration provided at the institution, including programs designed to renew the professional knowledge of Federal, regional, State, and local governmental officials. Such programs may include the expansion or improvement of graduate instruction in those social sciences which form the basis for effective education programs in public affairs and public administration. Grants under this title may be for projects and activities which are an integral part of such a comprehensive program such as~- (1) planning for the development or expansion of graduate education in public affairs of public administration, (2) increasing and training faculty, (3) teaching, research, curriclulum development, and other related activities, (4) acquisition of additional library resources, (5) research on problems of government, (6) developing and carrying out short-term intensive courses to renew the professional knowledge of public service employees. GRANTS SEC. 402. The Commissioner may make a grant under this title to an institution of higher education to assist it to carry out a program which he determines meets the requirements of section 401. No grants under this title shall exceed 75 per centum of the cost of the expenses incurred by the institution in carrying out the program with respect to which the grant was made or continue for more than five years with respect to any one program. Payments under this title may be made in installments, and in advance or by way of reimbursement, with necessary adjustments on account of overpayments or underpayments. PRIORITIES SEC. 403. The Commissioner shall, in consultation with the Advisory Council on* Public Service Education, establish a System of priorities to be used by him in making grants under this title where the funds available are insufficient to permit him to approve all eligible applications. AUTHORIZATION OF APPROPRIATIONS SEC. 404. For purposes of carrying out this title, there is authorized to be appropriated for the fiscal year ending June 30, 1968, the sum of $5,000,000; for the fiscal year ending June 30, 1969, the sum of $10,000,000; for the fiscal year ending June 30, 1970, the sum of $15,000,000; for the fiscal year ending June 30, 1971, the sum of $20,000,000, for the fiscal year ending June 30, 1972, the sum of $20,000,000, and for the four succeeding fiscal years such sums as may be necessary to enable institutions of higher education to complete programs begun before July 1, 1972. TITLE V-ADVISORY COUNCIL AND GENERAL PROVISIONS ADVISORY COUNCIL ON PUBLIC SERVICE EDUCATION SEC. 501. (a) There is hereby established an Advisory Council on Public Serv- ice Education which shall consist of the Chairman of the Civil Service Commis- sion, who shall be Chairman, of the Advisory Council, the Commissioner of Edu- cation, and ten additional members appointed by the President. Of the ten addi- tion~i members, one shall be an officer or employee of the Federal Government, PAGENO="0252" 246 three shall be officers or employees of State or local governments, and three shall be officers or employees of Institutions of higher education and three shall be representative of the general public. (b) The Advisory Council shall advise the Commissioner and the Commission on policies, procedures, criteria, and regulations implementing this Act, and such members of the Advisory Council who are not regular full-time employees of the United States shall, while serving on business of the Council, be entitled to re- ceive compensation at rates fixed by the President, but not exceeding $100 per day, including travel time; and while so serving away from their homes or regu- lar places of business, they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5 of the United States Code for persons in Government service employed intermittently. DEFINITIONS SEC. 502. As used in this Act- (1) The term "Commissioner" means the Commissioner of Education. (2) The term "Commission" means the United States Civil Service Commission. (3) The term "institution of higher education" has the meaning given it by section 103(b) of the National Defense Education Act of 1958. (4) The term "State" includes the District of Columbia, the Common- wealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, and the Trust Territory of the Pacific Islands. FEDERAL CONTROL PROHIBITED SEC. 503. Nothing contained in this Act shall be construed to authorize any department, agency, officer, or employee of the United States to exercise any direction, supervision, or control over any officer or employee of any State or local government, over the curriculum, program of instruction, administration, or per- sonnel of any education institution or school system, or over the selection of library resources. Mr. ERLENBORN. I notice in section 908 advanced funding is author- ized for NDEA and Higher Education Facilities Act. Would it not be wise to alsO provide for advanced funding in this act? I don't believe it is provided for. Although you can carry over your appropriation for this year you are not authorized to appropriate a year in advance. Mr. SIMPSON. I think this would be good. Mr. ERLENBORN. Is there any reason why it was not included? Mr. Smr~soN. No, I think not. I think the work on the drafting of it went back a good `long time ago. Mr. Hmrr. It is just a happenstance. This bill was brought up last year and introduced on this side and was adopted this year as a title. I think it was an oversight when it was left out. Mr. ERLENBORN. You would say the advanced funding is just as valid here and just as desirable? Mr. Hmrr. Yes. Mrs. GREEN. On page 109, Dr. Simpson, you suggest in asking for educational ceifters that there might be as many as 15 or 20. Is there any reason that these centers have to be outside of institutions of higher education? Mr. Snn'soN. No; I would contemplate them within the institutions of higher education. Mrs. GREEN. The language does not provide this, `does it? Mr. Huirr. In my reading of the bill I don't see the Federal Govern- ment setting up centers any place. PAGENO="0253" 247 Mrs. GREEN. I was thinking of title IV of the Elementary and Secondary Act. Mr. SIMPsoN. It reads- The Secretary is authorized to make grants to institutions of higher education or combination-and so forth. Then- Such grants or contracts may be such as- And then the fourth one is- Centers of study at the graduate or professional leveL So I think it does contemplate them within institutions of higher education Mrs. GREEN. At page 109, it says- The Secretary m~ay make grants to other public or private organizations or contract with public or private agencies or organizations. Mr. SIMPSON. It does say that. I think the idea was to ailo~' roOm for grants for some unique `contributions `that might be made by' schol- arly associations. Mrs. GREEN. What is the purpose, to establish centers in existing colleges and universities or to give authority to do both? Mr. SIMPSON. To give authority to do both, actually. Mrs. GREEN. Your first answer was that they definitely `should be within the college. Mr. SIMPSON. I would contemplate centers as described in my state- ment to be within universities. Mrs. GREEN. You would not object to language that would limit the centers to existing colleges or universities? Mr. SIMPSON. I don't think so. Mr. Ilurrr. Let me say a number of things that can be done in the act. I would see a center as being established at a university. I cannot conceive of it being established anywhere else. Mrs. GREEN. I wish you had been implementing title IV of the Elementary and Secondary Act. Mr. }TUITT. If, `for instance, the Secretary wanted to contract with a learned association like the American Political Science As~ociatio'n to make a study of What kinds `of programs are in operation in the country as a matter of information, he might do that but it would seem inconceivable to me that the Federal Government' would `attempt to establish a center to dO this type of thing. ` Mrs. GREEN. Tinder the Education Professional Development Act we had quite a lot of discussion of what was meant by "short term." I believe we put some limiting language in that act. In subpara- graph 5, what `do you mean by short term? Would this allow `you to set up 2-day institutes? Mr.' SIMPSON. I think it' would.' These are primarily' aimed at short- term sessions for those who teach or those who are engaged in the preparation of people. Mrs. `GREEN. Would you object to language similar to the Educa- tion Professions Development Act? Mr. SmipsoN. I would like to defer to my colleagues.' ` Dr. VALIEN. We would not. ` ` PAGENO="0254" 248 Mrs. GREEN. What do you mean by innovative and experimental?' In your statement you said that many universities are experimenting at the present time. Mr. SmrrsoN. I would simply like to encourage a good deal more of it in combination curriculums between professional schools, for ex- ample, and schools of public affairs in the development of professional or technically trained people for public service employment. I can give you some examples. In schools of public health where there are grants-in-aid available under the authority of the Public Health Service Act, I think much more could be done in the way of building into the curriculum of those schools, courses which would draw on professors and the expertise available in the schools of public administration. Health officers in the country are administering very large-scale public services and they need the kinds of training that are available in our schools of public administration. One or two schools have done this. I would like to see lots more of that kind of experimentation with combinations of curriculum. Mrs. GREEN. D you need the authority to give contracts and grants, and so forth, to profitmaking agencies or organizations and if so, what do you envision here? Mr. SmrpsoN. I would expect that this would be used very rarely. There might be occasions where we would want to contract with a profitmaking organization for the development of teaching materials; for example, where we wanted to try some wholly new approaches. Mrs. GREEN. You do contract with universities for this, too? Mr. SIMPsoN. Yes; we can contract with universities. Mrs. GREEN. I am getting gun shy of all the negotiated contracts plus a fixed fee by the Office of Education and Office of Economic op- portunity. What would be your reaction if we put a provision in the bill that the generosity accorded to the profitmaking institutions in each and every case shall also be extended to any college or university and that any college or university that is doing a bit of work that is similar to the profitmaking shall have the same kind of financial arrangement? Mr. SIMPsoN. I think this would be quite satisfactory. I would hope in this kind of use, and I think it would be rarely used, we would use fixed-price contracts with any private concern. We might thus con- tract for teaching materials, for example, rather than use a cost-plus- fixed-fee type of contract. But I think your suggestion would give me no particular trouble at all. Mrs. GREEN. They ought to operate under the same ground rules. Mr. SmirsoN. Yes. Mrs. GREEN. On page 111, who is going to determine the national need? Will that be up to the Secretary? Mr. Sm~PsoN. Yes; it would. There is authorized here, as you may have noticed, an advisory committee to assist the Secretary in the ad- ministration of this program. We would have to give a good deal of thought to that advisory committee. Whether we could use the ad- visory committee authorized, the general advisory committee on grad- uate education, or a separate one here, I think is a matter we would have to think through. PAGENO="0255" 249 If we did go to a separate one, I think we need representation on the advisory committee of both the consumer, officials of State and local government, leaders of State and local government, who know best what their needs are, and the producers, the educators in our institu- tions of higher education. Mrs. GREEN. How many new advisory committees do we have in the whole act? Mr. SIMPSON. I don't know. One of the advisory committees is `a- consolidation of some existing ones. Mrs. GREEN. I know, but every time we consolidate we do that and then we add two or three others. On page 113, would law students be entitled to 3-year fellowships? Mr. SIMPSON. Yes. I think that there is a possibility that lawyers who are going into a highly specialized field of public law might go on for as much as 3 years of further education for the practice of their specialty. Mrs. G1~EN. Let me turn now to the funding because it would apply, I think, to all of the fellowship programs. You like to announce your fellowship awards in March or April, is that correct? Mr. SIMPSON. That is correct. Mrs. GREEN. You are going to do that this year? Mr. SIMPsoN. Yes, ma'am. Mrs. GREEN.' Suppose you have awarded a fellowship to Mr. X and in October he finds he is drafted, what do you do? Do you freeze the funds and hold the `fellowship for him until he returns? Mr. SIMPSON. No. Now I am out of my field,'really. Dr. VALIEN. Let me try to answer that, Madam Chairman. We announce the allocation of fellowships usually in November or early December. The institution, of course, begins to recruit students and they make their awards generally around the middle of April, the 15th of April, this being the award date. Then, of course, the students are selected for entering the next fall, which is the next September. Up to that time, of course, what we have done, the students who have had fellowships under our present program and have been drafted after being awarded them, they have been permitted to do what we call interrupt their tenure, scholarships `are held for them until they come back. Mrs. GREEN. The money is frozen then? Dr. VALIEN. Yes. Now we are studying this situation at the pres- ent time in our Bureau of Higher Education in order to see if we can meet, of course, the increased urgency which we will now face in view of the new graduate draft policy which has just been announced. Mrs. GREEN. May I just say finally, Dr. Huitt, while I ordinarily would be quite excited about such a program, my enthusiasm for this legislation is considerably dampened by the current draft policy. It seems to me nothing less than sheer hypocrisy to talk about a new program, to try to give fellowships to 800 or a thousand people when we are at the same time saying to 226,000, "You can't continue your graduate education, you are going to be drafted." I think it is the greatest inequity that I h'ave ever seen in the draft system extending back to the Korean conflict and World War II. I do not know about my colleagues, but it would be with great hesi- PAGENO="0256" 250 tancy that I would take any bill to the floor and urge that it be passed for 800 to a thousand fellowships when at the same time we are cutting off the education of over 200,000. I would hope that you people would exercise the resources that are available to you to get a change in draft policy. I would like in an executive session for this subcommittee to consider the advisability of spending our time and efforts and energy on bringing about a change in draft policy rather than spending our time, energy, and efforts on a bill that is going to give fellowships to a thousand while we are denying an education to 200,000. Mr. BURTON. Amen. Mr. QDIE. May I ask one question for some information? Mrs. GREEN. Yes. Mr. Qun~. Congressman Brademas brought up the question of these people being underpaid. Do you have some information on what kind of salaries under the present schedules would be available in public service outside the poverty program? Mr. SIMPSON. Yes. I don't have anything with me. Mr. Qtrn~. In the action agencies, I think they are starting out as directors, the little ones, at $10,000 apiece, which is not exactly under- paid. I understand that in public service this is the problem. Mr. SIMPSON. I think we can furnish for the record some of the entrance level salaries. Mr. Qtrrs. Not only entrance level, because we want to hold them there, too. Mr. SIMPSON. Yes. We can give you the ranges. (The information follows:) PAGENO="0257" STATE SALARY RANGES of Selected Classes of Positions in Employment Security-Public Welfare-Public Health Mental Health-Civil Defense Vocational Rehabilitation DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE Office of State Merit Systems (251) 92-371 0 - 68 - pt. 1 - 17 PAGENO="0258" PAGENO="0259" TABLE OF CONTENTS Page Introduction iii Change in Mean Salaries, 1965 - 1967 v EMPLOYMENT SECURITY CLASSES State Director, Employment Service 1 Chief of Benefits 2 Hearings Referee 3 Local Office Manager 4 Unemployment Claims Deputy 5 Employment Interviewer 6 Director of Employment Security Research and Statistics 7 Labor Force Analyst 8 Employment Counselor 9 Unemployment Insurance Field Auditor 10 PUBLIC WELFARE CLASSES Director of Welfare Research and Statistics 11 Public Welfare Field Representative 12 Public Assistance Casework Supervisor 13 Public Assistance Caseworker 14 Medical Social Work Consultant 15 State Director of Child Welfare 16 Consultant on Foster Care and Licensing 17 Child Welfare Supervisor 18 Child Welfare Worker 19 PUBLIC HEALTH CLASSES Director of Public Health Statistics 20 Director of Public Health Engineering 21 Public Health Engineer 22 Sanitarian 23 Health Officer 24 State Director, Public Health Nursing 25 Public Health Nurse Consultant 26 Public Health Nurse 27 Director of Public Health Education 28 Nutrition Consultant 29 Laboratory Technician 30 (253) PAGENO="0260" 254 TABLE OF C~TENTS (Contd.) Page MENTAL HEALTH CLASSES Psychiatrist 31 Psychologist 32 Psychiatric Social Worker 33 VOCATIONAL REHABILITATION CLASSES Vocational Rehabilitation Director 34 Vocational Rehabilitation Counselor 35 CIVIL DEFENSE CLASSES State Director, Civil Defense 36 Deputy State Director, Civil Defense 37 Administrative Officer 38 Operations Officer 39 Area Coordinator 40 Training and Education Officer 41 Public Information Officer 42 Chemical, Biological and Radiological Defense Officer 43 Communications Officer 44 11 PAGENO="0261" 255 INTRODUCTION This salary survey has been made for the information and use of State and Federal officials concerned with the grant-in-aid programs. The compilation shows salary ranges in pay plans for selected classes of positions in State and local grant-aided employment security, public welfare, public health, mental health, civil defense and vocational rehabilitation programs. The survey includes all States, the District of Columbia, Puerto Rico, and the Virgin Islands. The data for the survey were compiled by the regional representatives, Office of State Merit Systems, in each of the regional offices of the Department of Health, Education, and Wel- fare. The representatives obtained their information from the classification and compensation plans regularly submitted to this Department, and to the Department of Labor, and Department of Defense as merit system plan materials. The definitions for the selected classes reflect typical functions and responsibilities as outlined in the appropriate class specifications of the various States. However, any brief defini- tion of. this kind cannot reflect all the possible variations in assignment of duties. If the prin- cipal duties of a class of position are determined to be. substantially the~ame as those outlined in the corresponding definition, the salary range has been recorded, irrespective of the State's title for the class. If the duties of a position in a particular State are determined not to be sub- stantially within the scope of the definition, salary data for the class in this State have been excluded. A number of the definitions indicate the customary amount of required background ex- perience by use of the following qualifying statements: "some" experience, "considerable" experience, and "extensive" experience. These are, in general, interpreted as follows: Some experience - less than 2 years; considerable experience - 2 to 5 years; extensive experience - over 5 years. The statements in the definitions indicating the usual educational requirements are based primarily upon those stated in the class specifications, but may reflect such educational require- ments maintained as a general practice through the total selection process. Definitions using the term, "This is the entry (beginning) level professional position in the series," should be interpreted as meaning the level of position in which new workers are recruited to fill beginning professional positions and not the trainee level of position. For the purpose of the survey, a trainee position is one in which the employee (a) is appointed to go on educational leave or (b) has the basic education but does not have the experience required for appointment to the journeyman level, is not expected to perform the level or scope of duties out- lined in the "Definition," usually works under close supervision, spends a portion of his time in a formal continuing training program (in contrast to regular orientation and in-service), and is trained for early promotion to the entry level professional class as defined in the "Definition." Where a position is not the trainee level as defined above, but is a beginning level po- sition where tenure is limited and promotion is automatic at the next higher level, footnote (f) is used. The decisions as to what are corresponding classes were made by the regional merit system representatives after studying the State class specifications and applying their additional knowledge to State classification plans and organization. Program representatives participated in the development of the definitions and the determination of comparable classes. The comments of State personnelon previous issuances of the survey have also proved valuable. 111 PAGENO="0262" 256 It should be kept in mind that because of the differences among the States in size and structure of organizations, as well as in programs and in assignment of duties, the data are not precisely comparable from State to State. In addition to differences in duties of related positions among the State and local agencies, there also are differences with respect to job titles, mini- mum qualifications, and the policies and practices in the administration of pay plans. Only the more significant of these differences have been identified in the footnotes to the tables. The standard footnotes are outlined below. In view of the considerable differences noted above, caution should be exercised in using these salary data, particularly in assuming exact comparisons between positions. Standard footnotes (a) through (f) used uniformly throughout the survey report, together with explanatory statements, are as follows: (a) Longevity payments are added to this base pay range. This footnote indicates that longevity payments may be granted above the re- corded maximum salary rate. Cost of living adjustments or other regular supple- mental payments are included in the salary range reported. (b) Appointments are frequently made above the minimum of this salary range. If under established policies appointments are always made above the minimum, the induction rate is shown as the minimum of the range. (c) Minimum qualifications in this State significantly higher. (d) Minimum qualifications in this State significantly lower. In footnotes (c) and (d), the references to significantly higher and lower qualifica- tions apply where the combination of education and experience is higher or lower than that stated in the definition. (e) This range includes the lowest minimum and highest maximum limits used by jurisdic- tions for this class. This relates to cases where the class of position is used by several jurisdic- tions and the salary ranges differ. Where many jurisdictions appoint at rates higher than the recorded minimum, the footnote (b) is also used. (0 After a short period.(6 months-i year) of satisfactory service in this class, the em- ployee is automatically promoted to the next level class which is at a higher pay scale. This footnote refers to entrance classes of positions from which the incumbent is automatically promoted to a higher level at the end of 6 months or a year. Remaining footnotes apply to special items applicable to particular States. iv PAGENO="0263" 257 For reference purposes, we are listing below the mean minimum and mean maximum salaries for the current period and the past two years. 7/1/65 7/1/66 7/1/67 MEAN MEAN MEAN CLASS Mm. -Max. Mba. -Max. Mm. -Max. State Director, Employment Service $10456-13123 $11021-13876 $12054-15324 Chief of Benefits 8969-11275 9440-11876 10257-13004 Hearings Referee 7750- 9737 8204-10339 8795-11174 Local Office Manager 6231- 787i 6604- 8345 7175- 9124 Unemployment Claims Deputy 5237- 6604 5521.- 6968 6000- 7629 Employment IntervIewer 4768- 6009 5100- 6394 5553- 7064 Director Employment Security Research and Statistics 9210-11546 9758-12257 10686-13557 Labor Force Analyst 5805- 7344 6078- 7702 6592- 8351 Employment Cainselor 5569- 7017 5918- 7448 6492- 8173 Unemployment Insurance Field AudItor 5663- 7190 5987- 7570 6550- 8299 Director Welfare Research and StatIstics 8974-11178 9648-12093 10620-13380 Public Welfare Field Representative 7501.- 9349 8000-10008 8846-11124 Public Anlstance Case Work Supervisor 5810- 7762 6180- 8325 6736- 9122 Public Andstance Case Worker 4544- 6049 4890- 6488 5306- 7133 Medical Social Work Consultant 7378- 9278 7958-10026 8635-10964 State Director Child Welfare 9730-11986 10296-12752 11395-14102 Consultant on Foster Care and Licensing 7414- 9290 7946- 9939 8610-10889 Child Welfare SupervIsor 6267- 8284 6658- 8864 7231- 9629 Child Welfare Worker 4913- 6493 5288- 7029 5724- 7630 Director Public Health Statistics 9050-11455 9433-12068 10378-13332 Director Public Health EngIneering 12366-15452 13114-16499 14054-17945 PAGENO="0264" 258 7/1/65 7/1/66 7/1/67 MEAN MEAN MEAN CLASS Mm. -Max. Mm. -Max. Mm. -Max. Public Health Engineer $ 6551- 8145 $ 7013- 8749 $ 7640- 9706 Sanitarian 5142- 6592 5408- 6990 5901- 7721 Health Officer 11145-14325 12276-15532 13596-17078 State Director, Public Health Nursing 8940-11309 9662-12147 10694-13743 Public Health Nurse Consultant 6934- 8784 7333- 9313 8210-10551 Public Health Nurse 4778- 6194 5093- 6640 5798- 7469 Director Public Health Education 8712-11026 9395-11713 10085-12907 Nutrition Consultant 6277- 7973 6726- 8573 7499- 9692 Laboratosy Technician 5052- 6393 5358- 6692 5904- 7S72 Psychiatrist 14199-17375 15498-18549 16816-20765 Psychologist 7115- 8990 7467- 9455 8268-10541 Psychiatric Social Worker 6293- 7980 6674- 8474 7238- 9196 Vocational Rehabilitation Director 11557-13722 12372-14820 13673-16497 Vocational Rehabilitation Counselor 6051- 7712 6465- 8229 6840- 8764 State Director, Civil Defense 11580-13522 11644-12453 12335-13055 Dei*sty State Director, Civil Defense 8621-10721 9359-11543 9979-12474 Administrative Officer 6893- 8819 7450- 9490 7891-10036 Operations Officer 7399- 9338 7789- 9840 8452-10818 Area CoordInator 6610- 8463 7069- 9034 7544- 9638 Training and Education Officer 6423- 8159 6898- 8756 7469- 9S05 Public Information Officer 6638- 8463 7041- 8972 7451- 9489 Chemical, Biological asxi Radiological Defense Officer 7184- 9092 7538- 9567 7759- 9804 Communications Officer 6726- 8210 7063- 8911 7468- 9582 vi PAGENO="0265" 259 STATE DIRECTOR, EMPLOYMENT SERVICE This is highly responsible administrative and. supervisory work involving the direction of the state-wide employment service program and the operation of the local Employment Security of- fices. This class usually requires extensive experience in employment security work and col- lege graduation, or its equivalent. New York 22800-26310 (a) *Wisconsin 16440-21360 *Michigan 16412-20254 (a) *fl.llnojs 15996-22404 Arizona 14868-18072 (a) Pennsylvania 14657-19664 *New Jersey 14590-18970 14520-17424 13973-18354 13800-17556 (a) 13380-17460 (a) 13278-16845 12900-16464 (a) 12840-15420 12636-17680 12612-16908 12612-16104 12576-16056 (a) 12552-16032 (a) 12348-15876 12280-15340 (a) 12176-14805 *Utah 12132-17040 (a) *Tenne~ee 11760-14820 *South Carolina 11555-15010 *Nostjs Dakota 11544-14592 (a) *florida 11520-14400 (a) *Mj,mesota 11400-16224 (a) *~abama 11304-14616 *Mlasou~j 11148-14928 *Rhode Island 11024-13260 (a) *Vfrglnla 10992-14328 Idaho 10812-13128 Montana 10620-13260 (a) *Arkajssas 10500-12900 (a) * West Virginia 10440-13380 Iowa 10200-11400 (a) *VlrglnIslancis 9840-12402 (a) `14ew Hampshire 9780-12040(a) * *Wyomlng 9720-11820 (a) Louisiana 9600-12000 (a) New Mexico 9420-12840 (a) South Dalvta 9300-10800(a) *De~a~e 9180-11340 (a) Puerto Rico 9000-11400 (a) Nebraska 8820-11400 (a) Maine 8580-10452 (a) Kansas 8i60-10416 (a) (a) Lŕngevity payments are added to this base pay range. No comparable class within scope of definition In California, District of Columbia, Indiana, Ohio, Texas. *Alaska *Msryland *No~ Carolina *Oldahoma Massachusetts *Colorado *Oregon *Ve~ont Georgia *Washlngton *Kentucky Hawaii *Mlsslssippl *Connecticut Mean Minimum Salary - 12054 Mean Maximum Salary - 15324 *Salary range revised since last semi-annual survey. PAGENO="0266" 260 -2- CHIEF OF BENEFITS This is responsible administrative and supervisory work involving the direction of the processing - of claims and benefit payments. An employee in this class has direct authority over the ccntrcl office benefit operations, but may have only indirect and very limited authority in regard to local office benefit functions. This class usually requires extensive experience and training in one of the fields of management. College training may be substituted for some of the required experience. *Wlscoreln *Masyland *Oregon *Connecticut Arlrona *Nevada *Rhode island *Washlngton *Mlssisslppi *Fjorjda Massachusetts *Colorado Texas - *Noith Carolina Idaho *Ol'l~}~osna *South Carolina Mean Minimum Salary - 10257 Mean Maximum Salary - 13004 (a) Longevity payments are added to this base pay range. No connparable class within scope of definition in California, Virgin Islands. New York 16655-19590 (a) Pennsylvania 13301-17839 Dlrtrict of Columbia 12873-16905 *jfllnois 12852-18012 *Mlchlgan 12779-16495 (a) *~jaska 1272045264 *JrnUana 1230045120 *New Jersey 12003-15603 *Ohjo 11960-17576 11856-15456 11548-15168 11400-13800 11140-13780 (a) 11088-13488 (a) 11040-13422 11024-13260 (a) 10896-13908 10812-13908 10800-12600 (a) 10782-13653 10608-13536 (a) 10512-12830 10320-13128 (a) 10296-12504 10260-13380 (a) 10111-13172 *~orth Dak,ta 10032-12672 (a) 10020-14040 (a) Iowa 9900-11100 (a:. *h(Jnn~ta 9744-13872 (a) *Minousj 9636-12900 *VlrglnIa 9600-12528 Kentucky 9384-11976 (a) HawaII 9372-11952 (a) Louisiana 9360-11160 (a) *~kansas 9300-11220 (a) *Sout.h Dal~ta 9300-10800 (a) *Ajabama 9264-11304 *Tennessee 9060-10800 *Vermo,jt 8996-12402 West Virginia 8940-11580 Montana 8880-11100 (a) Georgia 8544-11436 *Dejaware 8460-10380 (a) Nebraska 7980-10320 (a) *Wyomlng 7980.. 9180 (a) *New Hampshire 7895- 9835 (a) Kansas 7764- 9924 (a) Maine 7592- 9230 (a) New Mexico 7560-10320 (a) Puerto Rico 6600- 7800 (a) *Salary range revised since last semi-annual survey. PAGENO="0267" 261 -3- HEARINGS REFEREE This is responsible work preparing, conducting, and deciding quasi-judicial hearings, involving questions of statutory compliance, claims, assessments, and regulation violations, in issues be- tween State departmentsand outside parties. Decisions are subject to review of an administra- tive appellate body or of courts. This class usually requires knowledge of rules of quasi-judicial procedures and evidence, of the jurisdictional rules of procedure of administrative hearing agencies, and of Federal and State employment security statutes. This class usually requires college graduation and responsible experience in labor or industrial relations, public *welfare administration, law, or enforcement of Federal or State labor laws, or any equivalent combination of experience and training. Some States require graduation from law school or admission to the bar. *Callfornia 15276-18576 *Mlchigan 12779-16495 (a) New York 12140-14505 (a) 11916-14304 *Wjsconsln 11856-15456 District of Columbia 10927-14338 *Ohio 10400-14768 *J.ndjana ~.. 10320-12840 Arizona 10056-12216 (a) *Nostji DaIs,ta 10032-12672 (a) Idaho 8472-10296 Iowa 8400- 9600 (a) 8280-11580 (a) *Wyomlng 8280- 9480 (a) Montana 8160-10140 (a) *Washlngton 8136-10380 *VIrglnla 8040-10512 Nebraska 7980-10320 (a) *~&jabama 7944- 9924 *Florida 7920-10080 (a) *New Hampshire 7895- 9835 (a) *Maryland 7887-10360 *Vermont 7878-10790 *Delisyare 7800- 9540 (a) Kansas 7392- 9456 (a) *Oklahoina 7380- 9720 (a) West Virginia 7200- 9420 Kentucky 6996- 8940 (a) New Mexico 6900- 9420 (a, d) Louisiana 6900- 8400 (a, d) 6900- 8280 (a) *Mjssouri 6864- 9180 Texas 6624- 8076 Maine 6240- 7592 (a) Puesto Rico 5100- 6060 (a) Mean Minimum Salaiy - 8795. Mean Maximum Salasy - 11174 (a) Longevity payments are added to this base pay range. (d) Minimum qualifications in this State significantly lower. No comparable class within scope of definition in Connecticut, Virgin Islands. Pensssylvsnia *New Jersey Hawaii *Oregon Massachusetts *Nevath *Rhocle Jsland Mississippi *South Carolina *Colorado *South Dak,ta *Minnesota *Tennessee Georgia *Nosth Carolina 9960-13920 9923-13301 9875-12839 9372-11952 (a) 9300-11400 9110-11497 9083-11040 9074-10972 (a) 8952-11580 8846-11555 8724-11136 (a) 8700-10200 (a) 8664-12336 (a) 8640-10320 8544-11436 8520-10848 (a) *Salary range revised since last semi-annual survey. PAGENO="0268" 262 LOCAL OFFICE MANAGER This is administrative and supervisory work involving the management of one of the smallest local employment security offices excluding sub-offices and itinerant stations. In addition, an employee in this class usually spends considerable time performing the duties of the regular Employment Security Interviewer or Deputy. This class usually requires graduation from high school plus considerable experience in employment service or closely related work. 9108-10932 8952-10860.. 8825-10670 (a) 8700-10200 (a) 8652-10512 8499-10777 8484-11004 8280-11580 (a,c) 8160-10080 (a) 8124-10320 (a) 8100-10332 (a) 7887-10360 7800- 9540 (a) 7752- 9888 7737-10059 (c) 7692-10956 (a) 7560- 9420 "Colorado 7536- 9624 (a, c) *flflnois 7524..10548 7512- 9120 (a, g) `lOregon 7500- 9300 *Vermont 7410-10088 Pennsylvania 7407- 9923 Idaho 7320- 8904 7212- 9252 Georgia 7032- 9420 *Kentucky 6996- 8940 (a) *Michigan 6911- 8728 (a) *Florjda 6900- 8700 (a) *New Hampshire 6900- 8680 (a) 6900- 8280 (a) *North Dakota 6888- 8712 (a) Montana 6780- 8520 (a) `I4vyomlng 6780- 7980 (a, c) *South C~rol1na 6767- 8846 *Vizgsnsa 6720- 8784 *Oklaboma 6600- 8700 (a) Iowa 6600- 7800 (a) *Olilo 6552- 9776 *BJ~de Island 6370- 7722 (a) *Tennessee 6360- 7800 Louisiana 6300- 7800(a) Maine 6240- 7592 (a, c) Texas 6204- 7560 West Virginia 6120- 8040 6084- 7944 (C) New Mexico 6000- 8280 (a) Virgin Islancis 5940- 6984(a) *Mlssourj 5928- 7932 Nebraska 5880- 7560 (a) Kansas 5496- 7044 (a) Puerto Rino 5100- 6060 (a) (a) Longevity payments are added to this base pay range. (c) Minimum qualifications in this State significantly higher. (g) Two positions, one applicable to employment service and one to unemployment Insurance. No comparable class within scope of definition in District of Columbia. *Ajaska *Cajjfornja New York *South Dakota *Nevada Massachusetts *Wlsconsin *Utah *Connecticut *Nosth Carolina Hawaii *Maiyland *Delawa.re *Washington *New Jersey *Minnesota *Indlana Mean Minimum Salary - 7175 Mean Maximum Salary - 9124 *Salary range revised since last semi-annual survey. PAGENO="0269" 263 UNEMPLOYMENT CLAIMS DEPUTY This is technical work involving the non-monetary determinations on unemployment insurance claims including the adjudication of questionable or contested claims. An employee in this class may supervise claims clerks in the processing of the more routine claims. A working knowledge of unemployment compensation laws and related labor laws and regulations as well as of labor relations and employment problems is required. This class usually requires graduation from high school and considerable training and experience. College training may be substituted for some of the required experience. Hawaii *Michigan *New Hampshire *Vlrgmsa Pennsylvania *New Jersey *florjda *Utah New Mexico West Virginia *Wyomlng Iowa Maine *South Dakota *Dela~yare Louisiana *Arlcansas Texas *Ohio *Oklahoma Kentucky *Minourj Nebraska Kansas *Puerto Rico Mean Minimum Salasy - 6000 Mean Maximum Salasy - 7629 (a) Longevity payments are added to this base pay range. (is) Appointments are frequently made above the minimum of this salasy range. (c) Minimum qualifications in this State significantly higher. (J) Requires one year experience as trainee. No comparable clan within scope of definition in Noith Carolina, Virgin islands.. 6048- 7716 (a) 6013- 7496 (a) 5980- 7558 (a) 5880- 7680 5803- 7772 5774- 7508 5760- 7200 (a) 5652- 7896 (a) 5520- 7560 (a) 5520- 7200 5520- 6720 (a) 5520- 6600 (a) 5408- 6552 (a) 5400- 6900 (a) 5400- 6600 (a) 5280- 6480 (a) 5280- 6300 (a) 5088- 6204 4992- 7384 4980- 6600 (a) 4980- 6360 (a) 4884- 6540 4800- 6180 (a,b) 4740- 6060 (a) 4140- 5040 (a) 7272- 8724 *Minissippi 7212- 9252 *Wisconsin *Masyland District of Columbia *California *New York *Colorado *fflinols *South Carolina *Norl± Dakota *Vei.snont *Nevacja *Connectlcut Georgia *PJmcje Island *Tenn~see Massachusetts *ft.jabama Idaho *Indiana *Oregon Montana Arizona 7200- 9420 7170- 9417 (a) 7068- 9183 7008- 8520 6967- 8135 (a,j) 6840- 8724 (a, c) 6840- 8640 6767- 8846 6576- 8316 (a) 6552- 8840 6466- 7850 6400- 7840 (a) 6372- 8544 6370- 7722 (a) 6360- 7800 6349- 8034 6348- 8268 6324- 7692 6300- 7920 6300- 7860 6180- 7800 (a) 6180- 7512 (a) *Washington 6120- 7440 *Mlnnesota 6072- 8664 (a) *Salary.range revised since last semi-annual survey. PAGENO="0270" 264 -6- EMPLOYMENT INTERVIEWER Mean Minimum Salasy - 5553 Mean Maximum Salasy - 7064 (a) Longevity payments are added to this base pay range. (b) Appointments are frequently made above the minimum of this salasy range. (d) Minimum qualifications In this State significantly lower. (e) This range includes the lowest minimum and highest maximum limits used by Jurisdictions for this class. (f) After a shost period (6 months - 1 year) of satisfactory service in this class, the employee is automaticaily promuted to the next level class which is at a higher pay scale. (J) Requires one year experience as trainee. No comparable class within scope of definition in District of Columbia. This is the professional entry position in the Interviewer series and involves interviewing appli- cants for employment or interviewing employers seeking workers through the State employment service offices. The duties may include taking unemployment insurance claims. The work pri- marily involves determining the work qualifications of applicants and in most instances placing them in suitable employment. A working knowledge of employment service practices, State and Federal employment laws, the Unemployment Compensation Act, Dictionary of Occupational Titles, and occupations in industry and business is needed for satisfactory performance, but may be obtained after appointment. This class usually requires graduation from high school and considerable training and experience, some of which shall have been in related fields, or gradua- tion from a college. *New York *Caljfornia *Wi~onsin *fllinois *Colorado *Michigan *Oregon *Nost]~ Dakota *Connecticut *Maryland *Nojth Carolina *Washington Pennsylvania *Vermont Georgia *New Jersey Iowa *JtJ,ode Island Idaho *Utah *Misslssippl Montana ... *Arizona 7764- 9324 6967- 8135 (a,J) 6672- 7368 (f) 6648- 8688 6600- 8340 6204- 7920 (a) 6072- 8664 (a) 6013- 7496 (a) 6000- 7200 5988- 7572 (a) 5960- 7160 (a) 5900- 8562 5866- 7125 5832- 7380 (a) 5832- 7080 5803- 7772 5798- 7774 5784- 7752 5774- 7508 5760.' 6900 (a) 5746- 6968 5736- 6972 5652- 7896 (a) 5&40~. 7248 5640- 7080 (a) 5592- 6180 (a) Massachusetts 5590- 7072 5520- 7560 (a) *indlana 5520- 6900 `lOhic 5491- 8112 *Vlrginia 5400- 7032 *South Dakota 5400- 6900 (a) *Dejaware 5400- 6600 (a) *Tennessee 5340- 6720 Louisiana 5280~. 6480 (a) Arl