PAGENO="0001" HIGHER EDUCATION AMENDMENTS OF 1968 ~ ~b 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. MARCH 1, 4, 5, 6, 7, AND 8, 1968 PART 2 Printed for the use of the Committee on Education and Labor CARL D. PERKINS, Chairman U.S. GOVERNMENT PRINTING OFFICE 92-371 WASHINGTON : 1968 PAGENO="0002" COMMITTEE ON EDUCATION AND LABOR CARL D. PERKINS, Kentucky, Chairman EDITH GREEN, Oregon FRANK THOMPSON, JR., 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 WILLIAM H. AYRES, Ohio ALBERT H. QUIE, Minnesota CHARLES E. GOODELL, New York JOHN M. ASHBROOK, Ohio ALPHONZO BELL, California OGDEN R. REID, New York EDWARD J. GURNEY, Florida JOHN N. ERLENBORN, Illinois WILLIAM J. SCHERLE, Iowa JOHN DELLENBACK, Oregon MARVIN L. ESCH, Michigan EDWIN D. ESHLEMAN, Pennsylvania JAMES C. GARDNER, North Carolina WILLIAM A. STEIGER, Wisconsin SPECIAL SUBCOMMITTEE ON EDUCATION EDITH GREEN, Oregon, Chairman ALBERT H. QUIE, Minnesota OGDEN R. REID, New York EDWARD J. GURNEY, Florida JOHN N. ERLENBORN, Illinois MARVIN L. ESCH, Michigan JAMES C. GARDNER, North Carolina 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 (u) PAGENO="0003" CONTENTS Hearings held in Washington, D.C.: Page March 1, 1968 513 March 4, 1968 627 March ~, 1968 669 March 6, 1968 705 March 7, 1968 761 March 8, 1968 825 Statement of- Allen, Dr. John, president, University of South Florida, on behalf of National Commission for Cooperative Education 733 Barich, Dr. Dewey, president, Detroit Institute of Technology, De- troit, Mich., on behalf of the Commission, on Cooperative Education 728 Becker, Joseph, director of information sciences for the Interuniversity Communications Council, Inc., accompanied by Dr. James Miller, vice president of Educom 863 Brewster, Dr. Kingmari, president, Yale University 548 Cain, John L., Engineering Extension Service, Auburn University, Auburn, Ala.; past chairman, Cooperative Education Division, NCCE, on behalf of the Cooperative Education Association, ac- companieci by George Miller, president-elect of the Cooperative Education Association 716 Fellows, James, director of research and development, National Asso- ciation of Educational Broadcasting 832 Green, Harry G., president, United Business Schools Association, ac- companied by Richard A. Fulton, executive director and general corn sd; and Murray T. Donoho, president, Strayer Junior College, Washington, D.C 852 Harrington, Dr. Fred, president, University of Wisconsin 524 Herlong, IFIon. A. S., Jr., a Representative in Congress from the State of Florida 705 Hershey, Lt. Gen. Lewis B., Director of Selective Service 521 Kirkpatrick, John I., College Entrance Examination Boards 802 Kugler, Dr. Israel, president, United Federation of College Teachers, New York City 748 Lamb, Dr. Luke F., director of educational media of the Oregon State Board of Higher Education, on behalf of th~ National Association of Educational Broadcasters 844 Maloney, Frank E., dean of law, University of Florida; chairman, AALS Committee on Government Relations, on behalf of AALS, accompanied by Michael H. Cardozo, executive director, AALS - - 706 Marshall, Alan D., president, United Student Aid Fund, accompanied by Edward A. MeCade, Washingtoi~ counsel for United Student Aid Fund 684 Meaney, Dr. John W., professor of communications arts and assistant to the academic vice president for educational media, accompanied Harold Wigren, president of the Joint Council on Educational Telecommunications, University of Notre Dame 857 Megel, Carl J., director of legislation, American Federation of Teach- ers, AFL-CIO 746 Miller, Dr. John, dean, Graduate School, Yale University ~50 Mink, Hon. Patsy T., a Representative in Congress from the State of Hawaii 761 Murphy, Robert J., Jr., president, Knickerbocker Federal Savings & Loan Association, New York, on behalf of the National League of Insured Savings Association 696 (III) PAGENO="0004" Iv Statement of -Continued Patman, Hon. Wright, a Representative in Congress from the State of Page Texas 669 Proest, George, executive director, Commission on Cooperative Education 740 Purdy, Allan W., chairman, National Student Financial Aid Council; director, student financial aids, University of Missouri, accompanied by panel 764 Reeher, Kenneth R., executive director, Pennsylvania Higher Educa- tion Assistance Agency, accompanied by panel 790 Ryan, Hon. Wffliam F., a Representative in Congress from the State of New York 784 Sanders, Edward, College Entrance Examination Board 801 Stokes, Rembert E., president, Wilberforce University, on behalf of the National Commission on Cooperative Education 724 Strickler, Dr. Woodrow, acting president, University of Louisville___ 825 Trytten, Dr. Merriam H., president, Scientific i\'lanpower Commission_ 514 Vetter, Mrs. Betty M., executive director, Scientific Manpower Commission 517 Walker, Charles E., executive vice president, American Banker Association, accompanied by James E. Smith, associate Federal legislative counsel; Edward Garnion, a special assistant to the executive vice president; and Lawrence Banus 627 White, Mrs. Juanita Greer, member, American Association of Univer- sity Women, and chairman, Committee on International Fellow- ships & Awards, accompanied by Mrs. Alison Bell, staff associate, legislation 656 Witherspoon, John, manager of broadcasting services, San Diego State College, California, on behalf of National Association of Educational Broadcasters 836 Prepared statements, letters, supplemental materials, etc.: Abbott, Frank C., executive director, Colorado Commission on Higher Education, letter to Chairman Green, dated February 27, 1968--- 899 Allen, John S., president, University of South Florida, prepared state- ment of Betts, Hon. John B., a Representative in Congress from the State of Ohio: Letter to Chairman Green, dated March 4, 1968 876 "A Plan for Graduate Students Facing the Draft," Extensions of Remarks, Congressional Record, February 26, 1968 (enclosure) 876 Letter to Lt. Gen. Lewis B. Hershey, Director, Selective Service System, dated August 2, 1967~ 876 Letter from J. L. Blackwell, Colonel, GS, Office, Chief of Legis- lative Liaisons, dated August 7, 1967___ 878 Letter from John E. Lingo, Colonel, USAF Congressional Inquiry Division, Office of Legislative Liaison, dated September 7, 1967- 879 Letter from James B. Patten, Commander, U.S. Navy, Head, Enlisted Programs Branch, Recruiting Division, dated August 1, 1967 879 Letter from F. J. Frazer, Colonel, U.S. Marine Corps, Assistant Director of Personnel, dated August 11, 1967 879 Letter from Lewis B. Hershey, Director, Selective Service System, dated August 30, 1967 880 Letter from Thomas D. Morris, Assistant Secretary of Defense, dated August 30, 1967 880 Brademas, Hon. John, a Representative in Congress from the State of Indiana, "New Draft Rules Anger Graduates-Confusion and Resignation Also ~ound-~'IinOrity Is Seeking To Defy Law," article from New York Times, printed in Congressional Record of March 5, 1968 527 Cain, John L., past chairman, Cooperative Education Division, American Society for Engineering Education, and James Godfrey, president, Cooperative Education Associations: Joint statement 71~ Preliminary report of the Goals of Cooperative Education Com- mittee, Cooperative Education Division, American Society for Engineering Education, presented at the 1968 conference 719 PAGENO="0005" V Prepared statements, letters, supplemental materials, etc.-Continued Cardozo, Michael H., executive director, Association of American Law Schools: Letter to Gen. Lewis B. Hershey, Director, Selective Service Page System, dated March 1, 1968 712 Prepared statement of 714 "Selective Service," excerpt from AALS newsletter, February 12, 1968 711 Dawson, J. D., consultant for National Committee for Cooperative Education, letter to Hon. Albert H. Quie, dated March 19, 1968 - 743 Gardner, Neely, chairman, California Association for Public Adminis- tration Education, letter to Chairman Green, dated February 15, 1968 895 Green, Hon. Edith, chairman of the subcommittee, letters, statements, and articles bearing on the draft 594 Green, Harry G., president, United Business Schools Association: Involvement of proprietary business schools with Federal pro- grams (memo) 855 "Supply and Demand Factors Affecting Vocational Education Planning," excerpt from final report, contract No. OE-5-85- 068 856 "The Job's the Thing," reprint from "American Education"_ - - - 856 Improving Access to Information-A Recommendation for a National Library-Information Program-Report of the Ad Hoc Joint Com- mittee on National Library-Information Systems (CONLIS) 883 Kennedy, Hon. Edward M., Senator from the State of Massachusetts, speech, from the Congressional Record of February 28, 1968 579 Levi, Julian H., University of Chicago, letter to Chairman Green, dated February 15, 1968 900 Lyman, Richard W., vice president and provost, Stanford University, letter to Chairman Green, dated April 2, 1968 897 McFarland, Stanley J., testimony in behalf of the National Education Association of the United States 666 McGarry, Mrs. Barbara D., executive director, the American Parents Committee, Inc., letter to Chairman Green, dated March 21, 1968~_ 894 Megel, Carl J., director of legislation, American Federation of Teach- ers, AFL-CIO, prepared statement of 747 Mink, Hon. Patsy T., a Representative in Congress from the State of Hawaii, statement of 761 Montgomery, Edison, director of communications program, Univer- sity of Pittsburgh, telegram to Hon. Elmer J. Holland, dated March 22, 1968 899 Mumford, L. Quincy, Librarian of Congress, letter to Chairman Green, dated February 15, 1968 894 i\'Iurphy, Robert J., president, Knickerbocker Savings & Loan Associa- tion, on behalf of the National League of Insured Savings Associa- tions, prepared statement by 699 National Commission on Cooperative Education: Colleges and universities offering cooperative educational pro- grams 753 Amendments to be proposed to H.R. 15067 757 Pepper, Hon. Claude, a Representative in Congress from the State of Florida, statement of 872 Petrie, Richard W., executive director, Louisiana Higher Education Assistance Commission, letter to: Chairman Green, dated March 22, 1968 810 Guaranteed student loan program, March 11, 1968 (table), en- closure 812 Purdy, Allan W., chairman, National Student Financial Aid Council; and director, student financial aids, University of Missouri, pre- pared statement of 781 Rampton, Hon. Calvin L., Governor of the State of Utah; chairman, Education Committee, National Governors' Conference; chairman, Education Commission of the States, prepared statement of 881 Reeher, Kenneth R., chairman, National Conference of Executives of Higher Education Loan Plans, statement by 791 PAGENO="0006" VI Prepared statements, letters, supplemental materials, etc.-Continued Ryan, Hon. William F., a Representative in Congress from the State Page of New York, statement of 786 Sanders, Edward, vice president, college board, director, Washington office, College Entrance Examination Board, letter to Chairman Green, dated March 5, 1968 896 Scheiber, Walter A., president, Fels Institute Alumni Association, prepared statement by 89~ Stever, H. Guyford, president, Carnegie-Mellon University, letter to Hon. Elmer J. Holland, dated March 21, 1968 900 Stokes, Robert E., president, Wilberforce University, member National Commission for Cooperative Education, prepared statement oL - _ 726 Summary of recommendations in college entrance examination board study with comments of Office of Education 813 Sutton, Thos. W., director of financial aid, University of Miami, letter to Chairman Green, dated February 26, 1968 902 Resolutions passed and rejected by FASFAA and SASFAA enclosed 903 Walker, Charles E., executive vice president, American Bai~kers Association: Rates of return to lenders on guaranteed student loans 633 Bond yields and interest rates (chart) 634 Walker, Eric A., president, Pennsylvania State University, letter to Hon. ElmerJ. Hollavd, dated March 20, 1968 899 Wanlass, Lawrence C., president, College of the Virgin Islands, letter to Chairman Green, dated February 13, 1968 912 Weitzel, Frank H., Assistant Comptroller of the United States, letter to Chairman Green, dated February 27, 1968 906 Witherspoon, John, manager, broadcasting services, San Diego State College, California: Existing Oregon educational broadcasting microwave routes (fig. 30) 843 Midwest microwave system (fig. 13) 842 Midwest system channelizing diagram (fig. 12) 841 Wurf, Jerry, international president, American Federatiop of State, County, and Municipal Employees, AFL-CIO, letter to Chairman Green, dated February 26, 1968 911 Zablocki, Hon. Clement J., a Representative in Congress from the State of Wisconsin, prepared statement of 870 PAGENO="0007" HIGHER EDUCATION AMENDMENTS OF 1968 FRIDAY, MARCH 1, 1968 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR, TVa$/tingtom, D.C. The subcommittee met at 10 a.rn., pursuant to recess, in room `2175, Ray'burn House Office Building, Hon. Edith Green (chairman of the subcommittee) presiding. Present: Representatives Green, Burton, Thompson, Scheuer, Quie, Brademas, Reid, Erlenhorn and Esch. Present also: Representatives Mink, Ayres, Bell, and Steiger. Staff members present: William F. Gaul, associate general counsel; Charles R. Radcliffe, minority counsel for education. Mrs. `GREEN. The subcommittee will come to order for the further consideration of the Higher Education Act of 1968. In this legislation the `administration has made various recom- mendations in regard to facilities for graduate education as well as undergraduate education. Recommendations have also been made in terms of graduate fellowships and in other programs affecting the graduate schools around the country. The members of this committee thought that they needed more in- formation in regard `to the impact of the current draft policy on graduate education, and it is for this reason that the subcommittee is turning its attention this morning to the impact of the current draft policy on graduate schools. May I say that I have a tremendously high regard for the chair- man of the Armed Services Committee and the members of the Armed Services Committee. The members of this committee recog- nize very clearly that this legislation is under their jurisdiction. We have no in'tention of trying to take over this jurisdiction, but we do need to have information on the draft policy in order tha't we c'an m'ake informed judgments on `the recommendations that have been made `by `the administration concerning the graduate education. I am going to ask all of `the people who are here to testify before the subcommittee to come together to the `table. I think perhaps the committee then will be able to gain the greatest amount of information. We are very pleased that General Hershey has agreed this morning to come and to explain his views on `the impact of `the `draft policy on the graduate schools and on graduate education. General Hershey will be accompanied `by Colonel Frank and Colonel Jensen. May we ask that you take places there at tha't table. I will ask the staff to get some additional chairs down `there, too. (513) PAGENO="0008" 514 We also have with us this morning Dr. Trytten, who appeared before the subcommittee a short time ago, and who was one of the main advisers on draft policy during the Korean war. Dr. Trytten will be accompanied by Mrs. Vetter. I wonder if I might ask them to also come to the table. Then we also are pleased that Dr. Fred Harrington, president of the University of Wisconsin, and former president of the National Association of Land-Grant Colleges, has been able to come to Wash- ington today. Dr. Harrington, we are delighted you did not get caught in the snow. We are so pleased you have come this morning to give us the benefit of your views. If the snow at La Guardia Airport permits, we will, as soon as possible, have Dr. Kingrnan Brewster, the president of Yale University. As a method of procedure, I will ask Dr. Trytten to start with his statement. He appeared before the committee and following that wrote a statement explaining what he thought the greatest impact was going to be and what some possible alternatives might be. Following that I will ask General Hershey to present the material he has and then we will call upon other members of the panel. Dr. Trytten, will you proceed. STATEMENT OP DR. MERRIAM H. T1~YTTEN, PRESIDENT, SCIENTIFIC MANPOWER COMMISSION Mr. TRYr2EN. Thank you, Madam Chairman. I am glad to do that. May I also say I am happy to have the opportunity to appear at the same time with General Hershey whom I have Iniown over the years, going all the way back to the early days of World War II. I have had some very interesting relationships with him. During that time, I might say that my admiration for him has grown over the years and also for the legislation which governed and under which he administered the Selective Service System. What I propose to state here are some personal impressions of the effect of this present policy growing largely out of the more detailed and statistical presentation which Mrs. Vetter will make later on. What I will try to do is to relate some of the prime groups and institutions that will be affected in this way. First, I want to talk about how this will affect occupational deferments. This goes a little outside the graduate school but I think it is related definitely to it and I want to start with that. Since the immediate impact on college graduating men will affect only those graduates emerging from college at the end of the first semester of the present school year (who will be immediately liable for induction), the probable major impact will be on those whose occupational deferment will terminate as a result of the newly estab- lished policy. This group numbers probable some 100,000 or less. There are about 327,000 men now holding occupational deferments. However, about 40,000 of these are persons in training status as apprentices, several thousand are junior college students or trainees and it is likely that these will be considered as post high school stu- dents and be covered by the policy of deferring all college students. PAGENO="0009" 515 About half of the above number of 327,000 are not deferred because of critical occupations or essential activities and are probably de- ferred because of community hardship. There remain about 100,000 who were deferred because of their critical occupations and/or essential activities and will be no longer deferrable for that reason. These are generally persons of professional training (engineers, scientists, teachers, structural linguists, computer technologists, and so forth). They will no doubt promptly be reclassified as available for induc- tion and will fill the substantial draft calls of the months remaining in the fiscal year. Because of the heavy draft calls of 1966, the re- placement of these men now having served 2 years will demand high calls in the rest of this fiscal year. Thus, most of these men now in occupational deferment will prob- ably be reclassified in 1-A, and immediately inducted because they are older than the present age of call. How it will affect current graduates: The graduates emerging from college at the midyear commence- ments are in a particularly exposed position if they are in the older age brackets. The average age of induction at present is about 20.5 years. However, those occupationally deferred up to now who will be re- classified will be inducted first probably and will raise the average age of induction. As indicated above, the number in this category will probably not satisfy the aggregate demand for the remainder of fiscal 1968. It is probable, therefore, that midyear graduates will almost surely be reached by July 1. Certainly those who are older will be reached before July 1. In particular, master's degree recipients and doctoral graduates at midyear commencements will be especially likely to be inducted. The number of these will not be large enough to affect greatly the manpower equation for total inductions but, since they are likely to be in the upper age brackets, they will be reached early. How it will affect June graduates: Draft calls in fiscal 1969, beginning in July, have been forecast by the Department of Defense by implication based on their budget re- guests as averaging some 24,000 per month. It is safe to say that any changes in respect to calls will very prob- ably not be less and will very likely be more unless the present war situation changes in presently indiscernible fashion. Because of the likelihood that the pool of available inductees arising from the ces- sation of occupational deferments will have been absorbed and will therefore become a minor element, college graduates, and especially those graduating at the master's or doctoral levels, will be the pre- dominant pool. There will be about 320,000 altogether. Since oldest will be called first, the higher degree recipients will presumably be called first. Of the 7,000 doctoral recipients who will be under 26 years of age, probably these will be called early in the year-to be followed by older college graduates and master's degree recipients. PAGENO="0010" 516 It appears that at least 80 percent of degree recipients will be called among those liable for induction. Subsequent years: If present policies persist, the situation in fiscal 1970 will alter sub- stantially. It will be tighter. The occupationally deferred will have been absorbed and will not enter the equation. Nor will graduate stu- dents now deferred but who have been deferred for 1 year only. The pool, therefore, will approximate degree recipients, largely, plus the small number who become dropouts or fail for deferment on grounds of community hardship and minor inputs. By and large, it appears that the college graduate population at all levels will be the prime target and the percentage inducted could, and probably would, be close to 100 percent. What will happen to enlistments? Enlistments have in the past shown a tendency to fluctuate widely as a result of the changing factors in the military and the policy situ- ations extant at the time. Some young men enlist for patriotic reasons, some to have option of choice of service, some to have the option of officer candidate school and some to terminate uncertainty among other motivations. However, the probability of eventual service is a high factor in en- couraging enlistments. Selective Service officials have always noted that when draft calls are low, enlistments drop and vice versa. The effect of presently announced policy, therefore, will be sub- stantial on enlistment rates. They will definitely change. Voluntary enlistments among those 19 or 20 years of age can be expected to drop substantially when it becomes clear that the average age of induction will move up to possibly as high as 22.5 or 23 years. Indeed, many young men will find it possible to find jobs, estab- lish families and become fathers all before the age of probable induc- tion and escape liability for that reason. College students about to graduate may or may not enlist, a factor of little significance since it makes no difference in the equation whether they do or not. The end result is the same. One conclusion seems indicated: that enlistments by college grad- uates or near-graduates in preferred service, such as the non-Army services and officer candidate schools, should very soon fill available slots after June commencements. The large majority will be draft liable. What will happen to the universities: Perhaps the first impact of the new dispensations will be on younger faculty. It seems probable that all faculty members who are not fathers, and who are under 26 years of age (largely instructors, assistant pro- fessors and the like) will promptly be reclassified. These will in general be those who have moved rapidly in graduate school and beyond and, since they are under 26 years of age, may be presumed to bB the more promising of the scholarly community. The effect on teaching resources will be even greater in the loss of young graduate students who are assisting in teaching. This is a large number and will substantially affect teaching resources. In many universities the major routine load of recitation sections, as well as laboratory instruction, is handled by this level of instruction. PAGENO="0011" 517 The problem of faculty for old and particularly new junior colleges will be extraordinarily exacerbated, let alone the chronic shortage at the secondary school level. The effect on the inductees: Past experience with respect to the impact of interruptions, as ex- tensive as 2 years or more, on academic progress and/or later accom- plishment is difficult to document since adequate, careful studies have not been made. However, there is experience of a gross observational nature. World War II demonstrated that free educational opportunity available to veterans swelled enrollment. However, there is little evidence to indicate whether or not the impetus acquired by the veteran led to advanced training and to con- spicuous performance at advanced levels in research or scholarship. In fact, doctorate production after World War II did not make up for the sharp drop in production during the war years. There is considerable likelihood, in especially the hard sciences, that a substantial interruption produces a disproportionate deterrent to advanced training. To reestablish himself, to make up for the loss of momentum, and to catch up with developments in fast-moving science, are frequently challenges which the returning veteran either cannot or finds it not to his interest to accept. Older age and possible dependents may affect his position. Many may go into graduate work but in less demanding disciplines. The effect on scientific progress: There can be little doubt that scientific effort in the United States will pay a substantial penalty. At the very best, 2 man-years, and indeed closer to 3 man-years, of scientific work will be lost for each prospective graduate student in as many years as present policy continues. The psychological effect, the demoralizing effect on higher education, on industrial research and development, and the p~blic image of these matters all will suffer but the degree is not measurable. There will be no way of measuring or documenting the resultant loss in intellectual productivity. There is never any good way of measuring what might have been. Mrs. GREEN. Thank you, Dr. Trytten. Before we go to questions, Mrs. Vetter, would you like to summarize your statement? STATEMENT OP BETTY M'. VETTER, EXECUTIVE~ DIRECTOR, SCIENTIFIC MANPOWER COMMISSION Mrs. VETTER. Yes, I will be happy to. On February 15, 1968, the National Security Council advised the Director of Selective Service to suspend occupational deferments based on the list of essential activities and critical occupations and to end deferment of graduate students other than those now in the second or subsequent year of graduate study. Those in medicine, dentistry, veterinary medicine, and osteopathy are already deferred. General Hershey, in a telegram to State directors, said that the sequence of selection in filling calls is to remain unchanged, so that PAGENO="0012" 518 the oldest men from the combined age group 19 through 25 shall be called first. Occupational deferment: General Hershey's wire to State directors left with each local board the discretion to grant, in individual cases, occupational deferments based on a showing of essential community need. Community need was not defined. It seems apparent that some boards will begin at once to reclassify registrants who are in class IT-A. If they have neither a critical occu- pation nor are working in an essential activity, as deffned by the now suspended list, apparently their IT-A deferments, based on community need, will be continued. If they are on one or both of the lists, their cases undoubtedly will be reviewed and new decisions made. About half the approximately 325,000 men classified IT-A are said to be on neither list, and therefore presumably are eligible for reten- tion in IT-A on the basis of community need. We believe that there are between `10,000 and 100,000 men under 26 deferred in IT-A whose skills are the result of college training. These include engineers at the baccalaureate level or higher, scientists and mathematicians who have attained at least a master's degree, high school teachers of science and math, engineering and scientific pro- gramers, college teachers, and structural linguists. Since these men are college graduates of previous years, those re- classified to I-A will generally be among the first to be called since they will be in the upper brackets of age liability. Graduate students: Tinder the rules formulated in the President's directive of last June, graduate students now in their second or subsequent years of post- graduate work may be allowed (at the option of their local boards) to continue their graduate study until they complete the next degree. For many of this year's second-year graduate students, a master's degree acquired in June or August will be declared terminal, and these men will be subject to induction. Those men already past the master's level or in a program in which the Ph. D. was the earlier declared objective will generally be allowed a total of 5 years past the baccalaureate to complete the Ph. P. The new ruling makes no distinction between first-year graduate students this year who are in a 1-year master's program and those in a 2-year program. Presumably, no student now in his first year of grad- uate study may be deferred next year as a student. Additionally, no student completing a baccalaureate program and intending to enter graduate school may receive a deferment in class IT-S. Exceptions to these rules are the medical and dental fields, and stu- dents of divinity, who are exempt from service by law. Men completing a Ph. P. this year who might otherwise have en- tered occupational deferment will be subject to the draft if they are under 26 years of age, and will, of course, be the first to go under the oldest first rule. Approximately 7,500 June, August, and January 1969 Ph. D.'s are expected to be subject to induction under these rules after their degree is obtained. PAGENO="0013" 519 The next group to go, with an average age of 24, will be men com~ pleting a master's degree this year who are not otherwise deferrable- about 23,000 men. This year's first-year, full-time graduate students who are not in the medical fields, or who are not veterans or fathers before last June, or reservists, are expected to total 89,000 men at an average age of 23 available for induction. From the baccalaureate population, with an average age of 22, we can expect a net inductable population of 163,000. From these groups of current college students, we will then have an available total of about 280,000 qualified draftable men, age 22 through 25. Makeup of the draft pool: To the 280,000 draft-available men coming out of school this year at the baccalaureate or higher levels, we can expect to add about 50,000 college graduates of earlier years who have been deferred in IT-A and whose age will be about equally divided among 23-, 24-, and 25- year-olds. There will also be a small population of college dropouts who did not reach baccalaureate level, but who have been deferred as students and will reach age 22 or higher during the year. There are probably less than 10,000 of these. Below the age of 22, the draftable pool will include 350,000 men between age 20 and 22 who have not previously been drafted, plus about 336,000 men born in 1949-the 19-year-old available group- and about 160,000 men born in 1950 who become 19 during the year. This gives us a net available draft pool of about 1.2 million men. Who will be inducted? Tinder the rule of drafting oldest first, all available new Ph. D.'s will be drafted, as will all the scientists, engineers, and teachers who have been deferred occupationally and who fall back into I-A; all draft-eligible new master's degree recipients, and probably all the available and qualified men who are now first-year graduate students. The proportion of the baccalaureate graduates drafted will depend on the extent of the calls. The size of the draft calls will be determined in large part by the number of volunteers available. DOD expects to need a total input of 850,000 men to the Active Forces during fiscal 1969. The expected number of volunteers is 610,000, leaving a draft call of about 240,000. The acquisition includes 60,000 officers. Note that about 100,000 volun- teers are expected from the college graduate population. At the anticipated call level, it seems highly unlikely that any man under age 22 would be inducted during fiscal year 1969, although, of course, some variation in local board levels of age at induction can be expected. As of December 31, we had about 66,000 men in I-A who were born in 1942 through 1945. The calls in January through April total 146,300. Since we draft oldest first, we can assume that all these "older" men, plus those in the older age group who fall back into I-A by the end of the fiscal year, will have been exhausted. We are now dra~fting at an average age of 20 years and 4 months, and high calls through the rest of the fiscal year will probably lower this age. PAGENO="0014" 520 It seems apparent, then, that almost all of the men drafted in fiscal 1969 will be college graduates or college students who have dropped back into I-A. Effect on the drafta~ble students: Until this time, those men completing their college work and know- ing they were liable to military service generally had the option of choosing whether they wished to serve for a longer period of time as an officer or to be drafted for the minimum period and serve in the enlisted ranks. However, under the new riles, almost the entire draftable popula- tion will have achieved one or more college degrees. The military forces will not be able to utilize a very high proportion of these men in officer programs. The student who elects to try to complete a year of graduate work will be gambling, since he will have no protection from a draft notice right in the middle of a semester. The I-S (`C) classification is no longer available for men who were in TI-S this year and who `have completed a bachelor's degree. Effect on the military service: Both the age and the educational level of inductees will rise rapidly. Smce the Army has publicly stated that the best soldiers can be. made from 19-year-old inductees, the efficiency `of the most highly educated military force in history just may be decreased. Effect on the graduate schools: The best num'bers that can be determined indicate that `between 50 and 60 percent of the baccalaureate class who would ordinarily have entered full-time graduate work next fall will `be subject to the draft. About 62 percent `of the current first-year graduate students will be inducted, although we cannot assume that the remaining 38 percent will all be in graduate school, since there is a normal decline between first- and second-year graduate enrollment. Of the master's degree candidates completing a degree, about one- fourth will be drafted, and at least half the remainder will not be `continuing toward a Ph. D. The loss to individual graduate schools will vary widely. All-male institutions will, of course, be harder hit than coeducational graduate schools. The highest ranking graduate schools in the Nation should `be able to fill up their classes, by dipping further down in the quality of applicants for acceptance. For those smaller or newer `graduate schools still seeking a high- quality level who are not now overburdened with applicants, there will certainly be at least a 50-percent dropoff in both the first- and second-year classes of graduate study. Some schools will not be able to survive under these conditions. The effect on the undergraduate schools will be just as striking as on the graduate schools both in short- and long-range terms. No effort to extend teaching assistantships will fill the teaching assistant posi- tions needed to take care of burgeoning undergraduate enrollments. Effect on the Nation: All segments of the economy will be affected by the loss of this highly trained manpower, and we must be realistic in recognizing that the loss is real, and not simply a transfer of effort from one segment of the economy to another. PAGENO="0015" 521 Faced with a group of draftees who are almost all educated to at least the baccalaureate level, the Department of Defense will. have no choice but to use most of these men in a job unrelated to their special- ized education. The shock may be severe to many industries which lose both the new graduates they had hoped to hire and the current employees deferred on the basis of the lists of critical occupations and essential activities. It seems probable that some of the activities being carried on for the Government by private industry in support of our military effort will suffer slowdowns, or even cancellation of contracts that companies will be unable to fulfill because they lack skilled technical graduates. Junior colleges, opening at the rate of more than 70 new ones each year, will be unable to find adequate staffs for next year. In the years ahead, as the supply of new teachers emerging from the educational pipeline slows down, the situations will be even more serious, and will be felt at all levels from the elementary school through the university. Projections made before this change in draft regulations indicate that the country's Ph. D. production will increase from 21,000 new doctorates this year to almost 27,000 in 1972. If next September's intake into the graduate schools drops by even 40 percent, the output in 1972 will be down to less than 16,000-back to the 1963 level. This 10-year setback cannot even be made up. Since Russia is producing both engineers and scientists at a faster rate than we are, and of course utilizing them in their area of specialty training, it seems quite possible that we may find ourselves at a severe disadvantage in our efforts to prevent the spread of conimunism a few years. from now. If we will have achieved equity by drafting only those citizens who have followed our repeated advice to continue their education, then, indeed, the losses to the economy, t.o the graduate schools, and to the Nation which will result from these new rulings will have been worthwhile. Although there would seem to be a. possibility that these rulings will encourage young men to drop out of school, to marry and produce a child before reaching age 22, or to fail to get sufficient education to pass the military qualification tests, the National Security Council believes that this risk is not nearly so great as that some graduate students might ultimately never be drafted at all because the Nation needed their skills to be used outside the military service. There is a solution to the problem and if you are interested we shall be glad to present it. Mrs. GREEN. Thank you very much. We appreciate both your statement and your being here. General Hershey, may we now hear from you? STATEMENT OF LT. GEN. LEWIS B.. HERSHEY, DIRECTOR, SELEOTIVE SERVICE General HERSHEY. Madam Chairman and members of the committee, I want to say that I am not trying to pay Dr. Trytten for the kind words he said, although it is quite unusual to hear words like that in the .area where I am. But I would say that between 1948 and 1952, a coin- PAGENO="0016" 522 mittee that he headed set up a system that was flexible and enabled us to handle all sorts of deferments and probably a great many of us saw, with some regret, more modern methods being used to be flexible. The present policy on the deferment of graduate students has been developed over a period of time, going back to mid-1966, or earlier. The National Advisory Commission on Selective Service was ap- pointed at about that time, under the chairmanship of Mr. Burke Mar- shall. The Commission's report, made in February of 1967, recom- mended the termination of graduate school deferments except for students of medicine and dentistry. In November of 1966, the chairman of the Committee on Armed Services of the House of Representatives announced the appointment of a Civilian Advisory Panel on Military Manpower Procurement under the chairmanship of Gen. Mark W. Clark, with the mission of making recommendations to the conmiittee with respect to selective service legislation and operations and military manpower procurement policies generally. General Clark's panel made its report also in February of 1967, and endorsed sharply restricted graduate school deferment. Both Houses of the Congress gave extensive consideration to the reports of the National Advisory Commission a.nd the Civilian Ad- visory Panel. The Armed Services Committees of both the House and Senate, in extensive hearings, thoroughly considered the question of graduate student deferments, one of the many matters with which the Congress, the administration, and the country at large, was deeply concerned. The Congress endorsed proposed curtailment of graduate school deferments. However, the Congress recognized that it might later be found that the national interest required graduate school deferments in fields other than the health professions. With this possibility in mind, the Congress assigned to the Na- tional Security Council the function of continuously reviewing this area and of making recommendations from time to time to the Director of Selective Service concerning graduate study, occupations, and other training area.s where deferment programs might be necessary in the national interest. Following enactment of the Military Selective Service Act of 1967, selective service regulations were amended to reflect the statutory amendments and to implement new policies, including those of gradu- ate school deferments. These regulations provided for the deferment of students of medi- cine, dentistry, optometry, osteopathy, and veterinary medicine, and left room for the addition of other fields of study to be identified upon the advice of the National Security Council. The new regulations also provided for a transitional graduate school deferment program which in effect gave those students entering their first year of graduate study in the fall of 1967, a deferment of 1 year and provided also that students entering their second or sub- sequent years in the fall of 1967, might be deferred by their local boards to attain the professional or academic degree they were pur- suing. These regulations remain in effect and express selective service pol- icy on graduate school deferments at the present time. PAGENO="0017" 523 On February 15, 1968, I received from the National Security Coun- cil its recommendations with respect to graduate school deferments, with which all of us are now so familiar. The National Security Coun- cil gave long and serious study to this very vital matter. I think it is appropriate that I quote here from a letter I addressed to the chairman of this committee on February 15, 1968, in response to a letter from her to the President dated February 9, 1968, and a letter to me dated February 19, 1968, reviewing the testimony of earlier witnesses in these hearings and the concern of the committee.. Iquote: You will note that the enclosed memorandum from the National Security Council reflects that that agency, in reaching its recommendations, thoroughly and deeply considered the impact of the policies it was recommending on gradu- ate study and on the other hand, weighed the overall national interest and the importance of the fair and equitable distribution of the privilege and duty of military service. The decision reached by the National Security Council was a difficult one. The National Security Council, as its memorandum shows, also recognized that this matter was one requiring continuous attention and designated certain Cabinet officials to maintain a continuing surveillance over the Nation's man- power and educational needs to identify any area of graduate study that might qualify for deferment in the national interest. I am well aware that there has been a great deal of discussion of the age group being called and the present method of calling men within that age group, all as a part of the discussion of graduate school deferments. In this connection, I would like to quote here from a letter which I have written to the Honorable L. Mendel Rivers, chairman of the Committee on Armed Services of the House of Representatives, in response to his letter to me of February 20, 1968, raising the same questions which so deeply concern this subcommittee. I quote: With respect to the adoption of a so-called modified young age system, the posi- tion which I took before your Committee during consideration of the extension act of last July, that such a system was possible and workable irrespective of the many administrative difficulties and complications involved, has remained unchanged. The present method of calling available and qualified men between the ages of 19 and 26, oldest first, is a system of selection which has been equitable and effective through more than 20 years of selective service operation. This fact, of course, does not make change inconceivable; however, the fact that it has produced the required manpower is an excellent reason why it has been continued. At the present time, whatever age group or groups is being called, the Selective Service System is required by law to determine the sequence of selection within any age group or groups in the same manner that it has heretofore; in other words, .by date of birth, oldest first. The Congress left untouched the authority to designate any age group or groups to be called first, second, and so on; but within those groups selective service must, under the law, continue to call individuals in the sequence presently in use. In determining whether or not to designate different age groups or various age groups as separate categories in the sequence of selection rather than to retain the present broad group of 19 to 26, the equity to individuals, the character of the manpower provided the armed forces, the administrative feasibility of any differ- ent system than is in use now, are among matters which must be taken into account. While I have always maintained that as an operator, the Selective Serv- ice System can operate any program it is called upon to put into effect, some of the alternatives under consideration are more cumbersome and complicated than others. The gains from any change must certainly balance, and preferably out- weigh, the problems created. 92-371-68-pt. 2-2 PAGENO="0018" 524 The question of changing to a different system of age groups remains under con- tinuing study within the Administration. Similarly, the question of whether to propose to the Congress legislation to authorize a method of selection to replace the present sequence of dates of birth system also remains under continuing study. Madam Chairman, this concludes my statement. I will be pleased to answer any questions so far as I am able to do so. Mrs. GREEN. Thank you very much, General Hershey. Now if we may turn to Dr. Harrington, the president of the Umver- sity of Wisconsin, which has a large graduate school. May we hear your views, Dr. Harrington? STATEMENT OF DR. FRED HARRINGTON, PRESIDENT, UNIVERSITY OP WISCONSIN Mr. HARRINGTON. Thank you. I am Fred Harrington, the president of the University of Wisconsin. I am on the executive committees of the National Association of State Universities and Land-Grant Col- leges and also the American Council of Education. I am speaking for myself as the president of a university with 55,000 students but since Kingma.n Brewster, of Yale, could not get here I will make my remarks broad enough so that they will cover much of what he would say. I am pleased that this committee is giving attention to this subject. As you have said, Madam Chairman, the Higher Education Act of 1968 must take into consideration the selective service situation in order adequately to handle the facilities and fellowship question. I am pleased for the opportunity to say what a university president would like to say now. I should begin by saying our position is frequently misunderstood. We are widely quoted as being interested primarily in taking care of ourselves, taking care of our own institutions, taking care of our stu- dents, and establishing a privileged class of people who will not be drafted. This, of course, is not the case. We are interested in the national interest. We want to protect that national interest and it should be said time and again that we are not seeking wholesale deferments. Indeed, most of us in the academic community are quite prepared to have Congress reconsider the under- graduate deferments. We have in our midst a great many people, including President Brewster and me, who feel that a random system which would not give wholesale deferments to undergraduates would be preferable to a total undergraduate deferment system. On the other hand, we are not, right at this moment, considering that question but rather considering the question of graduate defer- ments. Since the law now in effect, passed last year, does exempt-defer for the moment-the undergraduates, we are considering the matter of the graduate students. Now as we consider that group, we are quite interested in having Congress give its attention to that group. We are, however, in hopes that there will be some administrative decision even prior to congres- sional reconsideration of the whole Selective Service System. PAGENO="0019" 525 We feel that the proposed oldest first plan which would take all the graduates of our universities and practically wipe out the entering group of graduate students would be unfortunate from the national point of view. We would much prefer a system of pooling age grou1ps to those persons who have not been drafted in the 18 to 19 age group, in the age group of college going, persons who are not going to college in the age group, we would like to see this pooled and, of course, this can be done under administrative regulation so that some of those who are now finishing college will be called, but not all. If all are called, we think this would be disastrous because it would put a very heavy burden on the colleges and universities. The colleges and universities are expected in the national interest to turn out teachers. We are expected in the national interest to turn out scientists and other research investigators, and we need a continuing flow. My own university, as one of the great universities, is not going to suffer as much as some of the newer institutions. Since we have a very selective system of allowing people into gradu- ate school we can dip a little deeper into the pool and attract a larger number of women graduate students and older graduate students, persons who have completed their military service. We of the large graduate systems can probably get along under this system but the newer graduate schools, the coming graduate schools, which, of course, are relied u~pon for our future teachers and for our future scientists will not be able to do their job in the national interest if all of these people are taken. I was very pleased to hear General Hershey say that it is not in- conceivable that a change could be made. I was pleased to hear him say that this subject is under continuing study. He quite properly and appropriately referred to the past history of selective service which is a very great history indeed, and to the earlier periods of crisis in which systems were worked out that were suitable and satis- factory. He referred particularly to those proposals with which Dr. Trytten had been connected in earlier years. General Hershey said, and quite properly, that the system we have been using has worked quite well for the last decade or two but, of course, we all know that we are not at this moment facing a situation very much like the situation of the last decade or two. We have special problems right now and the draft calls are such t;hat selective service will be using up the whole of a very valuable group of people. If we do not allow some substantial share of these young people to go into graduate work and to remain in graduate work, we will be doing damage to the country in connection with the country's research needs and teaching needs and this we should not do. We should, in other words, rise to the occasion by using such ad- ministrative authorization as there is, not just to call the oldest first, not just to call the college graduates, but to call some of them and others, and the Congress should give its continuing attention to this problem with a view to settling the problem in the long way by a satisfactory solution. PAGENO="0020" 526 We are, in the universities, so devoted to the national interest that we are quite willing to cooperate with the system that Congress brings out. We merely plead that the system be one that will be truly in the national interest. Mrs. GumN. Thank you very much, Dr. Harrington. Would you expand a little bit on what the present draft system is going to do at your university and what you think it will do to the graduate schools in terms of percentage, how many were you planning for September 1968 and how many for 1969 and how many are you planning for now? Mr. HARRINGT0N. We are, of course, in a state of confusion and I suppose that is a big point. It is, of course, possible that local draft boards, local selective service boards, will, by their rulings, be able to continue some flow of persons into graduate schools and thus we have a great deal of difficulty in deciding just what we should do. We have graduate schools both in Madison and in Milwaukee, we have about 8,000 graduate students. We would normally expect to take about 3,000 new graduate students each year. If the full impact of this program hit us we would find that the 3,000 we would normally plan to get would probably be reduced to about a thousand. If we look very carefully at the situation and offer many more oppor- tunities than normal, t;hat is, instead of asking for 3,000 or 4,000 we ask for 5,000, with some shrinkage we will be able to get a larger num- ber than, say, the 1,000. But this gives us so much uncertainty that we are concerned about. overestimating the number we should try to get and we are deeply con- cerned about the lesser graduate schools. Let me illustrate this point. If we, to get 3,000 graduate students,. need to make offers to 6,000, we will get the 3,000, probably, but we will be wiping out the opportunity of lesser graduate schools to get. these students. The consequence, of course, will be that if you take the graduate. schools as a whole you will be reducing the teaching assistance by 20 percent, 30 percent, 40 percent.. These teaching assistants are in train- ing to be teachers and they are part of the teaching staff of our great. universities so the loss here would be very substantial indeed. Mr. TRYTrEN. Madam Chairman, might I interrupt here? Mrs. GREEN. Yes. Mr. TRYrrEN. The last time I appeared before this subcommittee I mentioned the fact that we were carrying out a query of the universi- ties who have graduate schools to try to estimate the impact. We have a very large number of responses, I think some `TO or 80 are in already of the graduate schools. We have a summary here of the responses, if that would be of inter- est to you. Mrs. GREEN. That would be most interesting to the committee. Could you summarize it, and then I will ask unanimous consent to place it in the record at this point. Mr. TRYTPEN. Since Mrs. Vetter carried it out I will ask her to do that. Mrs. VETTER. The numbers themselves at this point are not signifi- cant. Only the proportions are significant because we have no idea PAGENO="0021" 527 whether the numbers we have tabulated are typical. We know we have large schools, small schools, all-boy schools and all-girl schools in the response. Since this was a hundred-percent survey, I do not have any idea how closely these are-this represents somewhere around between a third and `a fourth of the total responses. I will give you these numbers. They are not significant, only to show you what the relationship is. The estimated number of the senior class from each university who would normally have entered any graduate school next year is on this particular set about 16,000. These `are adi men. The number that they do expect to eater any graduate school this year is 7,000. This is down about half. This year's first-year graduate students, male, total 18,770 on this particular set of records. The number they would normally have ex- pected `to go on in second-year graduate work is 16,708. In other words, a drop of about 3,000. Now out of the number who would normally have been expected, 15,000, the number they will ex- pect in the second-year class is 10,200. So the drop at that particular point then is `one-third the dropoff into the second-year class. Now comparing what they think they `are going to `have next year in the first-year class compared to what they do have this year in the first-year class, all male, 17,770 they have in the class this year; num- ber expected next year, 7,000. So the drop is about two-thirds of the first-year students and one-third of the second-year students, if these `statistics will hold true as we go along with the survey. If we ever get back to finishing tabulating them, we will have these available, I am sure, in 2 weeks, a sufficient number that the data will be significant. Mrs. GREEN. I hope you will make these available to the com- mittee. Mrs. Vi~rrni. We certainly will. Mr. BRADEMAS. I ask unanimous consent that there be inserted at this point in the record an article by Fred Hechinger of the New York Times on the draft. Mrs. GREEN. Without `objection, it is so ordered. (The document to `be furnished follows:) [From the New York Times, Feb. 17, 19681 NEW DRAFT RULES ANGER GRADUATES-CONFUSION AND RESIGNATION ALSO FOUND-MINORITY Is SEEKING To DEFY LAW (By Fred M. Hechinger) College seniors and first-year graduate students across the nation have re- `sponded to the new draft regulations with a mixture of anger, confusion and resignation, but without panic. An outspoken minority is debating means of `defying the draft-even at the cost of going to jail-or evading it by moving to Canada, taking teaching jobs without first completing their studies, or finding iegal loopholes. From 160,000 to 200,000 undergraduate students and first-year graduate stu- dents are now eligible for the draft. The Reserve Officers Training Corps on many campuses reports being flooded with as much as a 100 per cent increase in applications. Few units are able to accommodate the influx and in many instances the ap- plicants are not admitted until the following term. PAGENO="0022" 528 ESTIMATES OP ADMINISTEATORS Inventiveness in devising ways of avoiding the call-up ranges from simulating homosexuality to entering agriculture as a critical occupation. But the over- whelming majority of students appear to be girding for the draft, without en- thusiasm. A few applaud the new regulations as an equitable measure to prevent middle-class intellectuals from becoming a privileged group. This picture emerged from a check of leading graduate schools by correspond- ents of The New York Times across the country. The interviews followed the announcement by the National Security Council that draft boards would be instructed to halt all deferments of graduate stu- dents in any field other than medicine, dentistry and related health professions, except of those who will have completed two or more years of graduate study by next June. Also exempt are theology students if they claim exemption. Draft boards may defer others whose studies they deem critical to community service. However, graduate school administrators have estimated that next Septem- ber's intake by their institutions will be reduced by between 40 and ~0 per cent. James A. Perkins, president of Cornell University, said that the new policy would have "an absolutely lethal effect" on graduate enrollment. But deans are telling students to keep cool, continue their education, and trust in luck, fate and sympathetic draft boards. They also assure students that, if drafted, they can expect readmission after discharge, without loss of credit and with maximum financial aid. Dr. Cohn Pittendrigh, dean of Princeton's graduate school, even promised similar consideration to students who "out of sincere moral conviction" go to jail or Canada and subsequently wish to return. URGES AGAINST EMIGRATION "Such students will not be placed in double jeopardy as long as I am dean," he said. But he urged students not to adopt such a course saying: "If many intellectuals leave the country when the going gets rough, it will make the McCarthy era seem like chicken feed." The Standford Daily, the student publication at Stanford University in an editorial, supported the fatalists. It said: "Don't lose faith in the inefficiency and inequity of your local draft board. The system's ineptness w-ill probably give you a long breathing spell before you must make a final decision." At the Massachusetts Institute of Technology, a hurriedly arranged meeting last Weckesday evening to answer draft questions filled the 1,000-seat Kresge Auditorium to capacity. Amplifiers were needed to serve an overflow crowd in the lobby. The regulations have spread "a lot of worry and a lot of confusion," said D. Sanborn C. Brown, associate dean of M.I.T.'s graduate school. NEW HAVEN CENTER At a meeting at Yale University on the same evening many speakers pointed students to the New Haven Draft Center, which is compiling a library on the history and types of conscientious objection, deferments for physical defects and emigration. At t.he University of North Carolina, Philip Weinstein, 23, of Sw-ampscott, Mass., who is working toward a doctorate in the classics, took the middle course. "I guess I will sort of bury my head in the sand and hope it goes away-and trust in the laziness of my local draft board," he said. TALK IS DISMISSED "We only hear from people who talk," said Dr. Brown at M.I.T., saying that such talk is not a reliable indicator. Among the vocal minority w-ho plan to defy the draft was William Maly, who started his graduate work in comparative literature at Rutgers University, New Brunswick, N.J., last September. He said he and his w-ife planned to go to Canada in May. He added, however, that he had considered the move for some time and that the new draft law was merely the "final blow." He called the draft just "one manifestation of the ridiculous American temper." PAGENO="0023" 529 Several students at the University of North Carolina, in Chapel Hill, said they had heard friends say that they would seek teaching or research fellowships in Canada. They had no estimate of the number who were serious about this. One student at Chapel Hill, Timothy Alvin Smith, 22, of Syracuse, who is married and expects his first child while working toward a Ph.D. in English, said: "I am opposed to the war absolutely. I think it is not only a silly war but an immoral one. I believe the United States is supporting a semifascist government in South Vietnam. I simply will not serve in any case if I am called. It may become a question of going to jail or to Canada, but I will not serve." TALKING IN TERMS OF JAIL David Atkin, of Mount Tabor, N.J., who is working on his master's degree in education and is editor of the Chicago Literary Review at the University of Chicago, said: "A reasonable number of my friends are talking in terms of jail, as I am. I expect to be drafted, and I am very seriously considering the possibility of taking the consequences, as I feel I ought to make clear my opposition to what's happening in Vietnam." He said he knew of 30 to 40 students, some graduate students but mostly college seniors, who are meeting to consider refusing induction. The more typical, though less vocal, reactions range from concern about continuing uncertainty to fatalism. THE BREAKING POINT Dean H. Vanderbilt, 25, of Cambridge, Mass., who is studying for his doctorate in electrical engineering and is president of the M.I.T. Graduate Student Council, said: "Most of the people I know wouldn't look for ways to avoid the draft. It's just that, if they knew they were going to serve, they would prefer to have it done at a more logical breaking point, without interrupting their studies." Even if he were readmitted to graduate school, as M.I.T. has assured all students they will be, he said he believed that "two years away from the field would require some time to reacclimate yourself." If new family obligations are added in the interim, he said, some students may not return to their studies. Michael M. Conway, of St. Joseph, Mo., editor of The Daily Northwestern, the student publication at Northwestern University, said: "We find graduate students as well as seniors are frustrated and pretty discouraged. A lot of students have checked with their draft boards and were told they probably will be drafted by the end of the year." A MARRIED STUDENT Similar impatience with uncertainty was expressed by Earl Harper, 24, of Valdese, N.C. who is married and a candidate for an education doctorate at the University of North Carolina. Mr. Harper, who taught high school for two years before returning to advanced studies, said he had called h:is draft board and had been asked whether he could show that he is filling some essential coin- munity need. "But I don't know what they consider an essential community need," he said. Others complained that the draft regulations had changed so often in the past that they had little confidence in the finality of the latest ruling. TALKING OF LITTLE ELSE One high-ranking observer at Yale, who said that students have been talking about little else since the regulations were published, added that defiance is likely t.o evaporate when the induction notice is received. "But," he added, "some who submit, after earlier objections, are likely to be plagued by the feeling of having sold out their convictions." On this issue, too, opinions are sharply divided. A student at the Yale Law School, probably representing the majority interviewed, said: "If I go to jail, my whole career would be ruined. I wouldn't make the bar. Doors would be closed. I'll go in, serve, get out, and get back here as fast as I can." PAGENO="0024" 530 By contrast, speaking for the actively disaffected, Bob Schneider, 22, of Santa Monica, Calif., who is a first-year law student at Berkeley, said he would go to jail, if necessary. "As I see it, I'm trying to uphold the basic principles of international morality, international law," he said. "If I were to put it in a legal framework, the law I'm looking at now is 30 years ahead, a Nuremberg tribunal. They'll say, what did you do during the war? And I want to be able to say I tried to uphold my morality." irns~ TO THE ROTC Another law student, who agreed with this view, said going to jail over this issue was becoming "kind of like being brought in for an antitrust suit, kind of respectable." But generally, indications are that those who want to avoid or delay entering military service until completion of their studies are looking for less risky ways. Reports from most institutions in the survey show a rush to get into R.O.T.C. units, with a view to getting commissions and serving after graduation. Stanford reported twice as many graduate students applying for the Army program as last year, and the Navy unit registered "a further surge" last week. SIGNING FOR THE RESERVES Mayer Freed, 22, a first-year law student at Columbia University, reported: "Someone in school said during the week that there was a new reserve unit in Jersey just outside Jersey City. Carloads of law students started going over there." When it turned out that it was not a new unit and had a long waiting list, the students signed up anyway. "It can't hurt us," Mr. Freed said. At Harvard's Navy R.O.T.C., captain F. X. Bradley said that "there has been a constant stream of students, the majority of them from the graduate and law schools," flooding the office since the new ruling. In response to the demand, the Harvard unit instituted a new program, which will take 9~ law students from all over the United States. But at M.I.T., Col. 3ack R. Shields, professor of military science for the Army R.O.T.C., said: "It is a far cry from reality to say that they are banging down the doors. It is not a panic situation by any means but an honest effort on the part of serious young men to evaluate the best situation for themselves." He said that the armed forces stood to gain by attracting young men of high caliber as officer candidates. Students also turned to other possible places. John B. Fox, director of graduate and career plans at Harvard, said that applications for Vista, the Peace Corps and the Teacher Corps bad skyrocketed last week. Many students hope to leave the university and teach in schools until the war is over. However, service in these organizations does not assure deferment. The American Friends Service Committee of Cambridge, which counsels stu- dents who seek conscientious objector status, has been visited by a record number of students. In addition, draft resistance groups on or near many campuses have stepped up their advisory services. At Harvard, the newly established Harvard Draft Proj- ect was seen growing into a universitywide coalition against the war and the draft. PROFESSORS COOPERATING At Yale, some professors, most of them from the Law School, are cooperating with students to offer counseling on the draft. The Berkeley student government appropriated $400 this week to set up a draft counseling program. Individual schemes, many of them whimsical, range from efforts by one Berke- ley senior to "stretch out" his undergraduate credits for another year, to retain his deferment, to inquiring about the chances of attaining Swiss citizenship. There is talk about obtaining phony medical certificates, going on crash diets to become incapacitated through extreme loss of weight and, in the case of one stu- dent, proposing marriage to a girl from the Soviet Union in order to acquire fam- ily members with Communist background. PAGENO="0025" 531 A HAWK'S VIEW By contrast, Charles Hurd, 22, from Los Angeles, who is a first-year law student at Berkeley, said: "I'm a hawk, and I'm facing it with equanimity." Most divinity schools, of all faiths, report that only a small minority of their students have taken advantage of clerical deferments. Most of them have declared themselves available for chaplain's duty. Douglas Rosenberg, a graduate student in political science at Yale and member of Resistance, an antiwar group, offered this advice: "Handing in your draft card is like getting married. It's much less terrifying after you've done it." Those who view the war and the prospect of military service with enthusiasm are clearly an even smaller minority than those who want to break the law to avoid the draft. Martin Nussbaum, 20, a first-year law student at Columbia, registered what appears to be the majority view. "Unfortunately, I believe the majority of the country supports the war and until my views against the war predominate, I will follow the law of the land." And a classmate, Bruce E. Pindyck, 22, said: "I'm scared. I suppose I have an obligation to serve. Not to serve the country-I think the war is wrong-but a moral obligation to serve the guys who are over there. It is wrong that they are over there and I am here just because I could afford to go to college and they couldn't." Mrs. GREEN. There is in an article from the Science magazine the following statement: The Department of Defense reports that over 55 percent of next year's draft call will be comprised of college graduates and graduate students. Last year, only 4 percent of 230,000 inductees had college degrees. Is this, in your judgment, an accurate statement of what the next year's draft call will be, comprising over 55 percent college graduates and graduate students? General HERSHEY. Madam Chairman, I have listened with a great deal of interest to all of these figures. I feel that they will tend to be higher than they will end up. I cannot prove it. But I am sure that a great deal of the lack of deferments because of the nonuse of the critical skills or the essential activities is, I think, exaggerated, because, in the first place, I don't believe the average individual who is teaching or doing something of that kind gets deferred because they are on the critical list. I think they get deferred because they prove to somebody that they are doing something. Now the number of people who are going to come out of colleges and be able to get occupational deferment of some kind, I think, are much greater than the figures have indicated, although, obviously, I would not want to put my opinion up against figures, although prob- ably I don't have too much respect for either one. But I don't know, I can't help but believe that we are, and I think fortunately, looking at the worse rather than the better. Of course, I have only been told that I can budget for 240,000 inductees next year. On the other hand, I do not think that we ought to take that too seriously. For the last several years, recruiting has not gotten the num- ber that they expected to and we have been called on for more. It does not make the total any greater but it does make the procure- ment of them a little different. Mrs. GREEN. General Hershey, the Interagency Committee recom- mendation to the National Security Council regarding the occupa- tional and graduate deferments were reported in the press to be PAGENO="0026" 532 limited to recommending graduate deferment only for men in the physical sciences, math, engineering, and some health-related fields. It is my understanding that these were not the recommendations. I wonder if you will tell us what they were since Selective Service is represented on the Interagency Committee? General HERSHEY. We are on the interagency committee all right, and we did participate in a recommendation that the physical sciences be excluded and that went to the National Security Council. Now, if my information is correct, we oniy made one recommenda- tion from this Interagency Council. If there are other recommenda- tions I have either forgotten or don't know about it, and I don't believe there were. We were subject to whatever criticism was leveled at us by saying that we were selective in the disciplines, if we want to call it that, and going back to Dr. Tryten's committee, over the years we struggled between 1948 and 1952, we found that it was very, very difficult to arrive at any place where you could begin to separate disciplines. We only found it was possible for us to get agreement by including, we thought, the quality students in all disciplines under the assump- tion in our broad growth we needed a great variety of people. Now it is true, I believe, that the public, maybe in a scientific age, but I don't have to agree with the public, but I think the public is more likely to defer an engineer than they would, for instance, a political economist or something of that kind. I think there was quite a disposition on the part of about every- body to not want to split the fields. The results was that perhaps the Council, although I know nothing about the deliberation of the Coun- cil, I had no part in it and know nothing about it, but I suspect they were driven almost to the place of either taking everybody or nobody. I have often thought that was unfortunate. But the people do not like our system that we had a couple or 3 years ago of racking them up on examinations and class standings under the assumption that if a person did pretty well in college they would do better in college than somebody that didn't do well in college. That wasn't a very profound decision but that is what we based it on. I do not know that I have answered your question but I don't have too much knowledge of some of these details. Mrs. GREEN. If I understand you correctly, the Interagency Coun- cil recommended the deferment only for the physical sciences. General HERSHEY .Yes; this is broadly so. The chemist, the physicist, and the engineers. That is essentially a true statement. There was dis- cussion about teachers but I am not so sure that the teachers got on. However, there is a difference of opinion on this, I am sure, but since 1958, I have not found that it is too difficult to sell teachers in most places. There are exceptions but there can be appeals taken in those. Mrs. GREEN. In this directive the local draft boards can defer to meet community needs; would teaching be one of those? General HERSHEY. Yes. That is one of the things. Now, maybe I am merely behind but I am a little surprised, I probably never thought the essential activity list or the critical skills were as im- portant, perhaps, as some people think. PAGENO="0027" 533 I am a little oriented toward out where they go and I have paid more attention to what man is doing rather than how he stood on the critical list. I intend to support by what little I can by taking appeals, trying to cover `the man who is doing things, because the man who is doing something was earlier in the deferred list than people who `are getting ready to do something. Mrs. GREEN. Does every one of the 4,000 autonomous boards have the authority to defer teachers? General HERSHEY. Yes. I don't think there is any question about that. Graduate students, I think we get into a little different field be- cause here we have a prohibition. But abolishing the ei~itical list and abolishing-they didn't abolish it, they suspended it as a means of influencing the board. Personally, I think it has been overestimated how much the board was influenced by that. I think they were intere~ted in what the fellow was doing rather than what list he was on. Mrs. GREEN. One of the concerns of the colleges and universities is that a large number of the graduate students provide teaching assistance. The schools are dependent upon these graduate students to teach undergraduate courses. Would these people then be subject to the same deferment as the teachers? General HERSHEY. I met with the presidents of the uthve'rsities and colleges in Ohio in the month of November and we discussed that subject. I don't think it is quite proper for me `to make any suggestions on how people go at things but if they had been doing their teaching over the years with students, I didn't know, but what maybe they could start teaching their teachers. Mrs. GREEN. Congressman Thompson. Mr. TI0MP50N. Madam Chairman, I am really completely confused IJy some of the things the General has said. I would like him to clarify. He says: "if the people are doing things." Now what does he mean? He runs t:he system. What does he mean by people who are d'oing things? (xeneral HERSHEY. Well, I am probably trying to get into the phii'os- ophy. Remember, there was a time probably when everybody who had au obligation for service, they `all served when they went out from the village. But there came a time when people had to do things, `otherwise, they didn~t sharpen the spears, there wou'ld not be any spears to take :out. Then we started delaying or postponing the individual who sharp- ened the spears, the one who built the planes or designed the planes. Then, mostly in World War II, we began to `anticipate there was going to be a need to d'o all of these things and in order `to watch our lead- time we began to develop people ~is students to get ready to do these things. The differentiation I am trying to make is that here the difference is between a teacher who is, I will say, doing something, he only had about 3 years of it but I feel he had a little experience, I would figure he was doing something, while the student on the other hand was preparing to do something. PAGENO="0028" 534 Mr. Tno~1PsoN. How can anyone do something if they are not edu- cated to do something? General HERSHEY. There is no question about that. I agree with you fully. On the other hand, sometimes when you have to choose between survival and getting ready to put up a surplus of spears,. you do have to take the spear-sharpener and take him in. I hope we never get into that position but there is a distinction that a local board- Mr. THOMPSON. I hope the rest of the war won't be fought with spears. General HERSHEY. I probably used an unfortunate word. On the other hand, I would be just about in as much trouble if I mentioned any of the modern weapons because they are controversial, too. Mr. THOMPSON. But, General, I just have one comment. You are responsible for the administration of the Selective Service System. I don't see how conceivably you can fail to mention things which may be controversial. We do not understand, at least I do not understand, your attitude toward teaching fellows in graduate schools, for instance. I would gather from what you have said that you do not think they are doing things. General HERSHEY. No. I think what I said was, I tried to and I didn't want to be too "oomph" about it, is the fact that we are now prohibited from developing them as students because the National Security Council has spoken. Now, what is the alternative? Mrs. GREEN. Dr. Harrington, you were going to comment a moment ago. Mr. HARRINGTON. One alternative might be to defer them as teachers if they are teaching assistants, General Hershey. I am surprised to hear General Hershey call himself an amateur. I am pleased that he referred to teaching in a favorable way and to his own teaching background which he said showed him the value of this field. I am pleased by his statement of confidence in the local boards which have certainly done an extraordinarily good job during the last generation. I am pleased to hear him say that he does not have full confidence in any classification of essential occupations. Most of us in the academic world are not in favor of such lists. We feel that the survival to which the general referred is not only getting through this difficulty out in Vietnam but getting through the next generation and having the United States stand not only as a military power but as a great peace- ful power in the world. Thus, the essential nature of teaching which includes the teaching done by graduate students, the training for all kinds of things, not only nuclear engineering but also political science, this is so important to the Nation that we ought not to miss any opportunity to use ad- ministrative action or new congressional action to save some part of these people whom we are going to be needing in the future. Mr. REID. Would the gentlewoman yield? Mrs. GREEN. I yield to Congressman Ayres of Ohio at this time. Mr. AYRES. Go ahead, Mr. Reid. PAGENO="0029" 535 Mr. REID. I just wanted to ask the gentleman one question in re- :sponse to his query which, as I understood it, is what is the alternative? My question has two parts. Is there not an alternative open to the President to place all of the graduate students and the graduates with a college degree in a larger pool, including 19-year-olds or 19 through 26, so that there would be an equal service liability for all from a much larger pool? First, is this not possible for the President to do by Executive order and, second, might this not be a fairer and more equitable procedure in terms of fairer application to all men and in terms of mitigating the sharp effect that the present plan might have on the colleges, their teaching resources, and their graduate students? General HERSHEY. I think it refers to the power which has already been delegated to the Secretary of Defense to make calls by age or age groups. That is, it is possible. I have said it would create a certain amount of bedlam. I think it violates some things, the principle of making a boy who has lived up to 19, put him under the same exposure as a person who has lived up to 25, but this question of what exposure is quite a debatable question. I would not pretend to know the answer. I think it is possible if the Secretary of Defense calls for individuals from five or six, or three or four, or two age groups, obviously if the age group that you had at 25 was called for on a percentage basis they would furnish less, especially if only taking 5 or 10 percent of them, than they would if you had a greater number. Now, on the other hand, I do not believe that you are going to be inducting any 80 percent of any group. At the present time, and I realize that they will not be rejected mentally, I should hope not, to the extent that we have, I have to face the loss of more than half of the individuals who are sent up for physical, mental, or moral reasons, of the average group. Now, these people will not be rejected for mental reasons, but I have no reason to believe that they are necessarily healthier than some of the other people of their ages. I will expect them to be much better morally. I have said that it is very, very cumbersome and I did not believe personally that the gain would make up for the losses because when you take one boy at 19 and put him in the same liability of the fellow who has had a liability for 5 years and is now approaching a place where he has escaped that liability if he is not taken. That is one thing I think had the Congress in the first place taking the oldest first because they thought that produced the greatest number because you got them before they got out. But it is possible under the law and under the regulations and the delegation has already been made to the Secretary of Defense, if they ask for only one age group, you tend, as I read the law, to establish a prime age group if you do that. Mr. Axiu~s. Thank, you, General Hershey. I have a question for Dr. Harrington. What was your male enroll- ment in graduate schools before the accelerated draft in comparison with the present enrollment? Mr. HARRINaTON. It has been increasing slowly. I am not sure I follow the question. PAGENO="0030" 536 Mr. Av~s. The question is, Do you have more graduate students now than you had, say 5 years ago? Mr. HARRINGTON. Yes. We have been increasing our graduate enroll- ment about 10 percent a year. Mr. Am~s. A large percentage of the graduate enrollment have had no military service? Mr. JiARRINOT0N. Yes; that is correct. Mr. AYRES. How many students do you have in the university now who are returned veterans, using the GI bill that we just passed in the Congress a little over a year ago? Mr. HARRINGTON. We do not have a great many yet. But of course this number will go up sharply. Mr. A~i~s. You are placing as much emphasis as you can on getting them? Mr. HARRTNGT0N. Yes; we do want these persons back. We have about 6,000 now. Mr. AYRES. If the graduate students were to leave now to go in the military service, would they not be replaced by the large number of returning veterans who completed their college work prior to the GI bill being passed, and now they would become eligible for graduate work? Mr. HARRINGTON. Some could, but this will work out if we don't draft all of those who are now graduating from college. That is the very point that we are making in higher education, that we need a continuous flow. If at any point you hit and take all the beginners, then the returning people are not going to make up for this. Mr. Av~Es. You' are going to have quite a reserve of boys coming up who have gotten their A.B. degree and now they want to go on to graduate school since we passed the GI bill. You are going to have many more applicants, far more than you have ever had in the history of the school? Mr. HARRINGTON. Yes; some this year, more the following year. That is why we don't want all of them graduating this year taken. Mr. AYRES. General Hershey, like some other Members of Congress,. I have the greatest respect for the job you have done and the difficult' task which you have with a fluctuating military policy to deal with. I say that even though I am one of those who got a greeting from you years ago. We have a lot of Members of Congress who were sent a greeting, too, for 1 year of training and 4 or 5 years passed befOre we were discharged. Now, I say this in all sincerity. We lose the Pueblo and then we call' up the Reserves. The Embassy gets attacked in Saigon and we hear that you are going to need 50,000 more men sent in that area right away. Now, as long as we have this fluctuating military policy, I realize it makes your job difficult, and also you have had to change your' policy as to whom you were going to take and whom you were not going to take. I recall a few years ago we had some discussions in this committee as to why Cassius Clay was not being drafted. You answered some very nice letters to me. Then a couple of years later you decided to draft him and he decided he did not want to go. PAGENO="0031" 537 Now, is there any possibility, General IHershey, in view of the hard- core unemployment we have-this committee is considering manpower retraining, we have just been through this this past year, with a large and detailed discussion on Job Corps, getting these boys off the streets, into camps-would it be feasible in your judgment to have a preinduction training program for these hundreds of thousands that you say are being rejected, to perhaps take them in for 4 to 6 months under military regulations and to make every effort possible to deter- mine whether or not they will make the type of soldier that is needed in this type of war? Now, the military have said they want the 19-year-olds. Those of us who have served know why they want them in this type of war. The 19-year-old is more adaptable to jungle warfare than someone who is older. But we do have these youths who are roaming our streets. We want to do something for them. Would it be possible to have a preinduction training program and then determine whether or not they would make satisfactory military men? General HERSHEY. I want it definitely understood you are hearing from me, and me only, because in the first place I know a great many people who came from the same profession with which I was associated for many, many years who do not agree with me. I, of course, happen to believe that is what we ought to do. When we have wars on our hands the Armed Forces will plead that they have other things to do. I don't happen to agree but I happen to agree that we ought to use the bases and the ability to train and the people. I agree we can find among Reserve officers, who are not on active duty, to do it and I happen to have some reservations on getting contractors to do it. I would answer you by saying that I would agree that that ought to be done but remember I speak for nobody but me. Mr. AYRES. I hope the Congress would take a step in that direction, because I feel it is most important if we are to utilize the manpower that we have in this country, because they are not being rejected for physical reasons. One last question, if this new program is not passed, may we have to extend the length of service as we did in World War II or call up additional reserves? General HERSHEY. One of the questions of what we have to de- pends on what we don't do some other way. I can't get into the Reserve or National Guard business for two reasons. One, I don't know anything about it; secondly, I don't have any re- sponsibility in that area. Mr. AYRES. Will we have to lengthen the service of those who were told they have 2 years to serve? General HERSHEY. No; unless the forces are increased a great deal, because we are not now being bothered by a shortage. We are suffering with overage. Mrs. GREEN. I am sympathetic to the questions that have been asked by my colleague, but I do hope this morning will not be used to fight the Vietnam war or to make major military decisions. I hope the ques- tion will be directed to the impact of the current draft policy on grad- uate education. PAGENO="0032" 538 Congress Brademas? Mr. BRADEMAS. Thank you very much, Madam Chairman. Mrs. Vetter, General Hershey, and gentlemen, we appreciate very much your coming this morning. As you may be aware, we have had some hearings on the subject of higher education legislation, and we have been concerned with such problems as how we can provide more effective forms of student aid and more effective assistance to colleges and universities for facilities, classrooms, and laboratories. The impact of the Selective Service System naturally bears directly on the kind of legislation we are considering. If, for example, we are going to have a 50-percent drop in graduate school enrollments that fact may tell us a great deal about the kind of higher education legisla- tion that we write in this committee. I am especially glad, as the Congressman from Indiana, to welcome General Hershey, a citizen of my State who has served our country long and faithfully and well. I am struck by the fact that this is the year 1968, which marks the 10th anniversary of the passage of the National Defense Education Act. We passed this legislation, you will recall, in large measure in re- sponse to a sudden awareness in our country, following the Soviets' Sputnik, that trained and educated men and women are essential to the defense and security of our country. We came to realize that brainpower may have a great deal to do with military power. I was most interested, therefore to note the, to me, very dramatic statement of Mrs. Vetter of the Scientific Manpower Commission which I will quote: Since Russia is producing both engineers and scientists at a faster rate than we are and of course utilizing them in their area of specialty training, it seems quite possible that we may find ourselves at a severe disadvantage in our ef- forts to prevent the spread of communism a few years from now. Her statement of course is made in direct comment on the recently announced change in policy of the Selective Service System affect- ing the drafting of graduate students. General Hershey, I am ob- viously not going to suggest that you are soft on communism, but I should have thought that if we have learned anything in this country in the last 10 years, we have learned that having an adequate supply of trained and educated men and women is enormously important, indeed, crucial, to the security of our country, which is what I thought the Selective Service had something to do with. Having said that, I would like to raise a few questions and ask any of you to make any comment you may wish. I wonder-especially in terms of Mrs. Vetter's comment about the importance of long-range manpower planning-if any plaiming has been done at the highest levels of our Government in terms of the long-range impact of the new selective service graduate school policy upon such areas as, for in- stance, the gross national product? For example, to what extent will this new policy lead, within a given timespan, to a drop in gross national product and consequently a drop in Federal tax revenues? What will be the impact of this new policy on all sectors of the Nation's scientific effort, to which Dr. Trytten made reference in his statement when he said: There can be little doubt that scientific effort in the United States will pay a substantial penalty. PAGENO="0033" 539 The words "substantial penalty" are your words, Dr. Trytten, not mine. How can you quantify that phrase? What, does it mean in terms of physics, chemistry, or other fields of science? From what sectors of American business and industry can we an- ticipate hearing plaintive cries in the next several weeks and months about the impact on them of our new draft policy? I will scatter all my questions here, Madam Chairman, and then in- vite replies from any of the witnesses. What about this question of "community need" as distinguished from "national need?" Dr. Harrington made, I thought, a very tell- ing observation when he pointed out that his apprehension of the pol- icy was not purely in terms of the impact of the policy on universities *and their admissions but in terms of the national interest as well. Yet, I can conceive that there may be a sharp distinction between what is needed in a particular community and what is needed in our national interest. Mrs. Vetter, do you want to start off by making a comment on any of these matters I have raised? Mrs. VETTER. On the basis of the Russian figures I gave you, I don't have the science figures with me because I did not stop to look them up this morning but I did stop to check the engineers' figures. Russia is now producing at the rate of between 138,000 and 148,000 We are producing less than 50,000 as things now stand. Of course, you must remember Russia does not have to worry about something we have to worry about. We must worry about equity and fairness. Russia does not have to. This gives them in this particular context an advantage in manpower. Mr. BRADEMAS. Wasn't there a report about 10 days ago by the Engi- neering Manpower Commission, even before this new draft policy was announced, pointing out that we have a very serious shortage of trained engineers in this country? Mrs. VETTER. That is right. The number of students entering engi- neering as a, proportion of the number of college students has dropped steadily for many years. We are not improving. In terms of specific disciplines, in science, particularly, the number of students who graduated at baccalaureate level in science and then went on to graduate study is much higher than it is, for example, in the humanities. The loss in graduate levels in the sciences is worse proportionately although there are still more students in humanities `than there are in the sciences. We do have numbers in this same set of breakdowns. We have them divided by disciplines. In physics, for example, we have this year, with these numbers, 639 first-year physics majors, first-year graduate stu- dents in physics. Next year's expectation, 126. This is because physics majors, chemistry majors, math majors, `tend to enter graduate study immediately after baccalaureate programs. To take `a brea~k it is too difficult to come back and catch up. People in the humanities, education, social science even, may go out 2 or 3 years after baccalaureate before beginning graduate study. This means the impact `hits harder on the sciences field than the oth- ers. We are very short of Ph. D. physicists now. The Government says 02-371-68-pt. 2-3 PAGENO="0034" 540 we are not but most of us who work in the area feel we are very short on Ph. D. physicists, chemists, mathematicians. There is no unemployment among them, shall we put it that way. I thmk the impact on this group is considerably greater. Mr. TRYTTEN. I would like to comment just a bit on one of your ques- tions or queries or statements with regard to the long-range effect of this sort of thing. In the first place there is no Federal agency that I know of that has the responsibility of examining the national needs and relating them authoritatively to national manpower policy. There are bits and pieces of it in a variety of agencies. The Office of Education has some relevant statistics, BLS has some others. But nowhere is there a staff that I know of that is charged with the responsibility of bringing all these statistics together and relating them to national policy. This, incidentally, is one of the contributions that Mrs. \Tetter has made because she went to the extraordinary effort of getting this kind of information from the several places where it existed and putting it together and then getting reasonable agreement on the part of the people concerned that what she came up with was quite reasonable. With respect to the impact here in the gross national product and productivity and so on, what you are really asking here is to measure something that doesn't happen. What happens if you don't have people of this kind. This is a very difficult thing to measure. I read recently, for example, an article in science written by Dr. Townes, formerly of Columbia, MIT, and now California. He was a man responsible above other people for development of the laser and the maser and an extremely interesting study. This shows the kind of thing that grows out of the investigation of a person who is perfectly free to follow his own insights. The problem we face here is that if we reduce the number we have here, we reduce the number of people who are free to follow their own investigating ins%hts and tendencies and definite new applications of technology on which eventually industry is going to be based. So that is about the only answer I think I can make. Mr. Bit~&r~E~rAs. General Hershey, I wonder if you could give us the benefit of any comment you may have on what kind of long-range manpower planning you and your colleagues get into in developing a policy of this sort and considering its impact on the Nation's supply of trained manpower? General HERSHEY. We attempt to do a great deal of them individu- ally and some collectively. I think perhaps the Office of Emergency Planning would be the one that would come nearer to having the overall responsibility. Maybe the size of it and the width of their responsibility makes the water pretty thin in most places. They are one area we would go to to find out some of the things we would like to know. One of the things we always would like to know is to find out what the Armed Forces anticipate but there again they have a very difficult problem, both in trying to figure out what the world is going to have and even as they figure it out there is not very much validity. Probably if we find out 60 days ahead of when we are going to fur- nish individuals we are lucky. The only other comment I want to make and certainly I am not advising it for America but the last time I PAGENO="0035" 541 knew about the Russians, about 55 percent of their engineers were women and about 75 percent of their doctors were women. Now, I am not advising that at all but it wa,s dire necessity I am sure that forced them into that when they lost a generation of men. I think they merely did it because they had to and not because they wanted to. I was interested to hear reference made to 1958, at the time sputnik went up was the time I felt that we had better start having a pretty general policy of deferring students. Mr. BRADEMAS. General, you are a very brave man to come before this subcommittee and speak of the dire necessity of having to turn to women. General HERSHEY. As another Hoosier, you know, I merely thought we didn't want to deprive other places of scientific means of the flower of our generation. Mr. BRADEMAS. General, I am glad I don't have to run against you. Mr. HARRINGTON. It is perfectly obvious that American prosperity depends upon trained people and the flow of trained people into the professions and our standard of living depends on it and our influence in the world depends upon it. We, right at this time, have a difficult manpower situation in the trained professions because of two things. One is the low birth rate of the 1930's and the early 1940's. We have not yet caught up with the training of people in sufficient quantities because we did have a very short supply of possible material from those low birth rate periods. In 10 years we will be better off in this respect because we had some high birth rate years and now although the birth rate is declining, it is declining in connection with a much larger base. The other difficulty as f'ar as the present manpower situation is, of course, the great trends toward automation, the technological trend, and scientific trend in American society. So we simply do not have enough trained people, we will simply not be able to pull our weight in the world if we do not move for- ward. When I say trained people I don't just mean chemists and engineers. We have, for example, a shortage of English teachers now that is very grave. I don't think we ought to leave the question of handling our needs to failures on physical examinations of people who grad- uated from college and I don't think we ought to leave it to supplying women for training when we do not have the men to do it. I think we have been very bad indeed about training our women into the professions and we ought to move into that in much greater degree than we have in the pa.st. That is a separate question and it does not really provide a substitute for our present need. Mrs. GREEN. Will you yield, Mr. Brademas? Mr. BRADEMAS. Of course. Mrs. GREEN. I appreciate your comment, Dr. Harrington. You recog- nize the training of women is a matter of wisdom and not of dire necessity. Mr. BRADEMAS. Let me make one final comment, Madam Chairman. I `think that `the country does not yet realize the immense impact of this new draft policy on our society. PAGENO="0036" 542 It represents, to quote Mr. Heckinger's article, "a 10-year setback in the cutting edge of manpower." I think we ought to realize that. And completely aside from all of the implications for private industry, for the gross national product, for a wide variety of other reasons, I think we have not really given adequate attention at all in this new policy to the potentially very damaging impact of this policy on the security of the United States, especially on our military defense posture. I just want publicly to predict that this country may well pay, within a very short time, a very high price indeed for this policy in terms of our failing to have an adequate supply of trained scientific and technical manpower. What I am really doing here is making a comment, in some measure based on the very alarming statement of Mrs. Vetter, to repeat, that "It seems quite possible we may find ourselves at a severe disadvantage in our efforts to prevent the spread of communism a few years from now." I am afraid we have not learned very much since the days of sputnik and the passage of the National Defense Education Act. While in the short run this may seem to be a reasonable policy, it may represent- and I do not enjoy offering this observation-it may represent a very damaging step in this Nation's efforts to fight communism rather than the other way around. Mr. TRYTTEN. May I make one more comment, Congressman Brademas? Mr. BRADEMAS. Of course. Mr. TR1~rrEN. In looking forward into the future, there are other matters that I think need to be talked about- Mr. BRADEMAS. Will you speak up a bit, Dr. Trytten? Mr. TRYTTEN. I say there are other matters that need to be talked about in connection with this because some of the greatest challenges which face us, and it will require additional scientifically and unscien- tifically trained personnel, are movements and developments within our society that we can foresee now, not quantitatively but it is clear, for example, the whole problem of the effect of technology on the world in which we live on the environment, on ecology. This is presenting all sorts of new problems, pollution, air pollution, water pollution, the impact on natural resources. How you recover Lake Erie, for example, is a problem that is going to require tre- mendous effort and the services of persons trained in a number of a wide variety of disciplines. The social problem of developing our society we all know about presents great demands for specialized personnel for research. One could expand this tremendously but it is a matter that will require personnel, and needs to come into our policy discussion. Mr. BRADEMAS. I would just like to say one more thing. I thoroughly agree with that. In fact, your statement comes with very telling effect in the wake of the recent report of the President's Civil Disorders Commission headed by Governor Otto Kerner and Mayor John Lindsay. It may well be that we are going to ffnd that the survival of this Republic depends as much on our capacity to cope with the jungle at home as the jungle in Vietnam. PAGENO="0037" 543 Mrs. GREEN. We have the pleasure of having Dr. Kingman Brewster of Yale University and Dr. John Miller, dean of the graduate school to join the panel. Dr. Brewster, we are delighted you can be here with us. I will give you time to catch your breath, and I will call on Congressman Quie to ask questions. Mr. QUTE. Thank you. My first question is for Dr. Harrington, if you will wait on the briefing a minute. The chairman mentioned that we do not want the graduate school to be draft haven. I feel that way as well. Evidently, the law was changed because some people went to graduate school and stayed long enough until they were over age for the draft or else they entered an occupation for which they received a deferment until they were over age. Now, that is going to be prevented. But the reason why we are holding hearings is the deep concern on our part that we are harming the graduate schools and thereby harming the country. Do you think that the graduate school should be a draft haven for anyone and if not, how can we help the graduate school retain some of these men and still have it turn out not to be a draft haven? Mr. HARRINGTON. Of course the graduate school should not be, neither occupations so far as that is concerned. What we must do is to have a flow of people into selective service in connection with the Nation's needs. I think we do that pretty well in the health science as an example, we take care of the national need and work that in with the occupational development. It is sometimes said that people go to college to get out of selective service or go to graduate school to get out of it. This really is an im- proper accusation because the individual who goes to graduate school simply to get out of selective service really is getting himself into something at least as difficult as serving in the Army because the whole field of graduate studies is one in which one is developing oneself and building on talent which one has, really building on them for later service to mankind. I think my examination of the records of this Republic will show that college graduates, those who have attended college, those who have attended graduate school, have served the Nation very well in- deed. The percentage of persons from oiie area or another that have gone on to service is very high. We train a substantial number of the officers who are in our armed services and the fact that an individual never does have military service does not indicate that he is unpatriotic. An individual may be trained for an essential occupation in which lie will be serving the country much better by his training withoul going into uniform. But of course you are quite correct, we should not have a draft haven. We should not have wholesale deferment of people in graduate school. We should have some excellent system of graduate school selective service handling, l?robably of undergraduates too, in which by pooling age groups we will be pulling not everyone from one group but from a variety of groups for the national interest. PAGENO="0038" 544 Mr. QUIE. Would you expect, then, that it would be a wise policy, ~s I do not think it would be, to take all the people from the graduate school or those who just received the baccalaureate degree and, there- fore, prevent them from entering graduate school? You don't mean they should have a permanent deferment or exemp- tion? Mr. HARRINGTON. No. Mr. QUIE. But eventually they ought to serve. Mr. HARRINGTON. Eventually they may well serve. It would depend upon the equities of the sit.uaiton and to some extent if you have a random draft it could depend on the accident of the circumstances. Mr. Quii~. At the present time, however, we don't have a random draft.. Why would it be better if men were drafted prior or during their undergraduate work rather than at the termination of their under- gaduate work which is now the case? Mr. HARRINGTON. From the viewpoint, of equity, an individual who goes to college should not necessarily have an advantage over a person who does not go to college, that is tiTe accidents of birth, the accidents of education, the accidents of family background, economic income, and the like may well set up a pattern that will mean that a good many people will* go to college because of their social and economic background and others will not go to college for the same reason. Thus, a random draft of persons as they become 18 or 19 will wipe out any social or economic advantage that you get by going to college. Mr. QUIE. If a person is deferred for college but is not exempted, that is he is subject to military duty as soon as h~ graduates, what advan- tage does lie have over the person who does not enter college? As it is now, he probably won't be drafted until he is at least 20'/2 or maybe older. Mr. HARRINGTON. You are speaking now of the undesirability of the undergraduate draft as I have stated it or are you talking about the graduate deferment. Mr. Qurii. In your answer you spoke to the question of why a person should be permitted to be deferred from the draft if his social circum- stances permitted him to go to college. However, it is only a deferment for 4 years and eventually he has to serve. Mr. IIARRINGTON. If a person is to be deferred, we feel rather gen- erally-rather the other way around, if the person is to be called there is some advantage to being called at an early age. For one thing, you do not run into some of the physical defects that General Hershey sa.id kept people of an older age out of it. For another thing, if you concentrate on drafting people just when they are entering graduate school, you are hitting them at a peculiarly important period in their careers when their training can move right forward and they can become trained people to the best degree. Calling them a little earlier would not have all those disadvantages. Mr. QUIE. Then I think we are getting to the point where there must be a reason and that reason is in the interest of the institution. In other words, you expect an individual to return to the institution if he is drafted prior to his baccalaureate degree. There is, however, a stronger danger that he won't return for graduate work if he is drafted at the termination of his undergraduate work. PAGENO="0039" 545 Mr. HARRINGTON. Yes, that is the point. Mr. Qun~. Dr. Trytten, I believe it was you who mentioned the need for mathematicians, and graduates in the fields of chemistry and physics. Do you think that we ought to defer from war doctors, dent- ists, and osteopaths and actually start deferring people who enter graduate work in disciplines other than perhaps those three? Mr. TRYTTEN. I think I would like to approach that question this way. I think in terms of the present Selective Service Act which was in effect during the war, this was what I would call a manpower act. It was an act that was based on the necessity of having a control of employment of our human resources in a wartime situation. This is done of course by the local board decision in each individual case. The net result of all these judgments was supposed to provide a balance between the needs of the civilian economy and its backup of the military on the one hand against the military needs on the other. As I said, in the implementation of the act we are moving in the direction of relentless pursuit of equity. The difference here is one of principle. The difference in principle is one that is particularly applicable in the large-scale mobilization. The other one is applicable when a limited number of people are taken, you can afford to move in the direction of equity, the difficulty we are in at the present time, that in either case we are in between somewhere. For that reason it sems to me the occupational deferment becomes a very key and crucial issue here. The extent to which we can afford an occupational deferment now affecting say 23, 24, 25, I do not be- lieve that we can afford to abandon the principle of occupational deferment. This I think, carries over to some degree into the case of graduate school deferment. I think it needs to be looked at in the same way. Mr. QrnE. If these three were critical, is there not a special interest in deferment for graduate schools that is somewhat different from occupational deferment? If it is true that those who go into the fields of physics, chemistry or math are less likely to return to it than those who get their doctorate in the humanities? Mr. TRYTTEN. Yes, I think there are different values in the two cases. Mr. QUIR. Would you choose those three disciplines for graduate school deferment? Would you expand it or what would be your sug- gestion? Mr. TRYTTEN. I would expand it considerably because I do not be- lieve that we can-I think there are two effects you have to worry about here. One of them is that a decision of that kind established by the Federal Government, I think, would have long-range damag- ing effects on the whole graduate school effort in the country. Furthermore, it is unrealistic. I would not be at all surprised that some of the behavioral sciences, disciplines, may turn out to be in the fewer among the most crucial disciplines we have in the society. Mr. QuIE. You believe they would be apt to come back to those disciplines after a period in the service and perhaps they would have learned a little bit about behavioral science? PAGENO="0040" 546 Mr. TRYTTEN. That is true. Mr. QuTE. If you are unwilling, from your study, to say that cer- tain disciplines are more important than others and should be de- ferred but rather would choose to defer all of them, and assuming that the doctorate degree and some form of pottery are as important as mathematicians, then how do you expect anybody else to make those decisions? Mr. TRYTTEN. It is very complex. I am not going to give you an answer today. Mrs. GREEN. Would you yield? Mr. QuiR. Yes, I will yield. Mrs. GREEN. Does the Nationa~t Scientific Manpower Commission serve on this interagency committee? Mr. TRYrTEN. No, it is a private manpower agency. Mrs. GREEN. Do you have a copy of those recommendations? Are they available? Mrs. VETrER. I have them. Which ones? Mrs. GREEN. The recommendations the interagency committee made. Mrs. VETTER. We have them but I don't know that we are allowed to release them. Mrs. GREEN. General Hershey, you served on that. Are those avail- able to the committee, the recommendations of the interagency com- mittee to the National Security Council? General }IEEsmcY. I am not so sure of the question, Madam Chair- man. What is available? Mrs. GREEN. The recommendations that were made by the inter- agency committee to the National Security Council regarding occu- pational and graduate deferment. General HERSHEY. That I could not answer and I do not like to make this kind of answer because it sounds like passing the buck, but I am not in the channel between the interagency committee and even speaking as I did awhile ago something about what they recommended was more or less, shall we say, bootlegging? I do not have custody and I am not in the channel of those going forward. I only know what the member of the committee that happens to come from my agency tells me. Mrs. GREEN. Thank you. Mr. Qun. General Hershey, again we have met here because of the concern of the effect of t:he draft policy on graduate schools. You said in the closing of your formal statement that: The question of changing to a different system of age groups remains under continuing study by the Administration. A similar question of whether it is proposed Congress legislation to authorize the method of selection to represent the birth systems also remains under continuous study. What that really means, does it not, is that nobody is going to recom- mend a change at this time, `and until a conclusion is reached that there should be a change, we ought to go ithead with the present policy. General HERSHEY. That is the way I understand it because the ~ a- tional Security Council placed the responsibility on certain of the Cabinet officers to keep alert to this and when at least the Cabinet officer felt there was danger to notify the National Security Council. As far as the change in the age business, it is primarily a responsi- bility delegated after the Congress passed the laws last suimner to the Department of Defense. I am, at the very best, merely a broker. PAGENO="0041" 547 Mr. ESOH. General Hershey, let me make sure I understand. It is your understanding that there is no need for further clarification of i~he present draft policy, that there will be a continuing review but under present consideration there is no need for clarification. General HERSHEY. In the first place, I am going to meet a week from Monday with 12 educational organizations. I think one of the discussionswillbe what will they want me to do that I can do within my manpower to do something about this. This is a continuing thing. I expect to see many adaptions and changes. They are inevitable. Mr. QUIE. General Hershey, you mentioned that now the reason men don't serve, who are not inducted, is because of physical inability or mental inability or moral inability to serve. What other means can young men find to say out of the service? General HERSHEY. Well, if we are talking about the deferments in anything approaching graduate school or substitute for it, I feel that we have very, very limited authority to do anything there. Now, obviously, individuals do not go because they are apprentices, they are in the first baccalaureate years, they are in some of our educational institutions that we think lie outside baccalaureate. All of those get deferment. The rejection rate of the armed service, the biggest one factor that prevents people from service, runs almost 50 percent. Mr. Quin. The physical, mental, or moral reasons that are the justi- fications for deferment account for about one-half? General HERSHEY. The moral ones are very small and very alarming in moderate increases. The other is split about 50-50 between inability to pass a mental test and I am thinking of mental, not mental behavior things you normally learn in school, about half are turned down on that and the other half on physical things that have to do with their physical commodities. The great numbers are in those two'. The moral numbers are not great but they are alarming. What is the reason for moral rejection is alawys debatable espeically between the Armed Forces and the Selective Service System because we think they ought to take people and straighten them out and they think they ought to get people who weren't crooks in the first place. Mr. QuIE. I would like to ask a question of Dr. Brewster, if I may, Madam Chairman. We recognize that the present policy is to get the large percentage or large number of young men who finish bac- calaureate work or who are entering graduate school or finishing graduate school. I-how do you think this ought to be remedied and what percentage of the able young men ought to he retained for graduate work this coining year? Mr. BREWSTER. I don't think I can answer that in terms of percent- age. I think that what those of us who are concerned with education have in mind is un~desirability of having the obligation all of a sudden fall on a certain group and there ought to `be some more equitable way of spreading this out by quotas, percentage, bracket or some other system of allocation whidh would spread out the vulnerability to induc- tion so it did not hit a single age group or single class of people all at once. PAGENO="0042" 548 I do think that we are each in our own institutions relatively aware of the prospective impact of the present regulations. In my own case I think it would perhaps at the outside reduce the graduate school enrollment by 20 percent although that would mean reducing the enrollment in the first two classes by a good deal more than that. I think that is a problem for the institution. I would not want to minimize that. On the other hand, I think our concern is to try to have a system which does two things. One is spread the vulnerability of the service, if you will, as equi- tably as possible, and, secondly, to reduce the uncertainty in the selec- tion so that you do not have total loss in the country, ability to plan and ability to complete what you set out to do. These values seem to be more important than the simple numbers of how many should be left in graduate school or how many should be safely withdrawn. Mr. QUTE. But somebody will have to make that determination if we are going to dhange the draft policy. Mr. BREWSTER. Yes. I don't think they would make it on the basis your question may suggest because if you say some system of random selection would put all graduate students in the same pool as 19 year olds, then the fact that that reversal of the oldest first procedure was adopted, would it mean that you have equalized the risk to a consider- able extent but also greatly reduced the sudden excessive impact on a single age group or a single class of college graduates? So that I think approaching it in those terms rather than in terms of trying to achieve a stated percentage would probably make more sense and `be more practical. I realize the legislative inhibitions under the present law on random selection but I think everything that has happened since the legislative consideration last spring, and particularly the sense of both inefficiency and inequity that `has come out of this recent facing up to the realities of persisting in the oldest first as the system of draft, reconfirms every- thing that the President said, everything that the National Advisory Commission said, everything that various Merabers of Congress said in favor of escaping from the oldest first as the only way of selection and therefore probably having to go to some form of random selection. Short of that, I think if it is permissible within the present law, and there is some debate about that, to have an allocation of induction or classification by age brackets will be the next best thing. Mrs. GREEN. Dr. Brewster, I wonder if we might turn to you for any general statement you would like to make instead of just having you respond to specific questions and also call upon Dean Miller. Then we will continue. From this time on we are going to enforce the 5-minute rule. Would you make any general statement as it affects your university and the impact on graduate schools. STATEMENT OP DR. KINGMAN BREWSTER, PRESIDENT, YALE UNIVERSITY Mr. BREWsTER. Thank you very much, Madam Chairman. I am Kingman Brewster, Jr., president of Yale University. I was also a member of the National Advisory Commission on Selective Service, the so-called Marshall Commission. PAGENO="0043" 549 As the majority of that commission recommended, I would, myself, still favor the abolition of all student deferments, at least under the present circumstances and present levels of draft calls and force levels. Now, this is not obviously because I am against college or against graduate school or against students but it is because I think it is bad education and bad national morality to have a class exemption or deferment of this kind unless it is very, very clearly related to some pressing priority national manpower requirement. At present, force levels, at present levels of draft calls, I do not think the case has been made for deferment for manpower reasons other than in the health and dental fields. But assuming that we are talking within the ambit of the present legislation which builds in a deferment for undergraduates, then my next preference would be for a pool into which college graduates join those who do not go to college and all are treated alike on a random selection basis for induction. I realize that although not totally prohibited there are special legislative inhibitions which have been imposed on the resort to a random selection system. So, moving to the third level of feasibility less desirable it seems to me would be, as I was saying in answer to Congressman Quie, that I think instead of having the impact of the abolition of graduate school deferments fall immediately on those in the first 2 years of graduate school or those who are just graduating from college, it would be far better, both for education and for the graduate schools and in terms of equity, to have that liability spread more evenly by age groups. I realize that General Hershey and his people have very good prac- tical reasons for worrying about the administrative feasibility of quotas by age. But I think if more effort and ingenuity could be devoted to this question to see whether by enlarging the age groups, not to expect the quota to be year by year but one quota for age 20 to 22, and another quota for age 22 to 24, it would be administratively workable. Finally, if none of those things can be done, it seems to me there is a very powerful educational argument in favor of a great deal of willingness on the part of draft boards to permit a college year or a graduate school year, once undertaken, to be completed. General Hershey, over the years, has, on the whole, been extremely sensitive to this need for minimizing the interruption of academic work, once undertaken, and I am simply saying that I hope that same sensitivity will be applied in the ease of graduate schools under the proposed regulations so that a person, once accepted for admission, a person who once registers for admission, will be permitted to complete the year for which he is admitted, or a person renewing his enrollment in the graduate school at some point would be told his deferment would again apply fort year and then he would go back into eligibility for induction. It just seems to me that the worst aspect of the present uncertainty is that neither schools nor the students can count on being able to pursue the course for for which they are finally admitted or continue the course which they have undertaken. PAGENO="0044" 550 Now, the impact on the graduate schools of the present somewhat irncertain state of affairs is necessarily hard to predict. Nevertheless, it is quite true that enrollments to decline, the avail- ability of tuition income, the availability of the resources with which to offer financial aid, all of these are put in question by the inability to plan either on the part of the student or on the part of the institution. Finally, of course, there is in different degrees and in different in- stitutions the problem of not knowing whether the graduate students will be available as laboratory assistants or teachiug assistants for the coming year so that the faculty side, the teaching side and research side of the institution are also put into considerable jeopardy. Now, the impact in terms of student enrollment, in terms of financial resources, in terms of teaching resources, is boirnd to be quite different in different institutions. The stronger the institution or the stronger the department within an institution the more likely it is that it can simply reach further clown in the barrel and have a full population. The more resources the institution has to fall ba.ck on to tide it over the 2 years of this dip, if you will, in graduate enrollment, the more likely it is to be able to survive at its present level of quality. On the other hand, those institutions which do not have the drawing power to replace graduate students who are drafted or those institu- tions who do not have~ the ftnancial resources to fall back on to tide them over the 2-yeai dip, I thiuk, are in a very serious situation. Being the presiding officer of a university that has both strong and weak departments, all I can say is that some schools will be hut harder than others and some departments will be hit harder than others. But the dean of the graduate school at Yale, John Miller, is also this year president of the association of graduate schools. So, I think he has a more specific, more explicit, more precise com- mand of the practical situation faced by a variety of schools and, Madam Ohairman, if I may, I would turn the microphone over to him. Mrs. GREEN. Yes, we will be delighted to hear from Dean Miller. STATEMENT OP DR. J~OHN MILLER, DEAN, (+RADUATE SCHOOL, YALE UNIVERSITY Mr. MILLER. Thank you. I am not sure that I can really expand in much more detail on the comments made by President Brewster. The graduate deans, not surprisingly, have been very much con- cerned about this problem from last summer. In various deliberations of the various associations early last fall they considered the alterna- tives in view of the impact of the rules recently announced, which are really a reaffirmation of rules which we saw last summer, the impact that they were going to have on the students and the educational proc- ess as well as upon the particular pool of students that would be drafted. We all, I think, universally accept the principle that the graduate student, like others, should run the same risk of being selected to serve and we have been extremely sensitive to the charge and are aware of the possibility that in the system of draft, as it has been admmis- tered in recent years, those who did go on to graduate school and PAGENO="0045" 551 remained in graduate school to the age of 26 were in a position often to avoid service. Now, we have given a lot of thought to the basic question as to whether the graduate schools were being used for the purpose of dodg- ing the draft. I think there are examples of this, although, in this respect I agree with President Harrington as I understood his state- ment that we felt that this was a minimal effect and that though many were able to avoid the draft, they were in graduate school for legiti- mate reasons and would have been there, draft or no draft. Nevertheless, I think all of us felt that the change in the laws which reduced any incentive, however small, to use the graduate schools as an alternative to being drafted would be desirable to eliminate. Consequently, we have recommended and the association of gradu- ate schools back in October and the council of graduate schools, a larger group, both recommended to people in the administration and in the Congress that as a long-run objective they would like to see a random selection at an early age. If this were made before a person entered into college or at least before he completed college, he would be in a position, if selected, to plan his own career in a way which suited his own objectives. He might serve before going on to college, he might interrupt his college career at the end of the first 2 years or, if the provisions of the program made it possible, he might postpone this until the end of his college career, at which time he would be called upon to serve. Having been called upon to serve and, in accordance with the admin- istrative rules, picked the time to serve, there would be no question of his motives for being in graduate school. I think I can say as a graduate dean that the faculty and the administrators alike would feel a good deal easier under those circumstances. We do not like to be used, to be perfectly blunt about it. We appre- ciate certain factors, I think, all of us, in the rules as they were promul- gated a few weeks ago; namely, they did not provide for categories of graduate students to be eligible for deferments in addition to those already provided by the legislation. It is again something that the deans debated at great length last summer and fall and they were all agreed that it would be divisive and corruptive of the educational system if we were to get into the definition of certain categories of students who are eligible for defer- ments while others were not. We recognize that if the conditions were such that we had drastic limitations of certain very critical skills that could not be adapted to by other diversion of resources, that in time we might come to a different level of mobilization, a different supply of critical skills in this country, we might come to this. This was true during the last war. We were not convinced this was the case at the present time, and in the absence of a showing that this would be desirable we wou'd think this would be quite corruptive and divisive in our universities to start picking out particular skills. After all, the skills that we want, the leadership in the future, depend on not having just scientists and scientific technicians, but people who have the broad training not only in the sciences and mathematics, but PAGENO="0046" 552 in the role which it plays in the social system so that it is important we feel to keep a balanced flow of talent in our universities. We recognize and appreciate the fact that the rules as they were promulgated recently respected that recommendation which we made back in October. However, the impact, as has been suggested by others, and since it has been suggested~ by Mr. Brewster and others I will not elaborate on it, but the impact seems to us to be too sudden with an unnecessary impact, probably for a 2-year period, on our educational institutions, not simply because it affects the graduate students as such but because it. will also have an effect on the flow of the whole undergraduate edu- cational process, particularly in those institutions, and they are very many, and it affepts very many graduates in those institutions where heavy reliance is made for teaching assistants and laboratory as- sistants on graduate students in their first and second years. The reduction in this student body, I would estimate in our own school for the first 2 years, the impact would be about 35 percent of the students, unless we take certain compensating steps and find enough women, 4-F's, and so forth, that we can stockpile. But this does not help the total system. This at best represents one institution's poaching on a relatively limited pool. I think it is fairly clear, and the graduate deans have discussed this, that they will not want to engage in that kind of activity and for that matter will not be able to very effectively. So that an institution such as ours may well find 35 percent of the first- and second-year students would not matriculate next fall. To the extent that you depend upon these students-we do less at Yale than most institutions-but an institution that does, to that extent the teaching of the undergraduates will be significantly affected. These are the principal comments I would make, Madam Chairman. I would suggest that in the absence of a random selection system which would require, I judge, congressional action, some system of dis- tributing the impact over the groups from 19 years old through the graduate students could reduce this sudden impact and spread it over a 2- or 3-year period and the impact and uncertainty could be further minimized if it were made clear that once a student matriculates in the fall he can complete the year or up to an appropriate breaking point by completing a unit of work. This would stabilize the situation most effectively with the present rules. Thank you Mrs. GREEN. Thank you very much, Dean Miller. I want to enter one protest. From the time when we first discussed this, one of my colleagues over here referred to the fact that the only people who would be in the graduate schools would be the lame and blind and women and then General Hershey this morning suggested that the Russians would turn to women only out of dire necessity to fill their professional needs. Now, Dean Miller, I see that you classify as 4-F's, the women who would remain in the graduate schools. So I just want to say that I am one of those who believe that women should be subject to the draft in modern warfare. PAGENO="0047" 553 Congressman Thompson, do you have any questions? Mr. THOMPSON. Thank you, Madam Chairman. I don't know whether women should be drafted or not but it sounds like they will be quite safe in graduate schools. I appreciate very much the contribution that everyone has made. I was particularly glad to hear Dr. Brewster and Dean Miller empha- size what they believe to be the need for a broad selection policy. The humanist is as valuable to the future as anyone else. Now, of course, they are being deferred. I quit.e agree that the impact of the newly announced selection policy is going to be tragic on a generation or two of brilliant youngsters. Moreover, I am not confident that they are going to serve in the armed services and then come back and go to graduate school for a great variety of reasons, not the least of which is that they will have other commitments and perhaps won't have the financial resources notwithstanding the GI bill. I, too, agree that the system as it exists now is inequitable and that there should be random selection induction. I think that young men of draft age ought to be able to postpone their service for the period that they are attending college. So should the apprentices and vo- cational students, so that there won't be the drain from any single segment of our society, the inequitable drain that exists today. I intend to cosponsor Senator Kennedy's legislation on this subject. General Hershey, Mrs. Mink, who had to leave, left some questions that she would like answered. Since the local boards will now have the discretion to determine occupational deferments unless the whole system is changed, based on local community needs and since you have stated your confidence in the local boards to make reasonable judgments, is it correct that local boards have already had discretionary powers? General HERSHEY. They had the discretionary power because this critical list was never anything but evidence. You have withdrawn some evidence. I didn't think it was the primary evidence. I may be very well wrong. I don't expect to see this sudden group in occupational deferment. I would not be surprised if it would go up. Mr. ThoMPsoN. Some boards are going to have much more trouble than others. It is obvious. In Alexandria and Arlington, in northern Virginia, up to 80 percent of the youngsters graduating from high school go to college. Their pool is going to be virtually all college people. The average induction level is going to rise from its present level in that area, and it is not by any means the only such area in which this will occur. Therefore, you are going to have a vast number of college graduate buck privates to deal with in the Army. I think that is going to be quite a difficult thing. Mrs. GREEN. Would you yield at this point? Mr. THOMPSON. Yes. Mrs. GREEN. To go back to the deferment based on community needs, you stated that you do not think that there will be any major change in the occupational deferment. Aren't we really substituting a national policy on occupational de- ferment for a policy that is determined by each community? it would PAGENO="0048" 554 seem to me it would be far more subject to abuse than if there were one national policy that measured in some intelligent way, or at least to the best of our ability, what our national needs were. General HERSHEY. In view of the area in which I find myself today, a man who has 10 granddaughters, I hestitate to even say just any- thing, but it is true that a national policy is a wonderful thing. It never exists, however, except as it is applied. If a national policy happened to be the least bit wrong, and if it were applied completely, then it would be manifestly terrible and a great deal worse than if you had 4,000 policies and probably not more than half of them would be wrong. I think there are a lot of people around Washington who thought that when they went on the critical skill list that they were deferred on it. They were not, because they had to be doing something. A great many people have a skill that they are not using at the time they are looked at, or if they are using it, there are two or three other people who can take their place, and therefore you can't make any virtue of their being necessary where they are. Mr. THOMPSON. But, General, in discussing deferment policy you used the phrase, "people doing something," and yet you are not defini- tive about what they are doing. Nor are you definitive as to those occupations or professions, aside from the field of health, which you consider to be critical. General HERSHEY. The critical skill business we are out of, because it has been suspended, the critical skills as determined nationally. That does not mean that the local board cannot make up its mind on a critical skill locally. I don't believe we have had critical skills nationally very much, anyway. I have as much confidence as some people have in the com- mittees up here that put certain words down on pages. Unless you can relate those to something out in the field, I don't think they have much significance. I want to again insist a lot of times people have thought when you get on a critical list, somehow you walk around with a card, and the local board immediately will not let you in. It was evidence. It was never anything more than evidence. It might have been quite persuasive, because when some Cabinet officer says that a skill is nationally critical, it may have some effect on a local board looking at a man who says he has that skill, and perhaps his employer says so. Mr. THOMPSON. What you are saying, General, is that there is no, and there has been no national policy, and that there are in fact no real guidelines to the local boards. General HERSHEY. No, I would object of that a great deal, because the Congress, itself, has given us pages and pages of guidelines for local board. We have laws that Congress, and I think very wisely, gave the President power to issue Executive orders. National headquarters, not to be outdone, at times has sent out advice, but just the same, that does not mean that they have no guidelines, but on the other hand, it does mean that no one here, either by law or by regulation, is going out into the community where I live and decide by something that PAGENO="0049" 555 comes from here whether John Jones is necessary to teach school out there. I can point out lots of places in the United States where a school- teacher is very necessary. I can point out other places where there are some excess, and therefore we can't be deferring under a general rule. We have to actually see the thing. Even our courts never decide things without hearing the evidence of the particular person who is before the court. Mr. THOMPSON. Speaking of that, General Hershey, how many ap- peals were sent to you from the local boards in 1967? General HERSHEY. I will be glad to furnish it, because where I get appeals mostly are the Presidential Appeal Board. In the first place, a man does not have to go anywhere for an appeal from his local board, because he has one. All he has to do is say, "I do not like this decision." Of course, he may not like the one he gets from the appeal board, but no one is making him fill out some form, accord- ing to some particular guideline. All we want to irnow is that he does not like his deferment, so he has one chance. Mr. THOMPSON. Would you provide us also with information on how many times you have overruled local boards? General HERSHEY. I did not get that. Mr. THOMPSON. Could you supply us also with information on how many times you have orverruled local boards? General HERSHEY. I never overrule a local board-I can answer that very quickly-because the Congress in its wisdom never gave me the power to classify anybody any more than it did the Supreme Court of the United States. The word "classification" is the one that only goes to the local boards, the appeal boards, and the National Appeal Board. The Selective Serv- ice Director cannot overrule anybody on a classification, because lie has no power. I make no classifications. I have never made any. Mr. THOMPSON. Do you have the authority to review decisions or appeals by local boards? General hERSHEY. I have a right, and I get them every night by telephone, because my number is listed, telephone calls from people who want me to take appeal for them. I call in their file, and if there is any doubt, if he has already been through the local board, and the appeal board in his State, the only thing I can do is take the appeal to the National Appeal Board, and I have taken them by the thousands. I will be glad to furnish you with the number we have taken the last year from the Stath appeal board to the National. Once in a great while we take an appeal from a local board to a State board, but unless the man has let his 30 days overrun, he does not have to come to us, because he has that power, himself. ~\That happens is that if he gets up to the appeal board, and they are all against him, and he goes to the State director, and he won't take his appeal, then his appeal is for me to take his appeal for him, but I don't make the classification. Mr. THOMPSON. I understand that, but do you make any decisions, or are you just a conduit? 92-37i-68-pt. 2--4 PAGENO="0050" 556 General HERSHEY. There is some difference of opinion. I think I make a lot. I make the decision of whether I will take an appeal or whether I will not, because when I appeal, it immediately gives the fellow what amounts to a postponement, because I can't take an appeal without postponing, because you have to pull the record out of the line, so they won't induct him he is getting a chance to be heard by somebody else. Mr. THOMPSON. Are there public records kept of these? General HERSHEY. Yes. Under the present law, anyone can see what he wants. We will be glad to furnish any information you want. We can furnish the number of appeals the Directors have taken by years back to the year 1940, or most of them now will be from the State appeal board to the National Appeal Board, because the uninterrupted right of the registrant to appeal to the appeal board of his State does not change except when he overruns. I do not like to see an individual let his appeal time go by, either, because he is careless, or didn't know, because I do not like to have a decision made that hinges on the fact that if he only had done something, the decision would have been different. I tend to take an appeal in any case, or I open up his right to let him take his appeal. That I. have the power to do. Mr. THOMPSON. I see my time is used up. I tha.nk you very much, General, for your very valuable contribution. Mrs. GREEN. Congressman Erlenborn. Mr. ERLENBORN. I think we have talked a great deal today about what the problems are. I am certain that all of us are aware that there are very difficult problems facing graduate and undergraduate students. I would like to explore what some of the alternatives might be, either legislatively, although I personally think the legislative process would perhaps be too slow, or administratively within the present legislation. Am I correct, General Hershey, in my understanding that the law we passed last year prohibits you from using any method of selection other than the method of selection that was in effect at that time, and that is the oldest shall be taken first from his age group? General HERSHEY. It prohibited random choice, but it did not prohibit, for instance, the establishment of the so-called 19-year-olds. That would depend on the call from the Secretary of Defense to the Selective Service System. Now, there is a little question, because we have never done it, whether or not if we would get calls each month for, let us say, six different age groups, I would rule now, and probably get overruled by some attorney somewhere, that that did not constitute a prime age group, because it is still scattered. But if they ask me from the Department of Defense for 10,000 individuals who are 23 years old, under the law I have to take the oldest 23-year-old who is a 1-A. M. ERLENBORN. If the Secretary of Defense designated the 19-year- olds, would you have the administrative ability, within the frame- work of the present law, to rule that those who had recently become PAGENO="0051" 557 eligible f Or the draft by reason of losing their student deferment or through graduation or through the application of the new law to grad- uate students are arbitrarily put in the 19-year-old group and subject to the draft from that prime age group? General HERSHEY. As I understand the law, if the. Secretary of Defense should establish 19, having the call there, then I would expect that anyone who became a 1-A would enter into the 19-year-olds, where his birthday took him. In other words, if he were born in 1942 or 1943, and he entered those born in 1948, that if his birthday was the 12th day of September, he would be a 19-year-old born on the 12th day of September, and when we came to the 12th of September, he would be taken. Mr. ERLENBORN. In other words, you are saying that a 23-year-old who has just become 1-A, through losing his student deferment, would be considered by you to be 19 years old, for draft purposes? General HERSHEY. Yes; on the date on which he was born. Mr. ERLENBORN. Then the month and day within the month in which he was born would determine his age? General HERSHEY. That is right. It would establish him. where he belonged among the 23-year-olds. Mr. ERLENBORN. All this can be done administratively, without any new laws being passed? General HERSHEY. That is right. I have said, and I do not want to leave any impression that I am very happy getting into several age groups at one time, but I do not want to admit as an administrator that I can't do it, because we can. Mr. ERLENBORN. I yield to the chairman. Mrs. GREEN. Isn't it true that in Congressman Rivers' letter to you, dated February 20, that this was, in effect, what he recommended, and he referred to the fact that the Department of Defense, the Marshafl Commission, the Clark Panel, the House of Representatives, and Sen- ate all concurred in the desirability of adopting the so-called modified age system? General HERSHEY. If I understand the question, in my statement I brought out this had to do with the order of induction, or 19-year-olds, or what? I did not get the question. The acoustics here are bothering me a bit. Mrs. GREEN. Is this in effect what Congressman Rivers requested of you in his letter of the 20th? General HERSHEY. Yes. Congressman Rivers, as I understand, asked me two things. First, he asked me about the graduate students, and the answer was quite simple, because that came from the National Security Council. He asked me about the order of induction, taking the oldest first. That was a thing that had already been delegated to the Department of Defense. I have received no calls. I did in my letter to Congressman Rivers defend the taking of them. Now, mind you, the things that have been testified here this morning, that it is going to create a problem, have not happened yet. We should look forward, I will say that, but our law is flexible enough we can solve them on pretty short notice. PAGENO="0052" 558 Now, I know something about the educational world, and you have to make some plans ahead. There is no question about that. But I did defend in my prepared statement the taking of the people at present, because it has been testified here by others this morning that our age is about 20 and 4 or 5 months. If it stays anywhere near there, there is not the need. I am not convinced we will be confronted, first of all, with the loss of occupational deferments, as has been indicated, although I can be wrong. Now, this is a question about these graduate students, but whether or not there are some other factors that will enter into it, I don't know. Mr. AYERs. General Hershey, I apologize for running back and forth to the telephone, but this is a Selective Service case I have been working on. Perhaps you can answer my question, although it does not have a direct bearing on the reason we are here. A young man in Akron, Ohio, dropped out of college in his junior year because, perhaps, he was not cut out to carry college work, although he was doing all right. General HERSHEY. When did he drop out? This year, or last year, Mr. Ayres? Mr. A~iu~s. He dropped out last December. General HERSHEY. That is 1967? Mr. An~s. Right. He enlisted, partially due to my suggestion and that of a nice, effective Air Force recruiter we have in Akron, in the Air Force. He passed his examinations, and is all set to go. They told him in January that they would love to have him right now, but their quota was filled until May. This morning he got his induction notice to go in on March 20. Where does he go from there? General HERSHEY. He will come to me. That is about where the thing lies. Was it the Regular Air Force, or one of the Reserves? Mr. AYRES. The Regular Air Force. General HERSHEY. The reason I ask that is I have been told by the Department of Defense not to postpone anyone to get in the Reserve areas. Mr. AYRES. He is ready to go right now. General HERSHEY. Yes, except the fellows who will enlist him will be ready in May. Mr. AYERS. Maybe we have too many recruiters, maybe they are doing too good a job. General HERSHEY. If anybody wants to enlist, for a lot of reasons we ought to let him do it. In the first place, we will probably enlist him for 3 or 4 years, in- stead of for 2. One of the things we are up against is whether or not they will take him in May. Mr. AYRES. They have promised they would take him in May. General HERSHEY. I know. They promised to take him in December, too. PAGENO="0053" 559 Mr. AYRES. They would like to have him right nob. General HERSHEY. We will look into that. I don't want to make anybody think I make snap judgments, but ~ help youngsters out like that a great many times, although I must say that our good friends over in the Armed Forces are quite lavish with promises of when they will take somebody, and then they will sud- denly take somebody else, and their quota is lower. At the present time I am helping a youngster out that was promised that they would take him in January. Somebody else came along that they preferred, so they postponed~ it. again. I am waiting it out with the youngster. I am openminded, and have a. lot of sympathy for these individuals. I was in the Armed Forces. I used to get recruits that had been told where they were going by recruiters, and it was not to Fort Bliss, Tex. Mr. AYRES. Thank you very much, General. I know with your rep- utation for fairness, we will be able to work this out. Mrs. GREEN. Mr. Erlenborn. Mr. ERLENBORN. To complete my line of questioning, if the prime age group of 19 were designated, and the graduates of this year and the graduate students who are losing their deferment this year were all thrown in the same pooi, could you tell me approximately what numbers would be in that prime age group? General HERSHEY. In the first place, of course, the 19-year-olds- and remember the system recommended by the Advisory Committee had an idea that there were going to be no deferments. Now, we have to subtract from the 19's, all the individuals who will be in college. Normally we start with about 1,900,000. Probably 700,- 000 will never pass, anyway, and part of those are deferred, but I think you can find that these individuals, whatever hundreds of thou- sands there are coming out this next spring, would probably drop into an area where they would be perhaps one for one, or perhaps two 19- year-olds for each one. I would think probably that their numbers would be less than the ones that the 19's had deferred, there is no question `about that. Still they would be a sizable part of it, but not near, of course, the fraction that they would be if they were off alone as 25-year-olds or 24-year- olds. Mr. ERLENBORN. In other words, the recent graduates and those who just lost their deferment would have a chance, maybe 50 percent or 33 percent, somewhere in that range, of being drafted, rather than 100 percent? General HERSHEY. Yes. I don't think it is a hundred percent. On the other hand, this is one of the unfortunate things. Suppose the boy's birthday is in October, and he thinks in that year they will not get down to him, and it is touch and go, and then the call goes up, and here he goes to school, and then we have to either take care of him by trying to make' some provision to let him stay in. Certainty on random choice is only relative. You never know in a random choice whether they are going to get to you or not, because it all depends on supply and demand. Mr. ERLENBORN. Thank you very much. PAGENO="0054" 560 Mrs. GREEN. Congressman Scheuer. Mr. SOHEUER. General Hershey, I have enjoyed your testimony; if at times my reactions have ranged from the confused to the bewildered to the perplexed, it is perhaps because you are the Casey Stengel of the executive branch. I would like to ask one question, prompted by your remark that just about half of all rejections from the armed services are the result of educational and physical inadequacies at the time of induction. Have you followed the experiment called the Project 100,000 of the Defense Department, and do you see an elaboration of that kind of approach? Do you see massive concentrations of remedial help to those who have few-and quickly remedial-physical and educational de- ficiencies as an important potential in the military manpower crisis that we are facing? General HERSHEY. In the first place, I am all for the 100,000 pro- gram. The 100,000 program was aimed primarily at mental rather than physical. We have not gotten deep enough into this 100,000 pro- gram to begin to do very much about the remedial for the physical. I happen to be very strong on that, too. Mr. SCHEUER. They did have a list of physical ailments which could be cured with a recuperation period of 60 or 90 days. General HERSHEY. But 100,000 is hardly a drop in the bucket, when we have 5 million. Mr. SCHEuER. I understand it was only an experiment. General HERSHEY. Yes; but I am in favor of it. Mr. SOHEUER. Can you tell us something about the results of this experiment? General HERSHEY. No, I can't., because in the first place it is carried on entirely by the Armed Forces, and I do not have access to these men after they either get accepted or get rejected at the induction stations. The Armed Forces really should tell their story on that, because I know little about it. I just know I am in favor of getting everyone in that we possibly can, because I think we can raise the level of Ameri- can citizenship. Mr. SOHEUER. Can Mrs. Vetter, or any of the other members of the panel, comment on this project, what hope it may hold for us? Mrs. VETrER. Yes, sir; we have about 30,000 more to take in next year to fill that particular program. The rejection rate of these men is not much higher-not rejection, the failure rate-the ones that the Army simply won't take on after basic training is not much higher than that for the services as a whole, so I think at this point it is being a very profitable program. It does tie up a lot of instructors. These boys get special attention in that there are more instructors per student than there would be in the regular system, but I think it is a very valuable program, and one in which if DOD was not so tied up with fighting a war, tha.t they im- doubtedly would wish to expand. Mr. SciIEtvR. Within the last 24 hours our country's greatest ex- pert on cost effectiveness in the ~thlitary service has left us. Is there any likelihood that we are going to do a. cost-effectiveness study of Project 100,000 to find out whether that investment of military man- power involved in the concentratiOn of resources in instructing these PAGENO="0055" 561 kids and helping them with their physical ailments is a cost-effective way of producing additional military manpower, as against all of the other options we have: Taking kids out of vocational schOol, and col- lege, and teaching positions, and what-not? Don't you think, looking at the four corners of the experiment it- self, you could present a prima fácie case of being encouraged to go to the cost-effective study to see how it compares with the investment of resources in `the other ways of getting military manpower? General HERSHEY. This study is already being made. The cost of training one of the men in the 100,000 project as opposed to the man who comes in from the draft, but you won't know' the answer when you get through. It costs more to train a man in this project than a regular inductee. On the other hand, the cost of letting this man not be used in the Army is not calculable. If he is capable of doing something else, and he would probably be employed at something else, that is one `thing. If he were standing on a street corner or raising a riot, that is another thing. So the cost of making a soldier out of him is greater than the cost of making a soldier out of a boy who is not deficient, but in terms of national cost, I don't think it can ever be assessed. But I think most of us think it is a price well worth paying. Mr. SCHEUER. It seems to me we ought to try to assess it, because of this assumption. You have a negative cost of getting him into mili- tary service, of getting him through the sound barrier, so to speak, but a positive cost-effectiveness implication of getting him out from where he would have been. Whereas with the chap who is the university instructor, you have very little cost getting him into the manpower pool, but you have a negative cost of taking him out of where he would have been. In other words, he was performing positively in society, so it has cost something to take him out. It cost very little to make him art effective component of the military forces. `With the kid we are talking about in Project 100,000, it costs us substantial resources to get him functioning effectively in the military service, but we have a positive saving in removing this lad from the point where he was about *to present a serious cost to society, and himself, of staying as a civilian without training, education, and health that would make him function effectively, and positively, and inde- pendently in American life. It seems to me that it is obvious that we ought to have some kind of cost-effectiveness study of the implications to society, concentrating on getting these kids into effective roles, both for the military and sub- sequently for the civilian society, as against the cost to society of taking that young kid doing graduate work, or perhaps engaged in teaching at universities. Does anybody else on the panel want to respond to this general area of inquiry? I yield, Madam Chairman. , Mrs. GREEN. Dr. Brewster. Mr. BREWSTER. Madam Chairman, I simply wanted to comment on what I think was an extremely important and I think highly promis- ing statement by General Hershey. PAGENO="0056" 562 As I understood his answer to the last question, on the issue of the prime age group, he believes that if he were instructed by the De- partment of Defense to work out a system or administer a system which put the graduate students who have lost their deferments, the present college graduates, and the 19-year-olds who are not in college or vocational or apprenticeship training, into a single class of eligi- bles for 1-A classification for induction, that this, (a) would be legal, and, (b) could be administratively feasible. This seems to me to be an immensely important revelation. I think those of us in the educational community had hoped that this were pos- sible. We had feared that either it was opposed by those in charge of the policy, or that it was not thought to be feasible by those in charge of the policy. I realize that there are these problems of legal interpretation, but with the support of those who played a major part in the passage of the present legislation, I would simply want to say as a member of the educational community, I would hope that General Hershey's promising statement, that he does not want to say it is impossible, and would make every effort to make it possible, will be followed up. Mrs. GREEN. May I say, Dr. Brewster, that the chairman of the Armed Services Committee feels this way. I have talked to him about it. This is clearly within the law, and they do have the authority to do this at the present time. It does not require legislative action. Mr. Qmi~. Will the gentlelady yield, on that? It is not the responsibility of General Hershey or the responsibility of L. Mende.l Rivers. It is the responsibility of the President to do it. Mr. HARRINGTON. The Secretary of Defense. We would like to underscore this, because `it is `a key point. As Congressman Erlenborn said, "to get legislative change now would be very difficult, and would take a substantial length of time. Therefore, in taking care of the immediate problem we face, adminis- trative changes are much more desirable." If, as General Hershey says, the Secretary of Defense ordered, speci- fied, that you poo1 age groups, then these people now graduating from college would be considered age 19, as well as the 19-year-olds, and therefore a recent graduate of college who wanted to go into graduate school, born on June 1, would be younger than a 19-year-old born in January, by this device. That would mean, therefore, that you would not be pulling in all `the graduates of college, all the graduate ~tudents. You would be pulling in some of them on an equitable basis, but would be keeping graduate school's functioning. You would be training teachers, you would be training research people, and you would get `a flow of people `into the selective service at different ages, which, of course, would be better, from the military point of view. Mrs. GREEN. Congressman Bell. Mr. BELL. General Hershey, I just have two quick questions. What :jS the philosophical justification for providing by law for the undergraduate deferments? General HERSHEY. Providing by law what kmd of deferments? PAGENO="0057" ~pc) uuo Mr. BELL. Undergraduate deferments. General HER5I-IEY. Is there any question abOut the fact that the law did not provide for everybody who was, a candidate for the baccalaure- ate-maybe I am not answering-I don't know that I can answer that question, because in the first place I was around here most of the spring a year ago, and at that time I suppose I would not have imagined that we were going to have almost complete deferment for the baccalaureate. The advice that I received in quite a number of these was not in that direction. When I was back in Indiana as a kid, very few people went to high school. By the time we got into World War II, it was taken for granted that we ought to let a youngster alone until he gets through high school. I am not so sure that we did not move up one more step and say that now the basis is a baccalaureate. I am here in front of these educators, and I am sort of embarrassed, because they know more about philosophy than I do. Mr. BELL. In that case, why would not the same justification apply to graduate students? General HERSHEY. If it takes 20 years to go from high school to acceptance of the baccalaureate, I don't know how much further it goes to get to the graduate. You see, one of the things is that when you are fooling with a high school kid, you can always say you will get him when he gets into college. When you go to a baccalaureate, you can say you will get him when he gets to graduate school, but when you are getting to graduate school, you are almost getting to the place where you are not going to get him. That is one of the more practical things of philosophy. Mrs. GREEN. Don't you extend the age until they are 35, for some? General HEI~sIi~Y. Yes; but we have had no calls for anybody above 26. Mrs. GREEN. I mean on the point you just made. General HERSHEY. The Department of Defense would probably think if a graduate student was so old that you could not teach him much, that if he got to be up toward 35, he would not be any better. Now, we do take, of course, the physicians and the dentists up to 35, because, in the first place, it takes a little longer for them to get to the place where they can practice their profession, but during World War II, when our mobilization was a lot more complete than now, we went up to 45, and then discharged about 700,000 individuals because they were over 38, and then we backed away from 38 to 26, and then went from 26 up back to 30. Frankly, I did not have very much to do with it, except having to go where there were people, but I saw pictures in the funny papers of a man pulling petals off a clover, saying, "I guess we will, I guess we won't." Mr. BELL. I have one more question, General. Isn't it true that the general philosophy of the Defense Department seems to be that the better soldiers are those in the 19-year-old age bracket? And isn't the combined effect of Public Law 90-40 and the recently announced decision regarding graduate deferments one that virtually guarantees the drafting of older men first? PAGENO="0058" 564 Do you view these factors as somewhat inconsistent with the Defense Department philosophy of considering younger men as better able to pick up arms? General HERSHEY. I don't think there is any question about it, prob- ably. On the other hand, you see, we always have some planning that puts in five or six things, such as taking no deferments, all 19- year-olds, and random choice, but when you take out any one of those three, what you have left is not what you started with. One of the problems we are in, and as an administrator I am always stuck with something that started out as a package and then they took out a part of them and put in some others, and when we ended up it was wha.t has been rather lovingly referred to as a hodge-podge that Selective Service was responsible for, because we were following it. Now, I am not one of those who believe that you can't train people a long time after they leave 19. However, I am not the person who has anything to do with the ages that come from the Armed Forces, except to furnish them, if I have any way of possibly doing it when they ask me to. Mr. BELL. I did not ask the question with reference to the fact that you can train ~people over 23, 24, 25. The policy seemed to me rather inconsistent, when the Defense Department keeps talking about 19- and 20-year-olds as the ones most ready, willing, and able to take the kind of physical effort and training required, whereas those in the graduate schools are getting further along in their thinking, and less able to adjust to some of the rigors of military life. General HERSHEY. One of the problems all along is in talking of the 19-year-olds, they were talking about individuals who were all the way from 19 to 25, yet we spoke of them as if they were 19-year- olds. The next thing is that I am prepared to defend the thesis that a person can go through graduate school and still be able to do most anything that has to be done. I have a little more confidence in them than others do. Mr. SCHEUER. In other words, graduate school is not entirely a crippling experience. Mrs. GREEN. Congressman Steiger. Mr. STEIGER. Thank you. Madam Chairman. I appreciate your gra- ciousness in giving me a chance to sit in with the subcommittee. President. Harrington, of the University of Wisconsin, is a man for~ whom I have the very highest respect, my father having served as a member of the board of regents of Wisconsin, and as president at one time. Dr. Harrington is an outstanding president of a great university, and a man who is recognized throughout the country. It is a pleasure to have him here this morning. The Milwaukee Journal, President Harringt.on, on February 11, had a short statement that indicated that the University of Wiscon- sin. may have to turn away some undergraduates next fall because of the loss of graduate students. Is this an accurate assessment, or do you not yet know ~ Mr. HARRINGTON. We do not yet know. We are in a state of great uncertainty, and we think we would be able to judge a lot better if PAGENO="0059" 565 this system which General Hershey outlined as a possibility were asked for by the Secretary of Defense. In answering the question, I should say that Congressman Steiger is a graduate of the University of Wisconsin, and we are as proud of him as he is of us. Mr. S'rEIGEn. Thank you, sir. General Hershey, would you have any comment at all, or any counsel you can give to the committee, on the announcement I saw last night by. the president of the National Student Association that they were going to recommend to their affiliated student body orgarn- zations throughout the country that all students whose classifications are changed take whatever action is necessary, and use all legal steps that are available, to appeal local selective service board rulings as to deferments or classifications? General HERSHEY. In the first place, I would like to feel that every one of those things were available to every registrant. I have so much faith in a great many registrants that do not belong to the top level of this particular organization that there are a lot of people who will not take them unless they feel they are justified. I still have great faith in our youth. I have to spend most of my time with a very, very small percentage of individuals. I would not have any quarrel with anybody taking an appeal that has a right to take an appeal. On the other hand, obviously, I could not support, I would not want to be found with individuals who say one of the ways we can have a great, constructive democracy is to keep our feet in the aisles always, so that people will be falling over them, and therefore we can that way slow up the march of progress. I don't believe in that, either. Mr. STEIGER. What would your best guesstimate be as to what the impact would be on local boards, and State appeal boards, and on the Presidential Appeal Board, if action were taken by thousands of college students who might take the action urged by the National Student Association? General HERSHEY. It will increase the load a great deal, and perhaps I may have to be over for more money. Some of those things will have some effect. Personally, I do not believe that the individuals who for the last several months have been advising people to do everything in the world have had much effect. It has had little. By and large, the youth of this country are a lot better than some- times we admit. I am pretty strong for the kids of this country. They don't buy all this stuff. Mr. STEIGER. What is the availability of administrative action to implement the recommendations that both President Harrington and President Brewster made this morning, on the question of allowing graduate students to finish their year of study, thus not having their studies disrupted by being drafted? qeneral HERSHEY. I am hopeful that next Monday we may have a fruitful meeting. I am going to meet with representatives of 12 of these different organizati~ns. I am not so sure what the practical things are. We cannot have a fellow run in and register the last day before we are going to induct PAGENO="0060" 566 him. It is going to take some sort of thing we call understanding or rules. WThether Or not we can figure out something, I don't want to say, but I will certainly be there trying to do my share in trying to arrive at something that is sensible and fair and is compassionate to the extent we can be be for the average student. Now, there are a lot of rights the students does not have, but he ought to have a little more than his rights. Mr. STEIGER. But it can be done administratively, or would it take an act of the Congress? General HERshEY. Of course, it is just a question of whether the Director of Selective Service can face up to quite a lot of other com- mittees, if he was postponing people who were in school 1 day, and they already had an order for induction. Somewhere we have to draw some sort of line on who we are going to defend. We cannot defend everybody, I am sure, because these are compromises. If we get somewhere, it will be because there is good will on both sides, and that we will set some sort of practical thing, and then we will try to operate it. But I invite postponing power. That is the only thing I have. It certainly would be ridiculous for me to postpone somebody for 4 years. As to what we can do, I don't know, because I don't know all the problems, I don't know all of the suggestions that they are going to make, but I `am going to have a meeting next Monday. Mr. STEIGER. Madam Chairman, I do want to make sure that. I, for one, take this opportunity to thank General Hershey for the one change which has been made in terms of deferring junior college stu- dents and vocational school students. I think it was an appropriate change. It was made consistent with the law, and consistent with the intent of the Congress, so that one thing has been cleared up. Let me ask just one further question, if I may. In the New York Times story on draft deferments they quoted what they called White House sources, saying President Johnson had de- cided to reject recommendations for a proportionate selection process by age groups, because it would have been unfair to draft. registrants, and administratively unworkable for the Nation's 4,000 local boards. I would take from your comment this morning, General Hershey, that you would not entirely agree that this is impossible, that you do in fact find it feasible and administratively workable to make such a change. General HERSHEY. I think it is going to be, I think I used the word "bedlam." The particular thing you referred to is a rather sensitive point with me, because I worry sometimes about what. a boy doesn't hear, that. calls me late at night at honie, when this conference took place, and the next thing is I know he may not know just what I said, and after he writes a pretty good article, sometimes that gets rewritten, and when the head writer gets at it, you have really had it. That is what went on in this case. I want to be clear I am not here recommending that we are doing these things. On the other hand, I am not going to tamper with what- PAGENO="0061" 567 ever techniques, and I am not saying I can do something that I don't want to do, so therefore I find myself in an awkward position. As a tactician, I have not yet seen the things that are pictured today. I would be in a quite different position. You say why go clear up to there. That is one of the things, unfortu- nately, we have to do in life more than we ought to. I want to be perfectly clear that I have never said that we could not do it. I think an individual in one of the departments of Government said that I said, I think lie gave the reason, why they did not do some- thing is because I couldn't do it. That is all right. Under the first amendment, he has a right to say it. Under the fifth amendment, he has a right to say, "No comment," on whether he said it or not. Just the same, I have never said it. I do not intend to say it. Maybe after I fail, I will say it, but I won't fail without trying, if somebody makes the situation up. Mr. STEIGER. I appreciate the fact that this panel is here this morning. I am grateful again to you, Madam Chairman, for giving me a chance to sit with you. I hope you will take the opportunity to have the new Secretary of Defense up here. I think it is most appropriate to have his comment on what changes he would be willing to make under the circumstances as outlined by the educators who are concerned, and who have a real rea- son to be concerned. Mrs. GREEN. Congressman Reid. Mr. REID. Thank you, Madam Chairman. I would like to add a warm word of welcome to President Kingman Brewster and my apologies for having to be absent, myself, briefly. I take it, President Brewster, that you would particularly favor action that might place graduate students and college graduates in a much broader pool, perhaps even to include undergraduate students on some basis of random selection, if that could be worked out, and, absent that, rearrangement by Executive order, so that the liability for service in the military could be more equally shared, and the impact on both teaching resources and graduate students would be minimized com- pared with the rather drastic implications at the moment. Mr. BREWSTER. Yes, sir; that is correct. My impression is that the impact on graduate education would be roughly cut in half, if you did that. If you join the nondeferred grad- uate students and medical college graduates with the 19-year-olds who were not in deferrable educational situations, then only about half the number of graduate students would be likely to be called than would be called if you persisted in the oldest first and operated under the most recent regulations. Mr. REID. If we do not do this, isn't there a danger, aside from the obvious impact on the educational system and on what we are doing versus the Soviet Union, of creating an adverse impact on the student, who feels that all should have some degree of service, but that we should not single out the graduate student and that the privilege of going to college should not mean a ticket to Vietnam. Mr. BREWSTER. That is right. It is an administrative approximation to what I think would have been the most desirable, and that is not PAGENO="0062" 568 to have any special classification for students, at this level of draft call, at least. But not being able to do that within the existing legislation, it seems to me that broadening the pooi to put together the graduate students, the recent college graduates, and the 19-year-olds not in college is the fairest thing to do. Mr. REID. Thank you. General Hershey, taking that formulation, is my understanding correct that if the Secretary of Defense recommended such pooling by Executive order of the President, action could be taken almost imme- diately along that formulation, without any reference to the Congress? General HERSHEY. I don't think we have any reference to Congress. There is some administrative thing. The physical examination will have to be turned very rapidly in another direction. I don't know how quickly we are talking about. Personally I don't believe we are going to have any trouble before midsummer. In the first place, I don't see the individual being pulled off the occupational deferments. I may be wrong, because in the first place Dr. Trytten was my adviser for many, many years, and I don't want to blame him for what I am going to do now, but when he says we have a danger, I hear it, but I don't happen to quite join him, so therefore I think our problem is going to be midsummer or later, because that is the time that we start this processing, and it is going to take 90 days if we have not already got these people moved along up to physical examination. It is a rather long process. Therefore I do think there is time, before this thino will be critical, if somebody in the Department of Defense decided t~iey are going to go to either one or two or three different systems. You don't have to go to 19-year-olds. I don't like spattering them all over five or six different age groups. If you do it, then you will still have each fellow dropping back in the age group from which he comes, and you will get some scatterment on that. Mr. REID. Dr. Miller, could you comment a little bit on the urgency of this question? Mr. MILLER. I do think it is a little more urgent, if one cares about the impact on the students and the educational institutions. One already sensed last fall the withdrawal of a small number of students who graduated from school, those who had planned to go on, who did not matriculate. The number was small but noticeable in most of the graduate schools where I contacted the deans, because of the feeling, "Well, we are being allowed to have 1 year in graduate school. Let us not bother to start." Now, if the situation remains uncertain, as it does at the present time, and we do not face the problem of clarifying this matter until the summer, I think we will have a fair number of graduate students who say, "Fine, under the present rules as I interpret them, I am one of the older people who will be pulled out, probably. I don't know whether it will be October or December or February. Why bother to start graduate education? Let us take 3 or 4 months, get a job somewhere, bum around the world, do something." PAGENO="0063" 569 This may not be bad, but the impact on enrollments will be greater. This then will have the kind of repercussions implied in some of the comments of President Harrington concerning his ability and our ability to count on graduate instruction, and consequently will have repercussions on our planning. Students are planning, and we are planning, and will be between now and June. As a `matter of fact, each successive week we are closing out alternative courses of action. Mrs. `GREEN. May I say, General Hershey, I think the members of this subcommittee feel that there is a great urgency about `having some kind of policy, so that the colleges and universities can make their plans. Beyond this, the fellowships over which this committee is now struggling, in terms of the numbers, the Office of Education announces the awards `in March and April. If this matter is left up in the air, if there is no policy that `is apparent to `anyb'ody, and if they do `make the award to `a student in March or April, and then in October he is drafted, they point out to us that the funds are frozen, they are not going to be used. You are creating a prthlem all around. It would also seem to me, and although t'his is not particularly the subject of our concern this morning, that there is urgency in terms `of students who will be looking for jobs. People won't hire them if they are going to be subject to the draft. May I say as one member of this `committee I must disagree with this. I think there is a great urgency. I think it is very critical. I cannot express to you in too strong `terms the concerns that the members of this committee have. Mr. REID. Thank you, Madam Chairman. I have just one final comment and question, General Hershey. I share what our chairman has just said. I think `the urgency is a critical national urgency, `both from the standpoint of our students `and from the standpoint of the universities. If the Secretary of Defense made a `determination with the obvious approval `of the President on the pool suggestion which has been raised by our witnesses this morning, an'd if he made the decision on on the 1-S-C deferment for the graduate student, to complete the year that he was in the middle of, would there be any difficulty in your implementing that almost immediately? General HERSHEY. In the first place, I don't think we need to im- plement it this year. What you need probably, if you are going to try to pretend in a time th'at we are in now, where many individual's do not know whether they are going to live until tomorrow, it is a little bit awkward to start out demanding that here is an'other group of people that have to know. On the other hand, don't misunderstand me. If you announce now what you are going to do, it will have, I think, a very good impact. I don't think there is any question but what selective service can accommodate itself to whatever we are asked t'o do. I will say this. Anybody who starts out thinking because it looks so they are not going to be taken now, and next December, for instance, let me stir up things just a little more, the Congress in its wisdom told the President that whenever we needed some of the baccalaureates, th'at he was authorized to take them. PAGENO="0064" 570 But within the limited certainty of things going as they are now, my `answer would be "Yes." Mr. REID. I would merely `add this comment, General Hershey. I appreciate your answer that it can be done, and it can be done promptly. I think the concept that some of us, at least, hold is that all Ameri- cans should face an equal opportunity for service. I personally would favor random selection, some form of lottery. We `are not faced with that at the moment. I would be happy to consider. it, either through the President's action or the Congress action, but I do think it would be highly inequitable to the institutions, individual and national interest, to suddenly draft all of our graduate students and our college students, or place `them in a position where they are `about to `be drafted. That does not seem to me to be equal treatment, or equal or wise planning, so I very much hope that you will consider this matter. I am sure that our committee may well want to talk soon with the Secretary of Defense. Thank you, Madam Chairman. Mrs. GrinnN. Yes. I will say I will agree with those comments, and will make one additional one. I am not sure that I like a policy which makes the college graduate and the graduate student the most vulnerable group in our entire coun- try. It seems to me this is what the current policy does, unless there is a change. General Hershey, if I may again refer to Congressman Rivers' let- ter to you, and this relates to a point which President Brewster men- tioned, and I think it was his third ailternative, but something that could be done right away. Congressman Rivers said: On the other band, I do have reservations concerning the manner in which this policy decision may be implemented. I believe certain aspects of this deci- sion require additional study `and possibly corrective action. Many educators point out that this abrupt change in graduate student policy makes no provision for a student pursuing graduate studies who may at some time in the future be identified for induction. It would appear that these graduate students would not under existing regulations or policies be permitted `to finish the academic term in which they are engaged. Obviously, to require the graduate student to abruptly terminate his studies in the middle of an academic term will have an unfortunate and adverse impact on not only his own personal academic effort, `but also on the administrative planning of the institution in which he is enrolled. Could you advise this committee if there is any decision by which the Selective Service System could respond to the suggestion made by Congressman Rivers' and by others? General HERSHEY. I thought I testified today that the individuals who came either under the 12-month rule of last year or under the 1-year rule of the master's, or under the 5 years, whatever it wa's, for the doctor's, I considered that this year it was given to these short of the 1 year, and I still consider it so. Therefore, I should do anything I could if I heard `of `anybody who was in graduate school under the 1-year rule being interfered with short of the year. I don't know whether that answers the question, or not. The next question is what are we going to do about the individual who goes into graduate school next fall, `and when do we have to get PAGENO="0065" 571 a certificate from the school saying this fellow is accepted, and if we know `mything about when we are likely to take him If we are going to take him in October, thit would be quite differ ent than it looks if we are going to t'tke him in February Mrs. GREEN. Suppose a person loses his 2-S deferment, and he is given a fellowship in March or April, and he has no knowledge of whethei he is going to be drifted or not, and he staits school in Sep tember, and he is admitted in graduate school. In October he receives greetings from Uncle Sam. Is he allowed to finish that year? General HERSHEY. At the present time, lie is ilot, but that is what we are going to talk about, I understood, a week from Monday. On the other hand, I do think that the fellow who is 25 years old, that has no idea when they are going to draft him after he gets out of this present deferment, ought to use some little different calculation. If he is 21 years old, I think it is quite another matter. Mrs. GREEN. General Hershey, it seems to me this is the point of Congressman Rivers' letter. If this person is in graduate school, and he has enrolled, he has been accepted in September, Congressman Rivers makes the point he ought to be able to finish out the semester. That is the point. Has there been a decision, or is there the specific matter that you are going. to be discussing at the Monday meeting, and you will arrive at a decision then? This does have a direct bearing on the legislation which we have before us. General HEiiSHEY. If we are still talking about the individual who went in before `October 1 last year, for a year~ Mrs. GREEN. I am not talking about that. General HERSHEY. Which one are we talking about? One of the difficulties about all these individual cases, I know quite a bit about them, I have some difficulty in even knowing which one of the groups he belongs to. This fellow now isgoing to get his deferment next fall? Mrs. GREEN. He has lost his 2-S deferment, under the current policy. General HERSHEY. Under which policy? Mrs. GREEN. Under the current draft policy. General HERSHEY. How; at this time of the year? I am a little bit at a loss to know if-he is now an undergraduate, or graduate. Mrs. GREEN. He is either a college graduate, or a first-year graduate student, either one. General HERSHEY. It makes quite a little difference. If he is an undergraduate, if he has lost his deferment, it is either because he is 24, he is thrown out, or he has graduated. Those are the three ways he can lose it. If he is a graduate student, and he went in a year ago, and he has been in less than a year, he has a year less, there is no question about~ it; unless he makes some other arrangements he is eligible. Mrs. GREEN. Let me try to clarify it. Suppose a man graduated from college last June. He applied for a fellowship. It is announced that he will receive it as of March or April. 02-371-68-pt. 2-5 PAGENO="0066" 572. He is enrolled in the college next year. He knows that he has lost his deferment. He enrolls in the college in September. In October he re- ceives his induction notice. I want to know if he can finish out that academic semester. General HERSHEY. You are talking about next autumn? Mrs. GREEN. YeS. General Hr~1~snEY. Unless we come to some agreement on Monday, the answer is "No," because in the first place he did not even have a deferment this year. Mrs. GI~N. That is my question. This is the question that Con- gressman Rivers asks, and he asks if these people will be able to finish the academic semester. Have you responded to Congressman Rivers' letter on this point? General HERSHEY. I have a few thousand of these cases go through, and it varies so greatly unless I know the elements of this thing. As I understand it, now, we have a boy who is not even in school. If he isn't, he doesn't have a 2-S. The question is, if he gets a fellowship, will we let him finish next year. Obviously, until we do something that we haven't done, the answer is "No." Whether I told Chairman Rivers no or not, maybe I did not know what he asked. Mrs. G~N. May I associate myself with the very distinguished chairman of the Armed Services Committee in making this request, that serious consideration be given to this, because it does seem to be tremendously important. Congressman Reid. Mr. REID. I merely wanted to pursue this one step further, if I could. Am I correct, General Hershey, that there is now a policy that a student who has matriculated, is in a graduate school, has had sev- eral months in a graduate school, would be subject, nuder the new regulations, to immediate draft, as opposed to not being permitted to complete the academic year that he is presently in the middle of? General HERSHEY. Whether he has a 2-S or postponement, he is entitled to complete a year, because that is what we promised last fall. We are talking about a graduate student who never had been a grad- uate student last fall, went in as a graduate student. He has a year, unless the college throws him out. Mr. REID. Let me put the question another way. I am talking about the case of a graduate student who has been there a few months of the first academic year, or a graduate student who is partly through his second academic year. Is either of those permitted to complete the academic year that he is presently in? General HERSHEY. In the first place, under the Executive order, he had to be in graduate school by the 1st of October, 167. If he has gone in since then, he is not under any rules. The most we could hope for him is grace, because he has no right.. If he went into graduate school, the person was accepted by gradu- ate school, before the 1st of October 1967, he has a year of grace. PAGENO="0067" 573 Mr. REID. But the student who went in in September, or started at some other point in an academic year that the institution might have, is not permitted to complete the academic year? General HERSHEY. If he had already been in during 1966 and 1967, and was a candidate for the master's degree, as one of the witnesses pointed out today, he is entitled to a year. If he is a candidate for the doctorate, he is entitled to 5 years minus whatever he has had. Mr. REID. But he is not entitled to complete the year if he is in the second year of a 2-year degree? Mr. BREWSTER. With your permission, Congressman Reid, if I under- stand it, if I may ask the General a question through you, it has been quite normal for Selective Service to postpone reclassification of those who have a student classification until they have completed the aca- demic year. Is that right? General HERSHEY. That is right. You have a law, 1-S. Of course, if he had 2-S the year before now, under the new law- Mr. BREWSTER. Now we have a situation where the rest of the popula- tion is classified 1-A. There ha:s been no procedure whereby Selective Service can postpone or change the order of call of those who were once classified 1-A. Is that correct? General HERSHEY. That is right. Mr. BREWSTER. What is involved in the present situation, in order to respond to Congressman Rivers' request, is the decision of a new willingness on the part of the Director of Selective Service to direct boards with respect to the order of call, as well as the classification. Is that correct? General HERSHEY. I do not understand Mr. Rivers went to the change of order. I thought he was talking about how do we save t;he man who is already in, has probably paid tuition, made all sorts of arrangements, and how do we save the man. There have been two propositions from the educational world. One was to save him at the end of the quarter, or trimester, or hopefully, to the end of the year. Mr. BREWSTER. I think that is entirely right, but the procedural diffi- culty is that under the new dispensation, you will have people who are enrolled students, but do not have student classification. The only way you can affirmatively respond to Mr. Rivers' request is to use the authority of your office to request the local board to affect not the classification, but the order of call. General HERSHEY. What we do is postponement. That affects the order of call, so far as he is concerned, but nobody else. Mr. BREWSTER. Have you in the past directed local boards to post- pone the call for induction of a person who is classified 1-A? General HERSHEY. I have the power to postpone him, and therefore the local board does not have to act, because it takes the responsibility off their shoulders. Mr. REID. I thank the president of Yale for his assistance and for that clarification. Mrs. GREEN. Congressman Steiger. PAGENO="0068" 574 Mr. STEIGER. May I follow up on General Hershey's statement? Did I hear you correctly, General, that you do have the authority as Director of Selective Service to overrule a local draft board in an individual `case to. postpone the time at which he is called? General HERSHEY. I do not overrule, because it does not change his classification, but the Director. of Selective Service does have the power to postpone. From a public relations standpoint, the Director of Selective Service has got to try to postpone within reason, because otherwise it looks as though he is trying to usurp rather than trying to aid. Therefore one of: the problems we will have when we discuss this on Monday is whether we will want to postpone for 8 months, or 4 months, or 3 months. Those are the things. I can be impeached-I have not been, but it is possible-for stretch- ing an authority that was given for good reason, but was used without reason. Mrs. Gimi~EN. General Hershey, is it true now that any local draft board can allow the student to finish the academic semester? General HERSHEY. Can do what? Mrs. Git~EN. It is possible at the present time for any local draft `board to allow any student to finish the academic semester in which he is? General HERSHEY. Yes. In the first place, of course, under the new law, the 1-S is a little shaky. On the other hand, the local board has some powers of postponement. For instance, you proba~bly read, and it happens to have been iii your State, you happened to lost two boys in one family up there. They have a boy. that is about ready to be inducted. That local board has deferred him for a year, and I think it is for a compassionate reason. I can probably see some lawyers say it was not legal, but that does not disturb* me any~ I think they used excellent sense, because they happened to have a 10-year-old boy, so `he was not the sole surviving son, yet here they lost two in a very short time. I don't think the local board went beyond its authority. Some strict constructionist might think so. I think the local board will, use a great deal of judgment on interrupting individuals in the course of their instruction. I don't anticipate too much difficulty in arriving at something `that does not have some very glaring things about it, in trying to arrive at some way where the person who in good faith entered in a year with some reason, at least, let us say a basis in fact, whatever that may mean, for believing he might finish the year, and it did not quite turn out that way, so you used grace, because you figure he makes a better soldier when you get him. Mrs. GREEN. If this is the authority that the local draft board has now, it would seem to me that there would be~ a tremendous advantage ii~ having a national policy, so that colleges and universities would Imow ahead of time, so that this committee would know, when we are trying to decide the number of fellowships, and so on, that we are to have. PAGENO="0069" 575 General HERSHEY. I hate to take any exception, but national policy is something we talk about and never see. We have laws all over this country, and judges every day are interpreting them most widely. In the same afternoon we `have people get, for the same offense, `6 months, and another fellow gets 5 years, and yet we have a uniform law. Mrs. GREEN. Do you' want to comment on this business of allowing a student to finish `an academic semester? ` Mrs. VEITER. Yes~ ` The 1-S-C, which has `been the status of `every' student up to now at any level, is a statutory deferment over which:the local board has no authority. If a man is ordered for induction while he is indeed a full-time student, lie is entitled once and once only to get'the 1-S-C. It is the `law that is changed; not the regulations. The law still allows the 1-S-C for the undergraduate `student, but has forbidden it to any student who has a 2-S this, year, and who has completed his baccalaureate.' ` ` , In order to get the 1-S-C back, it would take a change in the law. General' Hershey could send out an administrative directive to the local `board, recommending that postponement be `arranged for such people, but it would not replace the 1-S-C, which is the `statutory provision Congress put `in, which was removed for the graduate student under the new law. Mrs. GREEN. Thank you very much. I realize that we changed the law, but it would be possible by administrative act `to make it abundantly clear that any student who is enrolled could finish that semester? Mrs. VErrER. It could be done, yes. Mrs. GREEN. There are two or three other matthrs 1 would like to clear up, if I can. Mrs. Vetter, `would you try to help me with the recommendations th'Lt were made by the Inter Agency Committee to the National Security Council regarding the occupational graduate deferment ~ C'rn you comment on that without violating the confidential nature of the document which you `have? Mrs VETri~ I can, surely, to this degree The announcement that came out first in the New York Times and was repeated and picked up many other places, that `the recommendations were limited to recommendmg deferment for , men in the natural `sciences, health- related fields, engmeering, and mathematics, w~s' incorrect, inaccurate, and `totally incomplete. The recommendations of that group were brought about by a set of task forces which were appointed by the Inter-Agency Committee to study all" the available information on `the problems of manpower supply, and they looked `tt it from `i longrange point of view Their recommendations were very inclusive. It did include the four fields that were reported to be included, but it.include'd `a great many others. It also took care of the problem of teaching assistants, and it took care of a great number of fields which they called training directed to careers in fields which are emerging in national needs and interests. PAGENO="0070" 576 They gave many examples of this. I will certainly give you one. For example, in environmental health or transportation planning and problems. There is a long list of these, so that the recommendations of the Inter-Agency Committee to the National Security Council, which were the result of great study in depth, had by a good many people who knew what they were doing, were not indeed limited to defer- ment for men only in science and engineering and math. Mrs. GREEN. I would like to ask President Brewster and President Harrington, either one or both, to comment on this in terms of occu- pational deferment. As I understand, the policy would go into effect on July 1, unless there were changes, that we will no longer have a national policy on this in terms of a study based on the national needs, our own national self-interest, but we will indeed, apparently have occupational defer- ment on a community basis. `Would you care to comment On the desirability of one or the other? Mr. BREWSTER. My reading is not entirely the same as yours, Madam Chairman. I am not an expert, obviously, on national manpower needs and strategy; but I take this to be the considered judgment on the part of the task force which reported to the National Security Council that as a matter of national manpOwer need at the present level, the present force levels, and draft calls, it is not necessary to have defer- ments or exemptions on an occupational basis. I am very puzzled, frankly, by the wording of the telegram which General Hershey is reported to have sent to all State directors, which, if I may quote from the New York Times, and I sympathize some- times with General Hershey's concern about representation in the newspapers, but in this case I think it was a textural reprint, saying: Under advice received today from National Security Council with respect to occupational deferment, the lists of essential activities and critical occupations are suspended, leaving each local board with discretion to grant in individual cases occupational deferments based on a showing of essential community need. With respect to graduate school deferments, the National Security Council ad- vises that it is not essential for the maintenance of the national heaith, safety and interest to provide student deferments for graduate study in fields other `than medicine, dentistry and allied ni~dlical specialties, except that this recommenda- tion does not affect existing regulations governing deferment for graduate students who entered their `second or subsequent year of graduate study in the fall of 1967. It does affect students.graduating from college this year as well a~ those who entered thefirst year of graduate school last fall. The sequence of `selection in filling calls will remain unchanged. A change in the order of call is not justified at this time. Fairness `and equity to all men in the eligible age groups as well as the interest of the nation require that this longstanding practice `be maintained. Full text of the memorandum of ~ tlvice from the National Security Coun ~il will be forwarded to you promptly. I concur in the recommendations made by the Council. Leaving each local board discretion to gran'~ occun'aitiona} defer- ments based on showing of essential community need-this I think raises very serious doubts which perhaps are not the special province of an educator, but I think are the reasonable province of a lawyer, or anyone who cares about even handedness of the application of the law. The worry is two kinds: one is quite different standards which apnly to people whose claims are equally meritorious, just. because they live PAGENO="0071" 577 in two different communities; secondly, the concern that runs through- out the system that a large proportion of registrants dealt with by a board are not living in their community at all. There is again a kind of almost inevitable discrimination, if you want to call it that, in the sense that a draft board will know about needs in its own community, but it is unequipped to assess community needs for all registrants who are nonresidents of the community of their board. I am puzzled about. the kind of situaJt.ion that was contemplated by that very, very large loophole, and what otherwise seemed to me a pro- gressive advance toward national uniformity. Mr. HARRINGTON. So far as the universities are concerned, we are not asking for occupational deferments. `We are not interested in having various parts of the university cut up, and some designated as those that should have deferments. Mrs. GREEN. Did you want to comment on this, General Hershey? General HERSHEY. I think not. In the first place, of course, we are assuming, I believe, that because somebody got on the critical list that they got deferred, which isn't so. `We didn't want to see all the occupational deferments canceled. `We are over that.. I don~t think it has happened. I would not argue with a lawyer, which I am not, about the legal part of it, even though lie was a great educator. Mr. BREWSTER. My disguise as a lawyer is even more fraudulent. Mrs. GREEN. One final point. Mrs. Vetter, would you want to make any suggestions of an alterna- tive procedure, and where we go from here., in the recommendation to this committee as to what we should be doing? Mrs. VETTER. I believe there is an alternative pla.n to the one we will carry out, if we don't do anything to change it. If the current situation in Vietnam is viewed as a part of a long- term commitment in which otir Natioii can be expected to be involved to a greater or lesser degree for many years to come, then we must in- clude long-range manpower planning and . utilization as an objective in this decision. . This means that we must, continue the training of at least a substan- tial segment of our graduate school population until they reach their terminal degree. However, we must insure that the delay in their serv- ice will not provide them sideways exemption. Congress already took care of this by providing that no man deferred as a student after ~June 1967, is permitted tO be deferred for father- hood. Additionally; his liability under the prime age group provision includes no magic line at age 26. Therefore, students completing their graduate degrees are still available for service. The areas of graduate study for which deferment is needed must be fairly broad. This is because we are not smart enough to look ahead 5 years and know with certainty which special disciplines will be most needed at that time. It is important, then, to continue advanced training for this. small segment of our population capable of such training in a variety of disciplines. PAGENO="0072" 578 The Inter-Agency Committee, asked to evaluate this problemS by the National Security Council, is said to have made the same finding, after intense study of all the available data. However, this advanced, college training must be accompanied by an ongoing assessment of manpower needs and supplies at all times. I believe that 4,000 local boards should not be expected to maintain such continuing surveillance on a national scale, and that even a body such as the National Security Council cannot be expected to keep fully abreast of this picture in addition to its other extensive duties. A special group devoting itself to manpower planning and re- sources-either a new one, or our present Office of Emergency Planning, or a similar body, should be constantly concerned with national manpower needs and supplies in all activities. There will be men completing advanced degrees whose skills and training are, at that moment in time, needed more by the Nation in a civilian post than in a military one. \Vhile the military should always have first call, as it does for doctors, on men with such special training, the national need will dictate the use of some men in nonmilitary service, just as men are now exempted because they are found unfit for duty. However, college-trained men at all levels who. are not essential elsewhere to the Nation at the time they finish their training, or later, will fall back into the available draft group. The order of call of men when more are available than are needed could be solved in several ways, and many have been suggested. Perhaps the one with the least inequity is the 2-year combination which would call by proportional age groups for 1 year only, and then revert to the prime age group pattern provided for in the Military Selective Service Act of 1967. If you go to the prime age group immediately, you have skipped all the men in between, mostly the 20- ai~id 21-year-olds. You have reduced your pool from 1.2 million men available to a pool that is 18,000 from which you will make the calls, and all the people who are 20 concerned with equity surely will be concerned with that. The call, however, for the first year could run across the range, and it does not have to be done in several age groups. You could declare that one age group, 19 to 26 shall be considered to be the same age, just as in the prime group, and call them by birth dates, so you could take all the January birth dates, for example, in the first call. This would provide for a ratio of calls, because the men certainly have birth dates in approximately the same ratio across the year. This plan would spread the call among all age groups for the first year, and then concentrate for future years on the approximate 19-year- old group, plus the men who had been deferred for education. A lottery of each prime age group might be an acceptable way of determining which available men were inducted. An oldest first call in the prime age group would seem to offer one advantage-men with birthdays early in the year could be sure for several years in advance that they would enter service, and could make plans accordingly. If a new birth date lottery occurred each year, each individual would continue to be uncertain of his relative place in the line until a few months before his year of maximum vuTnerability began. PAGENO="0073" 579 This proposal, then, requests a change in the order of call on a 2-year pattern, leading to the establishment of a prime age group. It requests the deferment of full-time graduate students across quite broad disciplinary categories, and it provides for a continuously monitored advisory list of critical occupations and essential activities. Mrs. GREEN. Thank you very much. Does any other member of the panel have any other comment they would like to make at this point? I ask unanimous cOnsent at this point to insert in the record ap- proximately a hundred telegrams and letters that I have received from college presidents and universitiy presidents across the country. I would ask unanimous consent to include articles which I have on this particular subject, and also to include the speech which was made by Senator Ted Kennedy yesterday on the Senate floor in regard to his proposal for the draft. `Without objection, it will be in the record at this point. (Documents to be furnished follow:) S. 3052-INTRoDucTIoN OF BILL To REVISE THE SELECTIVE SERVICE SYSTEM Mr KFNNEDY of Massachusetts Mr President I send to the desk a bill to revise the Selective Service System and I ask that it be received and appropriately referred. The PRESIDING OFFICER. The bill will be received and appropriately referred. The bill (S. 3052) to amend the Military Selective Service Act of 1907 to pro- vide for a fair and random system of selecting persons for induction into miii. tary service, to provide for the equal application of deferment policies, to auth. orize an investigation of the feasibility of establishing a volunteer, army, and for other purposes, introduced by Mr. Kennedy of Massachusetts (for himself, Mr. Case, Mr. Hart, Mr. Kennedy of New York, Mr. Mondale, Mr. Nelson, Mr. Tydings, and Mr. Yarborough), was received, read twice by its title, and referred to the Committee on Armed Services. Mr. KENNEDY of Massachusetts. Mr. President, the hallmark of a free society is a pervasive spirit of individual freedom and choice. In contrast, the hallmark of a closed society is compulsion. We must, then, be ever alert when our free society demands for its survival some constrictions on individual freedom and choice. The survival of the United States depends in part upon ., an effective armed force. To maintain that effective force, our military services today rely on the draft to supply them with a steady flow of qualified young men. We must recog- nize that the draft is inherently a constriction on individual freedom and choice, as it, relies upon compulsion to accOmplish its purposes. Because it does rely on compulsion ~s e must be certain that its operation diminishes individual freedom and choice as little as possible. If we do not, if we are not certain that our draft is `is fair as we can m'ike it then we have curbed the pervading spirit of a free society unnecessary. . . . There are other powerful reasons for demanding that our method of mili- tary conscription be fair. Draftees are about 10.5 percent of total military strength. Draftees are 37 percent of total Army strength. They are 31 percent of Army strength in Thailand, and 42 percent of Army strength in South Viet- nam Diaftees account for 41 percent of Army fatalities in South Vietnam Draftees, then, account for less than 2 out of every 10 military men; but they account for 4 out of 10 Army combat deaths in Vietnam. Any system which must choose among equally qualified young men-some to be drafted, some not-must be as fair a system as we can devise. The Vietnam war only serves to sharpen the focus on the draft. In past weeks draft calls have been revised upward. With the termination of graduate school deferments, the young men inducted to meet these higher calls will represent an entirely different cross-section of skills and ,,motivations than has, ever be- fore confronted the military services, And as the intensity of the war increases, more and more draftees will wind up as war casualties. Consequently, I would expect the focus to get even sharper in the coming months. PAGENO="0074" 580 In an effort to make our draft law fairer, I am today introducing a thorough revision of the law amended by Congress last June. The law now in effect is a patch-work of piecemeal additions and alterations. It satisfies no one. We must rewrite it, and must rethink its underpinnings, if we are to have a law which fairly reflects the spirit of our free society. Before I outline my bill's major provisions, let me set out a brief outline of what took place last year. The Universal Military Training and Service Act, the suc- cessor to 1940's Selective Training and Service Act, was due to expire June 30, 1967. In preparation for congressional debate over draft law revision and exten- sion President Johnson appointed a National Advisory Commission on Selective Service, chaired by former U.S. Assistant Attorney General Burke Marshall. The chairman of the House Armed Service Committee, Mendel Rivers, ap- pointed a Civilian Advisory Panel on Military Manpower Procurement, chaired by retired Army Gen. Mark Clark. After these two groups had made their reports, the President on March 6 sent to the Congress his message on selective service. This message recommended adop- tion, either legislatively or by executive action, of the major reforms pro- posed by the Marshall Commission. I had introduced a concurrent resolution on February 23, which would have declared it to be the sense of the Congress that these reforms were necessary and that the President should institute them by executive action. During March, April, and May, three congressional committees held hear- ings on draft reform: the Senate Subcommittee on Employment, Manpower and Poverty, the Senate Armed Services Committee, and the House Armed Serv- ices Committee. On May 4, the Senate Armed Services Committee reported out an extension mid revision of the draft law. This bill would have left wide dis- cretionary authority with the President to institute the reforms recommended both by the Marshall Commission and the President himself. The House Armed Services Committee, however, greatly changed the. Senate- passed bill, adopting many punitive and restrictive provisions not in the Senate bill. The House adopted its committee's bill with little change. Virtually all of these provisions were adopted in the Senate-House conference, and this confer- ence bill was accepted by the Senate on June 14 by a vote of 72 to 23. It was signed by the President in this form on June 30, 1967. The bill I am introducing today is a complete revision of the law now in effect. This law now in effect is, as I have said, a product of the 1967 amendments being grafted onto the old law. My bill would repeal the law now in effect, and be a substitute for it. Let me describe my bill's major provisions. RANDOM SELECTION In any situation short of total mobilization, only some men out of many must be involuntarily inducted for military service. This one simple and overriding fact precludes the draft from being completely fair and equitable. But within the confines of this inherently inequitable framework-the neces- sity of choosing some men from among many-we can make drastic improve- ments over the system we have in effect now. The basis for this improvement is an impartial random selection system. This random selection system would be nothing more than a technique for determining, in as impartial a manner as pos- sible, an order of call among those already determined qualified and available for service. In the next few years, about 1,900,000 young men will reach age 19 each year. Thirty percent of these men, or 570,000, w-ill be disqualified because they fail to meet the physical, educational, or moral standards of the Department of Defense. Another 30,000 will receive hardship deferments or legal exemptions. There will, consequently, be about 1,300,000 19-year-olds qualified and available for service each year. Based on past experience, some 570,000 young men will voluntarily enlist in a regular or officer program, leaving 730,000 qualified and eligible 19- year-olds who do not volunteer. Since the military requirements for new men might amount to 680,000 men, and 570,000 will volunteer, about 110,000 must be involuntarily inducted. And they must be inducted from among the 730,000 non- volunteers. This is the imperative of numbers: that our draft system must somehow choose the one young man out of seven qualified and available who will be involuntarily inducted into the military service. PAGENO="0075" 581 These figures relate to a non-Vietnam situation, when our military strength re- verts to its peace-time level of about 2.65 million men. This was the July 1965 level. Now, as the force level approaches 3.5 million men? more and more of the qualified and available men voluntarily enlist, and more and more must be invol- untarily inducted. Thus, the problem is today not so much picking one man out of seven, as it is being sure that the one out of two picked and sent to Vietnam is picked in the fairest possible way. In sum, then, there are two compelling reasons for adopting a random selection system of determining the order of call. The first is the desire to raise the ele- ment of equity to as high a degree as possible. The second is the imperative of numbers, of choosing one man out of seven. My bill would require that the determination of order of induction be made by random selection. I have not written into the bill itself a specific plan for a lottery, as I prefer to give the President a measure of discretion in drawing up a plan and modifying it as conditions dictate. It is my understanding that a imrn- ber of alternative random selection systems have been prepared by the execu- tive branch, although they are not available for discussion publicly. I have in the past proposed a specific plan for a random selection system. Un- der this plan, the Director of Selective Service would publish each month a list of numbers corresponding to the days in that month. Thus, there would appear on the list the numbers 1 to 31 for January, 1 to 28, or 29~ for February, and so on. But these number would be arranged in a random sequence, which had been determined by a computer or some other means The numbers for Januai~ in this example might re'id 11 22 7 18 and so forth The Director of Selective Service would also set monthly quotas for each State, as he does now. Each State would set quotas for each local boai~d in the State, as it does now. These quotas are based on proportionate formulas which involve the number of qualified and eligible registrants in .a specific jurisdiction related to the number of such registrants in the Nations or State as a whole. Each local board would aslo have, for each montht, a pool of eligible young men. These men would be either 19-year-olds or constructive 19-year-olds, as I will later explain. In a non-Vietnam situation, this pool would have seven times as many men in it as are needed to meet the quota. Under the pressures of today's Vietnam requirements, the pool might have two or three times as many men as are needed to meet the quota. If a local board, under this proposal, had a quota of 10 men for January, it might have 70 men eligible for induction. To choose the 10, it would refer to the list published by the Selective Service Director for January. Under this example, the first number was 11, the second 22, the third 7, and so forth. The local board selects first the man or men born on the 11th of January, next the man or men born on the 22d, and so forth until the quota of 10 men had been reached~ These 10 would then be inducted. The remaining 60 men would not be called, but would, of course, continue to remain liable in the event of a. national emer- gency. But these 60 would not le called until the pool of. men in the following month had been exhausted. Thus, once the selection for a given month, had been made, those not selected could be reasonably certain of their status and make their plans accordingly. Some local boards might face the difficulty of choosing between different men born on the same day. This apparent problem could be easily solved by arrang- ing the letters of the alphabet in a random sequence for each month, and then choosing on the basis of the first letter of the last name. I want to emphasize that the plan I have just outlined is intended only as ai illustration of the feasibility of a random selection system. Under the actual term of my bill, local and State quotas would be replaced by regional quotas, or by a national quota, depending upon which organizational altermiative the Presi- dent actually instituted. A national system would be the most equitable, and I would personally favor it. The Marshall Commission report describes how a random selection system based on national quotas would work. In short, random selection is workable. I hope that w-e can have some definite action, and action soon, to permit the introduction of a random selection system. In this regard, let me quote from Senate remarks by the distinguished chairman of the Senate Armed Services Committee, Senator Richard Russell, during the June 14, 1967, debate on the conference report on the Selective Service bill: "The President has stated that the random system should be started before the first day of January 1969; and if he will propose, or the Senator from Massachm PAGENO="0076" 582 setts, or any of the other advocates of the random selection system, will intro- duce a bill that is reasonable and provides for a fair and workable random selec- tion, we can get a law long before the first day of January 1969 . . . We had a firm agreement with the conferees of the other body that if the President would propose something definite that deals specifically with the subject of random selection, when and how it shall be applied, we would give it immediate consid- eration. I am not opposed to random selection. I have said that all the way through." There is very little which can be added to that statement. YOTJNGEST FIRST Today draft-eligible young men between 19 and 25 years of age are called in reverse order of age, the oldest man first. When draft calls are low, this policy has driven the average age of the involuntary inductee, at induction, to nearly 24 years. When draft calls are high, as they now are, the average age drops to about 19i~ years, but when the draft calls are reduced the age will inevitably rise once more. In 1066 the Defense Department reported to the Congress that a thorough Stu(ly of the effects of this oldest-first procedure "clearly revealed that this policy was not desirable from any standpoint." Among the problems of oldest first pointed out in this Defense Department report were: The uncertainty it generated in the personal lives of the draft-liable men, who lived "under the gun" of the draft for 2 or 3 years. In fact. 39 percent of draftees in the 22 to 25 age bracket were told at least once by a prospective employer that they could not be hired because of their draft liability. The comparable figure for those entering in the 19 to 21 age bracket was 27 percent, and for those entering in the 17 to 18 age bracket was 11 percent. The incidence of deferment rises sharply with age. At age 19, only 3 percent of classified registrants had dependency deferments and only two-tenths of 1 percent had any form~of occupational deferments. But at age 24, nearly 30 per- cent of all registrants were in just these two deferred categories. Consequently, a rising average age of induction multiplies the number of deferment decisions each local board must make, while compounding the uncertainty each registrant faces. Combat commanders have consistently preferred 19- or 20-year-old recruits. These younger men are considerably more adaptable to combat training routines. Further, problems associated with dependents are less frequent, and the costs of dependents' care are lower, for the younger men. This Defense Department recommendation has had unanimous support in the last 12 months, and the only matter of concern is why it has not been instituted. The Marshall Commission, the Clark Panel, the President's message, the Senate and House Armed Services Committees' reports-all these have urged adoption of a youngest first procedure. My bill would require that the selection and induction be made from among the youngest qualified and available registrants, the 19-year-olds, and not leave this matter to Executive discretion. STUDENT POSTPONEMENTS The Marshall Commission was divided over the issue bf deferments for under- graduate students. A majority recommended that no new student deferments be granted in the future, with certain exceptions. A minority felt strongly that student deferments be continued, but so administered to guarantee that the de- ferments in no case became exemptions. The Clark Panel recommended, in ef- fect, that undergraduate deferments be continued. The President's message contained no recommendation on undergraduate de- ferments, instead waiting for a public discussion of the issue. The Congress re- sponded by guaranteeing undergraduate deferments for students in good stand- ing, until their graduation or age 24, whichever came first. One of the gayest inequities in our draft system-an inequity which w-as not corrected in last year's amendments, despite assurances to the contrary-is that what begins as a temporary deferment for college enroflment is easily extended into a de facto exemption. This happens through putting an occupational or some other deferment on top of a college deferment. Ultimately time and advancing age make the temporary deferments exemptions in fact. PAGENO="0077" 583 Consequently, my bill makes a number of changes in provisions governing stu- dent deferments. Under its provisions, high school students would be deferred until they finish high school, as the law now provides. The draft law should in no Way contribute to the already severe high school dropout problem. If, however, a student did not finish high school until after his 20th birthday, he would upon gradua- tion-or dropping out-be considered a 19-year-old for draft purposes, and be put into the pool of those qualified and available for selection. He would, conse- quently, be a "constructive 19~year~old.~~ My bill would give a high school graduate another' choice than facing ex- posure to the draft. He could choose `to go on to college instead, thus postponing his entry into the pool of 19-year-old draft-eligibles and consequently his exposure to the draft. He would keep this postponement until he finished college or dropped out as the particular case might be, and would at that point l)e a "con- structive 19-year-old." Under no conditions could this postponement extend l)eyond the 26-year-old cut-off date for determining draft eligibility. Thus, everyone who did not voluntarily enlist would at some point in his 19 to 26 year span be exposed to the chance of being drafted, equally with this contemporaries. This system offers a high degree of flexibility to each individual in setting out his education and career plans. It offers the military a broad mix of in- ductees-most would got in after high school, and some after college. Thus the wide-ranging skills the military needs would continue to be made available to it. Further, this system assures the military of a continuing supply of officers. Nearly 80 percent of each year's new officers enter military service from col- lege sources. About half are ROTC students, and the other half enroll in a wide variety of other officer-training programs, either during college or upon gradu- ation. There is some concern that ending undergraduate student deferments would greatly reduce this flow of new officers into the military services, with their obvious broad range of backgrounds and educational training. Thus, this new optional fOature would enhance individual flexibility and assure the military of a continuing flow of officers. But some experts have criticized this plan by pointing out that it offers those `who can afford college the choice of postponing military service during times of a shooting war, like Vietnam. Most individuals would today certainly choose to go to college for 4 years, if they could, rather than be drafted and perhaps `be sent to Vietnam. To meet this valid criticism, while retaining the high degree of flexibility, my bill provides that the optional student posi~ponements be discontinued when casualties reach a certain point. It will describe the operation of this discontinuance `belOw. My bill would also `broaden the definition of "student" to m!ake clear that all bona flde students receive equal treatment under its optional postponement feature. Unfortunately, today students in junior and business colleges, and students in apprentice and vocational courses, are given a different draft classificalion than students in colleges, in plain contravention of congressional intent. This 2-A classification makes them more liable to the draft than the 2-S college defer- ment. Quite rightly, these junior college and other students claim that the draft treats them as second-class students. Secretary of Labor Willard Wirtz put the issue succinctly, as he usually does, when he testified on the manpower implications of Selective Service, on March 21,1967: "The question will be pressed more and more strongly of why and whether there should be any different treatment of young men who are in occbpational training programs. My own answer is that there cannot justifiably be any such distinction made. It would be hard to prove, and it hasn't so far, that there is a larger value-either to the public or to the individual involved-in letting Bob finish college than in letting Jim complete his apprenticeship as a carpenter or letting John work his way up the unskilled steps toward a skilled job as a punch press operator." It is clear that junior college and business college students should be treated similarly, and'not exposed `to the draft in any higher degree than college students. There may well be administrative or management difficulties when dealing with the problem of less-than-full-time students, but the. principle of equality of treat- ment must be held to be paramount. PAGENO="0078" 584 The Senate Armed Services Committee made its feelings plain on the subject ~of apprentices, in its report on the draft law extension last May: "If student deferments are to be continued, the Committee believes that tip- prentices should be permitted to qualify for deferments under conditions no more restrictive than those applicable to undergraduate college deferments If an apprentice is full time, satisfactory, and making normal progress, he should be eligible for deferment as an apprentice in the same manner as a college student." Once again, though the legislative history is very plain, the operation of the draft system is at odds with it. My bill would give each bona fide student the same option: he could enter the draft pool after high school, or after his college or occupational training was completed. The GI bill, liberalized only recently, should Spur many individuals to enlist or enter the draft pool right after high school, so that their education costs would be assisted in part under its provisions. But some proportion would undoubtedly prefer to wait until after college, and my bill gives them this flexi- bility while enhancing the overall equity of the system. STUDENT POSTPONEMENT DISCONTINUANCE I have already mentioned that the "timing" argument of offering optional postponements to students for draft purposes requires some mechanism to pre- vent discrimination against those who do not have to option of going to college or graduate school, for economic or other reasons. This mechanism is a diScon- tinuance of the option whenever Armed Forces casualties reach a certain per- centage of the monthly draft call. During any period when our Armed forces are sustaining combat casualties, the President would be required to determine the total number of combat casual- ties each month. He would then put this figure beside the total number of regis- trants drafter that month. If the number of casualties reached 10 percent of the number of draftees, then the operational student postponement would be dis- continued. But the discontinuance would take place only when the 10 percent figure was exceeded for 3 consecutive months. And when the discontinuance did take place, it would stay in effect for the following 12 months. This discontinuance will insure that when draftees face an appreciable risk of being sent off to a shooting war, all young men must stand as equals at that particular time before the draft process. To permit some to elect to enter college, thus postponing exposure to the draft for 4 years, while denying this election to others, would be to continue one of our present system's worst features. It is important to note that the discontinuance would not apply to students already in college or occupational training when the 10-percent figure was reached. These students made their choice to enter college or training not out of a desire to avoid being drafted into a shooting war, because the shooting had not reached an appreciable extent when their decisions were made. Thus, it would apply only to those whose decisions on whether to take up the option was made in the light of combat casualties. It is also important to note that even when the 10-percent limit has been reached and the option discontinued, those not actually selected for induction w-ould be free to go on to college, school, jobs, or whatever. Casualties in Vietnam are running above 10 percent of the draftees. In the first (3 months of 1967, draftees totaled 87,600 and casualties 37,500-or over 40 percent. Consequently, my bill would discontinue the granting of student postponements during the Vietnam war. This discontinuance provision insures that the option feature is fair. CONSCIENTIOUS OBJECTORS That there exists in our draft statute a formal provision exempting conscien- tious objectors from combat duty is a credit to our democracy. It is legislative recognition that our society is strong enough to accommodate those who cannot in conscience participate in the killing of other men. Conscientious objection can take either of two forms under the statute, depend- ing on the nature and extent of the objection. A conscientious objector may be assigned to noncombat service in the military, such as in hospitals or in admin- istrative work. Or, he may ~e assigned to 2 years of civilian work, if be objects to both combat and noncombat milltary service. A number of this latter group are serving as civilians with voluntary agencies in Southeast Asia. PAGENO="0079" 585 Until last year, the law on conscientious objectors was quite clear, the Supreme Court in the 1965 case of United States against Seeger having interpreted the law and laid down some guidelines. But last year's amendments overruled the Seeger case, in effect, by eliminating the language on which the decision rested. The old law granted conscientious o~jectors status to an individual who "by reason of religious training and belief is conscientiously opposed to participation in war in any form. Religious training and belief in this connection means an individual's belief in a Supreme Being involving duties superior to those arising from any human relation." In the Seeger case, the Supreme Court interpreted this language to mean "a given belief that is sincere and meaningful and occupies a place in the life of its possessor parallel to that filled by the orthodox belief in God of one who clearly qualifies for the exemption." The new law eliminates the Supreme Being clause, thus implying that only an orthodox belief in God will qualify an individual for conscientious objector status. This apparently overrules the Seeger case. The Selective Service, System has told its State and local boards that the change means a narrower definitio~i of conscien- tious objector. This accords with the views of a majority of local board members in one State who, according to the Marshall commission report, feel that con- scientious objectors should not be deferred at all. On the other hand, a number of lawyers experienced in this field believe the courts will still uphold Seeger, on the other grounds. But this important subject will be unclear until eventually resolved by the courts. My hill would restore the language of the statute as in effect before the 1967 amendments. This would have the effect of reinstating the Seeger case as the con- trolling precedent. UNIFORM NATIONAL STANDARDS A consistent criticism of our present draft system is the utter lack of uniformity in its interpretation. The basic cause of this lack of uniformity is the wide vari- ance in guidance the local boards receive. That guidance comes in the form of the statute itself, regulations, operations, bulletins, local board memoranda, directives, and letters of advice. The State directors also may issue instructions to the local boards. As a result, local boards across the country receive varying amounts of guidance on the same subject and the guidance is often conflicting. In 1966, 39 State directors issued 173 bulletins, directives, or memorandums to their local boards dealing with deferment policies. Some State headquarters sent no guidance; one headquarters sent 13 separate sets of instructions. The resulting potpourri of deferment policies should surprise no one. Alabama and New York treated the results of the college qualification tests as mandatory; Idaho and Texas said they were only advisory. New York City and Oklahoma defined "full-time student" as one taking 12 semester hours; Oregon and Utah used 15 hours; Florida adopted the definition of each individual college or university; Kentucky classified any registrant at- tending school "below college level" as 2-A-occupational deferment; Arkansas classified registrants in "business school or similar institution" as 2-S--student deferment; Kansas classified registrants in a "vocational, technical, business, trade school, or any institution of learning below college" level as 2-S; Missouri and Illinois would not cancel induction orders if the registrant sub- mitted a "pregnancy statement," New Mexico would; Three civilian pilots doing the same job for the same airline were called for induction; one board deferred two of them, while another board classified the third as 1-A; and Returning Peace Corps volunteers are put at the top of the list in some States, while others put them at the bottom. Further examples of the variability of local board performance in applying our draft law are as numerous as there are boards making decisions. This vari- ability is one clear reason why cynicism about the rystem is so rampant. Dissatisfaction about the lack of uniformity is not limited to the registrant themselves. The Marshall Commission reports that 46 percent of local board members believe that more specific policies on occupational deferments are aeeded, and 40 percent believe that more specific policies on student deferments are needed. Once again, we find an anomaly in the operation of our draft system: The President has proposed "that firm rules be formulated, to be applied uni- PAGENO="0080" 586 formly throughout the country," the Marshall Commission has so recommended, fairness and commonsense so demand, and nearly half of local board members themselves so believe would be an improvement. The 1967 amendments permit the President to establish national standards for classification, and to require that these standards be uniformly administered throughout the country. My bill would make the adoption of national standards and criteria mandatory, and would require that they be administered uniformly. I should point out that these national standards would not be utterly inflexible, because they deal not with mathematical measurements but with human beings. The point is simply to be as sure as we can that a young man in one part of the country faces the same exposure to the draft as in another part of the country. Accidents of geography should not determine who goes to war and who does not. HARDSHIP DEFERMENTS Hardship deferments must be continued. There are many individual cases where drafting a young man would cause a severe hardship either to him or to his family. One case often cited as an example is that of the 19-year-old boy who works to support his widowed mother and his brothers and sisters. Taking the wage earner away from his family for 2 years in this instance is an undesirable hardship. Tinder my bill, the initial hardship deferment classification would be made by an area Selective Service office, instead of by local boards as is now the case. Appeals regarding this initial classification would be presented to local boards. This combination will assure a greater uniformity than presently exists in con- ditions governing hardship deferments, but at the same time retain the famili- arity with local problems which is potentially a distinguishing mark of the local boards. OCCUPATIONAL DEFERMENTS When he testified on the Manpower Implications of Selective Service, Secre- tary of Labor Willard Wirtz said: "It is my position that there is little basis in the present or prospective man- power situation for any `occupational deferments' from military service-es- pecially if the draft call is concentrated on the 19-year age group." He made this unequivocal statement from a unique vantage point: Secretary Wirtz is this Nation's chief manpower specialist. In the past, he was charged with determining which "critical occupations" should be deferrable. So he made that statement with a broad background of expertise. He also pointed out that more that half of those with occupational deferments were in jobs classified as neither essential activities nor critical occupations. The Marshall Commission made a similar recommendation, saying that "no new deferments for occupation should be granted in the future." In the 1967 amendments to the draft law, Congress directed the National Security Council to recommend policies on occupational deferments. Pursuant to this directive, the National Security Council recommended on February 16, 1968, that occupa- tional deferments be discontinued. Its memorandum of advice said in part: "The National Security Council advises that the Secretaries of Defense, Labor and Commerce should maintain a continuing surveillance over the nation's manpower needs and identify any particular occupation or skill that may war- rant qualifying for deferment on a un,iform national basis. When any such oc- cupation or skill is so identified, the Council will be notified so that it may con- sider the need and advise the Director of the Selective Service System accord- ingly. This recommendation is based on these considerations: The needs of the Armed Forces do not now require such occupational defer- ments. The needs of the civilian economy do not now require such occupational de- ferments. The inherent inequity, at a time when men are called upon to risk their lives for the nation, in any such occupational deferments from military service which may in practice turn into permanent exemptions." That, too, is an unequivocal statement. But the advice transmitted to State directors of the Selective Service, and to local boards, varies widely from that advice. General Hershey's telegram to State PAGENO="0081" 587 directors, pursuant to this National Security Council memorandum, states in part: "Each local board (is left) with discretion to grant, in individual cases, occu- pational deferments based on a showing of essential community need." This is clear evidence that occupational deferments are not ended at all- rather, they are continued, and left to the discretion of the 4,084 local boards. There will, consequently, be 4,084 different sets of rules governing occupational deferments. This may well be a step backward: in the past, only half of those with occupational deferments received them based on the unguided judgment of local boards; the other half were in jobs listed as essential or critical. Now, however, there is no national guidance, in direct opposition to the National Security Council recommendation. The effect of this broad discretion is clear. A high-ranking officer of a defense contractor said this week that about 800 of his company's 90,000 employees were affected by the new rules. But be added that he expected the local draft boards to continue the deferments of many of these affected employees. Part of the reason for this officer's assurance is a little understood quirk in the way the system today Operates. Although a registrant cannot change his local board if he moves, a man with an occupational deferment can use the appeal board in the area where he is employed. It is very easy to visualize this picture: a man now living and working in another city is denied an extension of his occupational deferment by `his own local board. He then takes his case to the appeal board serving his new community. Because the appeal board is sensi- tivO to the economic needs of its own area, it would probaibly view of the contin- uation of the occupational deferment as essential to its own community need. Statistically, appeals boards in industrial areas reverse local boards by rein- stating occupational deferments taken away by the local boards far more often than any other reversal action. In siim, there can be only one conclusion: so long as we continue occupational deferments, special privileges granted to some individuals but not others will protect the former from equal exposure to the draft. One other important factor militates against continuing occupational defer- ments: they can be the vehicle fec pyramiding deferments into exemptions. This loophole exists right now, as it has in the past. Until it is corrected, we will no't have a fair draft system. My bill would discontinue occupational deferments, except upon a Presidential finding that a particular skill or occupation warrants deferment on a uniform national basis. This would preclude the occupation~al deferment from becoming the protected haven it is to day. MILITARY YOUTH OPPORTUNITY SCHOOLS Each year, some 700,000 young Americans are found unfit for military service. This is about one-third of all the young m:en examined. About half are disquali- fied because of health deficiencies, and the other `half because of educational deficiencies. The Marshall Commission called these "alarming statistics, affecting directly our national security." Few could or would question that judgment. These failures reffect inadequate `education, poor medical `facilities, poverty, discrimination_the litany of social ills which we as a Nation are committed to overcome. The problem we face is eliminating the conditions causing the rea- sons for rejection. To do so, we must reach far back into each individual's years of development `and training. We cannot expect the military services `to do this. But the Department of Defense is making determined efforts to reduce the number of rejeetees. Foremost among these efforts is Project 100,000. Assistant Secretary of Defense Thomas Morris described Project 100,000 in these terms when he testified on the manpower implications of the Selective Service: "Under this program, we have made revisions in our mental and physical qualification standards. Under these `standards, our objective is to qualify 40,000 men in the 12-month period ending September 1907, and 100,000 per year in sub- sequent years. These men would not have been accepted under the draft stand- ards or enlistment policies previously in effect. They are, typically, men who, because of lack of educational opportunity or incentives, have done poorly in formal classroom achievement. It is our judgment that these men can best be trained, therefore, in our established training centers and schools, along with 92-371-OS-pt. 2-O PAGENO="0082" 588 other new recruits to service. All but a small fraction of these men, we believe, will require no special assistance to complete their basic training." Project 100,000 completed its first year on September 30, 1967. Its goal was to take 40,000 rejectees; it actually took 49.000. About 85 percent would have failed the educational tests, and 15 percent the physical tests without a revision in the standards. About 60 percent were volunteers, and 40 percent came through the draft. Sixty percent were white. and 40 percent Negro or other nonwhites. The average age was 21. Thir.t~ percent were unemployed, and another 26 per- cent earned less than $60 a week. The average reading score is barely at a sixth grade level; 14 percent read at third grade level or less. Secretary of Defense MeXamara has said that the Defense Department began Project 100,000 because it was convinced that "given the proper environment and training, they can contribute just as much to the defense of their country as men from the more advantaged segments of our society." The results of Project 100,000 bear out this conviction. Ninety-eight percent of traditional categories of recruits finish basic training: 90 percent of Project 100,000 men graduated-only 2 percentage points less than the traditional re- cruits. Many military commanders report that these men turn out "to be even iuore highly motivated than some servicemen with a much more privileged back- ground," to quote Secretary McXamara. This is evidence that Project 100,000 has in no way caused a dilution of our actual niilitary performance standards, and has in fact augmented these standards. At this point, I should note that Project 100,000 has done considerably more than augment our military performance standards. Because it takes a large num- ber of volunteers-60,000 this year-who previously would have been rejected, it reduces the number of men who must be drafted. And because it gives skill and occupation training to young men previously classified as dropouts from society, it has reduced welfare burdens and increased job opportunities. Project 100,000, then, is a marked achievement, and its accomplishments de- serve acclaim. But there is more the military services could achieve. To quote the Marshall Commission: "The Commission feels that any American w-ho desires to serve in the Armed Forces should be able to serve if he can be brought up to a level of usefulness as a soldier. even if this requires special educational and training programs to be conducted by the services." The Department of the Army made a limited attempt at a program of this type in 1964, and called it the special training enlistment program-STEP. It was de- signed as an experimental program of military training, educational and physical rehabilitation of enlistees who fell short of regular standards, but who could be brought up to these standards with short periods of educational training or medi- cal rehabilitation. Normal basic training costs about $3,800 per trainee; the adcli- tional cost per trainee in the STEP program was estimated at $2,100. The program was to be made available to 15,000 enlistees a year. The project was never actu- ally undertaken because of a specific objection to it contained in the Defense De- partmnent appropriation bill. My bill would require the Secretary of Defense to study and investigate the fea- sibility of military youth opportunity schools. These schools would offer special educational and physical training to volunteers who did not meet the current induction standards. The Secretary of Defense would report to the President and the Congress on the results of this 1-year study and is given considerable lati- tude in making the study. These schools are a logical extension of the successes of Project 100,000. They could further increase the percentage of volunteers in service, and further reduce draft calls. They would produce highly motivated, all-volunteer servicemen, And they woud help correct the social imbalance afflicting our society while increasing our military capabilities. STUDY OF VOLUNTEER ARMY Public figures with as widely divergent views as Barry Goldwater and John Kenneth Gaibraith and associations as diverse as the Ripon Society and the New Left have urged that the draft be scrapped in favor of an all-volunteer army. Sixty-one percent of students polled at the U.S. Youth Council favor a volunte~i' army. An all-volunteer army would certainly be closer to the spirit of a free society as it would require no compulsory service. It would reduce turnover in the serv- PAGENO="0083" 589 ices, and thus reduce cost., It would probably raise the level of skill of each individual serviceman. It would eliminate the problem of the conscientious oh- jector. And it would removeall problems of uncertainty. But at least one problem with an all-volunteer army is lllustrated:by the same U.S. Youth Council poll which showed 61 percent of the students in favor of an all-volunteer army: 58 percent of the students said they personally would not volunteer. There are as well a number of other problems. The estimates of the cost of `in all volunteer army-prim'irilv in highei salaries-range from $4 bil lion to ~17 5 billion Some experts ha~ e claimed that an all ~ olunteer army would be 1 iige1~ \egio 4~n all volunteei army may not ha~e the flexibility we need to meet w idely changing manpow ei needs Fin'tllv there is some danger tthat an all ~ olunteer `u-my of professionils togethei w ith the military industrial complex w hich would suppoit it w ould mepresent an e~ em present threat to political ft eedom &t 1)1 e~ent w e do not ha~ e enough specific information to decide w hethei these piobli ni~ are more appaient than real For thit reason my bill requires the Pies ident to conduct `i 1 year studs of the costs feasibility `md desirability of replac lag our present combination of voluntary and involuntary inductions with an entirely voluntary system of enlistments. The President would report to the Con- gress on his findings and recomiñenda'tions. The voluntary army concept is of high importance. But we need considerably more information than we now have to determine whether it is the right system for our society. My bill would provide us with this information. STUDY OF NATIONAL SERVICE `ALTERNATIVE A subject much discussed in the p'ist few ~ eai s is w hethem w e cm devm~e some form of nonmilitary national service as an alternative to military service. A cor- oflitry subject has been the feasibility of compulsory national service for all young Americans, including both military and nonmilitary service. Both subjects have much merit. Many young people in this country feel a strong obligation to serve their country or their fellow man through some form of public service. Many of these same young people, however, feel `strongly that they can make more substantial contributions in nonmilitary service. The overwhelming response from all across, the country to the `Peace Corps, to VISTA, and to the Teacher Corps indicate that our young people are committed and willing to serve their country. , A number of different specific proposals for national service have been ~.put forw-ard. Gen. Dwight Eisenhower has suggested that we adopt a system of universal training for all young men. It would be a system of military, physical and reme- dial training, administered by the Department of Defense. Only those with serious physical and mental defects, and those who, volunteered for military service, w-ould be exempt. General Eisenhower's proposal would be designed to promote physical fitness and self-discipline among America's young men. Some have suggested a system under which all qualified young men would serve in the military or in a variety of civilian programs for' 2 years. Those who elected military service would receive either higher pay, or serve a shorter period of time than those in civilian programs. Because this is a compulsory program for all young men, it wOuld, reduce' the present draft inequities. Others have suggested a system of voluntary national service, tinder this pro- posal, those who did not want to enter the military services could instead elect an alternative form of service, and they would in this way satisfy their draft obligation. They would serve longer or receive less pay, and other incentives than those in `the military services, in an effort to equate the two different forms of service. Clearly, this system would have to be discontinued in times of a shooting war, to prevent some young men from opting their way out of the risks of being sent into combat. All of these proposals have obvious merit. Youths in national service here at home could help solve `some of the major problems confronting our society, such as education, conservation, housing, medical care and others. They could do so by providing manpower for neighborhood health centers, legal aid, managerial as- sistance, a "disaster corps" to help victims of earthquakes, floods and other disas- ters. Overseas, as `the Peace Corps has illustrated, the needs are just as great. In short, there are vast numbers of `jobs to be done, and we are now making the manpower we potentially can available to get the jobs done. ` ` PAGENO="0084" 590 My bill would require the President to make a study of the feasibility of a Na- tional Service Corps in which individuals seeking nonmifitary service could ful- fill their obligation of service to the country. The President would report to the Congress on the results of his 1-year study. DR8FP AS PUNISHMENT Mr. President, military service is and should be an honor and a privilege. It should in no way be considered a punishment. For that reason, my bill would prohibit local boards from reclassifying draft protestors as, delinquents and subjecting them to immediate induction. Instead, whenever a protestor took part in any illegal activity, he would be prosecuted under the law's criminal provisions and, if found guilty, be punished accordingly. We should in no way protect draft protestors from the processes of the law. But neither should we draft them and send them off to serve beside men who are proud to be serving their country. My bill would prohibit using the draft as a punishment and would instead rely upon the U.S. attorneys and the courts to enforce the provisions of the law which goven illegal activities. SELECTIVE SERVICE DIRECTOR TERM Most Presidential appointments carry a fixed term of service, and are not open- ended. My bill would conform the Selective Service law to most other Federal statutes, by requiring that appointment as Director of the Selective Service be for a 6-year term, and that at the end of the 6-year term the President must make a new nomination and the nomination must be confirmed by the Senate. There is no prohibition against renomination of the same individual as many times over as the President requires. This new provision would not apply to the current Director, General Hershey. ALIENS Under our draft law, aliens are subject to confining, confusing, and discrimina- tory treatment. For example, when the law was written, the NATO countries re- quired 18 months' service. The law consequently provides that an alien in this country who has served 18 months in the military service of a nation with whom we are allied, is not subject to draft in the United States. But since this provision was written into the draft law, the NATO countries have lowered their service requirement to 16 months. Thus, aliens who have fulfilled their military service in their own country, and are now in this country, find themselves subject to our draft. This is in direct contravention to a number of treaties in force between this country and our allies. Numerous other examples of the need to revise our draft policies toward aliens were made by the Department of State to the Marshall Commission. By bill adopts the recommendations of the Department of State with regard to aliens and the draft. These are: That all nonimigrant aliens should be exempt from military service. That resident aliens should not be subject to military service until 1 year after their entry into the United States asimmigrants. That 1 year after entry, all resident aliens should be subject to miltary draft equally with U.S. citizens unless they elect to abandon permanently the status of permanent allen and the prospect of U.S. citizenship. That aliens who have served 12 months or more in the Armed Forces of a country with which the United States is allied in mutual defense activities should be exempted from U.S. military service, and credit toward the U.S. military serv- ice obligations should be given for any such service of a shorter period. These changes can assure that our draft policy toward aliens is coherent, and rational, and that it comports with our international treaty obligations. JUDICIAL REVIEW The 1967 amendments added a provision to the law which denies judicial re- view of any draft classification and processing action, unless the registrant is a defendant in a criminal action. In other words, the decisions of the Selective Service System are insulated from the reins of Federal Court review unless one desiring to challenge the decisions accepts the stigma of being charged with t~ criminal violation of the draft law. This is surely an extraordinary interpretation of the process. PAGENO="0085" 591 This provision was intended to prevent cases similar to Wolff against Selec- tive Service Local Board 16. In that case, the U.S. Court of Appeals for the Second Circuit held that by reclassifying participants in a demonstration against the Vietnam war as "delinquents" and subjecting them to immediate induction, the local board bad both exceeded its jurisdiction and had caused an immediate and irreparable injury to the participants' constitutional rights. Consequently, the suit was sent back for further hearing by the district court. In its opinion, the second circuit noted that: "Normally it is desirable not only that the administration (of the draft law) function with a minimum of judicial interference but also that, when the administration does err, it be free to work out its oWn p~obIerns. But, as noted above, there are competing policies and when as here a serious threat to the exercise of First Amendment rights exists, the policy favoring the preservation of these rights must prevail." The court pointed out that the National Appeal Board had concluded unan- imously that the reclassifications were valid, and that General Hersey had stated repeatedly that the reelassifications were proper. Thus, it would have been a futile recourse to pursue the normal appeal procedure, and the Federal court thus accepted jurisdiction. Now, that is all changed. If the same demonstrators were tOd~y reëlassified, they could seek judicial re~ iew only when they had been through the entire ap peals process, and only after they had been inducted-when the reclassification would be moot; or had refused induction-when thOy would be charged with a criminal violation of the law. Further, the courts would be virtually prohib- ited from considering the question of the local beard's exceeding its jurisdiction in the reclassfication proceeding. I think this is an unprecedented attempt to work mischief with constitutional rights, and that it should be stricken from the law. AcCordingly, my bill would strike it. PRosEcuToR's DISCRETION The 1967 amendments require the Attorney General of the United States, on the request of the Director of Selective Service, to prosecute a given selective service case or to advise the COngress, in writing, of the reasons for his failure to do so. This is a virtually unprecedented provision, and goes against the grain of our long established legal protection. Only experienced prosecutors have suf- ficient judgment to determine whether a give case merits thO expenditure of pub- lic funds, or whether a case would not merit such an expenditure. ~\Iy bill restores the provision of the Old law, giving prosecutorial discretion back to the prosecutors. LOCAL BOARD DISCRIMINATION The present draft law prohibits discrimination in determining the composi- tion of local boards-but only discrimination on account of sex. Despite the fact that the racial discrimination issue has already been raised in court cases, the law nowhere prohibits discrimination on account of race, religion, or creed. Should we interpret the explicit mention of discrimination by sex to mean an im- plict acceptance of discrimination on other grounds? I, for One, would hope not. But to be sure, my bill would explicitly prohibit discrimination by race, color, creed, or sex in determining the composition of local boards. My bill makes another change in the law goverCing the composition of local boards: it requires the membership of a local board to represent all elements of the public it serves, insofar as practicable. The Marshall Commission developed statistics which clearly reveal how unrepresentative local boards are in many in- stances. At the time the Commission report was issued a year ago, Alabama bad no nonwhite local board members, yet morO than 30 percent of the State's population was Negro. In New York City, 4.6 percent of the local board members were nonwhite yet 14.7 percent of the city were nonwhite. In the District of Columbia, 36.2 percent of the board members were nonwhite, while 54.8 percent of the District were nonwhite. And in Massachusetts, six-tenths of 1 percent of board members were nonwhite, while 2.4 of the State were nonwhite. The statistics are a cause of great concern, and the President has requested General Hershey and the State Governors to bring local boards more in line with the population they represent. My bill would require that the boards be so constituted, and not leave it to the discretion of the Director of the Selective Service and the State Governors. PAGENO="0086" 592 REORGANIZATION OF THE SELECTIVE SERVICE SYSTEM The Marshall Commission èoncluded that "the United States has outgrown its Selective Service System." It presents a wealth of logic, statistics, facts and find- ings which reinforce this conclusion. This information also justifies a second con- clusion: that the System has operated for 25 years with dedication and selfless patriotism on the part of those officials charged with its administration. Today's structure is built on the concept of the local boards, which the Selec- tive Service characterizes as little groups of neighbors on whom is placed the responsibility to determine who is to serve the Nation in the Armed Forces and who is to serve in industry, agriculture, and other deferred classifications. In point of fact, this characterization is inaccurate. The Marshall Commission points out that "the `neighborly' character of local boards seems to exist more in theory than in fact." There are a number of reasons for this. Most boards in urban areas operate in anonymity. More than half of metropolitan local boards are centrally located and operated. A~ large percentage of local board registrants have not lived in the local board area for years. Local board clerks perform a great deal of the work-to such an extent nearly 20 percent of local boards report that nine out of ten classi- fication decisions were virtually automatic. Based on these facts, the Marshall Commission recommended a restructuring and consolidation of the Selective Service System along these lines: A national office, similar to that now existing; A series of regional offices, perhaps eight in number, corresponding for national security reasons to the eight regions of the Office of Emergency Planning; A series of area offices, numbering 300 to 500, corresponding to the 231 stand- ard metropolitan statistical areas, the 149 cities over 25,000 outside these SMSA's at least one area office in every State; Appeals boards operating contiguous to these three types of offices. Under this plan, registration and classification would be handled at the area offices. Local boards would be retained, but their function would be changed. The local boards would become the registrant's court of first appeal, and they would have the authority to sustain or overturn classifications made in the area offices. This insures that the great strength of the local boards-a group of citizens divorced from the Federal system-would be applied where it is most critical. My bill would change the present law by requiring `that the system be reorga- nized as proposed by the Marshall Commission. President Johnson indicated a year ago that he was establishing a task force within the Government to review the Marshall Commission recommendations, to determine their "cost, the method of implementation, and their effectiveness." I am sure that by now this task force has completed its work, and that its findings can speed development of the new structure. This new structure can increase the likelihood that the draft law will be administered not by a rule of discretion, but by a rule of law. CONCLUSION I have outlined above a brief explanation of the major changes my bill would make in our selective service laws. These changes are badly needed. The recent announcement regarding the termination of graduate school defer- ments is yet another illustration. That action will make about 225,000 graduating college students and first year graduate students immediately eligible for the draft in June. The draft call for the year beginning July 1 is expected to be about 240,000. In other words, nearly all the draftees will be graduate students and recent college graduates. The army is not happy with this fact. Neither are the graduate schools whose enrollment will be drastically reduced. And neither are the graduate students whose course of study will be interrupted. It has been reported that other meth- ods of handling the transition between blanket graduate student deferment and prohibition against graduate student deferment were recommended. One of the fairest of these was made by Nathan Pusey, president of Harvard University. It has also been reported that the Selective Service System advised that it did not have the management skills to put any of these alternative recommendations into effect. That is, to my mind, a serious indictment of our Selective Service System. Be- cause of its archaic structure and procedures, w-e were forced to adopt a mecha- ninm which satisfies no one. PAGENO="0087" 593 We need draft reform today, just as we did last year and the year before. We have not been protecting our individual freedoms as jealoulsy as we might in our draft law, and for that reason alone we must change it. Mr. GRUENING. Mr. President, will the Senator from Massachusetts yield? Mr. KENNEDY of Massachusetts. I am happy to yield to the Senator from Alaska. Mr. GRUENING. I applaud the efforts of our distinguished colleague the senior Senator from Massachusetts to reform the draft. It has been full of inequities and injustices which are widely known, but nothing has been done about. Par- ticularly do I applaud his thinking about the desirability of a volunteer army. I would go a little further than he has because in this particular war I think the draft itself is most unfortunate and indeed is a major inequity. We have had it before in previous wars, but I think more widely spread throughout our land in regard to this particular war is the feeling that there is less'justification for it than for our previous wars in which the elements of national danger or national security were evident; whereas, in my view, these factors are not present at all in this war in Southeast Asia for reasons which I have frequently stated. Let me say that we should consider very seriously eliminating the draft to this extent; namely, that we should allow draftees to choose whether they wish to serve in `Southeast Asia or not. The reason for that is-andI think it is amply justified-if a man, enlists in the regular Armed Forces, whether it be the Army, Air Force,' the Navy, or'the Marine Corps, `he knows when he takes his oath of enlistment that he has got to go where the Commander in Chief sends him. He may not like this war. He may feel that it is wrong, but he has made a commit- inent. The draftee, on the other hand, does not have that choice. I am convinced that the amendment which I have sought twice previously to introduce, without success so" far, if adopted, would perhaps result in half the volunteers going to Southeast Asia for one reason or another. I can document that estimate by citing a specific example. I have a grandson who volunteered for service in Vietnam.' He is a 19-year-old. He is in the paratroopers. He' believed that be should go. I think that if such an amendment were enacted perhaps half of the draftees would go to Southeast Asia and perhaps half would not. It certainly would be a good affirmation of the principles of freedom which we allegedly espouse if that were to be done. It would strengthen support for the war in Vietnam. I feel definitely that a volunteer army is and should `be a thing of the future, that we should have a professional army composed of volunteers, adequately paid, and adequately compensated in case of injury, and so forth; but to con- script our boys to go down there and fight, in many cases against people against whom they feel they have no grievance, and perhaps die in the process, particu- larly when we think of the terrific corruption which the Senator from Massachu- setts has recently so ably called attention to, is in my view unjust and inde- fensible. Our boys are dying in Vietnam `to help keep in office a corrupt regime, a regime which freely permits draft evasion of its own boys. Desertions from the South Vietnamese Army are tremendous. There were 96,000 of them in 1966. In 1967 that number rose to 110,000. `Therefore, I hope that when this proposed legislation is heard in committee and debated on the floor of thern Senate, the Senator from Massachusetts will consider a modification w'hich will make it possible to allow draftees to choose whether they will or will not go to Southeast Asia. Mr. KENNEDY of Massachusetts. I appreciate the comments of `the Senator from Alaska. I know `that he has been long interested in a volunteer army, along with other Members of the Senate. He has made his case with great eloquence and great feeling. I also know th'at in the course of any kind of study concern- ing a volunteer army, the views and comments of the Senator from Alaska would be extremely valuable and' will be weighed by the Members of this body. Mr. GRUENING. I would be most happy, when the Senator holds hearings, to present my views. This is such a burning question and goes so deeply to the hearts anci minds of our younger generation-as well as `the older generation, for that matter, the parents of these boys-that I think we should have full discus- sion and exploration of the subject. Mr. KENNEDY of Massachusetts. I very much appreciate the comments which the Senator from Alaska has just made. PAGENO="0088" 594 STATEMENT ox SELECTIVE SERVICE (Statement by executive committee of the National Association of State Universities and Land-Grant Colleges) 1. The recently announced Selective Service regulations will have their major impact on the oldest eligible young men. We consider this impractical. 2. If these regulations prevail, universities will be unable to fill their responsi- bilities to the nation. This is not in the national interest. 3. In other than the medical, dental, and allied specialities, blanket deferments for graduate Students are not now necessary. 4. Universities can perform the services the Nation expects if selection falls equitably on all ages in the eligible pool. This we recommend. The statement is consiStent with the statement of policy adopted by the full Association at the annual meeting in November, 1967, and subSequently trans- nutted to President Johnson. Information before the committee was to the effect that implementation of this recommendation can be carried out adthinistratively within existing law. Although the law requires that, within designated age groups, the order of call be oldest first, the law also authOrizes designation of age groups from which monthly induction calls shall be filled; and Spreading of impact of induction calls `variously among the age groups designated." NATIONAL AsSocIATIoN OF STUDENT PERSONNEL ADMINISTRATORS, *~Pebruary 20, 1968. Hon. EDITH GREEN, House of Representatives, Committee on Education and Labor, Special Subeom- niittee on Education~ Rayburn House Office Building, Washington, D.C. DEAR MRs. GREEN : Enclosed is a copy of a statement from the Executive Com- mittee of the National Association of Student Personnel Administrators concera- ing the potential detrimental effect of present Selective Service regulations for graduate students on the undergraduate student at the colleges and universities in the United States. The statement, I believe, expresses our real genuine concern for how- these regulations may affect the undergraduate student. The Executive Committee sincerely hopes that the potentially destructive effect can be minimized. Sincerely yours, CHESTER E. PETERS, Director of Professional Relations and Legislation. POTENTIAL DETRIMENTAL EFFECT OF SELECTIVE SERVICE REGULATIONS FOR GRAD- UATE STUDENTS ON THE UNDERGRADUATE STUDENT The members of the National Association of Student Personnel Administra~ tors are committed to facilitating the growth and development of students in the most effective ways known. Increasing efforts are being made to expand the opportunities of college youth to have and profit from significant encounters with responsible adults. Educational institutions are being pressed very severely to stretch the educa- tional dollar. The result is an ever-increasing student-to-faculty ratio. With this ratio rising, the demand for research increasing, the opportunities for obtaining research dollars increasing, and the "publish or perish" demands for promo- tion and recognition, the student is in danger of becoming the forgotten man. His needs w-ill be met less effectively as concerns of the nation focus increasingly on other prOl)lemS. What w-iil happen to~ the university student if an important segment of the teaching or teacher facilitating faculty (graduate student teacher, or teacher aides) are withdrawn from the university at one time (namely at the close of the spring term, 1968) because of the present Selective Service regulations? The implications of the full power of the~ Selective Service Act upon the graduate student means that the enrolled undergraduate student will be taught in larger PAGENO="0089" 595 classes, will be able to have less contact with remaining faculty, will be more isolated from significant encounters with adults or at least will have less op- portunity of having these encounters. The Executive Committee of NASPA recommends that serious consideration be given to the implications of the new Selective Service regulations as they relate to the graduate students and the concurrent effect on the welfare of the undergraduate student body of the colleges and universities of higher education in the United States. AMERICAN CoUNCIL o~ EDUCATION, S Washington, D.C., 1?~~~ni 29, 1968. Hon. EDITH GREEN, house Of Representatives, Washington, D.C. DEAR MRs. GREEN.: This afternooii at your request we delivered to your office a four-point proposal for a solution to the Selective Service probJem. This pro- posal was adopted unanimously by our Commission on Federal Relations at its meeting on November 27, 1967. Two things have occurred since we issued our four-point program. One is the reaffirmation by the National Security Council that no change should be made in Selective Service induction as it then existed. The second is that there has been increasing discussion of what Chairman I~iende1 Rivers refers to as the "modified young age system" in his letter of February 20 to General Hershey. As we understand this system, it would provide for the induction of men of each given age group in proportion to the number of eligible men in each age grOup. This would have essentially the same effect as our proposal number one- in that it wouldspread vulnerability to induction proportionately, by age, to all those available for military service. it would, therefore, be entirely consistent with the position we took on November 27, 1967. Sincerely yours, JOHN F. MORSE, Director, Commission on Federal Relations. PROPOSAL BY AMERICAN CouNCil ON EDUCATION 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 govern- ment 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 IndianaUniversity President Elvis Stahr and are as follows: 1. That for the immediate future a prime age group (age 19) be designated 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 legislation be intioduced to pio~ ide t random selection ~ stem as a long-range solution. 3. That deferments in additional fields of graduate and professional study be provided only in narrow and critically needed specialties 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 teach- ers classified I-A until the end of the term in which they are studying or teach- ing. By term is meant a quarter, a semester, or a trimester-not an academic year. PAGENO="0090" 596 NATIONAL ACADEMY OF ENGINEERING, Washington~, D.C., March 1, 1968. Subject: Impact of the Military Selective Service Act of 1967 on Graduate Education. Hon. EDITH GREEN, Chairman, Subcommittee on Education, House Committee on Education and Labor, Rayburn Building, TVashington, D.C. DEAR MRS. GREEN: In conjunction with the hearings of your subcommittee, we would like to bring to your attention the statement we recently forwarded to the National Security Council. We understand that our contribution as well as that of many other groups making similar observations does not appear to be reflected in the recent statements from the National Security Council or the Di- rector of Selective Service. We hope that the views expressed in our letter be of some value in the hearings you are now conducting. If we can be of more direct assistance to you, please call us. Sincerely yours, CHAUNCEY STARR, Chairman. NATIONAL ACADEMY OF ENGINEERING, Washington, D.C., February 12, 1968. Subject: The Military Selective Service Act of 1967. NATIONAL SECURITY COUNCIL, Washington, D.C. GENTLEMEN: The Committee on Public Engineering Policy of the National Academy of Engineering has become concerned about the possibility of serious impact of the new Selective Service Act on our nation's resources of personnel trained at the highest academic levels. During the past two decades, the federal government has sponsored graduate education with emphasis on such fields as science and engineering, in order to increase the availability of specialists who would be able to deal with the social, technical, political, and economic problems of our nation. The national assets created by this public investment are worthy of enlightened stewardship and further development. Present laws and regulations regarding the eligibility of graduate students for military service are likely to produce a catastrophic reduction in the number of graduate students at our colleges and universities after the middle of 1968 and may also reduce the flow of eligible candidates to our educational institutions in future years. The consequences of these impending temporary as well as long- term effects are of deep concern to us. From the point of view of national interest, it would seem desirable to seek out alternatives that would continue to encourage the most intellectually able in- dividuals to be trained through graduate education to fulfill an essential func- tion in our society. Furthermore, an inventory of trained faculty and research capability has been built by our educational system to provide advanced ethica- tional experience of the highest quality for the considerably increased numbers of qualified graduates. This educational system and that inventory should not, if at all possible, be subjected to highly fluctuating demands since this results in inefficient use of limited resources. We recognize the need to have an equitable system for selecting those who are to serve the nation's military needs but trust that this can be done in the con- text of an overall appraisal of the nation's best interests .As a first step, in order to reduce the current uncertainties in the plans of graduate students and graduate educational institutions, it would seem desirable to delay for one more year the induction of graduate students so is to permit more extensive research and ana- lysis on the impact of the new law- on thegraduate schools and the nation's intel- lectual resources. If, after additional analysis, it is found desirable to maintain graduate stu- dents fully eligible for the draft, it is hoped that a way may be found to make the necessary draft calls in equal proportion across the age group suited to miii- tar~v service rather than demanding heaviest contributions from the age group that has already received the heaviest investment in intellectual skills. PAGENO="0091" 597 Our Committee would be pleased to assist in any way possible in the considera- tion of alternatives that would meet the military personnel needs as well as make optimum use of our most highly trained personnel. Sincerely yours, CHAUNCEY STARR, Uhairman. [From the New York Times, Feb. 17, 1968] BLOW TO THE UNIvERsITIEs In the name of greater equity-which was long overdue-the Selective Service System has dealt a crippling blow to. the nation's academic community, and per- haps also to the armed services which it is supposed to support. There can be no question that the decision to end most graduate school defer- ments, except in the fields of medicine, dentistry and allied medical specialties, eliminates an escape hatch that has unfairly permitted thousands of young men from privileged backgrounds to ellude a burden of service that has fallen dis- proportionately on those less fortunate. But if this abrupt change in policy is carried out with no change in the present rule of inducting the oldest first, the nation's graduate schools next fall will be decimated, with serious academic and educational consequences, Educational au- thorities estimate that more than 200,000 graduating seniors and first-year gradu- ate students will suddenly become eligible for induction and, at present and esti- mated induction rates, will be thrust into the armed forces before the year is out. This will, in the words of one university president, limit next year's graduate classes to "the lame, the halt, the blind and the female." It will complicate ad- ministrative problems, cripple university budgets and create a serious gap in fu- ture teacher material. It will also affect undergraduate studies, by drastically reducing the number of available teaching assistants. The induction of this large body of older, articulate students will also create serious problems for the armed services, which have found such older draftees less viable and more difficult to assimilate into military routines than younger men. It may create serious problems for Selective Service itself because a much higher percentage of war and draft objectors is found among graduate students. These bitter fruits are the inescapable priëe of the failure of Congress last year to rewrite a fundamentally bad dra.ft law. Equity and the broader interests of the nation simply cannot be served by tinkering with a basically inequitable act. The law should be revised in general accordance with the recommendations of the PreSident's Adv~sory Commission on Selective Service, which Congress ignored last year. MeanWhile, the impact of the graduate studies ruling could be eased by modifying the "oldest first" order of induction. [From Life magazine, Mar. 8, 1968] THE DRAFT MUST BE MADE FAIRER At `i moment when the w `ii in ~ ietiiam is in so discouraging a state and many more troops arc being talked of it is tragic for the nation to be saddled w ith `in unf'ur draft law Yet e~ ery time somebody sets out to imnpro~ e the draft it ends up worse than it started In the past the ine~ `table inequities though duel to indi\iduals were such that w e could li\ e w ith them as a nation Put in this `mgonl7mng moment grossly unfair draft rules `idd a tragic dim~nsmon to our pioblems Snsred in a war whose purpOse many questions and that is something short of national survival, we must ask of the draft that it treat w-ith complete impartiality the men whose lives it may take. With such stakes there is rio room for politicking or for satis- fying grudges against more privileged young men. But these have been a part of the latest rewriting and interpretation of the Selective Service Act. The old regulations badly needed rewriting. Their provisions allowed men w-ith above-average cash or intelligence to parlay a college education into pro- longed graduate studies and virtual exemption from the draft. The new rules. which will take effect in June, will not simply plug that loophole. They will completely reverse the inequity. From a situation in which few graduate students e~ er saw service the next year w ill see the di aft calls primarily filled by gi ad u'ite students while nonstudent ~ ouths are spared When the President last spring suggested a revision of the system, one of his PAGENO="0092" 598 key proposals would have reversed the order of callup-by inducting 19-ycar-olds first, then working up to older men if necessary. Since we would seldom need all eligible 19-year-olds, the President also suggested a form of random choosing, or lottery, as the only fair way to decide who would serve. Under such a plan there would be no need to continue deferments for graduate students since by the time they reac-hed that l~oint in their education, youths would already have served-or been assured that they would not be called except for a major emergency. The Congress bought only a small part of the President's proposal. It agreed to the abolition of graduate deferments for all but medical trainees (who are liable after graduation to their own "doctors' draft'). But the congressmen specifically ordered the President not to institute any form of lottery, and thus set the stage for more trouble. The new rules allow continued deferments only for men in their second year *of graduate school or beyond. Those who will finish their first year this spring, and seniors graduating this year who had planned to go on to graduate school, are now draftable. And since President Johnson has unaccountably decided not to institute his own plan to call 19-year-olds first, the two-year group of graduate students will supply most of the manpower-for the nation's draft boards. Of the approximately 300,000 male students in the two classes, it is estimated that the draft will take about 60%. And others will likely enlist to exercise a choice of service. The graduate schools will be left, in the words of Harvard President Nathan Pusey, with "the lame. the halt, the blind and the female." Dragooning most of the men from two full years of the education cycle in America is a matter of importance to more than just those students who lose deferments. Graduate assistants do much of the classroom teaching at univer- sities-and some schools will lose half of these instructors. Under the new rules, no graduating college senior w-ill know exactly when he will be called-and whether he should chanc'e starting a year of graduate study. The sonic uncer- tainties are playing havoc w-ith the universities which are already committed to overhead expenses for next year-with no idea of the size of their student bodies. As long as the draft needs fewer than half the men who become available each year, then the country needs a selective service law that will take them with some even-handedness from among the wealthy and the poor, the intelligent and the average. The President should revive his own plan to draft the 19-year- olds first. That age falls early enough to prevent much disruption of career of school plans. And we still think some form of random lottery is the fairest way to choose the 19-year-olds who will serve. INDIANA UNIVERSITY, Bloomington, md., February 26, 1968. Hon. EDITH GREEN, Chairman, Special ~S'ubcornmittee on Education, House Office Building, Washing- ton, D.C.: Please permit me to convey my endorsement of Am~rican Council on Education suggestion that reexamination of selective service law include consideration of pooling age groups In addition to a reduction in tremendous impact upon graduate * education, the wisdom of this course is supported by considerations of equity between college and noncollege male vulnerability to draft, the crying need for personnel to teach undergraduates, and better distribution by age group in the Armed Forces themselves. Our concern in higher education is not to reduce any individual's obligation to his country nor to work any disadvantage upon the per- son w-hose resources do not permit the pursuit of higher education, but is rather in support of the national interest in avoiding a truly drastic interruption in the flow of educated manpower into the society and a major blow to our already hard-pressed institutions. ELVIS STAHR, President. PRINCETON UNIVERSITY, Princeton, N.J., February 29, 1968. Hon. EDITH GREEN, Chairman, f~pecial Subcommittee on Education, House of Representatives, Wash- ington, D.C. DEAR MRs. GREEN: The recent reaffirmation of the President's Executive Order 11360, ending deferments of graduate students except those in the health sciences, has serious consequences for the nation generally, including the well-being of its PAGENO="0093" 599 educational system. I am writing to urge the need for new legislation which, on the one hand, would properly make all undergraduate and graduate students as liable to military service as their fellow citizens and, on the other, would mini- mize the adverse national consequences that will follOw from the present situa- tion. Au' attachment to this letter summarizes the consequences for Princeton of Executive Order 11360 and some of those alternatives which we believe the Con- gress should consider. Tl1e immediate effect of the prevailing legislation would be to reduce total en- rollinent in the Princeton Graduate School by 470 students who constitute 31% of the total graduate student body. More significantly, it would reduce the number of first- and second-year students by 50% and consequently the entire student body by 50% in a few years, were the present law to continue in effect. This precipitous drop in enrollment will cause a comparable reduction in the flow of monies to the University's operating budget at a time or great financial strain. The estimated loss of income ($700,000) to our annual operating budget is, moreover, not something which a university can offset in any prudent way by economies, as faculty cannot be discharged, and the costs of maintaining and operating basic facilities (library, laboratories, and the like) remains high and unchanged when the number of students normally utilizing them suddenly drops. The present situation also raises very substantial problems for the research and teaching functions of the University because it cuts by over one-third the pool of graduate students available for research and teaching assistantsbips. The most important consequence of the present law is,' however, one that transcends Princeton as a single institution. There will necessarily be a sharp and, in my judgment, very deleterious drop in the supply of highly trained per- sonnel-a supply already inadequate to meet the national demand. As you doubt- less know, U.S. Office of Education projections indicate that the existing system of higher education is inadequate to meet the national need of highly trained personnel. Projectioi~s indicated a need in' 1971-72 for 39,000 newPh. D.'s but a supply of only 26,800 (without reference to the consequences of Executive Order 11360) The effect of the present draft ruling will be to cut that supply to 16,080, which is less than half the demand and amounts to a 7-year setback with serious consequences not only for the educational system itself, but for government and industry too. I wish to emphasize that many `~of us involved in higher education were very dissatisfied' with the selective service system prior to* the Military Selective Service Act of 1967, and recognized fully the social inequities it involved. We believe that all students-undergraduate and graduate alike-should share with fellow citizens `in their `age group liability to military service. However, were their liability to service proportionate to their frequency in the total pool of draftable men, the serious disadvantages inherent in the present legislation would be largely removed. The attachment to my letter indicates for example that none of `the several schemes involving draft itability. of all students (19 to 26 years old) would cause more than a 12% drop in graduate school enrollment and ultimate Ph. D. productivity, and some of them cause no more than a 3% drop. There is no doubt that new legislation could create a selective service system that ensured social equity without entailing the generally adverse effects of the 1967 Act and the subsequent Executive Order based on it. I hope that your Committee will give careful consideraflion to this urgent matter. Sincerely, ROBERT F. GOHEEN. UNIVERSITY OF MICHIGAN, Ann Arbor, Mich., February 23, 1968. Hon. EDITH GREEN, Chairman. special $ubcornrnittee on Education, House of Representatives, Wash- ington, D.C.: I am convinced' that the National Security Council's decision to sweep aside graduate deferments in all but medicine, dentistry, and related specialties will bring future disturbing and detrimental effects to our educational system at all levels and to our Nation. Vital needs in cities~ in schools, and in research will go unmet because trained minds are not available; such an abrupt shift in present policy must create gaps in plans `and progress for' years to come. After study I PAGENO="0094" 600 heartily support the American Council on Education's request for a system of random selection. Such pooling of sources can provide the required manpower while drawing properly but not unduly from the limited ranks of those we have educated. Let me urge you to examine the National Security Council's decision. R. W. FLEMING, President. NORTHWESTERN UNIVERSITY. Evaitston, In., February 23, 1968. lion. EDITH GREEN, House of Representatives, Washington., D.C. DEAR MRS. GREEN: The recent change in selective serrice practices falls heavily on those universities that justify their existence in great measure by their post- baccalaureate efforts. Those forty-odd universities that bear the major responsi- bility for training at the highest level, the doctorate, stand to sink back to their level of operation of a decade ago, and another sixty or so that had responded to the challenge to play a more important role in the production of badly needed doctorates will be frustrated in their purpose, crippled for lack of students and finances to the point of doubting societies' will and wishes for an elite of highly educated and creative people. The educational community, neither through the presidents of universities nor the graduate deans, has asked for deferments for graduate students as a class. Rather, they have repeatedly asked that graduate students stand as ready as laborers, artisans, and others to bear their part of the military effort. We had expected to lose in this way possibly one of five of our students, but we counted not upon the loss of four out of five that the accident of "oldest go first" imposes upon us. We thought we could nearly fulfill our mission under the minor loss but we know we must fall with the major one. We here, like other major universities, have launched heroic plans~ plans that tax our utmost efforts, to increase our stake in graduate education. We had responded to the understood needs to raise the population of Ph.D's above the one-in-a-thousand of our people. We are proud to have been a part in the increase of annual production from 10,000 in 1960 to the 17,500 mark in 1966. We had expected to play our role in helpingto reach 25,000 by 1972, but if the draft of potential Ph.D.'s runs unabated we and our sister institutions will surly drop down to the 1900 murk by 1971. This first class of 10,000 will be composed largely of women, students of foreign origin, and those physically unfit for military duty. Such a situation must obtaIn until some of the draftees return to the halls of learning, but the losses will not be recouped immediately and certainly we stand to miss our national goals by 45,000 during the slack time. The loss of such a large group from the very top of the educational system is incalculable. It will, at the least, move us backward toward the simple agrarian society from which we sprung and at the same time it denies us the benefits of the modern counterpart of the pioneers. It will dismay our friends in the world and cheer our enemies. I hope to have your support in helping us to avoid this backward step. With kind regards, I am Cordially, J. RoscoE MILLER. President. RtTTGERS UNIVERSITY, New Brunswick, N.J., February 26. 1968. Representative EDITH GREEN, Chairman, Special Subcomniittee on Education. House of RepresentatIecs, Waslt~ ington, D.C.: I agree with the general position taken by the American Council on Educa. tion and the National Association of State Universities and Land-Grant Colleges. We have not opposed the abolition of deferments for graduate students so long as it is not combined with the ruling calling for drafting older people first. Since this would mean the sudden disappearance of approximately 40 percent of our graduate students it would have a very serious effect upon our teaching and re- search activities and would definitely not be in the national interest. Hope very much that you can be of some help. MASON W. G~oss, President. PAGENO="0095" 601 THE UNIVERSITY OF ARIZONA, Tucson, Aria., February 24, 1968. Hon. EDITH GREEN, House of Representatives, Congress of the United States, Washington, D.C. DEAR MRS. GREEN: The critically serious consequences of the administration of the Selective Service Act as announced by General Hershey following the r~cent decisions of the National Security Council will be so crippling to the TJni- versity of Arizona and to higher education nationally that I am impelled to seek your assistance and urge your support of congressional action designed to avert what could well be national disaster. The recently circulated position paper of the Council of Graduate Schools in the United States summarizes accurately the disruptive effects of the present sdheme. We concur with it completely. Reliable statistics prepared by the Scien- tific Manpower Commission show clearly that the pattern of drafting men in the presently stipulated age sequence (which makes prospective and first-year graduate students the most available of all eligible men) could reduce the num- ber of first- and second-year graduate students by 40 to. 50 per cent. This could have such a disastrous effect on the production of doctorates (for education, government service, and industry), five years hence as to undo in great measure the 5ubstantial improvement in advanced degree production brought about by the past and present massive federal support of capable students through the Na- tional Defense Education Act, the National Science Foundation, the National Aeronautics and Space Administration, the National `Institutes of Health, and others. Our own statistics show that we shall likely lose 38.5 per cent of the full-time first- and second-year graduate men normally expected for 1998-69. These men constitute some 28 per cent of our anticipated group of about 1,250 graduate assistants. In common with other large public universities, virtually all of our elementary classes in English, foreign languages, mathematics, and science laboratories are taught by graduate assistants. As our undergraduate enrollment increases by another S to 10 per cent next year, the loss of about one-fourth of our graduate assistant instructors could mean almost complete breakdown of this segment of our undergraduate instructional program. We think it unrealistic and quite improper to suggest blanket deferment of graduate students or even categorical deferment beyond that of the heilth professions specified in the present law, and we would support no such proposal. But the present policy of drafting the oldest first seems equally unfair in its virtual guarantee of drafting all able-bodied, unmarried non-veterans and so disruptive to higher education that a middle ground must be sought. Random selection within the 19 to 26 year age group not only seems eminently fair to all men concerned (both those normally headed for graduate school and those not so inclined) ; it would also decrease the disastrous consequences of the current scheme by approximately two-thirds. We urgently request the Congress to provide for a random selection procedure. Sincerely yours, RICHARD A. HARVILL. LExINGTON, Ky., February 26, 1968. Representative EDITH GREEN, Chairman, Special Subcommittee on Education, Committee on Education and Labor, Rayburn House Office, Washington, D.C.: Recently announced selective service regulations will have major impact on the oldest eligible young men. If these prevail the University of Kentucky along with other universities with strong graduate programs will be unable to fulfill its responsibilities to the Nation in other than the medical, dental, and allied specialties. We do not deem blanket deferments for graduate students necessary at this time. University of Kentucky can perform its service to the Nation if selection falls equitably on all ages in the eligible pools. We strongly recom- mend this course of action. JOHN W. OSWALD, President, University of Kentncl1-y. PAGENO="0096" 602 UNIVERSITY OF WASHINGTON, Seattle, Wash., February 26, 1968. Hon. EDITH GREEN, Chairman, Special Subcommittee om Education, Rayburiv House Office Bv;ilding, Washington, D.C.: The F. of W. is deeply concerned about the impact of current military service policies on graduate school enrollment. We strongly urge consideration by the Congress on establishment of a system to pool age groups or other appropriate action to reduce impact on graduate enrollment. F~ P. THIEME, Vice President. COLUMBIA UNIVERSITY, ~Tezv York, N.Y., February 26, 1968. Representative EDITH GR~N, Special Subcommittee on Edvcation, U.S. House of Representatives, Washing- ton, D.C.: On behalf or President Grayson Kirk I wish to express Columbia's serious concern over the impact of the current draft regulations on graduate education and to state our support of the proposal, suggested by the American Council on Education and others to pool age groups for purposes of selection. We do not ask, and do not favor deferments for graduate students. We do view with alarm the consequences for the country of placing on the graduate schools the full impact of the altered draft policy. DAVID B. TRUMAN, Vice President and Provost. NnwYonx, N.Y., February 26,1968. Hon. EDITH GREEN, U.S. House of Representatives, Wash~ngto;z, D.C.: The President's action in eliminating draft deferment ~or graduate students and those in essential occupations and drafting oldest first "is a potential disaster for the Nation." Universities will soon have no eligible male graduate students in first and second year study. While no nineteen and twenty year old students will be drafted. It surely can- not be in the national interest that most of the people drafted in 1968 should be in occupations that were considered essential until this week. We expect to lose about 2,000 students next year although this will reduce our income by about $4 million at a time when teaching and other commitments have already been made forthe next year. The major effect will be the serious disruption of our educational program for undergraduate and professional work. Nationally this policy will drastically reduce the flow of skilled manpower into essential occupations in 1970 and later years. We do not ask for complete deferment. We urge either that the law be amended to allow a lottery to choose from among those eligible. Or that you request the President to set up age polls so that there will be a proportional drafting from all eligible age groups. ALLEN M. OARTTER, Chancellor, New York University. NEW HAVEN (JONN., February 28,1968. Hon. EDITH GREEN, House Office Building, Washington, D.C.: Urgently urge resolution of mess left by termination of all graduate and profes- sional school deferments. While abrupt in its timing the policy is wholly uncer- tain in its impact. Present limbo makes it extremely difficult for either students or institutions to plan constructively for graduate and professional study. Yale is grateful to her honorary alumna for anything she can do to improve situation and would be glad to help the effort in any way you suggest. Subject to better advice I would work for apportionment of draft liability evenly among age PAGENO="0097" 603 groups with some assurance that once a student was admitted to and accepted enrollment for study in the spring he would be allowed to complete at least the full academic year following, respectively. KINOMAN, BREWSTER, Jr. WASHINGTON, STATE UNIVERSITY, Pullman, Wash., February 23, 1968. Hon. EDITH GREEN, House Office Building, Washington, D.C. DEAR MRS. GREEN: We know that you are aware and concerned about the effect of current Selective Service procedures on our Universities, particularly on our graduate schools. We have made a survey of their potential impact at Washington State University, and we thought you might be interested in our findings. Our study suggests that, under present procedures, about 225 of the physically qualified young men who are temporarily deferred as first-year graduate students will be subject to induction. In addition, we estimate that about 250 physically qualified graduating seniors who would normally enroll in our graduate school next year will fail to do so. This total of 475 represents about one third of our graduate students. Their absence will be felt in many ways. There will be a con- siderable reduction in available Teaching Assistants upon whom we depend to help us maintain quality undergraduate instruction, and a reduction in available Research Assistants will be a severe blow to senior investigators who depend upon them to help compile the data and otherwise aid in the conduct of numerous im- portant research projects. Perhaps more important in the long view will be the effectof a two-year lag in the production of the most highly educated segments of our society-our future teachers, scientists, humanists, and public servants. We are convinced that these effects are not in the best interests of education, and we do not believe that they serve well the best interests of our nation. We trust that you share these convictiOns and urge you to take whatever action you can to achieve a more equitable solution to the Selective Service problem. We believe a system which pools all eligible age groups and chooses randomly among them would achieve this purpose and would substantially reduce the impact on graduate education. Sincerely yours, GLENN TERRELL, President. PITTSBURGH, PA., February 23, 1968. Hon. EDITH GREEN, Cl, airman, Special Subcomrniittee on Education~, Longworth House Office Building, house of Representatives, Washington, D.C.: Revision of Selective Service Act and recent presidential decision to draft col- lege graduates except for those engaged in graduate study of medicine and dentistry could have disastrous consequences for graduate education in the U.S. if Presidential directive is unchanged. This action could result in reduction of male post-baccalaureate students at this university by 50%. Strongly urge your support for system of random selection based on pooling age groups in order to reduce impact. Failure to do so can have most serious consequences for production of graduates at masters and doctoral levels in the next several years. WEsLEY W. POSVAR, Chancellor, University of Pittsburgh. GAINESVILLE, FLu., February 26, 1968. Congresswoman EDITH GREEN, House Office Building, Washington, D.C.: University of Florida believes all baccalaureate graduates should be placed in age group pooling system for draft rather than singled out as especially vulner- able to draft. To place baccalaureate graduates at top of draft-eligible lists is to say, in effect, to all 18-year-old males "those who go to college are certain to be 92-371-68-pt. 2-7 PAGENO="0098" 604 drafted when they graduate; those who st.ay out of college can play the odds, and have a reasonably good statistical chance of not being drafter." Such a policy is unjust, inefficient, and will result in serious damage to both undergraduate and graduate education in America. There is only one question to be answered in any consideration of the draft problem: "What is best for the nation?" To discourage young men from enrolling in college and thus to undermine the country's whole system of higher education is not what is best for the Nation. Yet we believe this would be the result of a policy which placed baccalaureate graduates at the top of draft-eligible list. Such a policy encourages wastefulness of our most precious national resource, the gen' eration of Americans who are 25 or younger. STEPHEN 0. O'CONNELL, President. NEWARK, DEL., February 22, 1968. Hon. EDITH GRr~EN, Chairman, Education Subcommittee, Rayburn House Office Building, Washington, D.C.: Recent administration decision regarding drafting of graduate students will reduce our graduate college enrollment by one-third, lead to loss of income of more than $150,000.00, endanger quality of undergraduate instructional program, and jeopardize critical research. Strongly urge adoption of alternate approach which would not single out those in 25-26 age group but which would pool all draft age youth, thereby greatly reducing immediate impact on graduate education. JOHN W. SHIRLEY, President, University of Delaware. ATHENS, GA., February 2(3, 1968. Hon. EDITH GREEN, Chairman, Special Subco;nm ittee on Education. House of Representatives, Washington, D.C.: I respectfully urge you to seek changes, either by legislation or by executive order, announced policy to draft graduate students. Such change is essential not only to universities but to the long range security and welfare of the entire country. Experience shows that it is best for a person to continue his graduate educa- tion immediately after completing his undergraduate, and that it is best for one to continue to the doctorate upon completing the master's degree. Any delay makes a return to advanced study difficult. Unless a change is made, the teaching and research programs of the liTniver- sity of Georgia will be seriously affected by the resulting shortage of qualified personnel. Also, the University is not now producing the number of persons with advanced degrees needed in education, industry, and government in this State and section. Although the University has made great progress in recent years, the expected curtailment of enrollment could set the development of our grad- uate program back at least 10 years. I also foresee critical shortages in the years ahead of scientists, engineers, economists, and other social scientists, and also other highly educated manpower. The Nation's reservoir of such manpower stands to be seriously impaired. I urge these points for your consideration. FEED C. DAvisoN, President, University of Georgia. HoNoLuLu, February 24, 1968. Hon. EDITH GREEN, Chairmn an, Special Subcommittee on Education, House of Representatives, Washington, D.C.: University of Hawaii estimates that anticipated enrollment of fall 1068 enter- ing male graduate students will total 450 instead of 900 and continuing first year to second year male graduate students 400 instead of 800. Total enrollment im- pact will be to reduce by about 20 to 30 percent total anticipated enrollment 1968-1969. Impact on graduate assistants will be to create shortage of about PAGENO="0099" 605 thirty percent above usual annual number of replacements. Five to seven years from now there will be serious shortages nationally in supply of collegiate level teachers. THOMAS H. HAMILTON, President. ST. Louis UNIVERSITY, ~t. Louis, Mo., February 22, 1908. Hon. EDITH GREEN, house of Representatives, Washington, D.C. DEAR MRS. GREEN: As I am sure you know, the selective service legislation of 1967 will have damaging effects on the nation's manpower, civilian and military. As it now stands, this program will seriously limit our trained men in non- military professions. After studying the impact of the current legislation on Saint Louis University, I have asked the dean of our Graduate School, Dr. Edwin G. Egel, Jr., to write you and present revelant data. From statistics here it now appears that we will lose some 47 per cent of our full-time male graduate students in their first two years of graduate study. Further, the present legislation will seriously jeopardize the educational pro- gram of 6,000 undergraduates at Saint Louis University. In certain departments, notably English, mathematics and philosophy, we have an elaborate graduate program in which teaching of ~mdergraduates is an important part of the total Ph. D. program. This is a well-supervised and structured program and is bene- ficial both to these future professors in our colleges and universities and also to our undergraduates. These teaching fellows in these three departments alone supply one-third of all the student credit hours taught by these departments. The present draft legislation may well leave us with no one to teach some 2,000 undergraduates in these departments. We~ also depend heavily on graduate fel- lows in biology, physics, and chemistry to handle the laboratories. In these de- partments also our future science potential as a nation could be seriously affected by the present draft legislation. I am writing to encourage an amendment and to support the American Coun- cil on Education in strongly urging that if graduate deferments were ended, a random system of selection be adopted. A system such as the ACE program would seem to provide three advantages: (1) It would produce for the armed forces a more desirable age mix. (2) It would reduce enrollment in graduate and professional schools by only about one-third, thus assuring the nation a steady flow of highly educated manpower. (3) It would make college and non-college educated men and almost equally vulnerable to the draft. I would also like to' comment that the present legislation must be amended very soon if we are to remove the present uncertainty among our seniors. We have an unusual record in that 86 per cent of our male seniors go on to graduate or professional school. At present all they can do is apply, but cannot make certain their plans for the future. Neither can the graduate or professional schools who are `uncertain whether they will have these applicants as students even if they do not accept them. I sincerely hope that the Congress will address itself to the immediate need of correcting this most undesirable and distressing situation and that you will do everything you can to help in this matter. With warm personal regards, I remain Sincerely yours, PAUL C. REINEET, S.J., President. UNIVERSITY OF MARYLAND, College Park, February 23, 1968. Hon. EDITH GREEN, Chairman, Special Subcommittee on Education, Congress of the United States, Washington, D.C. DEAR CONGRESSWOMAN GREEN: The situation confronting the: graduate student population which will be precipitated by the vulnerability of all graduate male students to the draft beginning with the Fall 1968 semester, is very grave. The PAGENO="0100" 606 seriousness of the situation has been called to the attention of the President of the United States by many national organizations including The Council of Graduate Schools in the United States, the American Council on Education, The ~National Association of State Universities and Land-Grant Colleges and others. As of this date, there has been no indication that the President or the Depart- ment of Defense will seek changes either by legislation or by regulation in the current Selective Service Act. I am, therefore, asking for your consideration of the problem. I urge that you reconsider the existing Selective Service Act. Hopefully, you may conclude that certain modifications of this legislation are required; otherwise, our grad- uate student enrollment will be cut by drastic proportions. Please allow me to briefly summarize how the current legislation is likely to affect enrollment of graduate students at the University of Maryland. Current graduate student enrollment (males, 4,942; females, 2,487) 7, 429 Projected 1968-69 graduate enrollment based upon a normal growth pattern 8, 320 Anticipated 1968-69 graduate enrollment under present draft law 6, 202 The number 6,202 w-as arrived at as follows: Returning male graduate students composed of the physically dis- qualified 1,260 Veterans 600 Those over 26 years of age 1, 300 Graduating male seniors (using University of Maryland figures) who may go on to graduate school by virtue of being physically disqualified for the draft or being a veteran 442 Female students 2, 600 Anticipated 1968-69 graduate enrollment deficit if present draft law re- mains unchanged 2, 118 The current draft legislation will, as can be seen by the foregoing figures: (1) Reduce our projected male graduate enrollment by about 40 percent. (2) Alter the graduate student population so that 63 percent will be women, men over 26 years of age, and persons physically disqualified for service. Although I am presenting data reflecting the situation at the University of Maryland, this is, of course, a national phenomenon. A disruption of graduate education of the order inherent in the new draft legislation will seriously curtail the national movement and the growing need for more advanced education. In addition, it w-ill result in a depletion in the ranks of graduate research assistants and graduate teaching assistants. Both of these categories of graduate students are central to the achievement of the objectives of graduate education. It is my firm belief that it is essential to the welfare, not only of the univer- sities, but of the nation as well, that every effort be made to persuade the Con- gress to reconsider the existing Selective Service Act. We shall appreciate your thoughtful consideration of this important matter and it would be helpful if w-e could have your reaction to the current outlook. With kindest regards, I am, Sincerely yours, WILsoN H. ELKINS, President. WASHINGTON UNIvERsITY, St. Louis, Mo., February 26, 1068. Hon. EDITH GREEN, Cli airman~ Special Subcommittee on Education~ House of Representatives, Washington, D.C. DEAR REPRESENTATIVE GREEN: I would like to share with you my deep concern over the affect of the recent administrative rulings on the Selective Service Act of 1967 on military manpower needs, on the national pool of skilled manpower, and on the nation's colleges and Universities. The Selective Service legislation, as it is now administered, leads to the draft- ing of older men to a degree that is surely greater than the armed forces desire. It creates an unrealistic unnecessarily drastic reduction in the number of well trained men entering the non-medical professions-law, engineering, business, teaching-for years to come. PAGENO="0101" G07 According to the Scientific Manpower Commission, it appears that a pool of some 226,000 physically qualified college graduates, first year graduate students, and new winners of Master's Degrees will become available for induction by next July 1. The Scientific Manpower Commission and the American Council on Education estimate that almost all of them will be drafted. Given the total ex- pected draft quota for the year beginning July 1, 1968, this pool of 21 to 26 year olds will probably constitute two-thirds of all men inducted in that year. No more than one-third of the inductees will be 19 or 20. Civilian manpower needs are adversely affected by the draft's concentration on the present college seniors (149,000 available for induction) and present first year graduate arid professional students (69,000). This means that two years from now, and for several years thereafter, the country's universities-their graduate and professional schools-will produce only about one-third of the trained men whom they would otherwise produce. As an example, I am attaching a careful analysis done at Washington University estimating that at least 61% of the men who would otherwise `be first and second year graduate students will be drafted, and I believe this situation is `typical. I believe that the Congress should address itself swiftly to the correction of this undesirable situation, and hope that you can take effective action to help to correct it. Sincerely yours, THOMAs H. ELIOT, Cit an cellar. EFFECT OF 1967 CHANGES IN STUDENT DEFERMENT UNDER SELECTIVE SERVICE IN GRADUATE AND PROFES- SIONAL (POSTBACCALAUREATE) SCHOOLS, EXCEPT MEDICINE AND DENTISTRY, WASHI NGTON UNIVERSITY Graduate Male enrollment school of arts and sciences Law Business Eiogineer- ing Social work Fine Architec- iris tire Total 1968-69 estimated (under pre-1967 selective service provisions) 1st year 2d year Subtotal Less estimated 25 oercent ohysically disqualified Subtotal Less veterans and over 26 (percent varying by school) Selected for service (drafted)_ - Percent of 1st and 2d years drafted._ 900 250 325 435 100 10 60 2, 000 300 225 100 62 195 145 100 109 50 40 524 3 20 819 559 525 131 162 40 295 254 74 63 90 22 8 44 2 11 1,378 -343 394 1 53 122 116 221 191 2 7 125 68 1 9 6 33 ` 11 1 5 1,035 -183 341 106 147 166 59 5 28 852 64.9 65.4 50 65 65 62.5 63.6 61.8 110 percent. 225 percent. GEORGETOWN UNIVERsITY, Washington, DC. February 23, /968. Hon. EraTil GREEN, House Office Building, Washington, D.C. DEAR. MRs. GREEN: I am writing to you concerning the `matter which I know is of great concern to you in yOur work in Congress. I am referring to the effect of our present Selective Service Law on graduate and professional education. ` The regulations, which `h'ave been recently approved by the National Security Council and General 1-lershey, very properly exempt students who are in Medical School, Dental School, and in `the allied health `sciences. I think there can PAGENO="0102" 608 be no doubt about the wisdom of this decision and it is important for our Armed Services and the entire nation. The other recommendation, which will touch graduate students and students in professional schools. other than those mentioned, will, I believe, do a serious injury to the schools and to the future of our educational enterprise during pos- sibly the most crucial period ill our history. I do not argue that all of these students should automatically receive a deferment, which would in effect, remove from them the possibility that they would ever be called upon to serve in our Armed Services. During our present crises and with out present levels of military require- ments. I believe that such complete deferments would lead to serious inequities, e~'pecially toward those who are unable to afford graduate education. I do, however, subscribe to the suggestion that random choice of manpower from the total of those eligible within the stated age groups will insure equitable treatment for all concerned, and will, at least, alleviate some of the adverse effects which might be visited upon our educational institutions. At Georgetown. w-e have been trying to determine just how many of our students in our Graduate School of Arts and Sciences and in our Law School might be drafted under the present regulations. Our information is incomplete at the preseiit time, but the trend of responses to our requests for information indicates that 30% or more may be eligible to be drafted after the end of this academic year. One set of incomplete statistics, which we have received from one of our divisions, indicates that of the sample replies, approximately 60% are vulnerable to be drafted after the present academic year. The plain fact is that~ no one really knows how many of these students are eligible for the draft and how many of those eligible for the draft might be called up by their local draft boards. I believe, however, that it is safe to say that even conservative and optimistic estimates point to the distinct possibility that there will be serious inroads on the first and the second year classes in these schools. It is quite probable that not all of these consequences can be avoided, but I sincerely believe that a random choice system would, at least, reduce their effect significantly. Georgetown, in particular, will be apt to suffer a serious financial loss, because of a loss in tuition from the students, who will not be able to enroll or who will be forced to withdraw at some time during the coining year. This type of 1o~s comes at the worst possible time in our history. Our financial problems are already severe and this type of financial reverse could have the most drastic effects upon us. Of necessity, we have had to make our commitment to faculty and staff, even though we are laced with this terrible uncertainty. We are, of course, going to lack many of the graduate assistants, who would normally be of great benefit in staffing our undergraduate science laboratories and in assisting professors in non-scientific disciplines. The loss of so many students in our graduate schools cannot but have a serious effect upon our future supply of highly edu- cated people to work in education, in government, and other public service. I was impressed by a remark attributed to you in the press, during a recent hearing. It was reported that one of the representatives indicated that he thought it would not be as harmful if a history major was not deferred, as it would be if the person were taking physics or engineering. You were reported to have replied that you thought it might be even more important to have the person who is trained in history than in the other disciplines. I agree with you for two very special reasons. First, and least important, is because I myself was a professional historian before I assumed my present posi- tion. Secondly, I think our problems today are of such a magnitude that we desperately need people who have a training in history, as well as the other social sciences. if our country is to come to a solution to our unprecedented domestic and international problems. Your many services to education in the past are very well known to all of us and I can only close by asking you most sincerely to use your good offices to assist in what promises to be a very important crisis. With hest personal wiahes, I ani Sincerely yours, GERARD J. CAMPBELL. S.J., President. PAGENO="0103" 609 DLKE UNIVERSITY Dnrharn, NC., February 23,1968. Hon. EDITH GREEN, House of Representatives, lvasksngton D C DEAR MRS. GREEN: I am writing to you about current draft reg~IIatioñs as they affect graduate students. I hope you and your committee can still do some- thing about them. Please forgive me for writing a long letter. It seems to me you will better understand the plight of graduate schools if I spend my time describ- ing how the regulations affect us rather than denouncing them in the abstract. Let me assure you that nothing said below is meant to imply that the old regula- tions were fair. I would only contend that the new ones are not the best way of correcting the inequities of the old. For nearly a year American graduate schools have been living under a double threat: that of sharply reduced federal financing and that of student bodies gradually reduced by the operation of the draft. Both of these threats have now become firm realities. Unfortunately there is no present possibility of using the second to alleviate the first. In other words, graduate budgets cannot~ be safely shaped to the size of student bodies, because budget planning must be completed before the major effects of the present draft regulations can be known with any degree of accuracy. Since you are entirely familiar with wha;t has happened to federal support of graduate education, I will not review that; but I do want you to see how difficult it is for a graduate school to plan intelligently for the coining year even if it is able and willing to sacrifice some other w-orthwhile activity to maintain the operation of a high-quality graduate uchool. Let me review the probable operation of the draft. Present Draft regulations expose all able-bodied male graduating seniors and all able-bodied first-year graduate students to the possibility of being drafted at any time after the first week or two of June. Both groups are automatically deferred until the end of the current academic year, but both become eligible for the draft at that time. What this means is that graduating seniors desirous of entering graduate school and first-year graduate students wishing to continue in graduate school may apply in the usual way for admission and support. For their part, graduate schools may follow their usual procedures in screening and admitting students and in awarding available fellowships, traineeships, and assistantships. By some time in the late spring this process will be completed, budgets will be firmed up, and then in the summer the operation of the Draft on the two eligible groups will begin to undo what was so carefully done during the winter and spring. One can make some kind of estimate as to the number of graduate students who will eventually be lost to the Draft, and one can be quite sure that the losses will be spread out over many, many months. What cannot now be predicted is the date by which most of the attrition will have occurred. A fair guess might be that the heaviest losses will not begin until mid-fall or later. Obviously this guess will be rendered hopelessly wrong if the Vietnam War takes a radical turn for the worse or for the better. Under such conditions as these, how can a university wisely determine how many of its scarce resources to allocate to the uncertainties of graduate education? But if it skimps on graduate education, who will teach its classes three, four, and five years from now? My last question suggests that more is at stake than graduate education. Many universities use a large number of graduate students to teach elementary and in- termediate undergraduate courses. This is not so true of my own university as it is of the large state universities, but even at Duke we would be hard pressed to man our freshman science labs if we could not recruit an adequate number of graduate assistants. Present prospects look dim. Then there is the matter of housing. If we knew the number of graduate stu- dents we will lose to the Draft, we could admit more of the undergraduate stu- dents who have applied but cannot be admitted for lack of dormitory space. I could extend this discussion of the unsettling effects of current draft regula- tions to other areas of university planning, but I have tried your patience enough. Let me make just one p~sitive suggestion. Even in the present national emer- gency, I see no reason why the required number of students couldn't be drafted at logical intervals in their schooling, so both they and their schools could make intelligent plans. I am not suggesting that they be allowed to escape the Draft PAGENO="0104" 610 but only that they be allowed to finish whatever academic unit they are engaged in at the time their Draft Boards notify them that they have been chosen for service. In the long run, I think a lottery would be the fairest way to handle the Draft, but the one change I have mentioned would be of considerable help. If there is any way I can help you and your committee to improve the conditions I have been dIscussing, please let me know. Sincerely yours, R. L. PREDMORE, Vice Provost and Dean. KANSAS STATE UNIvERsITY, Manhattan, Kane., February 23, 1968. Hon. EDITH GREEN, U.s. House of Representatives, Rayburn Building, Washington, D.C. DEAR CoNGREsswoMAN GREEN: We share the deep concern which has been ex- pressed by a number of academic institutions and educational associations regard- ing the recent ruling of the National Security Council on the Selective Service status of graduate students. The ruling's abrupt impact on the Nation's educational effort and upon the con- tinuity of supply of highly educated individuals is the main question, for we do maintain that the individual should be prepared to answer a call to the Nation's service. The issue is one of timing and orderliness. Thus, a more gradual adjust- ment of certain prior inequities in deferment policies ought to be possible so that serious new imbalances and sudden disruptions are not created. Nevertheless, the recently announced policy will virtually deplete schools of healthy American males enrolling for their first or second year of graduate work. At Kansas State IJniver- sity w-e estimate that, from a previously projected graduate enrollment of about 1,560 students for Fall, 1968, about 320 will be qualified for induction. The effects of such an immediate and exhaustive loss upon teaching and research programs have been widely commented upon, but, multiplied across the country, the effect on the more distant future is likely to be more serious. Time is short and the problem is complex; but the Nation's future is as deeply dependent on the long-term responsibilities that must be met by educated citizens as on the more immediate requirements of its military commitments. I believe that current circumstances and available ingenuity are such that neither obliga- tion need be jeopardized, and I hope that the House Committee on Education and Labor can recommend improved alternatives to the present Selective Service policy. Sincerely yours, JAMES A. MOCAIN, President. THE JOHNS HOPKINS UNIVERSITY, Baltimore, Md., February 23, 1968. Hon. EDITH Gim~N, Member of Congress, House Office Building, Washington, D.C. DEAR MRS. GREEN: I am writing in connection with the recently announced decisions of the National Security Council and the Director of Selective Service concerning the application of the draft to graduate students. In the absence of some form Of prompt corrective measures, either through executive action or through legislation, the predictable result of these decisions is a massive de- population of the graduate and professional schools (other than medicine and dentistry) for the next two or three years. This will create seriously adverse effects on the supply of future teachers, scientists, and other urgently required skilled manpower; it will entail severe financial and manning difficulties for the universities extensively engaged in graduate education; and it will produce un- necessary inequities in the operation of the Selective Service System. Let me make clear that neither I nor my fellow-administrators have sought or now seek a continuation of the past policy of blanket deferment for graduate students. That policy has created real inequities in recent years, and we agree with the decision of the Congress last June that it should be discontinued. We also heartily endorse the decision of the National Security Council against the blanket deferment of graduate students in particular fields, such as science and engineering. PAGENO="0105" 611 What we do strongly oppose is the maintenance of the present sequence of filling calls starting with the oldest eligible age group (twenty five to twenty six) and working down. This will have the practical effect in the coming months of concentrating the draft very heavily on this year's college graduates and present first year graduate students. The ideal, in our opinion, would be some form of national lottery at age eiohteen or nineteen as recommended by the President last March, with the young men being enabled to complete their then phase of education (high school, col- lege, or first graduate degree) before actually serving. This would require legis- lation. Short of this, and entirely in the range of executive discretion under the present law, would be a policy of taking a proportionate fraction from each of the seven eligible age groups (nineteen through twenty-five). This would bet- ter meet the needs of the armed forces, would avoid inequitable discrimination in favor of or against any particular group, and would reduce to tolerable di- mensions the impact on graduate studies and on the universities. The President's message of March 6, 1967 stated clearly the reasons for alter- ing the policy of selecting the oldest eligible age group first, as did the Burke Marshall Commission and the Clark Panel. The House Armed Services Com- mittee endorsed such a change of policy, and the Conference Report on the Bill as enacted in June stated that it "will in no way proscribe or inhibit the Presi- dent in changing the priorities of various age groups for induction, nor will it preclude him from adopting the so-called modified young age system which would involve identifying the nineteen to twenty year age group as the `prime age group' for induction." To indicate the seriously detrimental effects of the recently announced deci- sions, I can summarize for you our analysis of the consequences for the Johns Hopkins faculties of arts and sciences and advanced international studies. Under normal conditions, we would have 800 first and second year graduate students in arts and sciences in the next acadeniic year. Of our present first year students, about 30 percent are women and foreign nationals, small number are `veterans, and 8 percent are physically unfit for military service. Upwards of 50 per- cent would therefore be eligible for the draft and the vast majority of these would presumably be drafted under the present policies. This would entail a gross financial loss of $800,000,' partly offset by savings in financial aid to students from general university funds; we estimate the residual net impact at about $550,000. This is 12 percent of our core expenditures for instruction and unsponsored res'earch in arts and sciences, and is more than we have been able to allocate in normal `years from `either endowment income or from current gifts. There are no obvious alternative sources to replace such lOst Income. More- over, the loss of so large a fraction of the normal' complement of first and sec- ond year graduate students would have severely unfavorable' effects' on under- graduate teaching arrangements and teaching quality. Presently some 200 grad- uate students in arts and sciences' hold part-time teaching appointments. They handle the laboratory sect,ions in natural sciences, the bulk of' the' elementary language instruction, much of the undergraduate mathematics teaching, and some part of the teaching load in other fields. Few of the foreign and female graduate students are in this teaching group, so we estimate that the draft policy might reduce junior instructors by 75 per- cent or niore. Since the undergraduate needs for teaching will be unchanged, this loss of graduate student instructors would require' a vast increase in the size of class sections or the total' abandonment of personal instructional con- tact, with highly detrimental effect.s on the quality of uiidèrgraduate education. At the same time, many on-going research projects of great significance would be curtailed or postponed, especially in the natural sciences and certain areas of social science which depend on `organized team' efforts to carry through the re- search projects. Any effort to compensate for these effects by massive "over admission" would mean a general lowering of standards for several years to come, with adverse effects all around. At our School of Advanced International Studies in Washington, the propor- tion' of potentially affected students is even higher, amounting to about 63 per- cent. That student body consists of future foreign service offiëers and future teachers of international affairs, groups whose importance to the national wel- fare has been emphasized by the Congress in passing the Act for Intermiational Education. A further defect of the policies so far announced is the absence of any pro- vision to permit a graduate student to complete a full year of studies once he PAGENO="0106" 612 has been admitted to graduate work. This could also be corrected by executive action. The present situation creates additional uncertainties and confusion for both students and institutions. It makes it simply impossible for us to carry on any rational admissions policy or to plan properly for next year's teaching and researCh activities. I should warmly welcome any action which you and your colleagues might take to rectify these unnecessary and highly damaging consequences to the na- tion's entire system of higher education. Since the normal season for n-inking graduate school admissions and budgetary and academic plans for next year is already well advanced, remedial action is required with urgency. Sincerely yours, LINcoLN GORDON. SOUTHERN ILLINOIS UNIvERsITY, Carbondale, Iii., February 23, 1968. Hon. EDITH GREEN, House Office Building, Washington, D.C. MY DEAR CONGRESSWOMAN GREEN: I am writing to ask you to use your good offices to assure that there is a careful and thoughtful re-examination of the present policies of the Selective Service System of the United States as related to the deferment of students engaged in graduate education. I am sure that you are aware of the basic problem involved, and I therefore will not belabor you with a recapitulation of the facts. It is the opinion of myself and my associates in the administration of the Southern Illinois University that unless major changes are effected in the cur- rent policy a very sharp reduction will be effected in the number of graduate students entering in the Fall of 1968 and probably for two or more years there- after depending upon circumstances which are not presently discernible. This in our opinion may not be appropriate for the national well being or welfare and certainly will have serious impact upon the particular institution which is at the heart of our educational system, the multi-purpose, comprehensive uni- versity both public and private. We have not been altogether Satisfied with the practice of deferring individ- uals on the basis of specific occupations or preparation for specific occupations and therefore are not dissatisfied with the decision of the National Security Council to essentially equate all occupations as having equal value in the Ameri- can system. We certainly do not pretend to know which of the various occupa- tional and vocational programs for which we prepare students are either in the short-term or long-term national interests and question whether a procedure which encourages students to enter certain occupations for the wrong reasons is in the interest of either the individual or the nation. LTnless we have a full-scale mobilization, we would therefore feel that the present position of the National Security Council is a proper one. On the other `hand we seriously question the validity of preferential drafting of individuals at older age levels when younger individuals are in the draft pool and are classified at 1-A. It would seem to us that the repeated suggestions of various educators and other groups that individuals be placed in the total pooi by age groups with each age group making its proportional contribution to the monthly levy would be a procedure which would be both equitable and would reduce the impact of the current policy on the graduate and `professional seg- ment of higher education `and in turn on the production of this segment of `higher education of highly qualified people for the national needs of the short-term future. I know that this is an `extraordinarily complicated problem and that we are aware probably of only certain aspects of it. Nonetheless, we feel that the matter is of sufficient urgency that it requires a thorough re-examination and reap- praisal, and we ask that you do everything you can to assure that such a reap- praisal ia in fact effective. We hope that the outcome of this reappraisal will be new regulations along the lines suggested above; but if in the last analysis the decision is to remain with the present policy, we can assure we will do everything we possibly can as a university to work. within the guidelines, whatever they may be. Very sincerely yours, DELYTE W. MORRIS, President. PAGENO="0107" 613 UNIvERsITY OF PENNSYLVANIA, Philadelphia, February 16, 1968. Hon. EDITH S. GREEN, Rayburn House Office Building, Washington, D.C. DEAR MRS. GREEN: We share the concern of the House Special Subcommittee on Education on the drastic effect that the current draft law will have on graduate schools throughout the country. Aside from the undesirable effects of interrupting the training of present graduate students and the failure to offer the opportunity of graduate training to those who will receive their baccalaureate this coming June, there is the devastating effect that the draft law will have in reducing the number of young men who are so necessary for our undergraduate teaching programs `and for our research programs in all fields and disciplines. Very sincerely, GAYLORD P. HARNWELL. UNIvEitsrrY OF COLORADO, Boulder, Cob., February 22. 1968. Hon. EDITH GREEN, Chairman, special ~S'ubcommittee on Education, House of Representatives, Washington, D.C. DEAi~ MRS. GREEN: We are of course deeply concerned about the impact on graduate education of the recent decision of the administration concerning grad- uate deferments. Like every other Graduate School, we are even now faced with substantial uncertainties, not only as concerns our enrollments, but particularly our fellow- ship awards and our staffing of many introductory courses and laboratories. It appears fro~n reports in the local press that virtually all eligible June male graduates in Colorado as well as those finishing their first year of graduate work will be drafted. It is my view, which I feel certain is widely shared, that a pooling of eligible males by age groups Would go far toward reducing the serious impact that cur- rent regulationa make inevitable. I am personally deeply concerned by the whole matter of student deferments, since it so obviously militates against those who do not or cannot. attend college. I hope that you and your special Subcommittee will do all you can toward changing the decision of the athuinistration by favor- ing the age group pooling concept. With best personal regards, Cordially yOurs, J. R. SMILEY, President. HANoVER, N.H., February 26, 1968. Hon. EDITH GREEN, House of Representatives, Washington, D.C.: Announced selective service policy expected to reduce graduate enrollments at Dartmouth by 25 to 40 per cent. This would have drastic impact on both academic programs and.finances of institution. In short time it will also lead to a national shortage of highly trained people. Urge congressional action to reconsider present policy. Either a random selection system or apooling of agegroups would relieve potentially disastrous impact, and still pi~Ovide fair basis for military servicO. If reconsideration of draft policy'impossible urge immediate study of ways to mitigate financial impact on institutions to protect faculties research and future strength. JOHN S~ DICKEY, President, Dartmouth College. UNIVERSITY OF ILLINOIS, Chicago, Ill., February 23, 1968. Hon. EDITH GREEN, House of Representatives, Washington, D.C. DEAR MRs. GREEN: I understand that your Committee on Education may be con- sidering the impact of the new Selective Service regulations as they apply to graduate students. PAGENO="0108" 614 For your information, I enclose a copy of a statement which was reported recently to the governing board of the University of Illinois. I would add that if any changes are made in the regulations, it is my view that they should not be pointed toward exemptions or any general group defer- ments by field of study. The most equitable plan, with minimum hardship on individuals and institutions, would be to establish a pooling system of all age groups with some kind of proportionate goals within those groups. An additional desirable provision would be to permit a student to finish an academic year if be entered that year. before he was called to service. Sincerely, DAVID P. HENRY, President. STATEMENT, FEBRUARY 21, 1968 Any statement as to the effect of Selective Service Regulations on enrollment must be predicEted on an understanding that current information is not precise. It is difficult to know how the expectation of being drafted will affect (1) the number of applications for graduate study at Urbana-Champaign and (2) the individual career decisions which students will make. Further it is difficult to estimate how many students eligible and fit actually will be called to service in the next academic year. Based on the best information presently available, it would appear that approximately 20% of the total number of graduate students (about M~ of the male graduate students) who are expected to enroll at the Urbana-Champaign campus in September 1968 will be eligible and fit for the draft. This number, totalling 1,600 male students, consists of about 1,100 presently enrolled and continuing graduate students and 500 new applicants. It is hoped that the actual reduction can be kept below this total. The impact of the nation's supplies of teachers and educated man-power will be felt throughout the academic year and thereafter. The cumulative impact of continuing disruption of education for individual graduate students also is a matter of utmost concern. WTe will, of course, make additional reports as the situation is clarified. J.W.PELTASON, Chancellor, University of Illinois. VANDERBILT UNIVERSITY, Nashville, Tenn., February 23, 1968. Hon. EDITH GREEN, Cue irman, Special Subcommittee on Education, Committee on Education and Labor, House of Representatives, Washington, D.C. DEAR Mns. GREEN: Vanderbilt University's position on the difficult question of draft deferments for graduate students is not, I am sure, unlike that of many other American universities, but the question is of such grave importance that I would n~t want to fail to inform you of just what changes we would like to see effected in the current Selective Service procedures. We do not seek any. broadening of present deferment categories. We do urge that most careful consideration be given the plan tthat would create a general pool of all draft-eligible men from which monthly quotas would be drawn in a way that would call up men from each eligible age group in num- bers proportionate to that group's representation in the total peol. We at Van- derbilt are convinced that such a plan would allow more equitable treatment of the graduate. student and would also represent an improved approach to pres- ent and anticipated manpower needs of the country. Sincerely, ALEXANDER HEARD. NEWARK, N.J.. February 26, 1968. EDITH GREEN, Chairman, Special Subcommittee on Education., House of Representatives, Washington, D.C.: Critical shortage of engineering manpower already forecast for 1970 and beyond. Recent administrative decision affecting draft status of qualified gradu- ate students will compound this problem. Severe impact upon graduate schools PAGENO="0109" 613 of engineering and upon manpower supplies might be lessened if some plan such as pooling of age groUps were instituted. NEWARK COLLEGE OF ENGINEERING, ROBERT W. VANHOUTEN, President. AUBURN, ALA., February 27, 196& Representative EDITH GREEN, Chairman, Special Subcommittee, Rayburn House Office B ailding, TVashington, D.C.: Approximately thirty percent of the twelve hundred graduate students cur- rently enrolled Auburn University subject to draft under new selective service regulation. Drafting these. would result in loss of equivalent of one hundred twenty full time faculty from universities teaching and research programs con- sidered essential to national interest. Problem will be magnified if reserve units are activated. We urge considera- tion by the Congress of system pooling by age groups as proposed by American Council on Education and Council of Graduate Schools in U.S. HARRY M. PHILPOTT, President, Auhurn University. CAMBRIDGE, MASS., February 27, 1968. Hon. EDITh GREEN, Chairman, Special Subcmnmittee on Education, house of Representatives, Washington, D.C.: The Administration's decision to provide discriminatory priority in drafting 25 year old men will create a serious depletion in the graduate student teaching and research commitments of MIT. A system ~f pooling age groups would greatly reduce the impact on our graduate student teaching and research assistant staff and I urge careful consideration of all such proposals. HOWARD W. JOHNSON, President, Massachusetts Institute of Technology. MINNEAPOLIS, MINN., February 26, 1968. Representative EDITH GREEN, Chairman, Special Education Subcommittee, house of Representatives, Washington, D.C.: The current selective service law and related policies of implementation pose serious problems for graduate school and ultimately for all of education. Am especially concerned about plans to draft older age groups first. Urge your ef- forts to secure pooling of age groups for draft purposes. Further urge your efforts to gain review of longer run impact of present dropped policy on education and the related i~nplication for our economy. MALCOLM Moos, P esident 11 nis ci s~ty of lfinncsota KNOXVILLE, TENN., February 24, 1968. Chairman EDITH GREEN, Special Subcommittee on Education, house of Representatives, Washington, D.C.: If the present selected service regulation prevails 750 existing and new graduate students at University of Tennessee will be affected seriously handicapping teach- ing and research programs this fall and the following period. We plead not for wholesale graduate deferment or for categorical deferment but for some method of age pooling selection to prevent the drastic impact on any one age group. A. D. HOLT, President, University of Tennessee. PAGENO="0110" 616 WASHINGTON, D. C., February 23, 1968. Hon. EDITH GREEN, TT7as/, ington, D.C.: The present administrated decision on selective service is expected to reduce full time graduate enrollment at American University by 30 to 50 per cent for fall of 1968 graduate students drafted will deprive the country of trained service in teaching. contributions to natural and social sciences, skilled work in government and international affairs, and the humanities full losses will not be felt by society for two or three years. Since major enrollment drop will accrue at masters and early doctoral levels. This university joins American Council on Education in requesting a system of pooling age groups in order to reduce impact on graduate education. HTRST R. ANDERSON, President, the American University. ~EW YORK, February 23, 1968. Representative EDITH GREEN, house of Representatives, hash ington, D.C.: The administration's decision regarding draft and graduate students is produc- ing chaos amoiig both students and schools. Soon the consumers of highly trained manpower that government industry schools and colleges-will become aware of the present short-sighted policy is it not possible to have a fair system of pool- ing age groups? The present system is clearly not in the best interests of any productive segment of the country, an age pooling system would reduce the num- ber of graduate riudents but it would not be so draStic as to seriously affect the efficiency of graduate schools and the consumers of highly trained talent. JOHN R. EVERETT, President, The New School. ATHENS, OHIO, February 26, 1968. Mrs. EDITH GREEN, blouse of Representatives, TVashington. D.C.: Request that careful consideration be given to American Council on Education proposal concerning draft procedure for graduate students. Recently announced policy could have detrimental effect on graduate education. Important to avoid w-holesale drafting of graduate students. VERNON R. ALDEN, President, Ohio University. LAWRENCE, KANS., February 26, 1968. Hon. EDITH GREEN, House of Representatives, TVashi ington, D.C.: Recently announced selective service regulations will make it largely impos- sible for universities to plan for the graduate schools as students are unable to plan ahead, pending decision on each individual case by local selective service boards. Universities will be unable to fuiñll their rsponsibillties to the Nation as the supply of future teachers and scientists is thus curtailed. With other univer- sity presidents I urge, not blanket deferment but, equitable disribution of the mci- dence of the draft. This can be accomplished if all ages in the eligible pool are treated and selection within this pool follows a predictable order. This I strongly recommended. W. CLARKE WESCOE, Chancellor, University of Kansas. PAGENO="0111" 617 BOSTON, MAss., February 26, 1968. EDITH GREEN, Chairman, Subcom'mittee on Education, U.S. House of Representatives, Wash- ington, D.C.: Urgently request you work for draft by pooling age groups rather than barring all graduate education. Rev. MICHAEL P. WALSH, S.J., President, Boston College. COLUMBLTS, OHIO, February 26, 1968. FIon. EDITH GREEN, house of Representatives, TVashington, D.C.: Selective service decision will have serious impact upon teaching and research activities of the Ohio State University and potentially serious academic and economic impact upon faculty recruitment two years hence. While agreeing with general policy, we urge adoption of some system to phase into this policy to reduce extent of immediate impact. NOVICE G. FAWCETT, President, Ohio State University. HousToN, TEX., February 26, 1968. Hon. EDITH GREEN, Chairman, Special Subcommittee on Education, U.S. Office of Education, Wash- ington, D.C.: The decision of the President of the United States regarding the draft act, wherein requests would not be made for graduate deferment, will have a serious impact on graduate education. If this is not changed but if allowed to stand for any period of time, however short it might be, irreparable damage will be done to graduate school enrollment. H. HADLEY HARTSHORN, Chairman, Intei~im E~recu tive Committee, Teaas Southern University. GRAND FORKS, N. DAK., February 26, 1968. Representative EDITH GREEN, Chairman, Special Subcommittee on Education, U.S. House of Representatives, Washington, D.C. Administration decision regarding drafting graduate students would have son- oiis consequences not only upon graduate enrollments and graduate college but upon total university urge you consider some fair system for pooling age groups to reduce the effect upon graduate education and hence upon the Nation urgently demanding more personnel educated to graduate level. GEORGE STARCHER, President, University of North Dakota. LAFAYETTE, IND., February 26, 1968. Hon. EDITH GREEN, House of Representatives, Washington, D.C. Purdue University, the land-grant institution of the State bf Indiana, with total enrollment ocf twenty-three thousand, of which more than five thousand are regular graduate students, supports appropriate and immediate action on the part of the House Subcommittee on Education for the Selective Service System to adopt procedures under which all men in the total pool of eligibles (18-26) be called for military service in the same ratio as the number in each age group bears to the total pool thus, in effect achieving in practice the principle of equal PAGENO="0112" 618 exposure to military service by all eligible men. In our view it is unfair, unwise, and impractical to meet all immediate draft calls from the older age groups since this places a greater exposure on the older age groups than the younger age groups. FREDERICK L. HOVDE, President, Purdue University. PROVIDENCE, RI., February 26, 1968. Mrs. EDITH GREEN, Chairman, Special Subcommittee on Education, House of Representa tires, Washington~ D.C. I strongly urge Consideration of Selective Service policy requiring selection of oldest eligible males first continuation of this policy will have an immediate bad effect on planning granduate schools but a more important bad effect on the orderly supply of educated people for the professions ending of deferments for graduate study was need for equity but previously deferred students should be placed in a pool with nineteen year olds, not all taken first. RAY L. HEFNER, President, Brown University. HOUSTON, TEn., February 26, 1968. Mrs. EDITH GREEN, House of Representatives, Washinqton. 1). (7. Respectfully urge that your subcommittee consider system of pooling age groups so as to reduce the clear danger of a further drop in graduate school en- rollment that will imperil the orderly preparation of needed specialists in many academic disciplines. Note that pooling of age groups does not constitute overall deferment but is a system protecting the national interest and rights of all con- cerned. Kind regards from a former Oregonian. H. PHILLIP G. HOFFMAN, President, University of houston. ALBANY, N.Y.. February 26, 1968. Hon. EDITH S. GREEN, House of Representatives, Rayburn House Office Building, Washington, D.C.: I strongly urge the Special Subcommittee on Education of the Congress to advise the President of the dangers inherent in the recent changes in Selective Service Regulations and ask that you recommend to him a change in the law which would provide for an impartial selection within the total draft eligible pool as a better way of serving the national interest. To meet present and future needs of this Nation for educated manpower in these times of rapid change, it is imperative that efforts be made to avoid deci- mating the ranks of those students who are the brain power potential of the United States. To do otherwise would reduce the capacity of universities to serve the national interest and deprive government, education and industry of strategic manpower necessary for the immediate future. Should these new regulations pre- vail at this critical period in our history, our progress in meeting national needs would be seriously arrested and it is likely that an actual set back of 10 years would occur in certain areas. In brief, the Nation must not be put in the peril educationally, economically and internationally. To underline my statements, I am presenting the following information about the State University of New York which is comprised of four university centers, two medical centers, twelve liberal arts colleges, six agricultural and technical colleges, and thirty community colleges. Unfortunately, at this time. estimates of the effects of the new regulations are available for only the university centers and the community colleges, as well as the agricultural and technical colleges. According to estimates, graduate school enrollments will drop about 40 per cent at university centers; the drop in enrollments of male students at the six agricul- PAGENO="0113" 619 tural and technical colleges will average over 80 per cent; and the drop in enroll- ments of male students of the 28 community colleges reporting will average over 50 per cent. To lessen the loss of educated manpower at this critical juncture and enable the State University of New York with the other universities to fulfill commit- merit to the United States, I urge the solution of initiating the syrtem of selec- tion which fall equitably on all ages in the eligible pool. SAMUEL B. GOULD, Chancellor, State University of New York. PASADENA, CALIF., February 27, 1968. Hon. EDITH GREEN, Chairman, Special Subcommittee on Education, House of Representatives, Washington, D.C.: Respectfully urge you to explore the possibility of revising the Draft Act of 1967, first, to provide for a random selection of draftees irrespective of age within the present accepted range, and second, to time the drafting of students at all levels to the normal periods when their immediate degree objective is' reached. Do not ask for special deferments for graduate students, but only that all young men be treated alike and that schools years not be disrupted. L. A. DIJERIDGE, President, California Institvte of Technology. BANGOR, MAINE, February 26, 1968. Hon. EDITH GREEN, Chairman, Special Subcommittee on Education, House of Representatives, Washington, D.C.:' The Lniversity of Maine confirms the punciple that National Manpower needs have priority over a university's needs. The recently announced policy on the draft of graduate students will have a serious detrimental impact on total urn ~ ersity responsibility because of the contribution of graduate students in under graduate instruction We belie\ e that all able bodied citizens have a responsi bility for completing their military service obligation further it is not reason ~ible to insist upon deferment of graduate or professional students in other than the medical dental and allied specialty fields This nation bhould ba~ e the human resources to make possible the development of a system of intelligent selection which will distribute the service responsibility equitably across all the age groups currently available. We would also like to' recommend that an en- rolled student selected for draft be given a delay in reporting for duty until the completion of his academic year program. EDWIN YOUNG, President, University' of Maine. FORDHAM UNIVERSITY, Brona, N.Y., February 2'6, 1968. Hon. EDITH GREEN, ` House of Representatives, ` ` Washington, D.C. DEAR CoNGREsSwoMAN GREEN: In writing to you about the recently announced new Selective Service procedures I know that I am speaking for the students faculty and administration of Fordham University These new procedures w ill raise havoc in graduate school education `I really believe that all graduate schools `are severely threatened by these new regulations. It is practically impossible to know how many students will be in graduate and professional schools next Fall and our plans are not even educated guesses. It seems to me that there is a strong likelihood that the number of stu- dents,in graduate schools will be reduced in a drastic fashion. I am writing to you because I am well aware of your interest in American edu- c'ition and if we talk of education without teachers we are talking nonsense But the new procedures are very likely to cut off the supply of teachers. 92-371-68-pt. 2-8 PAGENO="0114" 620 It is quite evident to all of us that draft inequities have existed. There has to be some solution but I hope you agree that the solution does not lie in procedures which will cut off the supply of future teachers for American education. It is quite obvious that some action must be taken. I feel that one equitable solu- tion lies in a random selection method based on the total pool of physically and mentally qualified men (age 19-26) available for induction. In this way, the miii. tary service could be drawing equally from the college graduate group and the non-college group. Such a system would: 1. Save the armed forces from trying to cope with an incredibly large number of potential and actual graduate students ready to argue about every command. 2. Produce a more desirable age mix for the armed forces. 3. Allow the graduate and professional schools to function and to render service to the nation. 4. Expose college and non-college men almost equally to the draft. Please accept my most sincere thanks for all you have done for American edu- cation. Sincerely yours, LEO MCLAUGHLIN, S.J. MIAMI UNIVERSITY, Oaf ord, Ohio, February 29, 1968. Hon. EDITH GREEN, House of Representatives, House Office Building, Washington, D.C. My D~n MRS. GREEN: In re special subcommittee on education. On behalf of the faculty and administration of Miami University I wish to sup- port the position of the American Council on Education in recommending a system of pooling of all students in the draft age group, followed by random selection, to reduce the impact on young men at the upper age levels. Since it seems apparent that the draft requirements will call only a minority of the eligible students, it would appear to be in the national interest to select from all eligible students and thereby reduce the impact on graduate education. While we certainly do not wish to put the interests of universities above those of our nation, the present regulation will seriously impair the ability of higher education to prepare sufficient numbers of graduate students for future positions in our colleges and universities. On the other hand, we believe we can continue to perform our vital services to the nation if draft selections fall equitably on all age groups in the eligible pool. While I understand that your education subcommittee does not have jurisdic- tion in this matter, I appreciate and wish to support your actions to spotlight the consequences of this present policy. Sincerely yours, PHILLIP R. SHRIVER, President. PENNSYLVANIA STATE UNIVERSITY, University Park, February 23,1968. Hon. EDITH GI~rnN, House of Representatives, Rayburn House Office Building, Washington, D.C. Dw~ Mns. GREEN: May I add the voice of Penn State to those from whom you must have heard concerning Selective Service Director Hershey's recent ruling on the deferment of graduate students. Let me make quite clear at the beginning that I do not propose the indefinite continuation of draft deferments for graduate students. That system is pa- tently undemocratic. Rather I propose that the Selective Service System take men at an earlier age so that their professional development need not be inter- rupted once it has begun. If Mr. Hershey's current ruling stands, we will experience severe disloca- tions: not just in the graduate school but throughout the total University. I quote from M. Nelson McGeary, Dean of Penn State's Graduate School: "As presently constituted the draft system will impose a number of disloca- tions in the structure of graduate education here at The Pennsylvania State PAGENO="0115" 621 University as well as at most other colleges and universities offering graduate work. At Penn State we do not expect graduate student draft losses to be offset by increased applications by degree candidates who are over draft age, are veterans, are physically disqualified for military service, or by women appli- cants. We do not plan moreover, on increasing the number of foreign national graduate students. Under these circumstances, undergraduate instructional pro- grams will require reallocation of faculty time because of the major role played by graduate teaching assistants. Some research programs will also be curtailed as more faculty time will have to be given to teaching in conjunction with fewer student research inquiries and less student research assistance." From a national point of view, I am concerned about losing some of our best scientists, liberal artists, and professionals. I fear their disciplines may pass them by during their years of service. Many will not have the initiative to begin again. I propose that graduate students be retained as draft-eligible until they com- plete work toward their advanced degrees. In the meantime, begin drafting men upon high school graduation. Within a few years, the nation's eligible graduate students will be veterans. The problem will have solved itself. We are indebted to you, Mrs. Green, for your concern about this matter. Sincerely, Enic A. WALKER, President. WICHITA STATE UNIVERSITY, Wichita, Kans., February 26, 1968. Hon. EDITH GREEN, Chairman, Special Subcommittee on Education, house of Representatives, TVashington, D.C. MY DEAR Mus. GREEN: I take this opportunity to add my comments to those which you are receiving from other university presidents with regard to the im- pact on graduate education of the present selective service requirements. This statement has the benefit and insight of Dr. John Breazeale, the Dean of our Graduate School. Before commenting on this impact, may I first make clear that this University shares with the American Council on Education and the Council of Graduate Schools, the following convictions: 1. That the national security transcends the interest of any individual or group of individuals, and that the obligation of military service should be bori~e by all citizens with neither graduate nor undergraduate students being ex- empted from such service. 2. That the system of selective service should create a minimum of disruption and uncertainty in the lives of those eligible for induction, and that, therefore, the selection process should take place at a natural time of transition in the education process of the atudent. The Graduate School of Wichita State University will be affected in the same way as other graduate schools are affected by the present selective service regula- tions. Since our graduate program is primarily at the Masters level, the loss of a significant fraction of the first year graduate class for a period of two years will result in a severe disruption of continuity in these Masters programs. This Uni- versity would also feel the impact of the present requirements in its under- graduate programs since the University uses approximately 130 graduate teach- ing assistants, most of whom are normally drawn from the first year graduate class. Inability to fill these teaching assistantships would have the greatest impact in science areas since laboratory sections of most of the science courses are taught by these assistants. Because of the urban nature of Wichita State University, a sizable number of our graduate students are employed and pursue their graduate work on a part-time basis. Since many of these students are older, or are deferred on other than a student classification, the impact of the current selective service require- ment on our Graduate School may be somewhat lighter than on more typical graduate schools. Nevertheless, I felt it appropriate that this University ex- press its alarm at the consequences for graduate education of the present selec- tive service regulations. We would strongly support efforts to reduce the impact of these regulations by pooling eligible men in broad age groups rather than PAGENO="0116" 622 adhering to the present practice of inducting the eldest registrants first. We believe that this action would be compatible with the two points endorsed above. and at the same time would help preserve the continuity and vigor of the educational programs of the University. Sincerely yours, EMoRY LINDQUIST. C.OLTMBIA, Mo., February 26, 1968. Mrs. EDITH GREEN, Chairman, House Subcommittee on Education. House of Representatives, Washington, D.C.: The executive decision with respect to draft calls will cause serious problems for the universities in the loss of graduate students and for the Nation in the loss of specialized manpower. I would like to urge that you institute congressional hearings on this entire matter. JOHN C. WEAvER, President, University of Missouri. SALT LAKE CITY, UTAH, February 27, 1968. EDITH GREEN, Chairman, Special Subcommittee on Education, House of Representatives, Washington, D.C.: Recent decisions by the Director of Selective Service in regards to graduate student deferments will have a most serious impact on the University of Utah. Our records indicate that 635 of our 1419 graduate students will now become eligible for the draft as will 110 of our 305 students in the college of law. These students teach large numbers of our freshmen and sophomore students and play a most significant role in our research projects. Removal of these students from their present academic positions will cause a major disruption of personnel on our campus. We are taking steps to recruit townspeople, faculty wives and others to help fill the gaps. in the teaching program but it will be most difficult to replace those students engaged in our twenty million dollar research projects. We believe these students should meet their commitments to the country's Armed Forces but the present system has very great impact on our graduate students while allowing under-graduate students to remain in school almost indefinitely. JAMES C. FLETCHER. President, University of Utah. SCHENECTADY, N. Y., February 26, 1968. Hon. EDITH GREEN, House of Representatives, Washington, D.C.: Respectfully urge you to press for revision of selective service deferment plan to distribute draft calls equitably over all age groups so as to lessen impact on graduate and professional schools. Letter follows. HAROLD C. MARTIN, Chancellor of Union University. COLUMBIA, S.C., February 26, 1968. Representative EDITH GREEN, Chairman, Special Subcommittee on Education.. House of Representatives, Wash- ington., D.C.: Please add my concern regarding new draft regulations to those already received. National health and safety requires a more effective procedure to achieve a wider distribution in ages of draftees. TIro~rAs F. JONES' President of University of South Carolina, Member of National Science Board. PAGENO="0117" 623 COLLEGE STATION, TEn., February 28, 1968. Hon. EDITh GREEN, Chairman, Special Subeonim ittee on Education, House of Reprcsentcttivcs, Wash- in gton, D.C.: Present administrative decision regarding draft status of graduate students portends to reduce fall 1068 enrollment of first and second year graduate students by 40 percent at Texas A. & M. University. Urge you support act to not request graduate deferment but system pooling age gioups and thus reducing potentul imptct on giaduate education EARL ADDERS, President, Teceas A. c~ M. University System. CAMBRIDGE, MASS., February 26, 1968. Hon. EDITH GREEN, U.S. house of Representatives, Tl7ashington, D.C.: Effect of administration decision on the draft estimated to reduce number of graduate students at Harvard in the first year 10 percent to 35 percent depending on particular faculty. Loss of teaching fellows and research assistants estimated to he more than 100 in the first year. These losses obviously cumulative in suc- ceeding years. Some system of pooling age groups would substantially reduce the losses expected under the present systeni. NATHAN M. PUSEY. BATON ROUGE, LA.. February 26, 1968. Representative EDITH S. GREENS Rayburn House Office Building, Washington, D.C.: Estimate frota fifteen to twenty percent of entire graduate student body of 2800 at Louisiana State University would be affected by recent National Security Council ruling concerning draft deferment concur in opinion expressed by many colleagues. This policy will seriously affect already critical short supply of faculty and not serve best interests of nfi1tional generally. Wholeheartedly support and urge adoption some method of random selection from pool of eligible men as proposed by American Council of Education and Association of American Colleges. JOHN A. HUNTER, President, Louisiana State University System. LEwIsnunG, PA., February 27, 1968. Hon EDITH GREETS Special Subcommittee on Education, House Office Building, Washington, D.C.: Bucknell University like others faces severe dislocations as result of new draft deferment directive on graduate students, and urges change to pool age groups. Your support of this change is requested. CHARLES H. WATTS, President, Bucknell University. YESHIVA UNIVERSITY, New York, N.Y., February 26, 1968. Hon. EDITH GREEN, Chairman Special Subcommittee on Education, House of Represent ative~, Washington, D.C. M~ DEAR MRs. GREEN: We at Yeshiva University are very much concerned over the new Selective Service regulations under which graduate students, with few exceptions, are subject to draft. We feel most strongly that this is a very shortsighted policy, one which will not only hurt American education, but which fails to take into accOunt our acute needs for specialized manpower and goes against the national interest. PAGENO="0118" 624 Under the new regulations the academic community will be faced with a very serious problem: an increased shortage of qualified teachers for the increasing number of students who are seeking undergraduate training on the one hand, and the shortage of people a~ualified to carry out advanced research and scholarly activities on the other. These two areas are inter-related. We have been able to meet some of the pressures in undergraduate education by using graduate stu- dents as assistants both in teaching and in research activities. With this pool of additional personnel dried up we will not only lose future scholars and leaders, we will do direct and recognizable harm to undergraduate education. I am not interested at present in putting forth specific alternatives. I would only urge upon you to use your good offices to have these Selective Service regu- lations re-studied in the light of the danger which the present regulations pose not only for the academic conimunity, but for our nation's future and welfare. It is imperative that the Selective Service System be altered to permit a more equitable selection among undergraduate and graduate students to help insure the continued development of highly trained people whose loss would pose a grave danger to our growth and survival in future years. Sincerely yours, SAMUEL BELKIN, President. BLACKSBURG, VA., February 26, 1968. Hon. EDITH GREEN, House of Representatives, TVashington, D.C.: This is to express grave concern by the administration of this university about the administration decision on the draft of graduate students for service in the military forces the effectiveness of service to the Nation by this university. which offers doctorate degrees in 26 fields and masters degrees in more than 50 fields, would be severly harmed, both in graduate and undergraduate educa- tion by the wholesale draft of graduate students. We concur with the position of the American Council of Education which as you know does not request deferment of graduate students but rather a system which pools the various age groups, thereby softening the harmful impact that the present decision would have on graduate education both here and other universities through the Nation. Sincerely, T~ MARSHALL HAHN, Jr., President, Virginia Polytechnic Institute. AMHERST, MASS., February 26. 1968. Representative EDITH GREEN, Chairman House Special Subcommittee on Education, Washington, D.C.: The interests of the Nation oppose the proposed priority drafting graduate students. Strongly urge draft apply equally to all draft eligible age group. JOHN W. IJEDERLE. President University of Mass. MORGANTOWN, W. VA., February 26, 1968. Representative EDITH GREEN, House Office Building, Washington, D.C.: Strongly support your stand in opposition to wholesale abandonment of grad- uate student deferment. Hope your good offices can be used to support the ACE proposai to pool age groups thus reducing direct impact on graduate education. J. G. H~AuLow, President, West Virginia University. Mrs. GREEN. Then, finally, may I express my great thanks to you, President. Brewster, President Harrington, and Dean Miller. I think your willingness to come today on such short notice reflects your great concern about the current policy. PAGENO="0119" 625 I may say to both of you that your views are shared by me, and I am sure the majority of the members of this subcommittee. I suspect it is even unanimous. May I express my sincere thanks to you, Dr. Trytten, and to you, Mrs. Vetter, for the help you have given, and your willingness to be here. And, General Hershey, to you and the two gentlemen who accom- pany you, may I also express my deep thanks. This has been a long session. I think that I would say that you hold a very difficult position in this country in time of war, and none of the decisions are easy, and none of them would receive the unanimous applause or unanimous approval of the people across the land, so we are sympathetic to the problems you face. We did want to call your attention to some of these problems. We did want clarification so that we could arrive at some better informed judgments. May I say also that with the approval of my subcommittee, I will certainly make the minutes of this hearing and the record available to the Secretary of Defense at the earliest possible opportunity. Thank you again. (Whereupon, at 2 p.m., the subcommittee adjourned, to reconvene at the call of the chair.) PAGENO="0120" PAGENO="0121" HIGHER EDUCATION AMENDMENTS OF 1968 MONDAY, MARCH 4, 1968 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR, WasMngton, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 2257, Rayburn House Office Building, Hon. Edith Green (chairman of the subcommittee) presiding. Present: Representatives Green, Brademas, Hathaway, Burton, Quie, Reid, and Erlenborn. Mrs. GREEN. The subcommittee will come to order for further con- sideration of H.R. 15067,'the Higher Education Amendments of 1968. STATEMENT OF CHARLES E. WALKER, EXECUTIVE VICE PRESI- DENT, AMERICAN BANKERS ASSOCIATION; ACCOMPANIED BY JAMES E. SMITH, ASSOCIATE FEDERAL LEGISLATIVE COUNSEL; EDWARD GANI~ON, A SPECIAL ASSISTANT TO THE EXECUTIVE VICE PRESIDE1~lT; AND LAWRENCE BANUS Mrs. GREEN. This morning the first witness to comment on H.R. 15067 are representatives of the American Bankers Association. Dr. Walker, we are delighted to have you back before this committee this morning. Are you accompanied by others? Mr. WALKER. Yes, Madam Chairman, Mr. James E. Smith, associate Federal legislative counsel; Mr. Edward Gannon, a special assistant to me in New York, who has worked very much on the program; and Lawrence Banus, who has done mathematical computations for our statement. Mrs. GREEN. Would you like the other two gentlemen to sit at the table? Mr WALKER I think this is satisfactory Mrs GREEN Then would you proceed `is you w ish Mr W'ilkei Mr. WALKER. Thank you very much. Madam Chairman and members of the Special Subcommittee on Education; the American Bankers Association is grateful for this oppoitimity to testify ag'un with iespect to the `idministr'ition's pio posals to strengthen and improve the guaranteed student loan pro- gram. On December 31, 1967, the guaranteed student loan program had completed approximately a year and a half of activity under the Fed- eral-State-private partnership authorized by the 1-ligher Education (627) PAGENO="0122" 628 Act of 1965. In that 18 months the program generated 685,000 student loans with an aggregate dollar value of $558 million. In the current fiscal year, the program's second full year of operation, we estimate that the program will produce approximately one-half billion dollars in student loans. This performance record certainly indicates that if the program is improved so as to make it fully sustainable, it has immense potential to make a most significant contribution to our Nation's student finan- cial needs. However, unless the necessary improvements are made, we are not optimistic about the program's future. In fact, the guaranteed student loan program is at the crossroads- and whether the correct path is taken depends heavily on the decisions made by this subcommittee. Placement and conversion fees: One of the major weaknesses of the guaranteed student loan program at the present time is that lending institutions are suffering out-of-pocket losses in extending loans at the l)ermlSsible 6-percent simple interest rate. It is wholly unrealistic and unfair to expect banks or other private lending institutions to main- tain active participation in any program which results in net losses to these institutions. The member banks of the American Bankers Asso- ciation do not seek to have the guaranteed student loan program placed on a full profitmaking basis: but they do believe that the pro- gram should permit them at least to break even in the extension of these loans. In an effort to solve this income problem, the administration has recommended that placement a.nd conversion fees be paid by the Fed- eral Government to lenders. Under this system a so-called placement fee, not to exceed $35 per year, would be paid to the lender at the time of each annual loan disbursement. The conversion fee-again not to exceed $35-would be paid at the time that the interim loan notes are converted into a repayment agreement. The exact amount of these fees would be determined by the U.S. Commissioner of Education after consultation with the Secretary of the Treasury as to the prevailing money market conditions. It was quite clear that the purpose of the variation in the fee would be to reflect variations in the cost of money to commercial banks, sav- ings and loan associations, credit unions, and other lenders. The American Bankers Association believes that such a system of adjustable fees could be easily and effectively administered by the Commissioner of Education so as to produce a return to lenders that would permit them at least to break even in the extension of student loans. We strongly urge the members of this subcommittee to recom- mend approval of this administration proposal. Since our prior appearance on this proposal last August, we have run some interest rate computations involving the inclusion of these proposed fees. The results of these computations-which we believe the subcommittee will find of interest-~are presented in an appendix attached to this statement. Each of the examples presented involve four loans-one in each college year-with assumed principal amounts of ~Th0, $900, and $1,000. The $750 minimum loan figure seems reason- able, inasmuch as the average annual loan under this program has already risen above $800. PAGENO="0123" 629 In each example, we assumed a grace period of 1 year after gradua- tion before repayment. We used three different repayment periods of 6, 8, and 10 years with each of the three different loan amounts, thus thus producing nine separate examples. We also used the highest per- missible fee of $35 for the four placement fees, as well a's the conver- sion fee, so as to demonstrate the highest gross interest yield for each of these nine examples. Last summer the Treasury went on record as saying they thought the fees should `be in the general range of $25 under existing condition's at `that time. A's is m'ade clear in the appendix, in only one example-the one involving four annual loans of $750 with a 6-yea'r repayment period- would the $35 fee yield a gross return to the lender in excess `of 7 pay- cent. And in `that example the yield is only 7.11 percent. The results of these computations seem significant to us for the following reason. The Higher Education Act of 1965-section 427 (b)-authorizes the Commissioner of Education to increase the per- missible `interes't rate on loans directly insu'red by the Office of Educa- tion to 7 percent per annum if `he finds `that a higher `return to the lender is required for the successful operation of the program. Thus our computations indicate that if `the Congress approved the fee `system recommended by the administration, it would be merely reaffirming the policy enunciated in the 1965 act with respect to the matter of return to lenders :un'der the guaranteed student loan program. The significance of this relationship is emphasized by the fact that as of today the Office of Education `is directly insuring student loans in 16 States. Presumably, under the provision of the act just referred to, the Commissioner of Education could raise the interest rate in these States from 6 to 7 percent-a rate higher than would be earned on the typical loan under t'he administration's proposal for placement and conversion fees. Stated differently, Congress originally, in the 1965 act, approved a gross rate of return to lenders that would `be no `higher on the typical loan than the `highest fee that could be administratively set under the new administration proposal. I `am not suggesting the Commissioner of Education is `about to raise the rate in those 16 States. It would throw the program into great difficulty `since in the `other 34 States the 6-percent ceiling would have to remain plus the usury problem in those States with 6-percent limits. Unfortunately, much of the discussion ~about the fee approach has become embroiled in a `debate as ,to whether the legislation would merely permit the lenders to break even, or whether-in the words of one witness-the fee approach would represent a "banker's bonanza." These charges miss the point. The relevant comparison is not between income and outgo and whether there is `a slight profit, a slight loss, or an approximate standoff. The relevant comparison on this or any other socially oriented public-private program is the gross rate of return on other attractive lending opportunities which profit-oriented financial institutions must forgo in order to make student loans. For example, the gross return on extensions of revolving credit through credit cards can reach 18 percent-three time the student PAGENO="0124" 630 loan gross rate. The gross return on automobile lending is 10 to 12 percent-about twice the student loan rate. And even the rate of in- terest to a prime corporate borrower would be higher, all things con- sidered, than the student loan rate. Again, I want to emphasize that the commercial banking industry is not asking for full-scale profits on student loans-I am simply pointing out the calculations that must go through the chief execu- tive's mind when he takes this money for student loans and does not use it for other types of lending-although precedent surely exists in the federally insured home improvement loans which allow gross rates approaching 10 percent. In other words, there are federally guaranteed programs which are geared to a full-scale profit for the lending institutions. The American Bankers Association and its members are convinced that loans to needy students are good for our communities, good for our country, and in the long run certainly good for our banks. We, therefore, will strongly promote the program if we can conscientiously make the case that they are not out-and-out loss propositions. There is still another point which argues strongly for enactment of the fee proposal. When Congress authorized the 6-percent rate in 1965, interest rates-including the rates banks have to pay to attract savings accounts and time deposits-were much lower than they are now. This is quite clear from the reproduced charts from economic indicators published by the Council of Economic Advisers for the Joint Economic Committee which is appended to this statement. If 6 percent was fair in 1965, then it is manifestly unfair today. The rate should be raised but, because of the complications arising from usury ceilings in a few States, the fee approach is the best alternative-and it places the. burden not on the student but on the Federal Government. The argument that the programs good performance in recent months-which is very gratifying to us-shows that the program needs no shot in the, arm is particularly distressing to leaders of the American Bankers Association who have worked long and hard to promote the program. One reason banks have stayed in the program is because ABA leaders expressed confidence tha.t the fee proposal was reasonable, had strong administration support, and would prob- ably pass the Congress, retroactive to Jime 1, 1967. A number of banks have made loans on the basis of that. It is, therefore, highly ironical that this argument be turned around as a. case against the fee. Indeed, some very significant, lenders have recently told ABA officials that in the absence of the proposed fee, they will have to seriously consider dropping out of the program. State guarantee programs: Amendments to the guaranteed student loan program contained in H.R. 15067 also include two administra- tion recommendatioiis designed to further encourage States to estab- lish programs to insure student loans. The first of these proposals would authorize a Federal "reinsurance program," under which the Federal Government would reimburse State guarantee agencies for 80 percent of the default claims paid by the State agencies. The second proposal authorizes an additional S12.5 million in seed money PAGENO="0125" 631 to be disbursed to individual State guarantee agencies on a I :1 match- ing basis. The American Bankers Association-we have commented on these in earlier testimony, so I will simply summarize-believes that both of these proposals have merit and will greatly assist efforts to en- courage States to undertake the guarantee function in this partnership program, as originally envisioned by the 1965 act. The additional seed money will not only help to strengthen existing State programs, but should prove to be an important stimulus to action in those 15 States which have not yet authorized guarantee programs. The "re- insurance proposal" should materially strengthen the State guarantee operations, for its practical effect is to multiply fourfold the guarantee capacity created by State-appropriated reserves. The American Bankers Association continues to believe that the overall purposes of this program will be most effectively achieved if the guarantee function is established at the State level through either State or private, nonprofit facilities. The performance record to date supports this conclusion. A review of this record reflects that almost without exception the program has performed most effectively in those States where a guar- antee program has been established. We, therefore, urge the sub- committee to `approve these two administration recommendations with respect to State guarantee operations. Other proposed changes: We are aware that the subcommittee has received recommendations from outside the administration for certain other changes in the guaranteed student loan program. The two most important such recommendations are (1) a suggestion that the interest cost subsidy paid by the Federal Government be discontinued in the postgraduation period; and (2) the suggestion that the college finan- cial aid officer be given a clearly authorized role in the program with respect to recommending the amount which a financial institution should lend to a particular student. The American Bankers Association believes that both of these recommendations deserve serious consideration by the subcommittee. Quite obviously, `the elimination of the interest subsidy in the post- graduation period would significantly reduce the overall costs of this program to the Federal Government. Much more important from the standpoint of the lending institution, there would be a reduction in administrative costs, for this would do away with the necessity for a lender to bill the U.S. Office of Education on a quarterly basis for a portion of the interest accruing on a student loan during the repayment period. This billing proce~ss necessitates additional recordkeeping activity which results in increased administrative costs for the lender. Additionally, we believe that the elimination of this subsidy after graduation might also help assure that needier students would be fully accommodated. Without the interest subsidy during the repay- ment period, a guaranteed student loan would produce a less attrac- tive interest rate for the borrower; thus, elimination of this subsidy might tend to reduce requests for these loans from those families in the upper middle income brackets who now seek these loans only be- cause of the highly attractive interest rate. That is not to suggest that is the only reason these people seek the loan. If you have a very large family and several children enter col- lege at once, even with a high income there can be a pinch. PAGENO="0126" 632 We are certainly aware of the fact that this recommendation poses a highly important question of public policy for the subcommittee. But for our part we believe that as a result of eliminating the post- graduation subsidy the program would operate more effectively and its availability to students having real economic need would be en- larged. As to the proposal for expanding the role of the student financial aid officers in the guaranteed student loan program, this recommendation has the full support of the American Bankers Association. Of the several student financial aid programs supported in full or in part by the Federal Government, the guaranteed student loan program is the only one in which the college financial aid officer is not permitted to play a meaningful role. There is no question but that the college financial aid officer is in the best position to determine the real financial needs of a particular student. He does this with respect to all other student assistance programs, and we can see no valid reasons for ex- cluding his important and informed judgments from the guaranteed student loan program. If I might digress from the statement a moment to give an illus- tration, only a few weeks ago I was talking to a leading banker from the hinterlands who is almost singlehandedly trying to stay in the program in his own conununity and making these loans. He is finding it much more difficult to do. He told me an illustration in the city where a branch head of a large national business corporation which keeps a substantial deposit in the banks "leaned on him rather heavily"-in other words, suggested his son ought to get one of these low-rate guaranteed student loans. It is very difficult for the head of a commercial bank to tell his biggest customers, either in terms of large personal accounts or large business acc.ounts, that their. sons or daughters can't have these loans because he is going to accommodate the needy. Despite this, the figures show, by and large, the banks have accommodated the needier bor- rowers by bringing the student financial aid officers into the picture so he could recommend to the bank this student should get $500, $700, or nothing whatever; it maybe would get the banker off of thi.s spot and he would appreciate that very much. We earnestly hope that this subcommittee will give its most serious consideration to expanding the role and responsibility of the college financial aid officer in the guaranteed student loan program. Public-private partnership for solving social problems: There are many observers who believe that in the long run our more pressing social problems can only be solved through a workable partnership between t.he Government and the private sector. The American Bank- ers Association shares this view. It is for this reason that we are orga- nizing a Bankers Committee on Urban Affairs to evaluate what bank- ers have already done in this area and to stimulate even greater and more effective action in the future. This program-which will be described fully in a public announce- mént later this month-has been most carefully developed during a 5-month planning and stafling period, and we have high hopes as to its ultimate contribution to the public interest. PAGENO="0127" 633 Signs of progress in the Government-private sector approach to solving social problems have been multiplying rapidly. The establish- ment of the Urban Coalition, the pledge of the life insurance coin- panies to support federally guaranteed loans for low-cost housing, the newly formed National Alliance of Business Men to provide jobs for `the hard-core unemployed-all of these, as well as many other such developments, are most encouraging. But these signs of progress should not obscure one fundamental fact: The private business community cannot be expected to participate in such programs on a sustained, longrun basis if it is expected to do so, year in and year out, to the detriment of the owners of the business. This does not mean that normal profits have to be made, although certainly profit is a great stimulant to action. It does mean that programs should be carefully designed to provide what the businessmen deem to be a break-even operation. In most instances this should be easy to achieve and at a modest cost to the Government. If this view is correct, then it is indeed a pity that one of the first and one of the most promising Government-private sector partner- ships is in danger. It can be convincingly argued that the guaranteed student loan program-a major partnership among the Federal Gov- ernment, State governments, and private financial institutions-stands as a prototype for the development of other cooperative efforts aimed at solving other equally important social problems. Congress can, of course, dismantle the program-or permit it to die a natural death by refusing to raise the lender's return to a break-even basis-and turn at great costs in terms of current appro- priations to a direct lending program. This is Congress' prerogative. But in so doing, Congress will have terminated a most worthy ex- periment in Government-private sector cooperation-a program that promises to serve as a guide to future programs-without having given the experiment a real chance to succeed. On the other hand, if the Congress moves rapidly to make this pro- gram workable and sustainable from the lender's standpoint, the leaders of the American Balikers' Association will work with renewed vigor for the `establishment of guarantee programs in all 50 States; for 100-percent participation by all commercial banks; and for in- creased participation by other lending institutions. To do these things2 however,, the income problem for lenders must be remedied. Otherwise we cannot in good conscience continue to tell our members that the program is both fair and workable on a long- range basis. (The information furnished by Mr. Walker follows:) RATES OF RETURN TO LENDERS ON GUARANTEED STUDENT LOANS Set forth below are the results of interest rate computations for nine student loan models'. The amounts disbursed and the periods of repayment have been varied to produce nine `separate examples. In each example we have assumed annual loan disbursements over a four-year period and a grace period of one year prior to the beginning of repayments. We have also used the maximum fee of $35 for the four placement fees and the one conversion fee. The interest rates are expressed in terms of percent per year compounded quarterly, and represent the average annual rate of interest yielded to the lender over the entire life of the loan. PAGENO="0128" BOND YIELDS AND INTEREST RATES In December, Trec(sury bill rates and corporate bond yields averaged higher than in November, while Treasury bond yields averaged lower, On a weekly basis, most interest rates and bond yields declined in early January. - ~ ~ E3 3 PAGENO="0129" 635 I E $ C,, ~ r-~ ~o $0 r- 00 00 ~- r-~ U) r-~ Co ~o c~ C) C) E U) C)) (DC) C) C) U) C) C) C) C) ~ 00 ~ U) ~ ~ ~- C) ~ :::~::; ~=:;; C-, -~ E 0< ~ C I -Q ~ C)C)C)~-~~ = C) C) ~ ~ ((CU) U) U) U) U) U)U) U) -~ CC ,~ U~U)~0 I =0C~~ HH~ ~0~? T I ~ ~ $(C(dr-~J, r1 - C)) 92-371-68-pt. 2-9 PAGENO="0130" 636 Mrs. GREEN. Thank you very much, Dr. Walker. I am very pleased to see the recommendation by the American Bankers Association that there be a much greater involvement of the student financial aid officers and also very pleased that you are recoIn- mending that the subsidy after graduation be discontinued. I agree with you. Would you outline the collection procedure which you would follow on those loans that would be delinquent? Mr. WALKER. I will give it in very broad terms and ask Mr. Smith if he wants to supplement the response. The commercial bank, or the savings and loan, or credit union or savings bank lender would take reasonable steps to collect the loan that is delinquent as to payment of monthly principal and interest, but after a certain stage the com- mercial bank would simply turn over this loan to the guarantee a.gency, to the State agency, if there is a State plan operating, to the Office of Education if it is directly insured by the Federal Government and the collection problem then would be simply that of the agency, the com- mercial bank would be reimbursed out of the guarantee funds for the loss on the loan. Jim, do you want to add to that or correct it if I misstated any part of it? Mr. S3Irm. I think that it is essentially correct. I think each State guarantee agency has certain standards as to when a loan goes into default for the purposes of paying the claim to the lender. I think generally that delinquency period is 120 days-4 months of delin- quency; the lender can then assume, for the purposes of filing the claim, that the loan is in default. I think also without exception that your State guarantee agencies in lending student aid funds are very careful about what they do in a followup period. I don't think there is a single case of ever going to court. I think they attempt to sit down with the student and work out a more liberal, stretched-out view of a repayment program to fit his problems. Mrs. GREEN. Do you think consideration ought to be given to some kind of penalty if the loan is in default, an increase, for instance, in the interest rate after a certain period of time? Mr. SMIrU. Mrs. Green, I would have to check the Federal regula- tions but I believe today that those regulations do permit the lender to charge an additional fee for delinquent payments just as the lending institutions do on other installment loans, $1 or $1.50. The figure does not stick in my mind, but I am certain their regulations do permit it today. Mr. WALKER. We will check and clarify it for the record. Mrs. GREEN. Are there precedents for this? Is it something that should be worked out? Mr. WALKER. Yes; this is quite typical because the cost involved in any delinquency, the administrative costs become very high indeed, particularly in this program when you might lend to a student in New Mexico who after graduation moved to New York or somewhere else, trying to find the student and locate him and getting the collection process gomg. Mrs. GIiREN. What about the procedure on some kind of incentive for a faster repayment? PAGENO="0131" 637 Mr. WALKER. The elimination of the postgraduation subsidy should partially provide that incentive. Mr. BURTON. Getting out of debt is an incentive. Mr. WALKER. It would be an incentive, if I were a college graduate today and got a job with $60 or $70 a month income, if I had a little more to pay off my education as opposed to buying an automobile or house; I would be more likely to get out of debt quicker. We have not specifically given thought to an additional incentive. The incentive is automatically tuilt into a loan contract. The quicker you pay it off, the less it costs you because of not paying interest. Mrs. GREEN. You don't think it might be necessary to have an added incentive? Mr. WALKER. I would like to think about it. We haven't thought of it. Mrs. GREEN. Do you have any breakdown or any one of the four gen- tlemen here have a breakdown of the people to whom the loans have gone during the last 2 years? I am thinking in terms of socioeconomic groups and in terms of men versus women. Mr. WALKER. Do we have any? Mr. SMITH. The Office of Education does hav.e some statistics. I don't have them with me today. I think the profile runs rather close to the NDEA profile. Mrs. GREEN. It is my recollection in the NDEA program women get about 52 percent and under the guaranteed program it falls down to about 42. There is quite a marked difference and I wonder if it reflects an attitude on the part of the bankers. Mr. WALKER. I have talked to bankers throughout the country on this and in testifying before you about a year ago some bankers made com- ments on this point. All I have talked to emphasized it makes no difference to them whatsoever. There might be something in the nature of the NDEA program versus this program where there would be more applications from young ladies and young men, but that we would have to take a look at. Mr. SMITH. It is altogether possible that the forgiveness features of the NDEA program with regard to teachers may have some impact on women applying there more than the guaranteed student loan program. Mrs. GREEN. What about any facts on entrance groups, the loans to various entrance groups? The was fear when this was proposed that the Negro student might suffer under the guaranteed student loan program based on the status of his family and what the bankers con- ceive as a future financial income for the family. Mr. WALKER. I have had one interesting spot comment on that and I think the Office of Education, if they have not looked into ~t, should be looking into it quite closely; but I was talking to a leading banker from the deep mid-South about this program, one of the strongest supporters of the program, a few weeks ago, and he pointed out in his bank over 50 percent of the loans are to colored students. So I think you have to remember where banks are strongly support- ing this program on a loss ba~is, they are doing it with a deep sense of public and social responsibility and therefore lean over to try to make the loans to those who need them most or mig~ht have the most difficulty obtaining them under straight commercial conditions. PAGENO="0132" 638 Mrs. GREEN. Thank you very much, Mr. Walker, for a very excel- lent statement. Congressman Quie, will you yield to Congressman R~id? Mr. REID. I yield to Congressman Quie. Mr. QuiE. No; I will yield to anybody on the committee. Mrs. GREEN. All right, we will yield to Congressman Brademas. Mr. BRADEMAS. Thank you very mudh, Dr. Walker and Mr. Smith, for your extremely interesting statement. I have two or three ques- tions. One of my major questions touches upon the question of leader- ship on the part of two groups-the State governments and on the part of the baukers themselves at the State and local levels. To what extent have State goverrnnents `been giving cooperative leadersiuip to the banks in making the program work? Mr. WALKER. Given the relative youth or early age `of the program and given the fact that it was put into effect with administrative diffi- *culties as to organization, getting out forms and so on, given the fact that it had some positive disincentives for any particular State govern- ment to drag its feet in that if no State program were set up a Federal program would go into operation in the State at no cost to the State, given all of those many factors which we couldn't foresee in 1964-65, `by and large the record has `been very good. Several States that did not have plans moved aggressively to set up plans. Other States, in which plans had been in existence, cooperated with this program and adjusted their plans, which they had to do in several legislative ways to make them conform to the Federal program. `Speaking for the bankers, we think that there has been generally good leadership in this area but not `anything like we would. like to see. The major reason has been that for a period of almost a year and a half there `have been discussions as to how to take the loss operation out of this program, to take the disincentive aspect out of the program f or the `States and to provide the additional seed money and leverage necessary to make the program work. `We simply have not had time to concentrate on giving the sort of support and guidance `at State level to bankers we would like to. If this package of legislation were to pass, Mr. Brademas, I can assure you we would `be beating the bushes and delighted to cooperate with Congressmen in every district of the country to go to their bankers and get things moving where they need to move. `Mr. BRADEMAS. I know from my own experience, with which you are familiar, that from my own congressional d'istrict in Indiana the bankers have displayed great interest in making the program effective. I have two or three specific proposals I have had advanced to me that might help the program move ahead more effectively and I would be glad if you could give me your comments on them. What would you think about a proposal that would make loans available to students who now find it difficult if not impossible to obtain loans by estab- lishing some kind of central pool of credit that would provide loans to such students so that if a student in one part of the State found the banks or other private lending institutions there were not able or didn't want to participate, he would not be effectively barred be- cause there would be some central pool which could be drawn from other institutions in the State? PAGENO="0133" 639 Mr. WALKER. I think that plan, that idea has considerable merit, because there are going to be circumstances of that type. However, I would not want to say that in every State of the country they should follow that approach. This is one of the beauties of the approach through the State plans. There has been a complete statewide pool established in North Carolina due to the establishment of a founda- tion sort of arrangement. Other States might find, like a smaller State like Rhode Island, or one sparsely populated like Montana might find another approach desirable. I think particularly in the more thickly populated or metropolitan areas, States with large metropolitan areas, your plan might have considerable merit. Mr. BRADEMAS. What do you think about the proposal to enable the Office of Education to enter into agreements with national insurance companies or credit unions or universities or other nationwide insti- tutions who might be willing to say- Yes, we will make a commitment to provide a minimum amount of student loan funds over the next 3 years or 5 years or something of that kind. Mr. WALKER. Yes, this is something that had been kicked around and discussed; it is something which we would be most happy to coop- erate in setting up or to promote. It applies not only to insurance companies as national lenders; it would apply to pension funds, labor pension funds, business pension funds, and it applies to one thing we want to get working, what we call the wholesale banks. Wholesale banks a.re banks that do not deal normally with the general public, do not make consumer loans. There are a few large banks of this type. We would like to see some sort of arrangement where student loans could be packaged in the same way that mortgages could be packaged and sold by the originating bank to a wholesale bank with the orig- inating bank continuing the servicing and collection of the loans just like an originating mortgage broker or lender continues the servicing of loans he sells to insurance companies. This is the longrun key to a really effective program because you would then have a tremendous volume of financial `assets available to support student loans and the burden for any particular lender would not be nearly so great as today. Let me add in my answer to the preceding question the pooling arrangement might be effective in handling the problem of loans to ghettos `and things of that type. Mr. BRADEMAS. What about another proposal advanced-namely, to stipulate the financial need-as a criterion in the guaranteed loan program? Mr. WALKER. It has merit, but I am not at all certain you would need to ask any student or family to make this sort of declaration. If you were to take the recommendation of the American council and others, including ourselves, that the student financial aid officer be given a key role to play and actually recommend to the financial institution how much should be lent, even make it illegal for the financial institution to lend anyone eligible for the subsidy over a certain given amount because the financial aid officer knows, he knows whether the student needs it or not and he knows what the other pro- grams are that are available to the student and knows whether he is PAGENO="0134" 640 trying to borrow money to buy an automobile; so I think you can circumvent the oath that you need it by giving the legal officers some j)oWer. Mr. BRADEMAS. I would hope very much we are able to work out some kind of device, conversion fee or some other, that will promise effectiveness in making the program work. I hope, moreover, that the American Bankers Association could cooperate with the universities, with credit unions, with State agencies, with the Office of Education in organizing statewide conferences and regional conferences at which the program could be discussed and explained and at which efforts could be made to encourage participation and cooperation on the part of all of those concerned and at which model programs, for example the North Carolina pooling arrangement, of which I had not before heard, could be brought to the attention of people elsewhere in the country so that we could get all hands moving to make this program really effective. Mr. WALKER. I think this is an excellent idea and would be glad to cooperate, and I will ask Mr. Smith if he wants to comment on that. Mr. SMrrn. Mr. Brademas, I might say we did this very thing on a' national basis in, I believe, June or July, 1966, here in Washington. We brought together at that time all of the State-plan administrators, we brought, together perhaps two dozen college financial aid officers, lenders, not iust bank lenders but savings and loan, credit union lenders, and this was sort of the first opportunity for all of us to meet with the Office of Education just after the regulations were finally promulgated. What has been done nationally could be done easily on a statewide basis. Mr. BRADEMAS. Thank you. I want to say finally, Madam Chairman, it seems to me that if we are serious about getting the bankers and other private lenders into the field of student financial assistance, we have to make it possible for them to do so, and I must say, Mr. Walker, I have found more compelling your statement today than when you were here before and I was quarreling with you somewhat. I certainly don't think banks ought to be asked to take a loss if they participate in this student loan program. The important thing, it seems to me, is to make it possible for bankers and other lenders to provide the money to the college students with which to go to college; otherwise, we are not meeting the purposes of the program, which is to help young Americans finance their education. I thank you very much for your testimony. Mr. WALKER. Thank you, sir. Mrs. GREEN. Mr. Reid. Mr. REID. Dr. Walker, I thank you for your testimony. I have just two questions. The first is in your statement `and in your remarks you refer to the fact `that the loan program could be in danger. Might I ask, what would happen, in your judgment, if there was an increasing shortage of money with a higher interest rate; will the program con- tinue to be `able to meet the needs of the students and will the sugges- tions of the administration for a placement and conversion fee take care of the problem if there is a sharp increase in interest rates? Mr. WALKER. Yes, sir; I believe it will. If we are talking about any- thing within reason-and by "anything within reason" I mean short PAGENO="0135" 641 of a truly crisis condition. I base this upon two or. three points. First and perhaps most important, this program was born with a baptism of fire. The really crucial period when this program was getting under~ way was July, August, September, 1966; if you refer to the reproduc- tion of economic indicators included in my statement and see the peak interest rates in the latter part of 1966, these increases were occurring and your crisis conditions also in the money and capital market just in August of that year. Mr. REID. Suppose the interest rate were increased. Mr. WALKER. Putting on my hat as an economist, if 6 percent went to 10, you would have so many problems in your financial system, that I wouldn't think that any sort of credit-granting might be good under those circumstances. Let me go back a moment. Given the $35 fee which is adjustable, given the Treasury statement that the fee as of last summer and pre- sumably about now should be $25 or perhaps $30, you would still have a leeway of adjustment up to a reasonable level, which is the second factor I wanted to mention. Beyond that, if we assume that interest rates were to go to 10, 12, or 15 percent, all bets then are off about the sustainability of any type of credit expansion, because you have a crisis situation. Mr. REID. Thank you. The second question I wanted to ask you, following up my colleague, Mr. Brademas, is: Are the bankers of America providing these loans on the basis of need for the student, more or less regardless of the financial income of the family? In other words, the student could be in clear need where the family might have a gross income of $20,000, yet there could well be particular expenses, debts such as hospital costs and so on; and what I am asking you is: Are you meeting the needs of not alone the low-income but the middle- income students whose need may be as great? Mr. WALKER. Yes, sir, I think we are. Unfortunately, there is simply not sufficient data to say just out and out. We dohave the sort of illus- tration I gave of where a customer, a very good customer whose son or daughter does not need the loan could put a great deal of leverage on the financial institution in order to get the loan made. Mr. REID. I am not thinking about leverage but talking about whether the student comes in, we will say, clearly from a middle-income family but, say, an examination of the facts clearly indicates the stu- dent could not go to college without assistance. Mr. WALKER. But who makes that decision? Mr. REID. That is what I am asking. Mr. WALKER. Now, clearly the banker has to make the decision; then it would not be fair to the banker and student, because the banker is not in position to analyze all of the factors. The person best qualified is the student loan financial officer. Mr. REID. I would not question that as being a useful suggestion, but what I am asking now is whether you are looking almost exclu- sively at the question of student need or are your thoughts being affected by the income level of that particular family. Mr. WALKER. I think the banker is trying to do a socially responsible job which, if he is in the problem-and evidently he is-is trying to look at all of the factors. We say the student is qualified for that PAGENO="0136" 642 purpose, and if you want to be sure we achieve this, I think giving him a larger role is the best assurance. Mr. REID. What some of the subcommittee increasingly think is, the criterion should be the need of the student, not a particular dollar limitation. Mr. WALKER. Exactly. Mr. REID. Why we are concerned about it is to make it possible for any qualified student to go to college irrespective of the financial mat- ter involved. Mr. WALKER. We agree with that. Mr. REID. Thank you. Mrs. GREEN. Congressman Hathaway. Mr. HATHAWAY. Doctor, I want to straighten out two points in your statement. First, on page 4, I am not clear from the second paragraph whether you are saying that the loss on these loans is due to compar- ison or due to the loan itself, thinking of it as an individual entity? Mr. WALKER. Not as an individual; no. Mr. HATHAWAY. The relevant comparison is not between incoming and outgoing, whether there is a slight profit, it says, and you want to compare your losing as a result of lending money, is your loss there as a result of higher interest rate or it costs you so much to lend money to the student? Mr. WALKER. In that second paragraph, I am referring to what the economists refer to as opportunity costs or opportunity forgoing. If you are chief executive officer of a commercial bank, and say, "I think this is a good program," and let's assume it is break even, you don't lose but break even on the whole operation, but the chief execu- tive officer has to compare, in trying to run a successful institution, if he allocates a million dollars to this sort of lending operation with no net rate of return, what is he giving up in terms of rate of returns on other lending and then say, "I can give to my stockholders and justify this because it is for various reasons in the interest of the public." Mr. HATHAWAY. What I want to know, is it a computed loss or ac- tual loss? Mr. WALKER. It is an actual loss as to what the bank would be re- ceiving if it had foregone these loans and lent to big business corpor- ations. Mr. HATHAWAY. I take it that the loss is not computed on the basis of what it cost you or what you make from the loan itself taking it as an individual entity? Mr. WALKER. It is no loss on the assumption I just made. Mr. HATHAWAY. Say you are only in the business of loaning money to students going to school and getting 6 percent, you would be making money? Mr. WALKER. No. Mr. HATHAWAY. And had no opportunity to loan money to anybody else? Mr. WALKER. No. Mr. HATHAWAY. What would your loss be then? Mr. WALKER. I am trying to speak-our argument is banks are going in the hole out of pocket-that the money they lend at 6 percent costs them more than 6 percent, let's say 6.5 percent, all things considered. This is out-of-pocket loss. PAGENO="0137" 643 However, there is another sort of loss which is the income that is forgone, the income you don't get because you are not making an- other more profitable loan. Mr. HATHAWAY. How much is that other loss reflected in requests for an additional $35 or up to $35? Mr. WALKER. None as best we can estimate. All we want to do is get a flexible mechanism where the out-of-pocket loss on the individuaJ transaction can be overcome and flexibly administered by the Federal agencies so that banks at least break even. That is all we are asking, brea~k even, and we are not asking for profit in the usual sense of the term. Mr. HATHAWAY. In other words, to isolate this particular type of loan would cost you more than the 6 percent you get back? Mr. WALKER. That is the judgment we get from bankers through- out the country. That is the best evidence we can get from what cost figures are available in this type of lending and they are sparse be- cause this is a new type of lending. It is reasonable when you look at the cost of money to banks today, when you look at the additional costs in handling and servicing these loans, when you look at all of the factors that enter into the picture. A reasonable judgment by practically all of the people I know who have studied this is that most banks are probably going into the hole on each loan made. There could be exceptions from very efficient lend- ing operations. Mr. HATHAWAY. Do you have figures that substantiate this? Mr. WALKER. Yes, sir; we gave figures. Mr. HATHAWAY. Have you received them? Mr. WALKER. Yes, sir; we submitted figures to this effect last August. The Treasury has submitted figures and the General Accounting Office has taken these figures and said on this basis, or because of the fact that this is a new type of lending and there are not many cost figures available, they could not, on the basis of figures alone, say whether or not this particular proposal was reasonable. But what this second paragraph that you referred to says or is meant to do in this context, is to point out in our judgment to debate whether this program makes the banks a little bit of profit, barely lets them break even, or gives them a little bit of loss, on that one transaction, that out-of-pocket transaction, really misses the point when you are asking these lending institutions to lend billions of dollai~ on a 6-per- cent basis, a very expensive type of loan when they could be lending at 10, 12, and 15, and 18 percent. We are not asking, though, for that sort of return, but saying on the basis of all the best judgment you can get, let's try to set it. on a break- even out-of-pocket basis. Mr. HATHAWAY. Now, another question I wanted to clear up on the same page, you say that the rate of interest for the prime corporate borrower would be higher. Mr. WALKER. Yes. Mr. HATHAWAY. All things considered? Mr. WALKER. Yes; because the rate of interest to the prime corporate borrower today, the so-called prime interest rate happens to be exactly the same as the student loan rate, 6 percent, but that prime corporate PAGENO="0138" 644 borrower is required by the bank to hold an idle demand deposit that may rim 10, 15, or 20 percent of the amount of his loan outstanding. So the effective rate of return on a prime bank loan is considerably higher than the 6-percent evident rate. In addition, he is a customer of the bank in many other income producing ways which supplement the 6-percent prime interest rate. Mr. HATnAwAY.Will the proposal that we not subsidize the interest after graduation save you money? Mr. WALKER. Yes; a great deal-and administrative confusion-I say a great deal of money. It will save some money. How much is in- volved you really can't tell until you get into the repayment period a.nd see what the costs are. Mr. HATHAWAY. Presumably it will cut down the $35 requests? Mr. WALKER. No, sir; it would not because we are looking at. the pro- gram now in terms of the loans in the conversion end of the payout period. We are afraid that costs in the payout period are going to go way up because we will have a double billing operation and while the student is in school, one, there is no payout, you don't have to worry about collecting the loan and second, the Federal Government paid all of the 6-percent interest so we are not having to deal with the student and Federal Government in that sense. On the other hand, when you get to the payout period the student pays x amount of money including half the interest and quarterly we will have to bill, thousands of lending institutions will have to bill, the Office of Education for the subsidized portion and it is almost an administrative nature aside from costs. We think the costs will be actually higher in the payout period or could be as a result of that arrangement. Mr. HATHAWAY. You say thai the billing process necessitates addi- tional activity as a result of increased administrative costs for the lender on page 7. Mr. WALKER. Sir. Mr. HATHAWAY. This is the last sentence of the first ri.mover para- graph on page 7. Mr. WALKER. Yes, sir. Mr. HATHAWAY. Where you say "increased administrative costs for the lender," and, presumably, these costs now are charged to the stu- dent loans? Mr. WALKER. There are few loans in the payout period, Mr. Con- gressman, now. Mr. HATHAWAY. How are the administrative costs for lender charged? Mr. WALKER. These are administrative costs for running the banks. If lie absorbs them, the fee will help him absorb some of them. The fee is computed on the basis of experience. We do not know how much it will go up in the repayment period because of the cumbersome administrative process in the legislation. We can tell you in 4 or 5 years but can't tell you now. Mr. HATHAWAY. The fee will absorb some of these future adminis- trative costs and if we eliminate these future costs the fee will not have to be applied to these costs. Mr. WALKER. The fee is not based on the period but based on the experience in the program in granting the loans, administering while PAGENO="0139" 645 student is in school,. and converting it to a payout operation also. I think if the fee were enacted, it would be quite appropriate for the Congress, the committee, the Office of Education, and others, to keep a very close watch on hów~ this develops and what the costs are. We will have better cost figures as we ~o down the pike. We know if it costs ~ amount to run this now, it will cost ~-plus in the payout period because of the double billing operation. Mr. HATHAWAY. How about the other recommendation that the financial aid officer submit recommendations to you; will that. save you any costs in processing the application? Mr. WALKER. Not a great deal. It will save some mental anguish on the part of the banker in trying to determine how much he should loan. Most of the students ask for a thousand dollars, and who should be cut back on, things of that type. The really expensive aspect in making the loans involves the com- plicated process of dealing with, first, a State agency, if there is such; two, with the Federal Government and Office of Education; and, third, the student, the filling out of relatively complex forms having to do with family income, and so on. The most efficient lenders' esti- mate to put a loan like this on the books it takes officers' time, clerical time, to do this sort of thing, and it is terrifically expensive. It is reliably estimated to put one of these loans on the boOks as compared to typical automobile loan or something of that type, where you have one person's security or what have you, is anywhere from 50 percent more or twice the cost of a normal consumer loan acquisition. Mr. HATHAWAY. Thank you. Mrs. GREEN. It would be true that you would not have to go to such a long tedious procedure on the second or third loan and would it be reasonable to take up to $35 on the second loan and then up to maybe $25 on future loans that are made on the same student. or same institution? Mr. WALKER. I think it is difficult to say in advance if there will be that much difference involved. There is still a lot of checking and recomputations that have to be done every time the student comes in. His family income may have moved out of the class available for the subsidy and things of that type which will require changing. Mrs. GREEN. If we put in, as you recommend, greater involvement of the financial student aid ofticers from colleges or universities as to need plus the preceding investigation you have done for the individual making the application, won't it be reasonable to presume that the fee should be less on loans beyond the first one? Maybe $35 is not correct for the first one, maybe it should be $50, I don't know, but it seems to me the second and third should be less. Mr. WALKER. Let me make two comments on it. First of all, I think we have to keep clearly in mind that the basic rationale of this fee is not simply to offset precisely the acquisition cost. People are going to vary all over the lot depending on efficiency of the fee. Inasmuch as the logical approach of raising the interest rate cannot be taken because of usury. laws in various States, then a fee can be paid for the purpose of raising the return to the lender on average to a competitive level. I would say that the fee should be varied depend- PAGENO="0140" 646 ing on money market conditions, depending on the cost of money and interest rate, not on the basis of whether lenders are more or less ~efficient in making the loan. Once we talk about: Does the fee really cost, or does it cost, that -much to put the loan on the books; we are getting away from the basic objective of raising the return to the borrower closer to a break-even level. Secondly, if there is or if the commitee said, however, we want to give some recognition to the fact that there might be a lower cost involved to the bank in renewals or subsequent borrowings, I would respectfully recommend you consider approaching it by setting a $35 fee maximum but making it quite clear in the record and legisla- tion that given some experience, the Office of Education ought to con- sider a lower level fee for the second, third, fourth loans and/or con- version loans. I think that administrative flexibility at this stage of the game when we have a promising thing before us is ultimately important to make the program work. Mr. HATHAWAY. Even on your initial loan, won't the financial aid officer be helpful considerably in the application by asking the same questions you normally would ask? Mr. WALKER. He will be helping us but I can't see a great decrease to the lending institution because it is mainly the cost taken by high priced employees in going through a processing operation. If it c-an be shown it will reduce the processing operation I would say "Yes." Again, I would set it flexibility and if it is demonstrated overtime as we move along to that effect, I would say by all means it should be perhaps done. Mr. HATHAWAY. I would think so. I don't know to what extent the participation of the aid officer would cut costs but it would lower the basis of what you said, that is one of the factors involved in deter- mining the cost? Mr. WALKER. Anything that cuts down on the administrative prob- lem will definitely help the program in great proportion. Mr. HATHAWAY. One last question, if I may, Madam Chairman. You mention on page 8, "Signs of progress in Government-private sector approach to solving social problems have been multiplying rapidly." I wonder if you have considered the long-range effect of continuing the program -of lending at the 6-percent rate without the additional fee. We already had experience under the GI bill, where we sent the vet- eran to college and graduate school, `and so forth, and thereby increase his income. So the GI bill has paid for itself. As a result of this pro- gram you `are going to get much more borrowing business in the future. I wonder how much you have computed that in-to your thinking? This is a.n investment to you in the long-run beca-use there will be additional borrowing of larger `amounts of money, say, 4, 5, 6, or 7 years from now. Mr. WALKER. Yes, this is the only way we can explain the success of the program at the present time. A-s I pointed out at the begi-miing, despite the fact this -program had a bWtism of fire, came into being PAGENO="0141" 647 under the highest interest rates and tightest money market conditions in 40 years with a great deal of administrative problems, there have been 685,000 loans made to `a tune of $558 million. I think it is significant `that this is exactly the selling point that we took to our membership when we started in l965-~66 so actively promoting the program. I think it explains why 80 percent of lender participation, where we have the figures in the States where you have direct Federal gi~arantee, comes from commercial banks as compared with other financial institutions. We have played this aspect to the absolute hilt, that it is good for the hank because it is good for the community, it is good for the coun- try and in the long run it will give you more customers and may even give more recruits for employees and officer trainees in the future. But this is not `a sustainable, or not a way to really get the program going on `all fours at the present time if the banker comes back `and says, "Yes, but I am losing money on every loan I make." If we can g~t the marginal amount there, we can h:ave `a tremendous push to the program and will do everything certainly we can to push it. Mr. HATHAWAY. Do you think that bankers are relying on the ex- pectation that Congress will increase the return `of `these loans? I no- tice you state that the nu'mber of loans `have increased tremendously as we have gone along. Mr. WALKER. The people closest to this are the people who are in charge of the various State plans whose representative will testify before you this week and I think that he will tell you that in certain States there has been tremendous reliance on forthcoming of the fee on a retroactive basis. I think some of the studies that have been made by college boards and others that are looked into this, support that thesis very, very much. This varies from State to State, but the in- dication I get from all over the country is the fee has been an im- portant factor. Mr. HATHAWAY. Relying on the whims of the Congress. Mr. WALKER. I say at certain stages a person has to stick his neck out and I did. Mrs. GREEN. Congressman Quie. Mr. QrnE. What do you mean by the conversion fee? You mentioned there are four $35 fees, if there are four loans made? Mr. WALKER. This is when the student graduates and goes into the bank and the loan which has sat there on the books for 4 years is then turned into a payout operation and he is going to say "I want to pay off in 6 years," and you compute what the amount is per month, and so on. There is also administrative cost there so there was to be a con- version fee, too, recommended in the same amount. Mr. SMITH. lip until that point you were having effect on, let's say, our "for demand notes" laying in the bank and after the year's grace period is run the student comes in and consolidates those and on a payout agreement and decides what the monthly payments will be and how long he wants to take. That is conversion activity. Mr. QUIE. What of the value of the Federal guarantee of every loan? You are not going to lose on any of those loans. You said that the automobile loan was not as expensive, but really. if you had a PAGENO="0142" 648 Federal guarantee on every automobile loan, there wouldn't be a high rate of interest either. What value do you place on that? Mr. WALKER. I have to assess the real impact of that. The real im- pact of the guarantee is you would have thousands of young men and women that cannot get credit accommodations but will if the loss fac- tor is taken out of the picture. Mr. S1UITH. It eliminates the credit check, the achninistrative cost. Mr. QUIE. How much does it usually cost? Mr. WALKER. Well, on a brandnew raw 18-year-old, it's basically to just see if his character and this and that looks reasonably good and reasonably promising. On a person like you or I, for $25 or $30 we can get a credit bureau report because we have a record. Again, the major reason for the guarantee is not to get the interest rate down but the major reason is that an 18-year-old is not going to be allowed to borrow a thousand and a thousand and a thousand and a thousand, because he does not have the credit rating to do it. Uncle Sam is coming in and saying, "Don't worry about his credit worthiness, we will take care of that and you take care of the other part." Mr. QUIE. In other words, you have to make an adjustment for a defaulted loan. Therefore, isn't it really an added expense? Mr. WALKER. Yes; but you still have the experience if the student defaults, as Mr. Smith pointed out earlier, there will be a period of time where the bank attempts to collect and this runs into expense, any defaulted loan runs into considerable expense to the bank in trying to shake it out. But you can't compare the interest rate on loans that would not be made if you didn't have the guarantee with interest rates on loans with the guarantee. Mr. QUIE. On page 3 you say there is provision for the Office of Education to go to 7 percent per annum. Has there been consideration of this in the Office of Education? Dr. WHITE. No, sir; I don't think so. This was just to indicate that Congressman initially approved the rate ceiling which is basically higher than the implicit ceiling that you would be approving if you enacted the $35 fee proposal. Unfortunately, because of some of the disincentive aspects of the program and because of our inability and other inability to move in and see if the other States would set up programs, several States did not act and other States ran out of money which led to a tem- porary triggering of the direct Federal guarantee program in 16 States. Now, it would be quite illogical for the Commissioner to consider moving to 7 percent in those States when he could not put a 7-percent rate in the States where you do have good active going-State plans. This was simply an illustration of the fact that Congress has ratified 7 percent as a reasonable rate of interest under these circumstances. Mr. QUIE. Would we solve the problem if we did go to 7 percent interest instead of 6 percent, except for those States that have usury laws of 6 percent? Mr. WALKER. Yes; and this would be the approach preferred by bankers according to ~nformations on Polls that I have seen. You get into :a question there, jf you maintain, who pays that extra point, PAGENO="0143" 649 particularly after graduation; but, in effect, this fee proposal on adjustable basis would not only achieve something like the same thing but wOuld gi~~e administrative flexibility depending on the changes in money mortgages. Mr. QLTIE. How many States now have usury laws below 7 percent? Mr. WALKER. There are at least four, and I thmk there may be more. Mr. QUIE. Of those States, how many now have some activity in the works to change them? You know they. are all being pressed pretty hard trying to figure out a gimmick in order to make loans anyway. Mr. WALKER. I think quite a few of them do and those who don't, that have any sort of usury statute, will be moving in that direction as a result of the imminent enactment we presume of the so-called truth-in-lending legislation. This will give quite a stimulus in straightening out usury statutes in many States. On top of that, with our financial support of the National Conference for Commissioners of Uniform State Laws who are drafting a uniform credit code which if enacted in the various States would eliminate the old once-and-for-all usury statute and apply usury ceilings for different types of credit, for this type of credit would be sufficiently higher for that 7-percent rate to be put into effect. On the other hand, this is the here and now. In a number of States, you have constitutional provisions that would be very difficult to change and in other State's legislative provisions that will be fought very hard. Mr. Qtrn~. In any instance in which the college gives you information in evaluating a loan for students, I imagine there might be some way of absorbing this expense for the college? Mr. WALKER. They do it now. It is very frustrating. The college financial aid officer sits with the student and goes over the whole income situation, goes over his expensive situation and starts looking at the various alternatives available, that this might be a good student and he can get him a scholarship and this is work-study and all of the various programs, and he comes to the student loan program and the financial aid officer really, legally, has nothing to say about what portion this should be of the student's program. So it is not really going to increase his expense. Quite the contrary, it will make him and his university credit worthy and is quite happy that finally they are in the program as they should be. * Mr. Q1IIE. You will be dealing with colleges and universities all over the State, or your bank will be dealing with colleges or universities all over the State or country, if it is a large enough area that you can service. Does this make it difficult since you don't know the presidents and student aid officers, all of those 2,000 or 800, or whatever the number is, that you are dealing with? Mr. WALKER. First, it makes it no more difficult than it is now and, in fact, it makes it easier because the banker has an expert opinion or recommendation on which to go as opposed to sort of being up in the air. Quite frankly, under the present program I expect there are some informal exchanges of views between financial aid officers and bankers involved. PAGENO="0144" 650 Mr. QUIE. Thank you. Mrs. GREEN. Congressman Burton. Mr. BURTON. How much of the time is spent on this complicated form and at this point I would like made available to the subcommittee members a sample form so we can view firsthand just what the elements are, but how much of the time is taken seeing that the student qualifies under the family income test, seeing if he qualifies? Mr. WALKER. Mr. Gannon conducted the survey a year or so ago on the cost of this program. Mr. GANNON. They originally had a very complicated formula to figure our adjusted family income. This has been changed within the last year, reducing it a little bit. The student is asked to figure out the adjusted family income for both the student and parent and this has to be signed by the parents. This is in addition to the application for the loan. A point that I wold like to add on earlier discussion here, there forms, the students takes them into the bank, they go to the fi- nancial aid officer at the college who has to verify that the student is in fact enrolled and is a student in good standing. The recommendation is that the same form being handled by the financial aid officer as it is, so it is not more of a burden on him and you are not really eliminating a step so far as the bank is concerned. Mr. BURTON. What percentage of tine students are rejected because they don't meet the income test? Mr. WALKER. This does not lead to rejection, but the only thing the income test decides is not whether you are eligible for a loan, my son is eligible for a loan, but whether you get the interest subsidy, full in- terest subsidy in college and 50-percent subsidy while out of college.. The son of the richest man in the Nation could get one of these sub- sidized student loans and I think that is a very significant point. Does the Congress really want to work that way? Mr. BURTON. Well, will you respond to that? Mr. WALKER. I beg pardon. He could get one of these federally guaranteed loans, not with a subsidy. Mr. BURTON. Well, how much time is spent in this aspect of deter- mining whether or not that student should get the interest subsidy? Mr. WALKER. Well, it does not take a dickens of a lot of time but is a matter of filling out the form on the part of the student but when you are dealing with a 16-, or 17-, or 18-year-old, you are making com- putations and checking, and so forth, and the cost of people in the bank with a clerk checking this and a junior officer, and so on, it means it runs into a little bit of time for clerical help, which is costly, it runs into quite a bit of money. Mr. BURTON. If we accept one of the recommendations you made that we eliminate the interest subsidy after graduation, really how im- portant is it that we hold fast to this requirement that the student must come within some artificial definition of being in a family that otherwise can't meet educational needs before they get the interest subsidy while in school? Are we spending more money than were on eligibility checks-or are we classifying students in a way not really that relevant? Mr. WALKER. I think the way you are classifying probably needs another look. However, you get around a lot of those problems by PAGENO="0145" 651 giving the financial aid officer more power in the program because he is the single best individual to tell you whether a student needs the loan even in relatively high-income families, because of the number of students that might be in college at any one time. But you still have to take an income sort of test if you are going to have subsidy. Taking it away after graduation will not eliminate it if you have a subsidy before graduation. Mr. BURTON. What percent of families, in a year for which we have the most recent data, have students where their adjusted gross is $15,000 or more? Mr. SMrrII. I think 85 percent was our best hunch a year ago, Mr. Burton. Eighty-five percent or more of the families have less than $15,000 adjusted gross? Mr. SMITH. Yes, sir. Mr. WALKER. Still, that can result in quite a bit of leakage lending to people who really do not need it. I would argue even that $1 of leakage of that type is not in the public interest, not in education's interest. Mr. BURTON. Well, discounting to whatever extent we find we are then building in some administrative red tape that washes out much of the so-called taxpayer's savings, we gain as a result of an income limitation. Mr. WALKER. I don't quite follow, I am sorry. Mr. BURTON. Well, if you spend $100 in determining eligibility for interest purposes, say, to save $80 on subsidized interest, you have yourself a bad bargain, don't you, as a taxpayer? Mr. WALKER. I am sorry, you are talking about just outflow and inflow of the parties? Mr. BURTON. If he has to pay $100 to save $80 from the standpoint of the taxpayer? Mr. WALKER. Yes; you shouldn't have a program like that if you base it on income and outflow, but what the taxpayer is buying with this and what the banks are buying to the extent we are losing money on the program we have this situation. Mr. BURTON. If you think there isn't a need for determining whether or not a student is eligible for subsidy on the interest if you did that would it reduce your administrative overhead? Mr. WALKER. Some, not truly significantly. If you can finish and say that what the taxpayer is getting for his money is a much higher level of education and hopefully citizenship in the country. Mr. BURTON. Would you distinguish for me the principle or the notion of a tuition-free system of higher education and a Federal interest subsidy for all students who apply for loans? Are they not quite analagous situations? Mr. WALKER. They would be similar if you gave the subsidy to all students that applied. But you still have the problem in fact if there is not enough money to go around some will be rejected. Mr. BURTON. Some States had or used to have that which was the equivalent to tuition-free higher education? Mr. WALKER. Yes. Some still have very close to it. Mr. BURTON. Yes. In national terms, won't we be equalizing that consideration by making loans available without an income test? 92-371-68-pt. 2-1O PAGENO="0146" 652 Mr. WALKER. I think it would be very similar to that, but argued from the standpoint of equity, my son should not be `able to get one of these subsidized loans. I don't think it is the way to go about solving our problems and let me qualify myself as an expert on edu- cation, which I am not, I am speaking on the financial points but speak- ing as a citizen I would have reservations about tuition-free colleges for all persons in the United States. That is a personal view. I think I have some responsibility as a parent to give my kids an education. Mr. BURTON. How do you account for the differing impact institu- tion by institution or State by State for those States that, where the taxpayers have assumed a broader responsibility of having virtually, if not in fact, tuition-free higher education, how do you account for the disparity in treatment looking at it in national terms, that either these students or institutions receive, or looking at it the other way, the obligation of the national taxpayers assuming educati6n of that student? Mr. WALKER. Talking about the tuition-free approach? Mr. BURTON. No, talking about the function of student loans, these loans are used to further one's higher education and if you paid $500 tuition your need for money is going to be greater `than if you pay none at all under most circumstances. Mr. WALKER. I see. Mr. BURTON. So we find that the national responsibility differs con- siderably depending on what the State education policy is and to some extent that discriminates unfairly one way or another against political subdivisions that `do or don't have what in effect is a tuition-free higher education system. Mr. WALKER. That is a problem. It seems to me you could only get around it by forcing an education policy on the States or, secondly, not having a State system of government where the States can make decisions as to how they want to go about handling their higher educa- tion. I think the student loan program has to be looked at differently from that as a marginal source of funds which, with the partnership of the Federal Government, the State government, and the private lend- ing institutions can enable some portion of aspiring college students with the ability to get education that could not otherwise if the pro- grain did not exist, this is superimposed on the existing system. Mr. BURTON. Do we have so much in the way of loans in `the pipeline that there is a risk that funding to pay the interest are not likely to be available? Mr. WALKER. I don't think so. It depends, of course,on congressional appropriation but it is not anything of that magnitude. There are now outstanding under the program this much. . Mr. BURTON. Madam Chairman, what I am t.oymg with in my mind is, what in fact is at stake that we have to require this eligi- bility check, given the testimony of the witness before us that there are instances that the local bankers does become subject to the special pleading of big depositors which is almost inherent in the nature of the relationship of the bank with some of the big depositors; that we may be encouraging an avoidance of full disclosure of family income in some situations families in the $14,000 to $18,000 or $19,000 PAGENO="0147" 653 or for that matter $25,000 a year adjusted gross who oftentimes are pressed just as badly as families whose adjusted gross is $14,999. ii really doubt that we can at one and the same time construct an effec- tive income test for a family and have it be as simple and inexpensive test to administer, I don't think we can do that, and I think if we had a test that is really relevant, we would build in administrative expenses to the point where the testing of the income eligibility may well outrun or come close to outrunning the actual shortages that this relevant test would have resulted in-if we don't have a relevant test we have an equity test where two families in the same circum- stances determine their ability to provide their children with higher education can be treated much differently simply because the test is not that relevant, and to make it relevant would result in an admin- istrative overhead that is on the other hand very costly. I give up the balance of my time. Mrs. GREEN. While philosophically, I would like to have the crea- tion of an educational subsidy available to everyone from kinder- garten, 5 years on up through higher education, but let's talk about this in terms of amoimt. Without the need test, I recognize there must be some limitation on the amount of money that the banks are going to give to the program of their total assets. Would not the amount of money that would be required go to astronomical amounts if everyone of the 6.5 million students who are in college today took advantage of the $1,000 loan that was available with the interest subsidy? Mr. WALKER. If everybody took advantage and the loans were made? Mrs. GREEN. Yes. Mr. WALKER. Yes, everyone theoretically can take advantage now, but it would be a very, very large figure. Mrs. GREEN. Have you estimated this, do you know of anybody that has? If we don't put in some kind of a control, as I see it, this pro- gram could go to amounts we never even discussed. Mr. WALKER. That is true and we will see if we can `develop figures or get figures from experts on the subject. This just underlines the need for a better and frankly fairer system of control than is in the present legislation. Mr. Burton's remarks certainly zeroed in on some of the inequitable aspects of this. We believe that you have to bring judgment and the best man to make the judgment is the college financial aid officer. Mrs. GREEN. It is also true that under the present law if a student is in the, we will say, above $15,000 adjusted income group he still would be able to borrow at the 6 percent level and the' Federal Govern- ment would still be paying for the $35 fee and the $35 conversion fee even through he is the son of a millionaire? Mr. WALKER. Yes, sir, because the purpose of the fee is to raise the rate of return to the lending institution at or close to a break-even level and `the cost is the same basically in each case. Mr. QrnE. Will you yield? Mrs. GREEN. Yes. Mr. QUIE. For the guarantee loan program, if it is not subsidized, are you still limited to a 6 percent interest? Mr. WALKER. If it is under the guarantee program. Banks would much prefer to make it under their own loan program, but you are PAGENO="0148" 654 at higher rates of interest and if some person with $30,000 family in- come and a number of students come in and say, "I want to borrow money because of an educational financial problem," the banks think under those circumstances they ought to be able to lend to him under their traditional program which would be at more than 6 percent. He is going to argue on the other hand he wants the 6-percent loan. In the $30,000 income bracket with the deductibility of interest pay- ments for income tax purposes, it is hard to make a case that that particular borrower needs a 6-percent rate. Mrs. GREEN. We, in effect, require the bank to give the loans, don't we? Mr. WALKER. No, ma'am, you can't require the bank to make the loan. Mrs. GREEN. You are saying that any student is eligible for the guaranteed student loan program if the bank is participating in the program, then we are certainly putting the pressure on the bank and putting the bank in a rather difficult position to say, "No, we won't do it." Mr. WALKER. They depend on the nature of the customer. He will not say to the bank, "If you don't want to give my son a guaranteed loan, I will take my deposit out." I don't think that is right. I think the vast majority of the citizens in these income brackets will not try to play it that way. Some of them could. It is a leakage in the j)rogram, but it is strictly voluntary to what extent the loans are made and in what income groups by the lending institutions. Mr. ERLENBORN. Dr. Walker, is seems to me one of the difficulties we have in the program is legislatively, it has been developed in some way ambivalent; on the one hand it is a student loan and on the other it is a family expense loan and if we determine the eligibility for subsidy on the basis of family income and on the other hand we de- sign the repayment provision of the loan as though it were a student loan, we are really looking at it from two different aspects. It oc- curred to me after hearing the Treasury talk about how the cost of education could no longer be considered something to be paid out of annual income of the family but as an investment by the family in the student future, is there any justification then for the family in the income bracket above $15,000 or $20,000 (wherever the breaking point might be) for these loans not to begin repayment as soon as the loan is made just as you do the commercial loans? Is there any justification for the 4-year or more grace period of repayment? Mr. WAu~mm. Are you talking about the present system? Mr. ERLENBORN. Yes. Mr. WALKER. You get into certainly a problem because it is the student that borrows the money and if you say the student should begin immediate repayment with really no source of income except to get it from his parents, you have sort of an inherent conflict in the whole theory and philosophy of the thing. This is something that people have been talking about in studying these programs and as to whether there is some sort of differentiation that should or should not be made. It is in a pretty early stage of discussion, but I think it is something that probably should and would be on the commission's agenda at one stage of the game. PAGENO="0149" 655 At the current stage, we would like this to be the position where it is viable to be able to consult as to the financial aspects of the program. Mr. ERLENBORN. I understand the Treasury last year, when they testified about the annual fee, the conversion fee, and placement fees talked about a level of $25 at the present time. This year when they testified before us they didn't mention it, but talked about the maxi- mum of $35. Do you have any knowledge of as to what figure they would use with the $35 maximum? Mr. WALKER. At the present time, no, sir; I don't. I would hazard a guess it would be the $20 to $30 range. Actually, if you look at the chart of economic indicators, and this is attached to our statement, several of your interest rate levels are higher now than they were at the peak of the crisis or seriousness, and that is the latter part of 1966. On the other hand, and this is an unusual situation, even though some interest rates are higher, monetary conditions are easier, it is easier to get a loan now than in August 1966. I would like that the Treasury would probably make `a case for something similar to what they talked about before. I would not administratively stint this thing at first. I cannot emphasize how important it is to get this program well accepted in the lender's minds and to get the State agencies to set up operations and get more lenders into the picture. After a time, over a time administratively you can move as you like and as seems fit depending on how costs develop and interest rates and other aspects of the program. Mr. ERLENBORN. At the present time, without the student financial aid officer making a recommendation or having any voice in deter- mining who should get a loan and how much, is it possible for the son of a family with an income of, say, $30,000 or $50,000 a year to come into the bank and borrow money at 6 percent and buy an automobile? Mr. WALKER. Yes, sir. Mr. ERLENBORN. And not have to begin repaying until he gets out of school? Mr. WALKER. That is correct. If I were the banker I certainly wouldn't make a loan like that. Mr. ERLENBORN. You wouldn't necessarily know what he was going to use that money for? The money is given to the student. He makes the loan, and he can use it then to purchase an automobile as well as pay for his education? Mr. WALKER. That is right, and Mr. Smith would like to make a comment. Mr. SMITH. Mr. Erlenborn, it is not a uniform situation. Under the Federal program this is now operative in 16 States, there is no bar to lending, to borrowing at the 6-percent rate because of family income, however, in the State programs, the minimum requirements for that State program to enter into agreement with the Office of Education only requires that the State program cover families up to the ad- justed family income of $15,000. Now, how many States permit loans above that, I can't honestly say, but I did want you to understand it is not a 50-State uniform situa- tion. PAGENO="0150" 656 Mr. ERLENBORN. One last question. Do you feel that the student fi- nancial aid officers in the schools are generally fully qualified to make these judgments? I am thinking of some of the testimony we. have had before the committee to the effect that many of the student financial aid officers only do the work part time and their full-time efforts, and maybe the majority of their time, is spent elsewhere in the school administration setup. Mr. WALKER. I cannot speak as an expert but can only pass on first what bankers tell me and they feel in general the student financial aid officers with whom they are so qualified. I feel certain it is true for the larger institutions with thousands of students who probably make up the bulk of the borrowers in the program. Second, even if only part time and if he is part time he is probably pretty dedicated, he is certainly better qualified tO make the decision all things considered than the banker is. Mrs. GREEN. Thank you very much, Dr. Walker and Mr. Smith. Your testimony has been very helpful. Mr. HATHAWAY. Did you say that 7 percent would be better than the fee? Mr. WALKER. I think there haYe been some which I have heard of by college boards and others which indicated that more bankers would prefer the 7 percent `than the fee. I don't think there is that much difference. I think from the standpoint of the Federal Government having some administrative flexibility, the Office of Education con- sulting with the Treasury operating in this `direction might be prefer-' able from your standpoint, and easier to adjust the. fee to an overall rate, but I think more bankers would like it in the traditional sense of the interest rate. Mr. HATHAWAY. Would you tell me what the interest rate is for nonguaranteed loans for students? Mr. WALKER. Yes; they are normally to the parent and run probably 10 or 11 or 12 percent. Mr. SMITH. Not that high. I would say 8 or 9 percent. Mr. HATHAWAY. Thank you, Madam Chairman. Mrs. GREEN. Thank you. STATEMENT OP MRS. flTANITA GREER WHITE, MEMBER, AMERI~ CAN ASSOCIATION OP UNIVERSITY WOMEN AND CHAIRMAN, COMMITTEE ON INTERNATIONAL FELLOWSHIPS AND AWARDS; ACCOMPANIED BY MRS. ALISON BELL, STAYF ASSOCIATE, LEGIS- LATION Mrs. GREEN. The next witness to appear will be Dr. White, rep- resenting the. American Association of T.Jniversity Women and the chairman `of the Committee on International Fellowships and Awards, and Dr. White will be accompanied by Mrs. Bell. You may proceed as you wish, Dr. White. We welcome you to the committee and are delighted `to have your comments on the legislation before us. Mrs. WHITE. Thank you. I will leave this development plan for our institution and this may give you some idea later on what we are facing. PAGENO="0151" 657 Mrs. GREEN. It will be made part of the files of the committee. Mrs. WHrrE. Madam Chairman and members of the committee, I am Dr. Juanita G. White, chairman of the AAUW Educational Foun- dation's Committee on International Fellowships and Awards. My residence is in Boulder City, Nev. I am here today t,o represent the American Association of University Women, `an association with a membership of 175,000, organized into 1624 branches in the 50 States, and the District of Columbia. We in the American Association of University Women wish to express our pleasure at being given the opportunity to appear again before this subcommittee. We wish to express our support for H.R. 15067 and to make suggestions which are incorporated in our statement. Although the American Association of University Women is not an educational institution in the accepted sense, its principal motiva- tion for the past 86 years has been support, by one means or another, for expanding educational opportunities. It was natural in the last quarter of the 19th century that one of its principal interests was the promotion of greater educational oppor- tunities for women. Our horizons have widened since then, but we do continue our efforts on behalf of women. This year under the AAUW educational foundation's fellowships program we are making awards to 44 fellows from 25 other countries, and to 52 American scholars to complete doctoral theses or undertake postdoctoral work. Last year our members contributed approximately $707,000 toward these graduate level awards. (Part of this sum was allocated to the foundation's growing endowment fund which now has a book value of roughly $5 million.) Each year the quality of the applications we receive goes up ap- preciably-making it progressively more difficult for our committees to decide which applicants will receive stipends. For several years the ratio of stipends to applications has been about 1 to 7. We can predict from the number of inquiries received in our fellowships office about our program that the percentage of applications from well qualified scholars soon will increase beyond our ability to maintain even this 1-to-'?' ratio. For example, this year we are able to award a total of 96 fellowships although we had 679 approved applications. Because of this experience we wish to comment first upon the amend- ments to title III of the 1965 Higher Education Act. The importance of education at graduate level has increased dramatically since the middle of this century as a result of the technological, socioeconomic and political revolutions we have been witnessing. Because we believe strong graduate programs contribute to community welfare and also to the national interest, the two proposals in the legislation before you for grants to strengthen and improve graduate school programs are very gratifying to us. The association, and I personally from my experience as a Uni- versity of Nevada regent, regret that no increase has been made in the authorization of funds to be devoted to strengthening developing in- stitutions above the $55 million authorization for the current year for this title. We have often appeared before this committee in support of an- thorizations which would permit long-range planning and advance PAGENO="0152" 658 funding and therefore heartily concur with the proposal for a 5-year extension of the programs authorized under the National Defense Education Act of 1958, the Higher Education Act of 1963, the Higher Education Act of 1965 and National Vocational Student Loan Act of 1965. If year-in-advance funding as well as longer term authoriza- tions are provided, the benefit to both `students and institutions in terms of freedom from uncertainty in planning (even for only months ahead), will be inestimable. We speak in particular to the several stu- dent financial aid programs. Under the present calendar-~as this committee is well aware-the academic year is well underway before Congress has appropriated funds for the scholarship, fellowship, loan, and work-study programs that are being consolidated in this year's higher education amendments. We in AATThV are aware that many families find themselves unable to meet the financial burden of sending a' son or daughter to college at the time he, or she, should be entering. On the other hand the family income is too high to fit provisions of the needs tests that are a part of most student financial aid programs. We believe the guaranteed loan program, with its built-in interest subsidy has substantial merit- if safeguards can be written into it which would prevent the program's use as a source of "cheap money." As an illustration of misuse a parent might find it more expedient to pay for a car and borrow under the program for a son or daugther's education. We also believe the borrower logically could be expected to assume interest charges beginning in the second year following graduation. We believe such a requirement would be an incentive to earlier repay- ment. Tite I, the university services program, for which $10 million was appropriated for the current year, calls for 75 percent Federal and 25 percent non-Federal sharing. We believe some flexibility in this provision might be written into this requirement to good advantage. The association wishes that more money was being requested for strengthening college and research library resources. Although prog- ress will be made through part C of title II and through the networks for knowledge toward institutional sharing `of rare, scarce (and ex- pensive) library resources, we believe easy access to library materials to be an invaluable aid to the college student and therefore wish the authorizations in parts A and B of title II could be larger. We are pleased with the `amendments to the Higher Education Act of 1965 in title VI which will provide grants to colleges and univer- sities for laboratory and other teaching aids. This assistance will con- tribute to improvement in the quality of education being offered by the participating institutions. The association has supported and continues to support the Educa- tion Professions Act. It also believes that the start which can be made under the limited funds `authorized in parts A and B of title XII for project grants and fellowships will launch a much needed program of training for public service. Up to this point we have not mentioned our support for extension of the guidance counseling and testing titles of the NDEA which we support. The proposed new program of special services for disauivan- taged students will act as a natural and vital supplement. It will also PAGENO="0153" 659 be a complement to other programs, enacted by earlier Congresses, in an effort to increase the number of economically disadvantaged youth who will eii±er college. `We mention such programs as talent search, upward-bound, work-study, and the educational opportunity grant program. The initial lower achievement records in college of many of these students from disadvantaged backgrounds show clearly that pro- vision of special services proposed in part C of title IV will comple- ment educational efforts made at the elementary and secondary level and will enable these students to take fuller advantage of their college educations and thereby increase their contributions to, society. Madam Chairman, your committee has more accurate statistics than we on the percentage of women compared to men earniiig masters and doctors degrees. We know the gap is widening. We recognize that discrimination against women for equal job opportunities is not legal. But we also recognize that other, unlegislated, and even easily under- stood discriminations exist-whether a woman is choosing a career or returning to college in order that she acquire or update her skills be- fore entering or reentering a workday world. One reason mOre women are not entering professional or status occupations is that they are not getting the education they need to enter these fields. Again we in AATJW speak from a background of experience. Be- tween 1962 and 1965 under a grant from the Rockefeller Bros. fund the AAIJW Educational Foundation conducted a pilot project to search out qualified women who might wish to enter college teaching. This small project which enabled women to return to college to qualify them- selves for college teaching has been carried on since 1965 by the asso- ciation's membership. Both the scholarship and employment records of these women have been most gratifying to us. Although our project has been directed solely at recruiting college teachers, we would like to draw your attention to a relatively untapped source of very able woman power, of which we are aware as a result of this experience. Members of this committee know from their committee work of the increasing number of women, who have been homemakers, or for some reason unemployed, who are now seeking to enter the labor force. To qualify for professional or status positions most of these women, many of whom have had excellent scholastic records, need to build upon their earlier education with refresher courses in their chosen areas of specialization, or possibly simply acquire a basic col- lege education. Because there are other pressing demands upon family budgets fur- ther schooling is a financial impossibility for most of them. As we said to this committee last year we recognize that most of the avenues of financial assistance open to other students from private sources as well as those listed in these amendmem~ts are not closed to such women. But who can blame `the admission officer, the student loan officer, or the faculty counselor who selects the student who is just graduating, or who is now at work in a job requiring further training, to someone who has been out `of schoo,l for some years? `We recognize that it is. the responsibility of these administrators to be certain that these limited funds are spent where the greatest expectation of return can be amticipated. Therefore we wish to ask this committee to add language in the bill or in the report which would provide for special PAGENO="0154" 660 consideration for these women who, with financial assistance in the form of both loans and grants, could enter the job market at higher levels. Women still are largely confined to the lowest paying, lowest status occupations. Most women earn just over half as much as is earned by most men. We suggest if this vast source of womanpower could improve its earning capacity through this proposed opportunity for educational advancement, the Federal Government would soon be reimbursed through the substantial increase in income tax payments which would result. In conclusion, Madam Chairman, may we say that although we have not spoken to the limitations H.R. 15067 places upon construc- tion of facilities we are deeply concerned over postponement of con- struction and over the proposed raising of interest rates on facility loans. We fea.r many institutions will find themselves in the position of being forced by already strained budgets to raise student fees to cover these additional costs. We thank you sincerely for the privilege of appearing before you. I am also here because as a university regent and AATJW member, I feel I support the principle of Federal aid to education, and more Federal aid to universities, and colleges and recipient community col- leges, and junior colleges. We actually are a:t a point now where we are having an explosion in higher education, much worse than we have had in the past 10 to 20 years, and we have reached a point at which the States themselves cannot support the needs in higher education. I am in particularly good position to note as I am a regent of a State university system in which there are only two higher education institutions in the State, both of which are State supported. We also have one community college and we have taken on programs in the technical educational level of an "AA" degree for technical programs. As a result of this terrific explosion and expansion in developing our higher educational programs we have asked each branch of the uni- versity to produce a 10-year development plan. We anticipate a development of about 17,500; that is, five times as many as we have now, over a period of 10 years, with 950 faculty and a $33 million annual budget. As contrasted to this year's $4.8 million. In 1955 we had a grand total of 357 students, over half of whom were part-time students. In 1967, we had 3,735, over half of whom were part-time students. I find myself, as I said, in a position of feeling that Federal aid to education in general is important and specifically for small developing institutions. As you know, the American Association of University Women has over a period of 86 years furnished fellowships to women scholars. The first one was awarded in 1888. At a meeting this past weekend we awarded 45 fellowships to foreign women coming to the United States for trainin~ and 54 fellowshins to women from the TTnited States who are either teaching or going into teaching primarily. A few of these are research people, but I assure you that most of the research people are taken care of by NIH and NSF and the other Federal agencies, so we are primarily concerned with training teachers for higher education. PAGENO="0155" 661 Occasionally, some of these people are interested in elementary and secondary education, but primarily for higher education or for teachers of teachers. We are under pressure to get sufficient awards for people who are applying. At the present time, we are making one award for every seven applications we accept. We can predict, from our applications, that number is going to get larger and larger as time goes by. As an evidence of what has happened in our institution, and I am flow speaking again as a regent who has been on the board for 6 years now, this past year or rather 2 years ago the comparative costs of our programs went like this: $725 per student in the 2 first years, that is the lower level, and $2,800 per student in the second level. The grad- uate level 2 years ago was costing us $5,300 a student. Do you know how much it cost us in Nevada, per student, for a med- ical student-$20,000 per year per student. This is what we are fac- ing, ladies and gentlemen; and this is what we are looking forward to having to support. Now, we admit that being a small developing institution, we are in a particularly peculiar position because of the fact that our costs are necessarily larger when we have smaller graduate enrollments. As our graduate enrollments increased, and this shows from year to year, the cost per student decreases. To give you a figure for the medical students, the new medical schools with 32 to 40 students are costing per student $20,000, and the older ones, which have 200 or 300 students enrolled in a medical school are costing around $12,000 to $14,000. This is what we can expect over a period of time, a decrease in the per student cost. But somehow or other we have to find the financial means of lifting the level of produc- tion in the new institutions to a point where they can operate more economically. Another item that I feel we must consider in the development of higher education programs is the impact of the GI's who are return- 111g. If you remember way back in 1945, even my husband was one of them, the higher education institutions were completely incapable of taking care of returning GI's. Some men had to wait 2 and 3 years to get admitted to what we call a retraining program. Therefore, I think in making allocations we should consider what is going to happen to our institutions as the boys return and want more education. The other thing we need to think about in considering allocations under these bills is the fact that the higher education colleges and universities are experiencing a brain drain by the junior colleges which are developing at the rate last year of 200. Science and math still take the lead for demand but philosophy and English positions are getting to be increasingly difficult to fill. In our particular case, we are being drained of our masters degrees with what we call professional training of 1 year beyond masters degrees by a brain drain of faculty into the junior college system. We have only one community college in Nevada and many of these graduates go to California. They don't stay in the valley. In other words, we are contributing to the tota~I need in the United States. Enough has been said indeed, I think, by the bankers, about the financial aid programs which are being discussed, but we in AATTW PAGENO="0156" 662 would hate to see loans supersede stipends. In other words, we must not forget that stipends are necessary, particularly at the graduate level, and if possible some kind of arrangement should be made to take care of this. I think that the bankers have discussed the financial aid in the form of loans and the possible misuse of them so I don't need to go into that. I do feel that you have made a great step forward in trying to make it easier to administer the loans. The people who are in the institutions and* who have to administer these loan programs, they really have a terrible job because they are put into positions of making decisions against somebody who needs a loan, possibly because of something in the family situation, they do have a difficult job in allocating limited funds. We have actually acquired a staff who do nothing but this. We also believe that the borrower logically could be expected to assume interest charges beginning the second year following gradua- tion and we believe that the requirement would be an incentive to earlier payment. I have heard the argument against this, but I think it is incentive rather than the other way around. Title I, the university services program, for which $10 million was appropriated for the current year, calls for 75-percent Federal and 25-percent non-Federal sharing. We believe some flexibility in this provision might be written into this requirement to good advantage. Actually, it does cost the university more than 50 percent to administer the program. Funds available under these programs are a tremendous contribu- tion to developing institutions like we have in Nevada. For instance, we have an education building and a physics building which are fire- traps. There is no question about it. In fact, we just spent $59,000 fixing the doors so the kids could push them open and out. The floors are made of wood. We are forced to use so much of our money for provid- ing faculty, that we are even, at times, in a position of having to use the local schools at night The institution which is represented in the 10-year plan to whicai I referred runs from 8 o'clock in the morning to 11 o'clock at night. I have been by there when the lights were still on at 1 o'clock. People were working here in the early morning hours. We happen to be in a) particularly peculiar situation where we have many part-time students so they can work at night.. Nevertheless, even if they weren't, we still have to work at night because we do not have enough classrooms to opera!te the institution and we don't have enough tax money to buy the classrooms to operate the institution. Title XII programs were the subject of a whole day's discussion at the recent) meeting of the Western Intersta!te Commission on Higher Education. Men there were pointing out the fact we not only need this in the Federal service, but in State service. In our State we actually do not have enough money at. any level to provide adequate counseling and guidance service. We have a. little money each year but it never is quite. enough and we end up in the institution with one counselor for 1,500 students and this is really inadequate. The programs such as talent search, upward bound, work study, and educational opportunities grant programs are extremely valuable; that really offer an opportunity for disadvantaged students to get and educational opportunities grant programs are extremely valuable: PAGENO="0157" 663 special services that they need in order to get the higher education programs that would make them more valuable as people and increase their contributions to society. The AATJW statement addresses itself and women returning to college. In the University of Nevada, speaking again as a regent, we had 225 women in continuing education courses. These are women between 25 and 60. Many of these women are intending to return as teachers in elementary and secondary education. We find in inquiring of the various superintendents that they prefer these women because their residence is established, they are going to stay there because their husbands are there. So we have built in both college, elementary, and secondary potential faculty. I would like again to speak as a regent, the University of Nevada has already imposed high student fees in order to be able to build necessary buildings to house its students. It takes a period of years, in fact, from the time that our legislature approves a building, it takes us 3 or 4 years to get the building constructed and in use. Mrs. GREEN. Thank you very much, Dr. White. I notice you have your Ph. D. in chemistry? Mrs. WHITE. Yes. Mrs. GREEN. How many women Ph. D.'s in chemistry are there? Mrs. Wrni~. Right now I don't know. At the time I graduated there were probably 75 but I graduated many years ago and there are many more now. Mrs. GREEN. My understanding is there are not very many nation- wide. I hope both the AAUW and WICHE will give attention to the "Network for Knowledge," the title of the bill, because it seems to me that particularly for WICHE it offers great potential. Mrs. WHrrI3. I would like to enlarge :but I realize we were pressed f or time. WICHE is very much concerned with all of this type of programing. As you know, we have a medical exchange program, dental ex- change, veterinary medicine, and dental hygiene exchange going. We also carry WICHE lists exchange programs in which students can par- ticipate in other areas than WIOHE, but not subsidized programs. Mrs. GREEN. I was talking particularly of what the "Network for Knowledge" offers as an opportunity for WICHE. Mrs. WHITE. Yes it is marvelous as far as we are concerned. It will help us tremendously because at the present time we are limited by what the State requests and feels they can budget; whereas, if we have this built-in network we can offer a lot more without having it come from below but actually we can impose it from above. Mrs. GREEN. Congressman Quie. Mr. QUIE. I want to ask you about this one part where you state that one reason there aren't more women entering the professional or status occupations is they are not getting the education they need to enter these fields. How is it the case when we are not permitting dis- crimination, that the high school teachers or professors are discriminat- ing against the girls? Mrs. GREEN. If you yield, I would say it is because we honor it in the breach more than in the observance. Mrs. WHITE. One of the things that happens is they get married and then they are out for a while. Mr. Qurn. I know it is our fault. PAGENO="0158" 664 Mrs. WHITE. And then they go back. Mrs. GREEN. But you Imow it is not fair to assume that the same number of men get married as women. Mrs. WHITE. Yes. And another thing, one of the objections to em- ploying women is the fact they say the.y drop out. Then when you go up to the employer and say, "Well, what percentage of your men drop out and how many of them change their jobs, too," it is the same per- centage. They go somewhere else. Do you see what I mean? Mr. QLrIE. No. Mrs. WHITE. It is an artificial discrimination against women. Mr. QurF~. Well, I recognize that the woman bears the child. Mrs. WHITE. And she has to look after it. Mr. Q'cJIE. And look after it-so `it makes it a little more difficult for her to get an education if she is married before she enters college. Mrs. WHITE. That is right. Mr. QUIE. And I assume you recognize that. There is a difference between men and women and will be no matter how long we integrate, but beyond that, you say that women are not getting education they need as though somebody is discriminating against them in a classroom or something. Mrs. WHITE. No, that is not it. Mrs. GREEN. May I ask, how many colleges and universities practice some form of discrimination? For example, the University of Oregon will not give a fellowship if the woman is over 35. How many other discriminatory features like that exist across the country? Mrs. WHITE. Plenty. Mrs. BELL. Particularly at the graduate level. Mrs. GREEN. In a graduate school they won't admit a woman. Mrs. WHITE. They will, but don't want to give loans or stipends or fellowships if over 35. It is difficult for a woman to get `them and that is why our AAUWT program is postdoctoral. Mr. QUTE. How about Federal legislation-is that biased as to grad- uate programs? Mrs. BELL. There is no discrimination built into the Federal pro- grams but it happens at the `admitting officer level. If you only have a limited amount of money to give and I have worked in an admis- sion's office, I do `know that you give the money to the person who is most likely to show results for it, who is most likely to get a good scholastic record and to go on and finish his degree or her degree and someone with a current record looks much better th'an someone that graduated from college 15 or 25 years ago. Mrs. WHITE. That h'appened to me. Mr. QmE. It is difficult then for the women who became homemakers to return and continue their education. Mrs. BELL. That is right, those women who have not been working and keeping up their skills. If you graduate in law, for instance, you might badly need a refresher course before you reenter a law office. Mr. QmE. Is there something wrong with just the traditional con- cept of women `going on so that they do not postpone that time when they can make full utilization of their mental capacities? Mrs. WHITE. It is an unusual man who will encourage `his wife to go back. I really mean this. Mr. QmE. I happen to have a daughter who is a junior in high school now and she will never be a professional person, and I hesitate to say that. She has friends, however, who rank in the top of their PAGENO="0159" 665 classes, who get mostly all A's and that sort of thing, and some of them whom I talked to are not interested in going on to college. They are only interested in getting married and that kind of disturbs me because I had interested my wife in leaving college in her junior year and I think that women ought to go further in college. We just don't have enough men with brains in this country to en- able us to depend only on them. Mrs. Wrnaii. You are going to have to use women, you can't help it. You are going to have such a pressure on your higher education institutions, that the only way you can do it is by using machines and women. Mr. Quii~. Machines and women. Mrs. WHITE. Yes, let's face that. Mr. QUIE. But if you say it is true here that there is some dis- crimination, and Mrs. Green mentioned some and you brought them out also, I think we ought to specify them, bring them further to light, and make certain that they are eliminated. Mrs. WHITE. I think we ought to encourage the groups to make awards to women; yes. Mrs. BELL. Mr. Quie, if I may say something, we in AAUW have had a committee that has been trying to do this for quite a few years and without very much noticeable success. We feel very strongly if a provision is written into the loan titles, the several loan titles of the bill, or if it is in the report, that a university applying for these sums and individuals getting them through the Office of Education, would certainly give consideration to these women. Spelling it out in terms of dollars2 in terms of amounts requested is next to impossible, I suppose, but if it could be done that would be the way to do it. Mr. QtTIE. Similar to what we did in the Job Corps, I suppose. Mrs. BELL. Yes. Mr. QUIE. All of the men on the committee joined in specifying a percentage of women who had to be included in the Job Corps, although some took a lower percentage than others. Would the same thing be a good idea in the field of higher education? Mrs. BELL. I don't know. I am not enough of a legislative expert to know, but it seems to me that something of that sort ought to be done or a certain sum allocated but maybe you can do it by saying that special consideration be given to this group, but something has to be done because `they are discriminated against. Mrs. WHITE. I talked with Nevada's presidents and the chairman of the schools of education and we have two very advanced groups work- ing on these new mechanisms for developing new educational pro- grams, and they were both very much interested in getting some money for setaside, which they could apply for higher education projects which would allow them to bring in the women who maybe had not finished their bachelor's degree and some who had already finished the bachelor's degree and wanted to come back in, to run these projects, give these people the necessary retraining in their field, and then put them into what we call intern programs, where they actually got teach- ing experience and another year of training. You are going to have to have enough subsidy so that small institu- tions can have 12 or 14 stipends for this sort of thing, but it would be worth it in the long run. There is no question about that in our minds in Nevada. We are still keeping on women who are 67 and 68 years old PAGENO="0160" 666 because we need teachers and they are simply tremendous teachers and we just don't let them resign. We just take them on from year to year. If they retired, we would lose tremendous personalities. Mr. QUIE. That is all. Mrs. GREEN. I would suggest that the counsel should draw up an amendment saying there would be no discrimination in granting fel- lowships or stipends either on the basis of age of an individual or on the basis of need. Mrs. WHITE. If they qualify they get the job or stipend; yes. Mrs. GREEN. Congressman Brademas. Mr. BRADEMAS. I have no questions, because I just glanced at the statement. Mrs. GREEN. Congressman Hathaway. Mr. HATHAWAY. No questions. I wanted to thank Dr. White for her statement and bringing this to our attention, and I, for one, did not know of .this discrimination in graduate schooling. Mrs. WHITE. I appreciate being allowed to tell you what some of our problems are. For we in Nevada represent what is happening all over the United States. Mrs. GREEN. I would like to ask Mrs. Bell to define various kinds of discrimination such as the ones mentioned where they would not givea woman over 35 a fellowship while giving it to men. A few years ago we had the health personnel fellowships and stipends before our corn- inittee and there was a difference in the amount going to a woman for a health degree in the health personnel field and that for a man. Thank you very much, Dr. White, and Mrs. Bell, for coming today. You have been most helpful in your comments. Thank you again; the meeting is adjourned until tomorrow morn- ing at 10. (Whereupon, at 12:30 p.m., the committee adjourned, to reconvene at 10 a.m., Tuesday, March 5, 1968.) (The following statement was submitted for the record:) TESTIMONY IN BEHALF OF THE NATIONAL EDUCATION AssOcIATION OF THE UNITED STATES PRESENTED BY STANLEY J. MCFARLAND Madam Chairman and members of the committee, I am Stanley J. McFarland, Assistant to the Assistant Executive Secretary for Legislation and Federal Rela- tions of the National Education Association. Another member of our staff, Rich- ard Oarrigan, is with me. The NEA, as you kaow, is an independent association of professional educators. Our membership includes educators in the public and private schools and colleges ranging from pre-school teachers to university presi- dents. Of our 1,100,000 members, 90% are classroom teachers. Our testimony on HR 15067 today is based on the policies of our Association as defined by the platform and resolutions adopted by 7,000 delegates at the annual convention of the Association. While the NEA has bad a long and continuing interest in the improvement of institutions of higher education, the broadening of opportunities for students to enroll and complete their studies in colleges and universities is a matter of particular concern to us. Since institutions of higher education produce the nec- essary instructional and administrative staff for our kindergartens, elementary and secondary schools, and 2-year colleges, the members of our Association are vitally concerned with the quality and quantity of higher education. Our in- terest is not confined to teacher education institutions, for we recognize that the improvement of all types of institutions of higher education is vital, not only to the well-being of the Nation, but to that of the world. For these reasons, we have in the past strongly supported the National Defense Education Act, the Higher PAGENO="0161" 667 Education Facilities Act, the Higher Education Act, and the National Vocational Student Loan Insurance Act. Each of these laws has sIgnificantly contributed to improving the quality of American education. We are pleased to express NEA's support for the Higher~ Education Amend- ments of 1968 embodied in HR 15067. To the extent that provision~ of the new bill are ~imllar to those contained in HR 6232 and HR 6265 introduced during the past session, We respectfully direct your attention to the testimony of Dr. John M. Lumley, NEA Assistant Executive Secretary for Legislation and Federal Relations, prasented to the Special Subcommittee on Education on Thursday, April 20, 1967. Since one of the major goals of the NEA legislative program is to "establish full and early funding of all federal education programs", We strongly endorse the proposed five-year extensions of the National Defense Education Act of 1958, the Higher Education Facilities Act of 1963, the Higher Education Act of 1965, and the National Vocational Student Loan Insurance Act of 1965. We support and commend even more strongly Section 908 of the bill which author- izes appropriations to be made one year in advance of their obligations for use, a provision similar to the advance funding principle so very wisely included in the Elementary and Secondary Education Amendments of 1967. Congress has been consistently late in releasing funds for education, often several months after the beginning of the fiscal year, depriving educational administrators of the opportunity to plan ahead or to make firm commitments for educational ex- penditures. This has been a particularly serious problem as regards fellow- ships for teachers and scholarships, loans and work study funds for students since colleges and universities must make commitments in the spring for the academic year starting the following fall. We are indeed grateful to this Subcommittee for clearly pointing out the problems of late funding of educational programs in the Oxcellent. and thoroughly exhaustive "Study of the United States Office of Education". We urge you to persuade Congress to provide for this long-range authorization and advance funding to eliminate the waste and confusion caused by late appropriations. We shall be pleased to lend our strength to your efforts. We support in general the proposal to consolidate the National Defense Student Loans, Educational Opportunity Grants and Work-Study programs into the proposed single Educational Opportunity Act in view of the apparent benefits and advantages of improved administration. The statement of purpose for the proposed Educational Opportunity Act-"to provide educational oppor- tunities beyond secondary school to all our youth that desire such opportunities and can benefit from them"-is strikingly similar to a plank in the NEA plat- form. We continue to believe however that the National Defense Student Loan program, is, of course, the heart of the student assistance title. We believe there would be merit in the continued separate five-year authorization of each of the three programs. We likewise have reservations concerning the proviso that an institution could transfer up to 20% of its allocation for each program to one or both of the remaining programs. We are concerned that this may be another effort to "phase. out" the National Defense Student Loans under the guise of "flexibility" in administration. The technical amendments proposed up-date the Student Assistance program and seem to represent reasonable improve- ments. We support the provision that the federal share of the Work-Study program be 90%. We support the Guaranteed Student Loan programs as a complement to the programs of the Educational Opportunity Act. We especially approve the inclusion expansion and extension of the Vocational Student Loan Loan Insurance program. We note with concern that with the exception of the first year's operation, the bill sets no dollars figures for the various programs it contains. The proposal that specific authorizations be scrapped in favor of the indefinite "such sums as are necessary" phraseology is a cause for real concern to us. Such a proposal sur- renders the control of this Committee and of the entire Congress over the future of the programs. It is with regret also that we must state once again that most of the established programs are too meagerly financed, and consequentiy too limited. It is apparent to us that this situation is not due to neglect nor to the actions of this Com- mittee, for your recommendations to the Congress have spelled out iii crystally clear terms what is advisedly considered to be the reasonable and minimal needs of the educational programs authorized by recent educational statutes. We do not underestimate the international danger confronting us nor the need to provide for the defense expenditures necessary to repel the threat of that danger. We do contend however that the funding of educational programs in the carefully considered amounts authorized by Congress is equally essential to our 02-371---68-pt. 2-11 PAGENO="0162" 668 l~ational security. We are disturbed by the priorities that have been set in making budgetary appropriations and in applying budgetary cutbacks. We naturally support the new programs of fellowships and projects to prepare graduate students to enter public service with increased competence, to improve the quality of doctoral programs at "middle-range" graduate schools, to provide special services for disadvantaged college students, and to promote "Networks of Knowledge" for cooperative sharing of technical and other resources among colleges, but we most respectfully inquire whether it is wise to proliferate new and meagerly Funded programs when established programs continue to be under- funded and must be implemented at levels considerably below the minimum needs identified and defined by this Committee. We must repeat an objection which we most recently expressed in testimony concerning the Education Professions Development Act of 1967. As we have indicated on several occasions, we believe a serious departure from acceptable practice appears in Section 107 of this bilL The Commissioner is authorized to contract with profit-making agencies to carry out experimental projects in the fields of community service and continuing education. Madam Chairman, we wish to reemphasize that this effort on the part of the Office of Education to secure authority for the Commissioner to bypass the public and private non-profit edu- cation agencies and to deal directly with profit-makers is, in our opinion, as dangerous a proposal today as it was when we first called it to the Commit- tee's attention in 1966. This kind of authority permits the Commissioner to use tax-payers' money to provide profit for private agencies in carrying out activities which are clearly and solely the prerogative of institutions of higher education, public and private non-profit institutions and agencies. Equally serious is the potentiality for federal control and direction of the entire education effort of this country, in direct violation of the American tradition of state control of public education and language contained in these laws. Profit-making agencies are in business to make a profit. If permission to contract with profit-making agencies is granted, we will run the risk of central federal control over curriculum and instructional materials. It is our conviction that financial agreements with profit-making agencies should remain the respon- sibility and prerogative of the individual institution in the state or local educa- tion agency, to protect the public interest. May we make it perfectly clear that we are not opposing~ the involvement of the profit-making sector of our society in the educational enterprise. We believe that situations can arise where it is economical and efficient for public and non-profit educational agencies to contract with industries such as the computer or electronics industry, to provide specialized training or develop machinery for specific parts of a research or demonstration project. Our strenu- ous objection is to the proposal that the IJSOE be authorized to contract directly with profit-making agencies, with no involvement of the public and non-profit educational sector, in such a manner as to achieve whatever objectives the USOE may unilaterally determine. H.R. 15067 proposes, on page 86, lines 7 through 10 that the heading of Title III of the National Defense Education Act of 1958 be amended to read "Financial Assistance for Strengthening Instruction in Academic Subjects". This heading is objectionable because in certain states the term "academic subjects" has a special connotation which is quite narrow in scope. We have supported the concept of expanding NDEA categories not restricting them. We believe the bill should clarify such matters as this and not leave the decision to the guide- line writers in TJSOE. Page 88, lines 11 through 19, repeal the provision in Title III of NDIiIA which has authorized about $10 million for state supervisory services in the categories enumerated in Title III NDEA. We oppose the repeal of the authority for the states to use NDEA funds for this purpose. Indeed, there is reason to believe that this part of NDEA Title III has been perhaps of more benefit than the equipment provision, especially in what the Office of Education calls the weaker states. We strongly urge that Congress continue to provide state education agencies the opportunity to appoint subject matter specialists to their staffs to assist local school systems in strengthening their curricular offerings. This is further reason for our concern about removing the categories in NDEA Title III. Madam Chairman, we appreciate the opportunity to present the views of the National Education Association to this Committee. We are confident that this Committee will produce another bill which will continue to improve the quality and quantity of educational opportunity in this country and at the same time preserve the traditional structure and control of education by the States. PAGENO="0163" HIGHER EDUCATION AMENDMENTS OF 1968 TUESDAY, MARCH 5, 1968 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR, Wathington, D.U. Tile subcommittee met at 10 :15 a.m., pursuant to recess, in room 2257, Rayburn House Office Building, Hon. Edith Green (chairman of the subcommittee) presiding. Present: Representatives Green, Brademas, Carey, Hathaway, Thompson, Quie, Reid, and Erlenborn. Staff members present: William F. Gaul, associate general counsel, W. Phillips Rockefeller, minority research specialist. Mrs. GREEN. The subcommittee will come to order to resume hearings on H.R. 15067, the Higher Education Amendments of 1968. This morning we are again turning our attention to the student financial aid part of the legislation. The first person to give us tile benefit of his views is the very distinguished chairman of the Banking and Currency Committee of the House of Representatives. Mr. Patman, we are delighted to have you again appear before this committee. `We appreciate your work in times past. We are glad for the. opportunity to hear your views on this legislation. STATEMENT OP HON. WRIGHT PATMAN, A REPRESENTATIVE IN CONGRESS PROM .THE STATE OP TEXAS Mr. PATMAN. .Thank you, ma'am. Madam Chairman and members of the subcommittee, I appreciate the honor and privilege of once more appearing before you to discuss H.R. 15067, the Education Act of 1968. Last August, the subcommittee was kind enough to invite me to testify on the amendments to the Higher Education Act in general and the student guarantee loan program in particular. Since your subcommittee is made up of experts on educational legis- lation and has a. far vaster knowledge of what is needed in educational fields than I do, I would like to limit my testimony this morning solely to the question of the conversion fee payments of the guarantee student loan program contained in H.R.. 15067. Last August when you had this bill under consideration, there was a great deal of pressure to quickly enact the conversion fee section into law. It was suggested by witnesses that unless the conversion fee was immediately put into effect and even made retroactive to July 1, the whole student loan program would fold and thousands of college students would not be able to return to school. (369) PAGENO="0164" 670 Fortunately, Madam Chairman, you and your subcommittee were not taken in by this baseless emotional appeal and the dire conse- quences predicted by those who were crying "wolf" never happened. Not only did the student guarantee loan program not fold but rather it prospered and now shows every sign of reaching the heights orig- inally predicted for the venture. During the last fiscal year, there were 328,943 loans made under the program. As of December 31, 1968, the current fiscal year, there were 327,144 loans made. Thus, in one-half year the program all but equaled its entire output during the previous year and there are indications that in the coming fiscal year 750,000 loans will be made. Thus, it can easily be seen by even the most casual observer that the program is not on its last legs but rather is doing a brisk business. The gains, of course, have been made without the necessity of paying bonuses in the form of conversion fees to financial institutions. I feel that one of the problems of the program in its formative stage was that it was being judged solely on the basis of how many loans were made as compared to the number of loans that had been pre- dicted would be made. It was said that the program was in trouble solely because it had not reached the nunTher of projected loans. Even so, by June of 1967, the program was operating at slightly more than 60 percent of its projected level. But projections, unfortunately, are not totally reliable, particularly when a new program is born. If newspaper stories had reported that by the end of June 1967 more than 357,000 loans had been made to college students under the student guarantee loan program, this fact would have been widely hailed. It would have been pointed out that more than one-third of a million students were being helped and that the program was doing a wonderful job. But instead, the program had a projected figure of more than one-half a million loans hanging over its head and the only way it could be credited with doing an outstanding job was to exceed the projected figure. I feel that the student loan program has performed an excellent service from the very beginning and its record of achievement is con- stantly increasing. Perhaps the projection was unrealistic or not enough information was plugged in to the decisions that lead to the projection or, perhaps, as is too often the case, there were too many variables. New programs must experience growing periods. There has to be adequate `time for the word about the program to reach all corners of our country and for students and their parents not only to become acquainted with the program, but to have faith in it. I feel that the experience during this fiscal year shows that the program is now ready to stand on its own two feet. In my last appearance before you, I felt strongly that the conver- sion fee, whether it be $35 or $25 or whatever the figure should not be allowed. I feel even more strongly at this time th~t the conversion fee feature of the legislation should not be adopted. First, let us look at the amount of money it would cost the Govern- mect if the conversion fee were adopted. If, as predicted, there are PAGENO="0165" 671 750,000 loans made during the next fiscal year and a $35 conversion fee is enacted, it would mean that the cost of paying the conversion fee on that amount of loans would be more than $26 million. And, if the Government were also required to pay 6 percent interest on each of these loans, it would mean an additional $56 million outlay. but since the 6 percent interest would be paid whether or not the con- version fee is adopted, let us drop that figure and consider only the conversion fee payments amounting to $26 million. If, for example, we take an average 1-year college loan as being $1,000, we could send 26,000 deserving students to college for 1 year instead of handing the money to the banks. As I pointed out last August, if the Government sets up its own loan revolving fund, it would save the 6 percent a year, plus the conversion fee payment or a total of $82 million. Of course, the cost of obtaining the lending funds would have to be deducted from that amount but there would still be a multimillion-dollar savings. If instead of operating the student loan program as a basis for further subsidizing the banks, the Government set up its own loan fund, the savings obtained by not paying the .bank subsidies each year would equal the initial loan fund investment in 10 years. Eventually, the repayments into the fund would make the program virtually self- sustaining on a monetary basis. Of course, it would require an appropriation for the first several years to keep the program going. Perhaps the appropriation in the first year would have to be $500 million but alongside the $524 million that was spent on small business loans through the Small Business Administration last year, I think the student loan appropriation would be clearly justified. It must be noted that the percentage of defaults on student loans in the past has been extremely small, less than 1 percent, I believe. Based on this, I feel that a direct Government lending program would be far more in the public interest than the bank subsidy pro- gram being recommended by the American Bankers Association and Under Secretary of the Treasury Barr. One of the great disappointments of this program to me has been the role played by Under Secretary of the Treasury Barr. He has joined the American Bankers Association in the fight to gain the $35 conversion fee. The American Bankers Association is, indeed, fortunate in having such an outstanding individual as Mr. Barr helping, whether intended or not, in its lobbying campaign. But, I am afraid that Mr. Barr is doing a great disservice to our country, to millions of college students, and to thousands of banks across the country. I do not overlook the fact that Joe Barr has been a valuable man in Government service. He was a Member of the House of Repre- sentatives and a member of the Banking and Currency Committee. He has served as Chairman of the Federal Deposit Insurance Corpora- tion Board. He has also been in the Treasury Department and Under Secretary of the Treasury. He has been a favorite of mine and I have noticed him over the years and I was impressed with his sincerity and honesty of purpose. In this particular case, I think he has gone far afield. I am sorry PAGENO="0166" 672 that he is advocating what he is in connection with making this loan program more expensive. I realize that Mr. Barr testified before your subcommittee that he was a banker. But I certainly hope that he has not allowed his banking background to interfere with his duties as a representative of the Government of the United States. And I am not charging that it has because I know a lot of Members of Congress have banking back- grounds and I do not see any evidence of its interfering with their public duties as Members, of Congress. Durmg Mr. Barr's appearance before your subcommittee in mid- February, it was pointed out by Congressman Hathaway that he had been told by a number of banks in his di~strict that they did not want the extra money but felt that the guaranteed loans should be made as part of the bank's public service program. I have experienced a similar situation in that a number of bankers have written to me expressing opposition to the conversion fee pay- ments. These. bankers have pointed out that they would rather see a cut- back in the amount of paperwork connected with the loans rather than an increase in the fees paid to the banks. Almost every one of the lette.rs I have received in this regard has touched on the belief that the college loans should be made on a public service basis. Why then is the American Bankers Association and Under Sec- retary of the Treasury Barr fighting so hard for the extra payments if, in general, banks do not want the money? Perhaps the answer is contained in a column written by Joseph D. Hutnyan in the February 23 issue of the "American Banker." The column, for the most part, shills for the American Bankers As- sociation's position of obtaining the $35 conversion fee. In discussing the possibilities of the conversion fee's adoption, Mr. Hutnyan, in part, writes: It also made some American Bankers Association staff members nervous be- cause some banks were enticed into the program with the expectation that the loan fee would be approved by Congress. Although there. is no mention of who the American Bankers Associa- tion staff members might be, I am sure the article refers to the bank lobby's hired Ebenezer Scrooge, Dr. Charls Walker, who last sum- mer, told bankers to start making the college loans because the $35 converSion fee would be retroactive to July 1, 1967. May I invite your attention, Madam Chairman, to the fact that putting Out the word through the Bankers Association, go ahead and make these loans, that we will guarantee that they will be paid back to July 1, was a terrible thing in my book. If a jñdge of a court had had a similar case before him and one of~ the litigants had acted as Dr. Walker acted he would have been fined for contempt. That was a sabotage of this program. Here we were trying to get a trial run, a test, to see how we could do on 6 percent `and they go in there and tell the banker, "Go ahead and make those loans. We will guarantee you it will be dated back toJulvi." In ~t.her words, that is a rather arrogant statement., anyway. It is an insinuation that the Amrican Bankers Association has more in- PAGENO="0167" 673 fluence with this Congress and committees and individuals than they really have, I am sure. And I do not think they had a right to do it. But it was sabotaging the program. There is uncertainty now. We don't know how many of them made the loans on the basis of getting this back pay. Not knowing t.hat, the only thing we can do now is start again fresh, new, another trial run, in which everybody knows that we are not going to date it back. I hope you consider that. Qf course, Dr. Walker had no basis for such a statement and he later admitted that he had, indeed, crawled out on a limb in making the statement. It would appear now that Mr. Barr is leading the effort to get Dr. Walker off the limb before it is sawed out from under him. Certainly such a motive should not be the driving force behind any type of legislation, particularly if it affects the future of thousands or even millions of college students. But there is, perhaps, a hidden reason why Dr. Walker and Mr. Barr are fighting so hard for the placement and conversion fee section of this legislation. Section 426 of the legislation provides that the payment of the $35 fee shall be retroactive to June 1, 1967. At first blush, this language seems fairly innocuous but upon closer study it develops that this section of the bill is a hidden banker's bonanza that will cost the taxpayers an additional $13 million plus. A check with the Department of Health, Education, and Welfare reveals that from June 1, 1967, through December 31 of the same year, there were 374,946 loans made that would be eligible for the $35 place- ment fee if this legislation were passed. That means that the taxpayers are going to have to come up with $13,123,110 to hand over to the banks. And, additional money will have to be obtained to pay the banks for the loans they have made from December 31 until the bill is enacted. In light of thi~ hidden bonanza, I think it is clear why the American Bankers Association is pushing so hard for the legislation. I sincerely wonder, in view of the needs of our boys in Vietnam, if we can justify turning more than $13 million over to the banks, when it is no part of the contract to pay them this much money or any part of it. I must congratulate the members of this subcommittee for not being misled or trapped by some of the statements by Secretary Barr in his appearance, particularly with regard to the costs that the banks incur in obtaining, funds for lending and investments. Mr. Barr, in attempting to justify a high acquisition cost for banks, completely left' out the billions of dollars the banks receive each year in the form of interest-free demand deposits. However, Mr. Gibbons was quick to point out this omission of Mr. Barr's. Nor did Mr. Barr mention the millions of dollars that banks receive every year interest free in the form of Federal, State, and local government deposits. Nor did he mention any of the, other subsidies that banks receive. I think `that Congressman Gibbons perhaps summed up Secretary Barr's performance in this legislative matter when he suggested that the lending rate for student loans would come down if we quit pushing the panic button. Mr. Gibbons also pointed out that Secretary Barr had, indeed, pushed the panic button'. PAGENO="0168" 674 Madam Chairman, in the past few days, a study conducted by the General Accounting Office, at your request-and I commend you for making that request-concerning the profit and loss incurred on these loans by banks, has been made public. You have done a great service, Madam Chairman, in asking for such a study to clear the air on this matter. Both Mr. Barr and Dr. Walker have testified in the past that the 6-percent interest received by the banks on student loans is a loss rate. However, in a recent issue of the respected banking publication, Bank Stock Quarterly, a study conducted of 25 banks across the country, concluded that the break-even point for these banks~ on their loans was 3.89 percent interest. And in ~June of last year, the same publication surveyed 50 banks in all size categories across the country and also determined that the break-even point on loans was 3.89 percent interest rate. I would be the first to admit that a sampling of 75 banks does not represent a full picture of the banking industry but since this is a banking publication and is designed to gather all types of information rather than to provide a specific point, we must give a great deal of credence to the figures compiled by the publication. I do not want to suggest that the figures presented by the American Bankers Association portraying these loans as losing propositions were fraudulent but perhaps your subcommittee might be interested in look- ing into the methods used to obtain these figures. I am certain that if you asked the investigators for the General Accounting Office who conducted the study to testify on the ABA's figure gathering operation, you would be shocked at some of the disclosures. Also, I cannot understand if banks are making loans that are classified as costing the banks money, why the profit picture of the banks does not reflect these losses. In 1966, bank earnings topped the $3 billion mark for the first time in history and indications are that in 1967, bank profits increased by 8 percent over the previous year. Perhaps Dr. Walker or Mr. Barr would be willing to explain to your subcommittee why bank profits have soared if they are making so many loss loans. Mr. Barr's lack of candor is in keeping with the philosophy of some Treasury officials. During the 89th Congress-now this is something that is absolutely unbelievable but it happened-during the 89th Congress, the Banking and Currency Committee attempted to obtain some information from the Treasury Department concerning interest rates on various types of debt and savings instruments. It was information the Treasury was reluctant to supply. After much delay, the committee was finally given what appeared to be the requested information. By mistake, however, the persons submitting the information had overprinted an interoffice memo onto the com- mittee's copy that clearly was not meant for our eyes. The interoffice memo read: Attached is a review of developments in the certificates of deposit market which may temporarily answer the question raised by the Patman committee as to the influence of certificates of deposit on our Treasury bill rates. As you note, we have purposefully not answered the question except in a very indirect way. PAGENO="0169" 675 And we have never gotten the information to this good day. It would appear the Treasury is continuing its indirect answering methods in its testimony before this subcommittee. I am certain you will recall last summer that Dr. Walker and Mr. Barr testified that the banks were losing money on student loans and a rather loose set of figures that purportedly justified the American Bankers Association's position was presented to the committee. I suggested in my appearance that these figures were perhaps not on the up and up but rather were obtained to prove a specific point rather than to lay the full truth before your committee. According to my calculations at the time, the banks were not losing money as claimed by the American Bankers Association but rather were making money on these loans. I am, indeed, gratified that the General Accounting Office study strongly questions the accuracy of the American Bankers Association's figures and makes it clear that the banks are making a tidy profit on these loans. In Commissioner on Education, Harold Howe's testimony, he sug- gested that consideration should be given to using pension funds as a student loan pool. I personally favor such an idea and feel that if these funds were offered an earning asset of 6 percent a year, they would jump at the opportunity to provide money for the loans. Or, as an alternative, perhaps consideration should be given to an educational bond that could be sold to the general public with a 6- percent interest rate. These bonds could carry a longer maturity so that they would not compete with savings bonds. Not only would this make millions, if not billions, of dollars avail- able for student loans, but would greatly aid this country's banking industry so that it would not have to continue making loss loans. Madam Chairman, I sincerely hope that when your committee has worked its final will on this legislation that it will drop the conversion fee section and give the student loan program an opportunity to function in an atmosphere free of panic button pushers. In short, the program is just beginning to reach its potential. Let us not take any hasty action while this program is in a period of for- ward movement. We need a much stronger experience factor before making any drastic alterations. In closing, I would like to point out that if the conversion fee of $35 is adopted, and a year or 6 months from now the American Bank- ers Association decides that it is not enough money for its banks, it will be a simple task for that association to instruct its members not to make additional loans until the fee is raised. Then we can look for Dr. Walker to put on his mask and strap on his gun and hold up Congress again in the name of higher education. Can we afford to treat Our students in this manner? Thank you very much. Mrs. GREEN. Thank you very much, Mr. Patman, for your very informative and very provocative testimony. Some time ago I asked the Treasury Department and the Office of Education to make a study of the cost to the Federal Government over a 10-year period of loans under the NDEA and under the guaranteed student loan program with the proposed $35 conversion fee. PAGENO="0170" 676 Mr. Patman, what is the interest rate on the FHA mortgages? Mr. PATMAN. It was 51/2 percent. It is about 6 now plus one-half of 1 percent for insurance fee. Mrs. GREEN. Six and a half? Mr. PATMAN. Yes, rna'am. Mrs. GREEN. In the President's message on housing, does he recom- mend an increase? Mr. PATMAN. Yes; the President recommends that the ceiling be taken off. I have stated that if it were shown that it would provide more money I would not object to it. But I have been unable to get any proof, documentary or otherwise, that would indicate more money would be available. I am convinced there would not be any more money available. But if we were going to do it, it should certainly be for a temporary basis, We just should not take the ceiling off entirely. Mrs. Gu~N. On the FHA home improvement, what is the effective rate there? Mr. PATMAN. It is up rather high. I do not know what it is right now. That is where all these scandals have been all over the country, where they would doctor the figures and get mortgages on homes when people did not know they were giving mortgages on their homes. There are more scandals I suspect in that part of the housing pro- gram th'an any of the others, possibly than all the others. It is a very high rate, Madam Chairman. Mrs. GREEN. What would you say it was? Mr. PATMAN. I would say 18 to 20 percent. It is not the FHA. This 1S tile home improvement rate that they make for 3 years and 5 years. It was 3 years at first. Then we extended it to 5 years. Mrs. GREEN. It is your conviction that the banks do break even on the 6 percent on the guaranteed student loan? Mr. PATMAN. They more than break even, Madam Chairman. They make money on them. Besides, they could not have a better public relations job. Why should not the banks do a little something for the public, especially for education? You know, the banks have a monopoly, an exclusive monopoly on checking accounts. No other financial institution can do that, only the commercial banks. That means that they get half their capital abso- lutely free because it was written into the law one time, when nobody was looking, that it should be unlawful to pay interest on demand deposits. That rn~ans half of their money that is available is absolutely free, they don't pay `anything for it. No `other institution has that favored position. Mrs. GREEN. You suggested if there is not sufficient money in the guaranteed student loan that the Government should increase the amount and have a direct loan to students? Mr. PATMAN. That is right; yes, ma'am. Mrs. GREEN. I am convinced in my own mind that the expansion of the NDEA would be cheaper to the Federal Government over the long haul. I am concerned whether or not the dollars would be available this year of a tight budget. PAGENO="0171" 677 Is it your judgment that the Congress would be willing to appro- priate the necessary hundreds of millions of dollars? Mr. PATMAN. Well, of course, there are other ways of doing that. You know, if you will permit me to digress just briefly, we have monetary authorities headed by the Federal Reserve. it is their duty to keep interest rates low, not high, in the public interest. They can do that. They can fix the interest rates at whatever they want to on Government obligations and our huge national debt is so. large that whatever interest rate is fixed on the national debt becomes the interest rate clear across the board. That can be demonstrated over a 14-year period, from 1939, June 30, to June 30, 1951, or extend it on to 1953. During that period of time when we had a Federal Reserve Board operating in the public interest we had very reasonable interest rates. If we had those same interest rates now we would be saving $8 billion a year this year just on the interest rates on the national debt alone. So, the Federal Reserve could be brought into this. In fact, I am contemplating right now offering an amendment soon to require the Federal Reserve to make available at least $10 billion in credit for housing programs in this country. We have a billion. Last time it was H.R. 14026 that was passed for 1 year, to Septem- ber 21, and then we must have had a premonition of something; we decided we would not extend it for more than 1 year which will expire September 21, this year, in which we interrogated Mr. Martin, the Chairman of the Federal Reserve Board about it, and asked him if he would be willing to make available to the housing industry loans in the way of purchasing their paper so that they would have money to make loans. He said he would not like to do it, personally did not favor it, but that if we wrote it into the law he would carry out the law. We wrote it into the law but he has not carried it out. I think when we get this bill up for consideration in the near future, the next 30 or 60 days, I have a feeling that our committee will write a direction and a demand that the Federal Reserve make available housing credit like we contemplated when we extended that act. It can be done and I hope it will be done, and the interest rate could be not 6, 7, or 8 percent-this business of the market fixing the rate is all phony-but the rate could be 3 percent like those good provisions in the Housing Act now, nursing homes and things like that, and they could carry it for 3 percent, there is no question about it. It is just a question of making the Federal Reserve carry out its duties. Mrs. GREEN. Thank you again, Mr. Patman. It is my understanding that today marks the first day of the 40th year you have served in the Congress, is that right? Mr. PATMAN. Yes, ma'am; thank you. Mrs. GREEN. May I, on behalf of the committee, commend you for the fine record you have made and for your very effective service rendered this committee as a member of the Texas delegation and as a watchdog of the purse strings. Mr. PATMAN. Thank you, ma'am. Mrs. GREEN. Mr. Quie. Mr. QUIE. I have received information from so~me banks showing the cost of student loans. They usually start out with `the cost of money to them at 5 percent. PAGENO="0172" 678 On page 7 you state, Mr. Patman, that in two sets of studies, one for 25 banks and one for 50 banks, the break-even point for these banks was 3.89 percent interest. Mr. PATMAN. That is the banks' own figures, Mr. Quie. I just took their figures for it. Now this 51/2 percent, my dear sir, is not a correct figure. You divide that by two. You know, half of their deposits are free. Under their franchise with the Federal Government they have a very lucrative franchise. They don't have to pay any interest at all on demand deposit. When you say 51/2 that means time deposits they are paying interest on. When you divide that by two it is 2%, of course. Mr. QmE. Is it a rule of thumb that a bank has half of its money in demand deposits and half that it is paying interest on? Mr. PATMAN. Considering the past, I guess you could call it a rule of the thumb. It has been that way the last decade or two. I don't see any reason why it should change. It is just like on demand deposits. YOU see, a bank can make loans like the old goldsmith did, $10 to every $1 of reserves. But time deposits as you mentioned, 5½ percent, they can make 331/3 times as many loans for $1. Mr. QtiIE. What would you estimate would be the interest charge that a bank should make to break even over and above the cost of the money? You said the 75 banks but did not indicate that is really the figure for all the banks. Mr. PATMAN. I am in no position to give you all the information. I am no expert. But the very fact that the banks' profits are going up all the time is pretty good evidence that they are not losing money. Mr. QUIE. Do you estimate, then, that some banks are actually real- izing a profit of 2 percent on the student loans? Mr. PATMAN. I am in no position to give you the accurate figures on that because I don't know. But why should they not make money on a 6-percent loan. The money cost them nothing. They use the Govern- ment's credit absolutely free. Mr. QmE. But, you can't say all their money costs them nothing. Mr. PATMAN. Well, the time deposits cost them some money. As you say, regulation Q permits 5~/2 percent. That is what they Thave been paying. Remember this, on time deposits banks can make loans or investments equal 331/3 to 1 on time deposits. So that is a pretty lucrative deal, itself. Mr~ QUIE. What about when they make long-term loans, for example, when the banks get into the housing business. Are they then paying the same amount for that money as the savings and loan asso- ciations do for their deposits? Mr. PATMAN. They are paying less on balance than average. They are paying much less. Mr. QmE. If they secured additional money to make those loans, the additional money would be the same as they paid for money that was not on demand deposit, would it not? Mr. PATMAN. It all depends on the situation at the bank. You would have to know more about that before you could evaluate it. Mr. QuTE. That is all. Mrs. GI~E~. Congressman Brademas. PAGENO="0173" 679 Mr. BRADEMAS. Thank you, Madam Chairman. I want to add my own congratulations, Mr. Chairman, to the ones you have already heard on your long service in Congress. Mr. PATMAN. Thank you, sir. Mr. BRADEMAS. I confess. I am puzzled as to the facts in this whole matter, Mr. Patman. On the one hand, you use phrases like "tidy profit" and "bonuses" that the banks are making. On the other hand, the representatives of the American Bankers Association have sug- gested to us that unless there is some kind of a conversion fee, they will lose money on these loans. Mrs. Green has referred to a GAO study and I think to other studies that have been made on the profit-and-loss picture of the banks and other private lenders on these loans. I really am very puzzled because I don't know what the facts are. I wonder if you can elucidate on this problem because I think if we can cut away some of the rhetoric and just ask the simple question, what are banks making or what are banks losing, we will be better able to make intelligent judgments. Now is there some valid survey or study to which you can point that gives an answer to that question? Mr. PATMAN. Yes, sir; the GAO study which you mentioned. Mr. BRADEMAS. What does it say? Mr. PATMAN. The General Accounting Office study. Remember this, that the General Accounting Office is an agency of Congress, they are part of our. body. They are an agency of Congress, you can rely upon them. Mr. BRADEMAS. What do they say, though? Mr. PATMAN. They will tell you the truth. They will say that the banks are not losing money. Mr. BRADEMAS. But what does the report say? What are the facts? Mr. PATMAN. What is that? Mr. BRADEMAS. You must have some basis of facts. Mr. PATMAN. I am quoting GAO. I am willing to rely on them because they are an agency of Congress, traditionally they are reliable, they will tell you the truth. 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, American Bankers Association, and as recomputed by us using the cost estimates developed by the committee and the Treasury are shown below. This gives the information, gain or loss. If you will get that report I think you will find it is very convincing. Mr. BRADEMAS. I am not sure that I am convinced by that. I am not bringing any particular bias to this discussion but I want to simply make clear that I still am not satisfied that we have the facts before this committee from any reputable survey. I say that without having seen this particular survey. The fact that you have eight loans that you are citing is absolutely unpersuasive to me. Mr. PATMAN. May I comment on what you have said here. Mr. BRADEMAS. Please. Mr. PATMAN. You see, the GAO has no ax to grind. PAGENO="0174" 680 Mr. BRADEMAS. I understand. 1~'Ir. PATMAN. None in the world. Traditionally they have been honest and reliable and they represent Congress. It is an agency of Congress. Mr. BRADEMAS. I understand that. Mr. PATMAN. And we should rely upon it. Mr. BRADEMAS. I understand that, Mr. Chairman. Let me get to another question because I think this dialog is a bottomless pit. Mr. QUIE. Will the gentleman yield? Mr. BRADEMAS. Yes. Mr. QtrIE. Did I understand you to say that a loan of $750 or less was a loss to the bank? Mr. PATMAN. They were talking about in some instances. There are too many figures here to begin reading them out but I invite your attention to page 6 of the General Accounting Office report. Mr. QtJIE. So that in some cases there is a loss at 6 percent. Mr. PATMAN. Probably so, possibly so. Mr. BRADEMAS. I yield to the chairman of the subcommittee. Mrs. GREEN. I will ask counsel if we cannot get additional copies and make them available to the members of the committee. Those eight specific studies, as I recall, were eight specific cases that the American Bankers Association used to show profit or loss and this was an anal- ysis of the eight specific cases by the General Accounting Office. Mr. BRADEMAS. I thank you chairman. `Let me turn to another aspect of this matter with the simple. obser- vation that as only one member of the subcommittee I still do not know what the facts are on the question of profits and losses on these loans. Mr. PATMAN. Stay with GAO; they will tell you what the facts are. Mr. BRADEMAS. You say that you would prefer to have a program whereby we have a Government loan fund, a revolving fund with which to provide such moneys?. Mr. PATMAN. One alternative. Mr. BRADEMAS. That is one alternative you suggested. Then on page 4 of your statement you say "perhaps the appropriation the first year would have to be $500 million." My question is very much like that of Mrs. Green's; namely, have we any kind of assurance that in a year like this we would get that kind of money? Mr. PATMAN. It would be difficult. Therefore, I have another alter- native, pension funds. If pension funds could get 6 percent you know they would be very happy, the managers of those funds would be. The only reason they are `not doing it now directly is because so many loans are involved. If you had an agency like the commercial banks or the mutual saving banks or the savings and loans or the credit unions whereby they wOuld pick up these in quantity and take them to the pension funds, you could get plenty of money that way because 6 percent is a pretty high rate on pension funds. Mr. BRADEMAS. You may be right, Mr. Chairman. I just express a great degree of skepticism over whether this Congress at this time would put up a half billion dollars in appropriations. I think if Congress would not do so, the students who were hoping to get some money with which to go to college would face the real dilemma. PAGENO="0175" 681 Mr. PATMAN. I hope the gentleman has not overlooked my other alternative, pension funds. Mr. BRADEMAS. No, sir; I haven't. Mr. PATMAN. You would not have to appropriate any money at all. Mr. BRADEMAS. I am openmind.ed on your suggestion. Another problem that I would be glad to get your comment on, Chairman Patman, is this: The representative of the ABA pointed out the other day that there was considerable competition for loan funds from other forms of activities, for instance, loans on automo- biles, which would provide for private lenders like banks considerably higher interest rates than would student loans and that, therefore, without some such conversion fee the banks would simply put their money where they could make the most money on~ interest rates. Would you comment on that? Mr. PATMAN. I will be delighted to comment on that. Remember, the loans that they have mentioned are not Government- guaranteed loans. They are not Government-guaranteed loans. Now the banks, the reason that we do not have more money in the rnorlgage market today, are putting their long-term investments in tax-exempt bonds. They own over half of the tax-exempt bonds in our Nation today bought by creating the money on the Government's credit to do it without cost to themselves. The report of the last 2 months indicates strongly that they are now buying 99 percent of all the tax exempts that come on the market. Why should they not? It is a way of evading taxes and it cuts their whole tax bill down. The commercial banks do not pay taxes like business and industry pays. Business and industry pay 48 percent, the banks pay 23 or 24 per- *cent because they have so many gimmicks and loopholes and ways of evading it like tax-exempt bonds. Mr. BRADEMAS. I hope your truth-in-lending bill will help us in this respect, Mr. Chairman. Mr. PATMAN. I do, too. Mr. BRADEMAS. As one of my colleagues suggested, I hope we can get suppoi~t out of the Congressmen from your State on this oil depletion problem which would break loose a lot of money with which to get that $500 million. Mr. PATMAN. Why don't you offer a bill to do that? That would be a good way to get consideration. Mr. BRADEMAS. I might do that but you Texas people have a lot of power around here. Mr. PATMAN. If they caunot justify it I will support what is justified. If you cannot justify 27½ percent, I will vote for what is justified. Mr. BRADEMAS. I was distressed, Mr. Chairman, over one thing you said in your statement because it has to do with a former colleague in Congress from my State. I am confident that I am right in saying that your criticism of Mr. Barr's position in this matter is in no way a reflection on his integrity. Mr. PATMAN. No; I like Joe Barr. I have liked him ever since he came here. But I think he is way off to the left or right on this one. Mr. BRADEMAS. Thank you. Mrs. GREEN. Congressman Erlenborn. PAGENO="0176" 682 Mr. ERLENBORN. Mr. Patman, I understand in your testimony here that you have suggested that the funds could be made readily available from pension funds. Your statement was that if they could get 6 percent they would be very happy to invest. Do you think that with the 6-percent interest charged to the student there could be a return of 6 percent of the peii- sion funds? Mr. PATMAN. No; there would have to be somebody to service these loans because the pension funds do not want to service them on a piece- meal basis. Obviously, they would not. Somebody would have to service them and for that they would be entitled to a reasonable amount. Cer- tainly if they got 4 percent they would be very happy over it. They don't get 4 percent as it is. Mr. ERLENBORN. You suggest they would be happy to invest their funds at 4 percent? Mr. PATMAN. Certainly they would. There are lots of pension funds in this Nation that would be glad to do that, or even less. Mr. ERLENBORN. I have no further questions. Mrs. GREEN. Congressman Hathaway. Mr. hATHAWAY. Thank you, Madam Chairman. I also want to join my colleagues in commending Mr. Patman for his service in Congress and also want to thank him for mentioning my name in his statement. I would like to say that I have received unsolicited calls from my district reemphasizing this point as recently as last week, that they do not need this extra money and tha~t they are willing to do this as a public service and they realize in the long run it will be of great benefit to them. You mentioned that the GAO did point out that in certain cases there was a loss on loans but does this consider their opportunity gains. Mr. PATMAN. No, that is theoretical loss. Mr. HATHAWAY. You do point up the fact that loans have been on the increase under the guaranteed loan program. It would seem to me that this fact in itself is pretty good evidence that we should keep the loan program just the way it is until the nuthber of loans starts to fall off. Mr. PATMAN. May I suggest this: In a half year the loans have been as much as a whole year. A half year recently. Mr. HATHAWAY. What do you think of the argument that was made yesterday at the hearing that the only reason these loans are increasing is that the bankers have been more or less assured that the Congress would go along with this increase and make it retroactive to last July? Mr. PATMAN. Who assured them, my dear friend? Mr. HATHAWAY. That I am not sure of, Mr. Patman. Mr. PATMAN. They would n~t take any kind of rumor, would they? Mr. HATHAWAY. I would not think so. I wanted your comments on it. Thank you very much. Mr. PATMAN. I think they would be very poor businessmen, they are not the kind of bankers I have known, if they would take rumors like that. Mr. HATHAWAY. I agree with you. PAGENO="0177" 683 Mr. PATMAN. In other words, they would have to say they had Con- gress in their hip pocket and if they could vote Congress like they wanted to they could guarantee it. Mr. HATHAWAY. Congress, I know, would be very difficult. Mr. PATMAN. Yes, sir. I have served with over 3,000 Members of Congress since I have been in Congress and you just do not find finer and better people on earth than you find in the Congress of the United States. I have never known a Representative that I personally did not like. I realize that when these Representatives get together they get mean- ness in their heads. Mrs. GREEN. Congressman Thompson. Mr. THo~1PsoN. Thank you, Madam `Chairman. I would like to join with my colleagues in congratulating you on your long service, Mr. Patman. Mr. PATMAN. Thank you, sir. Mr. THOMPSON. You have been here since almost before I was born. You have certainly learned a great deal. I am particularly amused by the use of `the word "shills" in your statement because I called a group of people shills after a hearing a couple of years ago and it cost me $3,000 in legal fees to defend myself against a million dollar libel suit. I made the mistake, however, of saying it in t'he Hall. Ultimately, the decision was handed down in my favor but it cost me that much money. Mr. PATMAN. I h'ope you did not lose any votes on it. Mr. THOMPSON. No. As a matter of fact, I gained some. Without having the opportunity yet to see the GAO report which I am looking forward to seeing, I have been particularly interested by your statement and also by that of your friend Dr. Walker. I have his statement before me in which he said that each of the examples in- volving four loans in 1 college year established to him that 6 percen't interest is unfair and that it is unproductive to the banks and, there- fore, this conversion fee ought to `be allowed. But we are going to have to take a good hard look at th'at state- ment and the GAO report before we make our ultimate decision. In my judgment, the possibility `of the Congress establishing a multi- million dollar revolving fund and appropriating for it at this time is absolutely out `of the question. Mr. PATMAN. It is just one alternative, my dear sir. Mr. THOMPSON. 1 know, and I am intrigued by your pension fund alternative and some other possibilities. I would suppose that if we're to put a Vietnam tag on `the revolving fund it would go through on the consent calendar, but very little else will. I have no further comment except to thank you very, very much for a very `thoughtful and provocative, as the chairlady called it, statement. Thank you. Mrs. GREEN. Thank you very, very much, Mr. Patman. We appre- ciate your counsel. Mr. PATMAN. Th'ank you, Madam Chairman. Mrs. GREEN. The next witness before the committee is the presid'en't of the United Student Aid Funds, Mr. Alan Marshall. He will be accompanied by a friend of this committee, Mr. McCabe. Mr. Marshall, will you proceed as you wish in presenting your testimony. ~2-37i---6S--pt. 2-12 PAGENO="0178" 684 STATEMENT OP ALAN D. MARSHALL, PRESIDENT, UNITED STUDENT AID FUND; ACCOMPANIED BY EDWARD A. McCABE, WASHINGTON COUNSEL FOR UNITED STUDENT AID PUND Mr. MARSHALL. Thank you, Madam Chairman. Mr. McCabe and I are delighted and honored to have the opportunity to appear again before your committee to present our views with respect to the legis- lation you have before you. As you know, our organization is a private nonprofit tax~exempt corporation formed 8 years ago to guarantee repayment of low-cost student loans. United Student Aid Funds, Inc., has endorsed more than 300,000 loans for more than $185 million in all 50 States, the District of Co- lumbia, Puerto Rico, and the Virgin Islands. Participants in its regular reserve program now include more than 900 colleges and universities, 100 vocational schools, and more than 9,000 banks and other lenders. it also operates guarantee programs for 27 States, Puerto Rico, and the Virgin Islands. We were founded in the belief that an educated citizenry is the greatest asset of any nation. Our purpose was and is to provide the marginal financial assistance that would make it possible for needy and deserving students-I use both adjectives advisedly-to complete their college educations. We have confined our efforts to guaranteeing student loans even though our charter is broader than that. In that field, I believe the range and diversity of our experience cannot be matched by any other agency-Federal, State, local, or private. This is largely because of the diversity of our operations. The recommendations I shall make today on the legislation being considered by your committee are based on this experience. In brief, we endorse recommendations of the Office of Education which simplify operations of the several guaranteed loan programs and make them more equitable. These are the recommendations dealing with- (a) making terms and conditions of loans to students at voca- tional schools the same as those to students at institutions of higher education; and (b) encouraging all guarantee agencies and lenders to defer payment `of loans when the borrower is serving in the military, the Peace Corps, or VISTA, or is back in school as a full-time student; and authorizing the full Federal interest subsidy bene- fits during such period. THE INTEREST StTBSIDY We propose repeal of those sections of the Higher Education Act' which now prohibit Federal interest subsidies to students from fam- ilies with adjusted gross incomes of $15,000 and over. This would have several advantages. It would be more equitable, since many fumilies with incomes over $15,000 `can need assistance as much as families with lower incomes. PAGENO="0179" 685 Further, this provision now generates far more annoyance than it can possibly be worth. Repealing it would add about 10 percent to the present inschool interest subsidy costs, since about 90 percent of all families fall below the present $15,000 cutoff. We have never been enthusiastic over this whole interest subsidy idea. But we say-if you. are going to have a subsidy, apply it to every borrower while in school. Then eliminate it for all after graduation. You will save substantial amounts of money. You will also simplify loan arrangements for the student, the lender, the guarantor and the college. You will eliminate the form with greatest nuisance value among the many Federal forms which have plagued us all since the Higher Education Act became operational in 1966. GIVE THE FINANCIAL AID OFFICER AT THE SCHOOL A MEANINGFUL ROLE We propose that you expressly permit the financial aid officer to counsel with the student and his family, and to take family circum- stances into account, and to recommend the amount of the loan which that student should receive. Clearly, this is one of the most significant of all the changes you could make in the present law. If this be a so-called ¶`needs" requirement, so be it. WTe believe there are both moral and practical reasons for writing it into this particular law.. . It is wrong for students who could perfectly well remain in school without a guaranteed and subsidized loan to obtain such a loan, purely for the sake of their own or their family's convenience, at the ex- pense of students who really do need the money. And since the amount that lenders can set aside for nonprofit loans is obviously limited, this kind of shift from students who have need to students who borrow for convenience is bound to take place under the present law. Indeed, the law as designed makes it take place. The Office of Edu- cation has stated that NDEA lOans should care for students from low-income families, leaving middle-income students to be served by the guaranteed loan program. But this does not mean that it is not perfectly possible to lure higher income students into the guaranteed loan program, and to force lower income students out of it, simply by making it generally known that these low-cost loans are available regardless of financial circumstances. Many financial aid officers report that this is already happening. WHAT IS OUR FUTURE DIRECTION? We believe Congress should this year answer a key question for the guidance of all of us who are now engaged in this field of student assistance. Do you want the guaranteed loan program to become a complete Federal program, administered by the 17.S. Office of Education? Or, do you want to continue a cooperative program, administered by the States and by such private nonprofit organizations as the States and educational institutions may elect, and supported in its PAGENO="0180" 686 early stages by such repayable Federal financial support as the Con- gress may decide? That, it seems to us, is a very crucial question at this time. Under the act as currently written, authority for the Office of Education to set up new Federal guarantees will expire June 30, 1968.. The bill before you would extend this authority for another 2 years. It would also provide 80-percent coinsurance by the Federal Government of loans guaranteed by the States. If one thing is sure on the basis of the record, it is that a Federal loan guarantee, whether on a 100-percent basis or an 80-percent basis, will dry up other sources of guarantee funds. Federal money ready to do the job, is bound to drive out State~ and private appropriations. In this case, a paraphrase of Gresham's law certainly applies. Just as bad money is bound to drive out good, so Federal money is bound to drive out State and private guarantee funds. The examples are abundant; the dominoes are already falling. While it took 10 years, for instance, for 35 States to set up State guarantee programs, just since last August the Federal guarantee program has been activated in 19 States. The presence of a Federal guarantee makes unnecessary, and cer- tainly eliminates any incentive for, either State programs or Stat& appropriations. State officials and college officers alike, pressed to find funds to meet all their needs, will not appropriate money for a loan progra.m of any kind if students can borrow under a Federal guarantee without such appropriations. Indeed, it is easy to see how, with any sizable increase in lending capacity, an open-ended Federal guarantee might take over large seg- ments of the area now occupied by National Defense Education Act loans. And this I want to emphasize. After all, it would offer a college the incentive to save the $1 in $10 it now deposits in its NDEA loan fund, and it would get it completely out of the collection business as far as collecting loans from its alumni is concerned. Who would continue such a program, when an aid officer, simply by signing a piece of paper, could enable students to borrow under a Federal guarantee at no cost to the college? And why should a State appropriate money to guarantee 20 percent of the loan amount when, if it takes no action, 100 percent of the loans will be guaranteed by the Federal Government? As we see it, Congress should give th~ answer now. Shall there be authority for continued 100-percent Federal guarantees, and authority also to institute an 80-percent Federal coinsurance program as recommended? Or, shall there be authority to appropriate the relatively small amounts required as repayable seed money to encourage State and pri- vate sources to continue to carry this burden, and to give them the lead~ time they need to do it? If you decide now to go the Federal route, you should, of course, eliminate that part of section 421 (a) of the Higher Education Act of 1965 which says: PAGENO="0181" 087 The purpose of this part is * * * to encourage States and nonprofit private insti- tutions and organizations to establish adequate loan insurance programs for stu dents in eligible institutions * * * If, however, you decide to continue your first emphasis on State and private effort then leave that language in, but give some encourage- ment, some leadtime, and a real sense of continuity to people at the State and private level. To do this we suggest that you authorize an additional increment of the repayable Federal seed money. This additional Federal seed money, a portion of it to be advanced to the States on a matching basis, should be for the fiscal year ending June 30, 1969. The best basis in our view would be to provide some of this seed money for all States-say $10 million-on `the basis on which these ~advances have been made to date. In addition, further repayable seed money-not to exceed $15 mil- lion-could be made on a matching basis to those States which ap- propriate their own funds. This will give a new legislative session to the States, most of whose legislatures meet in odd-numbered years. Thirty-five States have, as Commissioner Howe points out, taken steps to establish State guarantee programs. It would be nice, indeed, to see what the remaining 15 will do; also, the extent to which all 50 will make appropriations with continuity of encouragement from Washington. The comparatively small Federal cost involved would be many times offset in a single year if Congress eliminates the subsidy of half the interest after borrowers are out of school. At the rate of increase in these loans projected by the Office of Education, this after-graduation subsidy will reach an astounding $330 million a year by 1972. It is very difficult to see how such a postcollege subsidy can be justified. Graduates are earning their own way, with the income ad- vantages that a college education has brought them. The effect of the subsidy after graduation is a maximum $5 monthly saving to a well-paid graduate ~ho borrowed $2,000 as `a student. Is this enough to justify Government costs of so many million dol- lars a year, and a staggering paperwork cost as well to everyone else involved? We certainly don't believe it is. To sum up, our principal recommendations are these: 1. Repeal the $15,000 income-test provision, and provide that any interest subsidy be paid on behalf of all `borrowers, `but only while they are in school. Eliminate any interest subsidy after the borrower has finished school. 2 Permit the financial aid officer to consider family circum stances and to recommend the amount of any loan for which a stu- dent may apply. 3. Eliminate the provision for an 80 percent Federal guarantee~ Provide instead an addition~tl `ippropi~iation for repayable seed money, some of it on a matching basis. This would give the neces- sary leadtime for the State and private action which was the very heart of your 1965 loan guarantee provisions 4 Permit the existing Federal insurance authority to expire as now scheduled, on June 30, 1.968. PAGENO="0182" 688 We believe adoption of these proposals would enable the guaranteed loan program to meet in full, for the foreseeable future, the genuine needs of the lenders, the colleges, and, above all, the students themselves. It would accomplish this without miring down the Federal Govern- ment in a costly, open-ended operation, and without driving State and private nonprofit agencies from a field where they have been working diligently and well. Permit me again to emphasize that we who are associated with united student aid funds are truly interested in making it possible for deserving students from families at all income levels to finish their education and to provide this help by utilizing the special talents of all parties involved. This concludes my formal testimony. I shall be glad to answer any questions. Mr. Bn~DE~L&s (presiding). Thank you very much, indeed, Mr~ Marshall. I have two or three questions. I take it from your testimony in its early part that you don't have any complaints about the idea of using some sort of index or determina- tion of need in providing for guaranteed loans? You are not complaining about it but you are complaining about the use of the adjusted gross income of $15,000 and over as a basis for exemption? Mr. MARSHALL. That is right, Congressman. My experience in the employee benefit field for a number of years indicates that any sharp cutoff point like this creates problems, both under and over. So that if this is not going to cost much we would prefer the interest subsidy to everyone but then determine whether the student needs the money or not on all the facts involved, not just the income. Becatise many people with large families in college-I speak with some feeling, I have financed two boys for many years to do college work-need the money even though their incomes may be over $15,000. Mr. BRADEMAS. There is one presupposition in your observation that puzzles me. That is you fail, I think, maybe you could comment on this observation, to take into account when you make that statement that it is not just a question of gross income that we are talking about here~ it is adjusted gross income. So that when you use the phrase "there are some people with large families," your observation is redundant. Mr. CAREY. Will my colleague yield at that point? Mr. BRADEMAS. I yield to the most redundant colleague on the ëom- mittee. Mr. Carey has a very large family. Mr. CAREY. Does the gentleman feel that the $600 exemption which brings you down to the adjusted income reflects the cost of educating a child? Mr. BRADEMAS. As a bachelor on the committee, I am the last fellow in the world to comment on tl~at problem. But you understand my question? Mr. MARSHALL. Yes, I do. It seems to me that the formula for fixing the adjusted gross income does not give the necessary allowances as Congressman Carey pointed out. If it is $20,000 you are out anyway. Mr. BRADEMAS. That is a very helpful response. Obviously, when PAGENO="0183" 689 we use the adjusted figure we are trying to make some effort to take into account the question of need as determined by the number of children that a family was supporting. I was a little surprised on page 1 of your statement. to hear you say that this question of the $15,000 cutoff represented the greatest nuis- ance value among the many Federal forms since 1966. The reason I say that surprises me is because I have a nnmber of colleges and universities in my State and I have not had the first com- plaint about that matter. Mr. MARSHALL. This is the so-called form 1070 that the student has to fill out which provides for a record of high family income, he has to go; and ask his father for the tax return. Usually then he goes to the financial `aid officer who gives him some help and finally the loan officer of the bank has to sit down with him and tell him how to fill it out. This would eliminate the need for that form. Mr. BRADEMAS. As I understand, to get back to the first question I was asking, what you are really trying to do is to come up with a more realistic approach to the determination of the actual need of the student so that we can put the money into the hands of those students who in fact have the greatest need for it rather than in the hands of students who might find it convenient to have such loans rather than necessary. Is that correct? Mr. MARSHALL. You are correct We do have cases where the banks tell us that large depositors come in and say, "I want this for my son," and they give it to him. There is another facet which I have not emphasized quite enough that is, that the financial aid officer at the college knOws what other aid has been given by the college, work study, scholarships, what the cost of the education is. He is really in the best position of `anybody to say to the student, "Are you going to use this to buy your Mustang with or to pay for your education?" Mr. BRADEMAS. I have just one other area of questioning. That is with respect to your support for the idea of not continuing the Fed- eral guarantee and relying on States and private agencies. Are you honestly confident that they will get the job done? Mr. MARSHALL. I really am. We have evidence almost every day of States that have failed to make `appropriations-I have a letter here from the Governor which says why `should we make an `appropriation by our legislature when the Federal guarantee program is there ready to do business. Now if that had not been ready I am quite sure that the legislature would have appropriated the money. and the Governor would have signed the bill. Mr. BRADEMAS.' I am a little dubious about your conclusion. I am not familiar with State legislatures rushing in to help meet these problems. ` Mr MARSHALL This is one where the bill was already in the legis lature. As a matter of fact, I think it passed. ` Mr. BRADEMAS. I am delighted to hear it. `Mr. MARSHALL. The other thing I can tell you about it is that our volume of busmes has increased during the past few years even with PAGENO="0184" 690 the threat of the Federal guarantee there, and our deposits from col- leges for the first 8 months of this year are larger than in any similar period. But they would have been several times what they are now, I am sure, if the Federal guarantee had not been in effect, for example, in Indiana where all the colleges in Indiana are in our program and at least one of them has a deposit of as much as $250,000 with us and was increasing it right along until the Federal guarantee program came in. Mr. BRADEMAS. How do you explain why a number of States have gone ahead and set up State guarantee programs if, on the basis of your logic, they should get out of the business? Mr. MARSHALL. Some of them really do prefer to have their own programs rather than have the Federal guarantee program in effect. They tell us that quite frankly. Mr. BRADEMAS. That is not a response to my question. That is simply restating my question in the form of a sentence. My question is, on the basis of your logic, the existence of a Federal insurance program should drive a State out of this business, yet 35 States are in this business. Why? Mr. MARSHALL. Not all 35 States are still in the business. There are 19 that have been taken over. I am like you, I can't really tell what is behind the action of the legislature in any State but we do know that there are some States that prefer to have their own programs. You see, we take directions from a State officer in every State for whom we administer the program. In many of those States the State officers tell us they prefer their own program rather than have a Federal guarantee. Mr. BRADEMAS. Therefore, your statement on page 6, where you say- Just as bad money is bound to drive out good, so Federal money is bound to drive out States and private guarantee funds- Is not really an accurate statement? Mr. MARSHALL. I think eventually it will because what has hap- pened, a case in point, this Governor says: Look, my neighboring States all have this Federal Guarantee Program in effect. Why should I be the only sucker to appropriate money and take money that I need for other educational purposes and appropriate for a reserve fund? My neighboring States are all in the Federal guarantee. Mr. BRADEMAS. I will not press you further on this. I am still not persuaded that you have given me evidence for your response. Mr. MARSHALL. Could I read this letter? Mr. BRADEMAS. Sure. Mr. MARSHALL. This is a letter from the Governor of South Dakota. The Legislature of the State of South Dakota which has recently concluded its session, has determined that no further State appropriations will be made with respect to student loans. rt was their under~tanding that under the Federal Loan Insurance Act supervision of this loan program would be assumed, if desired, by the Federal Government, and accordingly the action of our South Dakota Legislature can only be construed to indicate a desire and wish that continuation of our Higher Educational Student Loan Program be implemented and supervised by the Federal Insurance. Mr. BRADEMAS. I am very hesitant about generalizing for the Repub- lic from the actions of the State of South Dakota. Mr. MARSHALL. I could take the other 19. PAGENO="0185" 691 Mr. BRADEMAS. My other question is this, Mr. Marshall: Assuming we did retain the provision under which Federal insurance becomes available where State and private sources fail to supply it, have you any suggestions f or incentives that we might write into this law that would encourage a greater degree of State `action? Mr. M~s~i4r~. I was `afraid somebody would ask that question. It is very hard for me to think of an incentive to a State to `appropriate money to start in a loan program when they don't `have to appropriate anything and the loan program will be started for their students anyway. There was one suggestion that was made by the administration, I think last summer, in which the proposal was made, I don't thmk it was passed by this committee, that in `States where the Federal gaarantee program is put into effect that there be no interest subsidy to students in that State. Theoretically this put pressure on the Governor `and the legislature to appropriate some money on `a matching basis or `however it was necessary; if you put in the Federal guarantee you would not pay the Federal `interest subsidy. It would be on `an either/or basis. I am not too confident, myself, that that would be a `sufficient incentive. Mr. BRADEMAS. Thank you very much. Mr. Erlenborn? Mr. ERLENBORN. On page 3 of your statement, you make the com- ment that you have never been enthusiastic about the whole idea of the subsidy for interest. Could I draw the broad conclusion then that though you are sug- gesting we do away with the half interest subsidy after graduation, you would maybe feel even better if we did away with all interest subsidy? Mr. MARSHALL. I don't think as a practical matter you could do that now. I think that the. recommendation for the interest subsidy came as a surprise to us, but having once had it in there I think it would probably be a mistake now to do away with the interest subsidy as far as the student, himself, is concerned. We have taken no position on that. Mr. ERLENBORN. If the interest subsidy during the period the student is in school were removed, would it be possible to make that repayable with the loan rather than during the period the student is in school? Mr. MARSHALL. That is exactly how our program worked prior to the interest subsidy payment. The interest accumulated while the student was in school and was added to the principal of the note he signed after he graduated. Mr. ERLENBORN. If that were true, would it then vary greatly from your suggestion of doing away with the subsidy after your graduation? Mr. MARSHALL. I did not understand the question. Mr. ERLENBORN. Would it be any more difficult under those circum- stances to do awa.y with the interest subsidy than it would be to do away with the half interest subsidy after graduation? Mr. MARSHALL. There is a little distinction. Well, yOu are right in this respect. The int.erest payment in either case is made by the graduate who is employed and earning. . PAGENO="0186" 692 The interest accmnulated during the college year does add quite a bit more to his payments then does the interest repayable after gradu- ation, particularly if it is only 3 percent. Mr. ERLENBORN. Because of the interest on the interest? Mr. MARSHALL. The interest on the interest, that is right. Mr. ERLENBORN. You suggest that there would be a. substantial sav- ings if we took off the half interest subsidy after graduation. Currently there would also be a much more drastic or drama~tic. savings if we took off the entire interest subsidy? Mr. MARSHALL. That is right. I submitted in my testimony before this coimnittee on August 23 an appendix which was based on Com- missioner Howe's estimate of the borrowers in 1972 when the pro- gram presumably would be in full effect and the annual cost to the Government there., if only a third of the students borrowed a. thousand dollars, the interest subsidy in school would be $720 million. The interest subsidy with 3 percent on the payout notes would be $330 million. Mr. ERLENBORN. On page 8, you make a suggestion of providing seed money for States. You have some examples. You say $10 million on the basis on which these advances have been made to date and, in addition, further repayable seed money is not to exceed $15 million. Do you mean these figures in toto or for each State? Mr. MARSHALL. In total. Mr. ERLENBORN. For all States? Mr. MARSHALL. Yes. The 1965 bill appropriated $17½ million; $~½ million in 1 year and $10 million in the other. This is the same figure, $17½ million in total. Mr. ERLENBORN. I have no further questions. Mr. BRADEMAS. Mr. Carey. Mr. CAREY. Thank you, Mr. Chairman. There is a great deal of merit, I believe, in your idea that the student aid officer is better able to make a complete judgment on what the mix of aids could be for the student who needs the loan and other assistance in order to pursue a college career. But isn't it true that if you examine the physical distance elements here it may not be quite as workable as it appears on paper. It. is all right where the student and the institution are located in the same commirnity. What about the student located in Long Island, N.Y., or New York City, who is applying for admission to an institu- tion far remote from a metropolitan area which is where a great many students have to go now if they can't gain admission in a local institution? Here we have two strangers who have never heard of each other before except through correspondence. The student does not write to one institution. The experience I find today is that they are writing to a dozen or more and submitting their college boards and inquiring about financial aid. Is it not so that the student wouTd have to build up a relationship with maybe a dozen student-aid officers before he finds the one who is going to be able to handle his financing package, whereas, if he is dealing with the local bank in his community he takes his problem to one institution whom he meets face to face, and in a sense the bank becomes the agent of the institution anyway. PAGENO="0187" 693 Isn't this a very real situation? Mr. MARSHALL. You have put your finger on our problem that has ~faced the educational institutions for a good many years. How do you determine, the boy who is entering, whether he needs the money or not? There have been mechanisms set up to do that; the college entrance board, for example, has a mechanism set up. Because you see, colleges have been faced with this problem not only in this program but in the scholarship program that they have been giving out. The college entrance board has one national mechanism. I know in some large State universities every student who applies for aid is put through this service of the college entrance board to determine his need. There is another organization whose name I forget now, but is a competitor of the college entrance board that performs the same serv- ice for colleges. You are right, of course, the banker at home, in this case New York, probably knows as much or more about the need of the student. On the other hand, the banker is not in a position to say, "Well, maybe this student's marks are good enough in high school so that he can get a scholarship." Mr. CAREY. This situation I described, of course, woul.d only ob- tain insofar as the first-year loan is involved. The second-year loan, assuming, of course, he stays in the same institution, he would be in contact with the student-aid officer on the campus. Could you envision a situation where the bank might continue to make the initial loan and thereafter the eligibility for further loans could well be carried on by the student-aid officer on the campus? Mr. MARSHALL. When we started our student-aid program, we had those problems to iron out. We had 20 meetings throughout the coun- try where we got together with the bank officer and student-aid offi- cers. We got them to discuss these problems. I think you are right there but normally we suggest. that the finan- cial-aid officer make a recommendation. If the bank-loan officer dis- agrees with that recommendation, then they get together by telephone and straighten it. out. The two of them together, with the information that the financial- aid officer has with respect to other assistance that the college might furnish and the bank-loan officer knowing the family circumstances, *usually make a better judgment than either one of them separately. The thing we object to is the prohibition in the present act so that the financial-aid officer cannot make a recommendation or does not feel he wants to. Mr. CAREY. I agree we should clear that up so that we could get a greater concert of judgment here instead of unilateral judgment by the ~banker~ alone. Mr. MARSHALL. That is right. Mr. CAREY. I can understand your apprehension that:given a Fed- eral guarantee program that States will opt out of this program be- cause it is one more appropriation that the hard-put State legislators can well do without. PAGENO="0188" 694 But is it not true in the State where you are located, which I rep- resent, that the outstanding example of the mix of programs is be- fore us, that in New York the last figures we had in the last Congress showed that New York had extended some $66 million in student loan funds under the Higher Education Assistance Corp. of New York State, and now we have had the Federal guarantee student loan program in effect since 1965 and this year, with the blend of programs, New York is up to a new high of over $88 million? So there has been a 25-percent increase in the State programs even with the input of the Federal guarantee. Does this not refute some of your notiOns that this is going to happen? Mr. MARSHALL. Let me see if I can get the facts straight. In the first place, we have never attempted to operate much in New York State because the Higher Education Assistance Corp. has done an out- standing job and was in place before our organizations was started. Mr. CAREY. Right. The New York corporation antedates your corporation. Mr. MARSHALL. That is right, by a year, I believe, or 2 years. We do have a few colleges in New York State in our program who make deposits with us because they have students in their colleges coming from other States who are not eligible under the New York program. The second part is the fact that the Federal guarantee program is not operated in New York State. The only loans made in New York. State today are made by the Higher Education Assistance Corp. be- cause they have funds and money and there was no reason to put the Federal guarantee program in the State of New York. Also, in Connecticut and many other States, because they were ap- propriating adequate funds and the programs were available. So th~ Federal guarantee has gone only in those 19 States where the legisla- ture for one reason or another said, "We won't appropriate any money." Mr. CAREY. If this is an appropriate question, what is the financiaJ arrangement that your organization makes with the State in order to administer its program? Does it charge a gross fee per contract or so much per loan? How do you operate with the State? Mr. MARSHALL. You see, what we do, we ask for a 10-percent reserve deposit with us. Then we will eventually, and this year we almost reached that point, get to the point where the interest income on these reserve funds-we deposit those in securities and get a little less than. 5-percent rate of return on that. Mr. CAREY. Are you bound by the legalities? Mr. MARSHALL. No; we can invest in anything. We get some common stocks. Mr. CAREY. I think Counsel McCabe ought to improve your port- folio. I doubt whether many corporations wOuld be proud of a 5-percent return in New York. Mr. MARSHALL. Well, it is pretty good. Mr. CAREY. It could be higher than that. . Mr. MARSHALL. We want more. We hope to pay our operating ex- penses with that interest income. So far, the deficit has been made up by gifts to us. PAGENO="0189" 695 Mr. CAREY. What is the arrangement? Is it so much per loan? Mr. MARSHALL. We don't charge the State anything. Mr. CAREY. They deposit with you? Mr. MARSHALL. They deposit the reserve fund with us. We mvest it. Overall, the interest income on our invested reserves pays our operating expenses. Mr. CAREY. Which makes you self-sustaining with the gifts to make up the difference? Mr. MARSHALL. Yes. Then the insurance fee covers our defaults we hope, eventually, the half percent that the student pays in insurance we guarantee. So that they konw we have something to back up our guarantee with. Mr. MARSHALL. We operate in all. 50 States, but we do the program in 27 States. . Mr. CAREY. Your clients are in 27 States. It is 10 percent reserve of the outstanding amount that the State has in your program? Mr. MARSHALL. They deposit $5,000 with us and we agree to guaran- tee $50,000 worth of loans. When we get up near that point, we say we need some more money. The `reason for that is our contract with the banks. We contract with 9,000 banks and we agree to keep our deposit in cash or marketable securities x percent of the loans that we guarantee. So that they know we have something to back up our guarantee with. Mr. CAREY. In your experience with these banks, do you find that there is the general availability of money, among the banks on a 6-percent return basis? . Mr. MARSHALL. The answer to that is that our loan volume has been increasing. For example, we guaranteed $64,260,000 worth of loans between July 1 and March 1, 1968, which is the first 8 months of our fiscal year. For the entire fiscal year ended last June 30, we guaranteed $58 million, which was also a record. So we are guaranteeing more loans than we ever did before. Now we do not know, `there are difficulties in some parts `of the country in getting banks to participate. I have in mind one fair- sized city in the West where only the smaller bank in town will come into the program. The other two banks won't. We put on a campaign there, we tried to get them in. We have other areas in the country where for different reasons there is difficulty for a student to `obtain loans. By and large, the banks have done a splendid job in making these loans available. Mr. CAREY. From the figures you cite, however, is it not true that one State alone, New York, has extended more loan funds now than all of the States that you service combined? Mr. MARSHALL. That is right. Well, we don't service California. `California and New York are 20 percent in total. If you take those `two major States out-I guess Indiana has a Federal and State pro- gram which we did not service last year, too. Indiana was one of our big States. PAGENO="0190" 696 Mr. CAREY. It is fairly evident, though, that there is a very big sector of market for loans and need for loans among students that we are not serving now. Mr. MARSHALL. We are not serving. The States are, except for the 19 States where the Federal guarantee has been put into effect. Mr. C~niw. Thank you very much. Mr. BRADEMAS. Thank you again, Mr. Marshall, for your extremely helpful testimony. It has been most useful to the committee. Mr. MARSHALL. Thank you. Mr. BRADEMAS. Our final witness this morning is Mr. Robert J. Murphy, Jr., president of the Knickerbocker Federal Savings & Loan Association, who is testifying on behalf of the National League of Insured Savings Associations. Mr. Murphy, we have about 15 minutes before the House comes into session. If it is agreeable with you, sir, perhaps you could summarize your testimony and it will be printed in its entirety in the record. STATEMENT OP ROBERT J. MURPHY, JR., PRESIDENT, KNICKER.~ BOOKER FEDERAL SAVINGS & LOAN ASSOCIATION, NEW YORK, ON BEHALF OP THE NATIONAL LEAGUE OP INSURED SAVINGS ASSOCIATIONS Mr. MURPHY. I will start formally, at least. My name is Robert J~ Murphy, Jr. I am president of the Knickerbocker Federal Savings & Loan Association of New York City. It is my privilege to appear today on behalf of the National League of Insured Savings Associations, a nationwide trade association. There are basically four points. Overall, members of the national league support this legislation, but there are four points in particular that we would like to draw your attention to which we believe would facilitate a larger flow of savings and loan money into the student loan program. First of all, we fully support that part of the bill which would authorize the Federal associations to make loans for vocational education. At this time, we are only authorized to make loans for college students, and we feel that it should be broadened, that it seems unfair that people who do not wish to go to college cannot reach their own fulfillment in the area in which they have capacity. Under the New York State plan, the State associations can make these vocational loans. We are fully behind your suggestion that we be given authority to make vocational loans. We support the Federal reinsurance plan, because we think it is probably less expensive for the Government than doing it directly or totally, and it would make more insurance available. For every dollar laid out by the State, in the event of default, the Federal Government would pay $4, which is a total of $5 in insurance.. Furthermore, the. thought in this is that you keep the State in the picture, too, and the lending institution. A third Point has to do the tax law and is possibly outside the in- terest of this committee at this time, but I think it is very important that you should at least know that in the definition of a domestic say- ings and loan, building and loan association- PAGENO="0191" 697 Mr. CAREY. Mr. Chairman, may I interrupt the witness at this pomt. I think you should be on notice that this whole matter of the unavail- ability of your funds in the nonconforming sector of your deposits has been taken up in our subcommittee hearings prior to this time with Under Secretary of the Treasury Joseph Barr. He totally agrees with your analysis here that these funds should be placed in the conform- ing loan sector as far as your 18-percent factor and other factors are concerned. He agrees that he will go to the Ways and Means Committee and his own Treasury Department to seek whatever change in legislation is necessary to bring about just what you seek in this particular point. I think we can promise you that this makes sense. Mr. MURPHY. This would make a tremendous difference because right now we are limited in a 18-percent category of assets. `flie stu- dent loan is competing with nonresidential like nursing homes, motels, hotels on which we can get ~½ or 8 percent. Take it out of the narrow stream of 18 percent of assets and put it into our main flow of money where a 6-percent loan can begin to com- pete with the FHA or the VA or it can compete with the ordinary mortgage we make of 6 percent and no points in our neighborhood. The final point is that the league, speaking on a national basis, be- lieves that there should be some form of fee. Again from an under- writing point of view, you have selection of loans to make, FHA, VA, we get 6 percent, we get something to offset the expense. In the local conventional loan in New York, we cannot charge more than 6 percent, it is usurious to charge anything over that. However, we can charge them for the appraisal and credit report. So there is something there. With the fee you take the student loan out of a third position and move it upto second and maybe first. That is as quickly and as succinctly as I can put it. Mr. BRADEMAS. Thank you, indeed. In effect, do I take it you are sharing the general point of view of the bankers that without such a fee of some kind you are going to find it difficult to make these loans, or are you saying that though hard pressed, you would be able to continue making such loans without such a fee? Mr. MURPHY. We would only be able to make less of them. Right now we receive no fee from New York State, I am talking about New York State. We make them on an accommodation basis. We will not turn one down for any student that comes in from our territory.. We do not seek them or advertise them overtly, just on location. We would like to get into it. We would like to see our moneys diverted to that. You are dealing with underwriters, you are dealing with people' who have to take the money of their depositors and put it out as best they can. It is helpful if we can make a comparison and say this is as good an investment as that one. That is my real point. Mr. BRADEMAS. Thank you. I would like, if I may, to call next on Mr. Carey, if it is agreeable with Mr. Erlenborn. Mr. Carey comes from your State, and is one of the ablest members of our subcommittee. Mr. CAREY. Thank you, Mr. Chairman. PAGENO="0192" 698 I find it a real pleasure to welcome Mr. Murphy here today in his capacity as head of the trade associations, also as chief executive officer of the Knickerbocker Savings & Loan. I think it is true, is it not, Mr. Murphy, that your institution in the metropolitan area among the savings and loans is the lead institution in the number of student loans provided to college students in the area today? Mr. MtTRPHY. I don't know whether I can claim that for the Knickerbocker but we are as active as we can be in it. I think that there are some figures in here that- Mr. CAREY. I did not want to make you unpopular in your own association, but I have conferred with Mr. Hollister who administers the higher education assistance program in New York State and we were talking about various institutions who cooperate in the program and he seemed to indicate a great pride in the contribution your institution was making. That is why I brought this up. Mr. MURPHY. We are very active with him and I must say the cooperation we get is marvelous. There is no real problem. Mr. CAREY. Isn't it true, also, that all institutions do not have a uni- form policy on the acceptability of these loans? It is true that one neighboring institution which I will not nameS actually will only make loans to depositors or families of depositors who have had accounts in that institution for more than 2 or 3 years, it is a really low level of eligibility a.nd this could be improved if we had some sore of uniform degree of acceptability of these loans. I think I should tell you, that the mood or the current thinking of this subcommittee, as I sense it in regard to the $35 conversion fee, is about as sympathetic to it right now as we would be t.o Father Knick- erbocker in full dress coming into the room in midsummer. It just does not seem to be selling in the subcommittee. Now I can appreciate it is very hard with your portfolio to justify 6-percent high cost service loans even though they are serving a public purpose. Is there any other alternative that you might suggest that might give us some leverage to get more institutions into the program and to get more of the assets of these institutions pledged to the program rather than this conversion fee idea? Is there any other instrumentation that you can think of that would serve the same purpose? Mr. MURPHY. I think it is a matter of giving them justification for where to place the money. I don't say it has to be $35. To whatever degree that can be an offset. Mr. CAREY. You understand the objectionable feature of this, that the student has to pay the fee? Mr. MURPHY. I did not understand that. Mr. CAREY. Who is going to pay it? It will be added to the cost of the loan somewhere. Mr. MURPHY. I assume it will be paid by the Commissioner of Education. Mr. CAREY. Since it is going to be paid by the Federal Government, certainly the student payment- Mr. MURPHY. I do not agree that it should be passed on to the student. PAGENO="0193" 699 Mr. CAREY. Since the Federal Government will be paying the fees, is it possible that we could use an option such as this, that the Federal Govermnent might reimburse the State up to, say, 1 percent or 1 per- cent in a given year where the State was unable to attract enough lend- ers into the program or where the portfolio in the lenders' hands was not sufficiently attractive to commit more of his assets, that we could use this 1 percent on the outstanding amount in a given year as an inducement to be used by the State to get its institutions in the pro- gram? Would this be acceptable? Mr. MURPHY. I think as it is implied in this testimony, it is more or less of a formula where it could be demonstrated that an institution, and it is going to vary across the Nation, is not getting a return- Mr. CAREY. If a State has enough lending institutions to do the job, they are meeting the demand and requirement, then the $35 fee becomes a bonus that is not necessary. But if the experience in the estimate of the Federal officials of the State is a straining for money and there are not sufficient assets in the institutions to make the loans, then is it not possible to give the institution some inducement in terms of a percentage of the outstanding at the end of the given loan program could be used as an inducement? Mr. MURPHY. Absolutely. I think it is a workable plan. It is a motivator. Mr. CAREY. To stimulate it in the areas where the lending is not sufficient to meet the need. Mr. MURPHY. It would provide something over and above just the 6 percent to offset the operating expense that they do have and thereby making it more competitive with the loans we do make. Mr. CAREY. It could be used in a year where money is tight but it would not obtain in a year where interest rates are more attractive in- stead of this flat $35 conversion which would apply whether money is available or not? Mr. MURPHY. That is righL Mr. CAREY. Thank you, Mr. Murphy. Mr. BRADEMAS. Thank you, Mr. Murphy. We appreciate your coming to testify. (The document referred to follows:) STATEMENT BY ROBERT J. MURPHY, Jn., PRESIDENT, KNICKERBOCKER FEDERAL SAVINGS & LOAN AssoCIATION, ON BEHALF OF THE NATIONAL LEAGUE OF INSURED SAVINGS ASSOCIATIONS Madam Chairman and members of the Special Subcommittee, my name is Robert J. Murphy, Jr. I am President of Knickerbocker Federal Savings and Loan Association of New York, New York. It is my privilege to appear today on behalf of the National League of Insured Savings Associations, a nationwide trade association serving the Savings and loan industry. Our members would like to be more active in the field of making loans for vocational, college and university education. As noted by the President in his Special Message on Education delivered to the Congress on February 5, 19138, it is highly desirable in the public interest that work continue toward achieving what he called the Fifth Freedom-freedom from ignorance. The savings and loan industry wants to do its share toward breaking down the barriers of deficient income that deprive many worthy and talented potential students of the practical opportunity to obtain an education that will enable them to contribute more fully to the development of our nation-whether that educa- tion be vocational or collegiate in nature. I think it is axiomatic that ever- 92-371-OS-pt. 2-13 PAGENO="0194" 700 increasing costs of vocational and collegiate education make it ever more difficult for even middle-income families to bear the costs of helping their children to obtain that education. I would like briefly to invite your attention to four legislative actions that could be taken to turn into actuality the potential participation of a larger number of savings and loan associations in this program. 1. Authority to Make Loans for Vocational Edueation.-The savings and loan industry operates under a dual system of State and Federal charters. State- chartered associations derive their lending authority from the laws of the respective States under which they are chartered. Federal savings and loan associations, such as Knickerbocker Federal, obtain their authority to make loans from the Congress. State laws vary regarding the authority of State- chartered savings and loan associations to make loans to students for the purpose of defraying educational expenses. In the Federal field, the Housing Act of 1964 for the first time authorized Federal savings and loan associations to make student loans for college and university education up to the amount of 5 per cent of an association's assets. But this authority to this day does not empower Federal savings and loan associations to make student loans for vocational education. This vacuum of authority should be quickly filled by appropriate amendment of section 5(c) of the Home Owners' Loan Act of 1933, the statute under which Federal savings and loan associations have been chartered and have been enabled to perform many and varied services in the public interest over a span of 35 years. Such action becomes even more appro- priate in view of the proposed merger of the National Vocational Student Loan Insurance Act of 1965 with the low-interest insured loan program of the Higher Education Act of 1965, as set forth in section 430 of the Higher Education Amendments of 1968 (H.R. 15067) introduced on February 5, 1968 by Chair- man Perkins of the Committee on Education and Labor for himself arid Chairman Green of the Special Subcommittee. The National League therefore vigorously supports the provisions of Section 429 of HR. 15067 that would grant any Federal savings and loan association authority to invest in loans for the payment of expenses of vocational educa- tion as well as continuing its authority to invest in loans for the payment of expenses of college or university education, all within a total limitation of 5 per cent of its assets. The Subcommittee might well give consideration to in- creasing the 5 per cent of assets limit to 10 per. cent of assets in order to provide leeway for handling vocational loans in addition to college and university loans. 2. Reimbursement of State or Nonprofit Private Insvrance.-Section 423 of H.R. 15067 would authorize the U.S. Commissioner of Education to agree with either a State or a nonprofit private institution or organization to reimburse it SO per cent of the amount of insurance proceeds it pays out under its student loan insurance program undertaken pursuant to the Higher Education Act of 1965 and what was the National Vocational Student Loan Insurance Act of 1905. This arrangement, sometimes referred to as reinsurance, would have the desirable effect of stretching each dollar of State or private nonprofit insur- ance reserves so that it would provide a total of $5 in insurance reserves. Under it the State or private nonprofit entity would be reimbursed $4 for every $5 it pays out of its insurance reserve fund as insurance proceeds on account of losses on the outstanding unpaid principal balance of an insured student loan that result from default by the student borrower. Since this arrangement w-ould place the Federal Government in the position of an indemnitor to the extent agreed, it would not be called upon to make any disbursement under this partial reimbursement arrangement unless and until defaults on repayment of a student loan persisted uncured to the extent that funds are actually paid out of insurance reserves by a State or a private nonprofit entity. This should obviously be less expensive to the Federal Government than if it serves as direct insurer of these student loans with an obligation to pay out 100 per cent of the insurance proceeds that become due because of default in loan repayments. Moreover, the administrative work and costs involved in handling insurance claims under the partial reimbursement method would be borne by the State or private nonprofit entity rather than by the Federal Government. The National League supports enactment of section 423 of H.R. 15067. 3. Limitations Imposed By Taw Definitiion of Domestic Building and Loan Association.-StatisticS gathered by the Federal Home Loan Bank Board show that savings and loan associations located in the State of New York have PAGENO="0195" 701 made more student educational loans than such associations situated in any other State. I am certain this is partly due to the fact that in New York State, State-chartered savings and loan associations have auliority to make student loans and so do Federal savings and loan associations. It is also due in part to the fact that the State of New York has long had an effective State guarantee program for student loans that are made to pay the expenses of higher education. The Federal Home Loan Bank Board's latest available statistics show that as of June 30, 1967 all FSLIC-insured savings and loan associations in the United States had $18,047,000 outstanding in unsecured educational loans (those not secured by any lien on property). This compares with $15,383,000 of such loans held by these insured institutions at the end of 1966. Of this total, insured institutions in New York State had outstanding at the end of 1966, $11,913,000; and on June 30, 1967, $10,409,000. While these statistics show the predominant position held by New York savings and loan lenders in the industry as to educational loans, they also indicate a decrease in net outstanding educational loans in New York State in the first half of 1967. This decrease may well be due in part to the limitations placed on savings and loan associations by the Internal Revenue Code's definition of a "domestic building and loan association". All savings and loan associations, whether Federally- or State-chartered, must confine their portfolios to the percentage limitations set forth in Section 7701 (a) (19) of the Internal Revenue Code of 1954 as amended in 1962 and the regula- tions issued thereunder, if they wish to preserve their status as "domestic building and loan associations" for Federal income tax treatment of permissible additions to bad debt reserves. I would like to point out two limitations this definition places on educational loans. Section 7701 (a) (19) (E) of the Internal Revenue Code disqualifies as a domestic building and loan association for Federal income tax bad debt reserve purposes any association that has more than 18 per cent of its total assets as of the close of a taxable year in assets that are not in one of the following categories: (1) cash; (2) Federal or State obligations, obligations of a State political subdi- vision, obligations or stock of an instrumentality of the United States, a State or a political subdivision, or obligations of or certificates of deposit in a State-chartered corporation that insures deposits or share accounts of its member associations; (3) loans secured by an interest in residential or church real property; (4) loans made to improve residential or church real property; (5) property acquired by the association because of default in loans secured by residential or church real property or improvement loans on residential or church real property; (6) passbook loans, or (7) office property used by the association to conduct its business. Obviously loans to students for educational purposes do not fall within any of these categories, so they must come within the overall 18 per cent of assets limit. But many other loans that savings and loan associations may make must also fit within this same 18 percent of assets limit, such as, for example, loans secured by a lien on nonresidential property and loans made to improve non- residential property, like shopping centers or nonresidential portions of urban renewal projects. Consequently some savings and loan associations in New York State find that they cannot make any more educational loans without exceeding that overall 18 per cent limit. Section 7701(a) (19) (C) of the Internal Revenue Code of 1954 requires at least 90 per cent of the assets of a "domestic building and loan association" to be held in assets that do not include guaranteed educational loans under the Higher Education Act of 1965 or the National Vocational Student Loan Insur- ance Act of 1965. Therefore, this particular provision has the effect of limiting such educational loans to not more than 10 per cent of the assets of a domestic building and loan association. Paradoxically, this may not present as great a problem to savings and loan associations as the 18 per cent of assets limit previously mentioned. This is because nonresidential real property mortgages use up part of the 18 per cent limit but are not counted against the 10 per cent limit. Nonresidential real property mortgages qualify as part of the 90 per cent PAGENO="0196" 702 of assets test a savings and loan must meet, thus leaving the 10 per cent of assets category free for making loans and investments in other than nonresi- dential real property mortgages that is to say in such loans as guaranteed educational loans. Since the 10 per cent of assets limit must include all loans and investments except those that qualify toward the 90 per cent of assets test, it is not exclu- sively available for guaranteed student loans. Therefore, even while remaining within the 5 per cent of assets limit that demarcates the extent of educational loans that may be made by Federal savings and loan associations, such an asso- ciation may find itself unable to make any more educational loans without piercing either the 10 per cent of assets limit or the 18 per cent of assets limit noted above. For while the 5 per cent of assets limit applies only to educational loans, other types of loans and investments count against both the 10 per cent of assets limit and the 18 per cent of assets limit. I realize that this Subcommittee does not have within its own jurisdiction the amendment of the Internal Revenue Code. But its members each have a vote on any such amendment as a member of the House of Representatives and a certain amount of opportunity to converse with members of the tax-writing Ways and Means Committee. Therefore at an appropriate time and place, your support is enlisted toward amending the tax definition of a "domestic building and loan association" in order to provide savings and loan associa- tions more practical flexibility than they now have in making student loans and in engaging in other activities permitted to them by law. 4. Administration Fees.-A fourth barrier to more participation in the student loan program by savings and loan associations is the fact that this program results in nonprofit loans in today's money market. The combination of an interest rate on the loans that is limited by current law to 6 per cent per annum on the unpaid principal balance of the loan and the administrative costs in- herent in handling loans presently limited to $1,000 per academic year for undergraduate students and $1,500 per academic year for graduate students results in a net yield on the loans below the cost of money to the lending associa- tion itself. It is realized that section 422 of H.R. 15067 would raise the $1000 limit to $1,500 for all eligible students, but this will not overcome the problem of disproportionately high costs of administering the loan program. Savings and loan associations that make these loans do so on the basis of providing a community service in order to project a good image for the association. They do not expect to make profit on the loans, but they would hope to be able to handle them on a break-even basis. As in the case of advertising, an association can allot a portion of its expenditures to the making of student loans. But in today's competitive market, there is a practical limit beyond which an association cannot absorb losses resulting from a student loan program. The savers in the association who expect returns on their savings accounts in the range from 4~ to 5 per cent per annum on passbook accounts and from 5 to 51/4 per cent per annum on savings certificates are inclined to become impatient with an associa- tion that does not realize an income yield on its investments sufficient to pay such dividend rates on savings plus all operating `and overhead costs of the association, including reserves that must be set aside to meet supervisory requirements. They have at h'and a ready way to demonstrate their impatience by withdrawing money from the association, thus decreasing its capital available for loans and invest- ments. Any thrift institution must operate on the spread between the cost of money to it and the yield it receives on its investment. The amount of that spread necessarily influences the manner and the media in which an association invests its funds. Today's very narrow spread is not conducive to making a large volume of loans tha't result in net loss, no m'atter how much an association would like to contribute to a good cause in the public interest. Therefore enactment of section 426 in H.R.15067 would enable more savings and loan `association's to take part in the student loan program on a break-even basis. That section would authorize the U.S. Commissioner of Education from time to time to establish appropriate schedules of maximum application fees and loan consolidation or other loan conversion fees to be paid by the Commissioner to eligible lenders with respect to student loans they make that are insured under a State or private nonprofit or Federal program. A $35 limit would be placed on any such application fee or other such fee. Only one application fee could be paid for all loans to an individual student borrower in one academic year. Only one consolidation `or conversion fee could be paid for all insured `debt incurred by `an individual student during his entire study program. PAGENO="0197" 703 In determining the amount of the fees to be so paid the Commissioner is to consider, among other factors, the lender's reasonable and necessary placement and servicing costs not adequately compensated through interest charges. Federal Home Loan Bank Board statistics show that the prevailing interest rate on real estate mortgages is well above the 6 per cent simple annual inQerest rate allowable on student loans under the Federal statutes here under discussion. Real estate mortgage investments make major demands on available funds of savings and loan associations. Providing handling fees such as those contem- plated in section 426 would make it practical for savings and loan associations to make more student loans than present conditions make feasible. The National League supports the Administration's request that the Congress authorize the payment of such fees as required to place the insured student loan program on a break-even basis. I appreciate the opportunity of presenting these views on behalf of the Na- tional League. Mr. BRADEMAS. The hearing is adjourned. (Whereupon, at 12 o'clock noon, the subcommittee recessed, to re- convene at 10 a.m., Wednesday, March 6, 1968.) PAGENO="0198" PAGENO="0199" HIGHER EDUCATION AMENDMENTS OF 1968 WEDNESDAY, MARCH 6, 1968 HOUSE OF REPRESENTATIVES, SPECIAL SIIBOOMMITrEE ON EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D.C. The subcommittee met at 10:30 a.m., pursuant to recess, in room 2257, Rayburn House Office Building, Hon. John Brademas presiding. Present: Representatives Carey, Quie, Reid, and Erlenborn. Staff members present: William F. Gaul, associate general counsel, and W. Phillips Rockefeller, minority research specialist. Mr. BRADEMAS. The subcommittee will come to order. The Chair would like to suggest that because we have a fairly lengthy list of witnesses this morning and would like to give everyone an opportunity to be heard and to respond to questions, it would be helpful if the witnesses could summarize their statements. The statements in their entirety as prepared will nonetheless be inserted in the record. This procedure will give the members of the subcommittee a greater opportunity to raise questions with you. The Chair would first like to call upon our distinguished colleague, a very widely respected Member of the House of Representatives, the gentleman from Florida, Mr. Herlong, to present a wItness. STATEMENT OP RON. A. S. HERLONG, JR., A REPRESENTATIVE IN CONGRESS PROM THE STATE OP FLORIDA Mr. HERLONG. Thank you, Mr. Chairman. I appreciate the privilege of being before the committee this morning to announce to the com- mittee that you have several distinguished Floridians here with you, among whom is Dr. John Allen, who is president of the University of South Florida who will testify later, and Dean Frank Maloney of the University of Florida Law School, the law school from which I was graduated some 38 years ago. They have been generous enough to give me a degree in law. I am sure that I can commend to you the statements that they will make. I would like to associate myself with their remarks and endorse what they have to say. It is my privilege, Mr. Chairman, to present Dean Frank Maloney. Mr. BRADEMAS. Thank you very much, Mr. Herlong. Dean, won't you come up with your colleagues and proceed? Would you identify yourself, sir, for the subcommittee? (705) PAGENO="0200" 706 STATEMENT OF PRANK B. MALONEY, DEAN, COLLEGE OF LAW, UNI- VERSITY OP FLORIDA; CHAIRMAN, AALS COMMITTEE ON GOV- ERNMENT RELATIONS, ON BEHALF OF THE ASSOCIATION OF AMERICA.N LAW SCHOOLS; ACCOMPANIED BY MICHAEL H. CAR- DOZO, EXECUTIVE DIRECTOR, ASSOCIATION OP AMERICAN LAW SCHOOLS Mr. MALONEY. Thank you, Mr. Chairman and gentlemen. My name is Frank Maloney. I am the dean of the law school at the University of Florida. I am chairman of the Government Relations Committee of the Association of American Law Schools. I have with me our executive director of the Association of Ameri- can Law Schools, Mr. Michael Cardozo. I am here to speak on behalf of the Association of American Law Schools on the higher education amendments of 1968. The association, whose membership consists of 118 law schools in the United States, supports these amendments because of their very great importance to the national welfare and the institutions of higher education, includ- ing law schools that will be assisted by them. This assistance makes it possible for them to carry out their respon- sibilities to society effectively and contributes to the aim of insuring that no student will be denied a*n opportunity to attend an institution of higher learning because of lack of personal resources. Our association recognizes that law schools are among the institu- tions to which the President's message of February 5, 1968, was ad- dressed when he said that- The prosperity and well-being of the United States and thus our national in- terest are vitally affected by America's colleges and universities, junior colleges, and technical institutes. And we welcome his assertion that- Their problems are not theirs alone but the Nation's. We believe, sir, that this legislation reflects the Nation's aim to help solve these problems. Now if I may comment on some specific provisions of the bill that have particular significance for legal education and I will summarize those comments. Title II of the bill dealing with libraries extends the college library resources program and we certainly support it. Title III, dealing with developing institutions and graduate pro- grams, is of particular interest to us because it does provide for the improvement of graduate programs. We believe that law study is a graduate program which is designed to train students to become members of the legal profession. We be- lieve that it should be made clear that the provision of the bill which includes programs leading to the degree of doctor of philosophy or equivalent degrees should include professional degrees which would embrace all candidates for a law degree who have previously received a. college baccalaureate degree. Clearly we think it embraces programs leading to the S..J.D. de- gree and legal education should be able to receive meaningful support under this provision to meet its very great needs. PAGENO="0201" 707 One program in which we are actively interested is a plan to conduct a series of clinics, probably in the summer, to help young and begin- ning law teachers develop and improve their skills as teachers. `We hope to be able to have such clinics conducted under some of the most stimulating teachers in the field and to be able to instill some of their enthusiasm and ability in the participants and we believe this bill will help us in this aim. We recognize that it will not meet our total needs and it is for this reason that we are also supporting the establishment of a national foundation of law under separate legislation. If I may comment on title IV, on student assistance, we support the programs of financial aid for students that are encompassed in title IV, the educational opportunity grants, the national defense stu- dent loans and the work-study programs. Both the national defense student loan program and the work-study program are directly applicable to law students and they will help and have already helped significant numbers of law students to complete their legal education. In addition, law schools have successfully utilized the work-study program to further their overall objectives of the professional train- ing of law students. If I may comment particularly on the new part C of H.R. 15067, we are interested in the special services for disadvantaged students that would be provided. `The objectives of this part correspond with the purpose of the newly established council for legal education opportunity which is a joint venture of our association, the American Bar Association, the National Bar Association, and the Law School Admission Test Council. It is expected to receive financial help from the Ford Foundation and from the Office of Economic Opportunity. It is through programs of this nature that the legal profession hopes to be able to attract into its ranks students from disadvantaged backgrounds who would ulti- mately be able to make valuable and significant contributions not only to the law but to society at large. We are very gratified to find this part in the bill. On title VI, instructional equipment and materials, we are pleased that this part of the education package is no longer subject to the limitations that it was and that it would extend to graduate schools and departments. This is particularly true and will be helpful to law schools now that they are beginning to consider seriously the greater use of audiovisual equipment, closed circuit television and equipment of that sort in the regular courses of instruction. On title TX, networks for knowledge, we support the idea of net- works for knowledge which would make it possible to share educa- tional and related resources among colleges and universities through cooperative arrangement's and increase the opportunities for sharing curriculum materials and information in the field of legal education. On title XL facilities, we are very pleased to see the Higher Edu- e~tion Facilities Act being extended beyond its original expiration date. If I may again add an aside, our own new law center at the cc~1- PAGENO="0202" 708 lege of law of the University of Florida has been made possible as a result of the extension of the Higher Education Facilities Act to in- clude law schools and indeed we have received approximately a million dollars in assistance for a. building that we hope to occupy this Sep- tember which will become a part of a bigger law center complex that would not have been possible without this assistance. Indeed, by the sunimer of 1967 some law schools will have received over $16 million in aid for the construction of new law school facilities throughout the country. On title XII, Education for Public Service, the law schools are anxious to contribute in any way they c.an to encourage students who desire to enter careers in the public service. Our law schools offer many courses that are relevant to students moving in the direction of such careers and, therefore, we support. this title of the act. It has been a privilege to offer this testimony to you, sir. `We will be happy to answer a.ny questions you may have. Mr. BRADEMAS. Thank you very much, Dean Maloney. I have, two or thre.e questions. How do most law students in the United States finance their edu- ca.tion? Have you a.ny idea, on some percentage basis, of the techniques a.nd resources they use for pa.ying their way? Mr. MALONEY. Through personal savings, through loan programs. Some of them receive substantial assistance. from their parents, al- though at the age which they have attained and with other children in the families not as much of this is possible as might be for under- graduate education. So that many of them have to make substantial loans in order to get. through law school. In fact., my first interest in this area in the Na- tional Defense Education Act came about when we discovered that law schools were on the bottom of the list in effect for receiving aid under the loan program because of the priorities in it. Mr. Gibbons of your committee became quite interested and helped in rectifying that situation to provide a. more equal opportunity for law students. Mr. BRADEMAS. Mr. Cardozo, has your association made any survey on this particular point? Do you have some kind of evidence on hand? Mr. CARDOZO. I don't believe we do, Congressman. `We do know that law students get less financial aid from scholarships, fellowships, both private and public sources, than I think any other group of graduate students in the university. I can't say that we have made a survey of all of them as to how large a percentage of them do have some aid. Mr. MALONEY. If I may add one comment, about 5 years ago a sur- vey was made by a graduate student who did it on Federal funds. He determined that there were 68 fields of educational endeavor and lie found law 68th on the bottom of the list at that time. Mr. BRADEMAS. At that point, I note that you refer on page 3 of your statement to the great needs of legal education in the United States. What do you regard as the most important needs of legal educa- tion? Facilities, st.udent aid, libraries? Would you quantify that? Mr. MALONEY. I would say all these things are needed, sir, but my PAGENO="0203" 709 own feeling is that fellowships are one of the most acute needs. In the competition for the best brains, legal education is at a severe disad- vantage because of the almost complete lack of fellowship aid as com- pared with other academic disciplines. Mr. BRADEMAS. My last question has to do with the purpose of the networks for knowledge title of this bill. To what extent do law schools in the United States now have cooperative arrangements for sharing their library resources? Mr. MALONEY. I would like to pass this to Mr. Cardozo, if I may, sir. Mr. CARDOZO. Of course, they are all on the interlibrary loan system and cooperate but I would say except for the few books that are ex- changed that way very little, because it is the nature of legal educa- tion that the students must have immediate access to their own libraries. So, almost every school, I would say every school, has a library, in order to be accredited it must be an adequate library of~a certain size. The better the library, the better the legal education. I think that what w~ had in mind under this title would be a sharing of the mechani- cal facilities rather than the books themselves, the cataloging and that sort of thing. Mr. MALONEY. The use of computers in this area is coming into legal education. Our own librarian is working hard on this. We are storing information on the computer. This would be of assistance to other law schools in our area. Mr. BRADEMAS. As I recall, at the University of Pennsylvania Law School, or is it Penn State Law School, there is to be found a com- puter operation in which they have all of the State statutes on the computers and in retrievable form? Mr. CARDOZO. If it is any, it would be the University of Pennsyl- vania. I don't think that is being done at the university. There are several operations going on through various agencies that are putting the statutes and some cases on computer tape. It is still in an experimental stage. But, of course, once it is then to the extent that they can be connected up it will be of great help to all of them. As a matter of fact, I think the Army or the Air Force has one of the large projects. Mr. MALONEY. The Air Force has been doing this. Another possibility here certainly is long-range xerography where you can Xerox a page of a book that is in another library. Mr. CAREY. Mr. Chairman, I beg to be excused. I must go introduce a witness to another committee. I want to state that as far as the statutes being put on computer tapes and so forth I only suggest to the committee that I went to law school 20 years too soon. Mr. BRADEMAS. Mr. Reid. Mr. REID. Thank you, Mr. Chairman. I want to welcome you and thank you for a very thoughtful state- ment and comment. I would like to ask you one question on the impact of the new draft guidelines on the University of Florida Law School, including what your estimates are of the impact on enrollment, and also, if you would like, I would appreciate a comment on whether you: think it would be desirable for a student to be able to complete an academic year in the law school if he is called in the middle of a year. PAGENO="0204" 710 Mr. MALONEY. Yes, sir; if I may comment, the Association of Amer- ican Law Schools at its annual meeting in Detroit in December of last year, took a position adopting the statement of the American Council on Education on the draft problem. We believe that the present draft regulations will be quite disruptive insofar as the operation of law schools is concerned. To answer your question more specifically about the University of Florida Law School, we have made a study which indicates to us that in a law school of approximately 700 students that probably about 100 students will not be back next fall plus the fact that there will be disruption if the students are called out in the middle of a quarter and not permitted to complete at least that quarter. The La.w School Association included the position of the American Council of Education that local boards be urged to postpone the induction of students, and teachers, I might add, who are classified 1-A, at least until the end of the particular term in which they are located and our association recommended that if feasible the 1-S classification be kept and applied to a student until the end of the term as a way of at least preventing that type of disruption. We also took the position that the long-range solution ought to be a random selection method. Mr. REID. Would you favor, on behalf of the University of Florida and of the Association of American Law Schools, a system that per- haps could be effected by Executive order that would place college graduates and graduate students-include law school students, of course-in a commOn pool, 19 through 26, based to the degree that it is possible on random selection. Since that may require a change in the law, perhaps this objective could be achieved by a broader pool ap- proach trying to have the responsibility for service fall much more equally across the board? Mr. MALONEY. Yes, sir; I would favor that and I feel sure that the Association of American Law Schools would. I should defer to Mr. Cardozo, if I may. Mr. CAm~ozo. I think our resolution at the time of our annual meet- ing does show that we were in favor of something like that, in fact, almost anything that would change the situation from the entire bur- den falling on the graduate schools to something that would spread it out would be desirable. We certainly do not want any exemption for law schools as such or any deferment for them as such but merely as gra.duate students. Mr. REID. The feeling of some members of the committee is very clearly that we are opposed to any draft haven, period and paragraph, but at the same time we believe that the service should fall equally. Did you say, Dean Maloney, that 100 out of 700 would be affected? We have had other testimony from the president of the University of Wisconsin and the president of Yale which indicated some higher per- centages might be affected. Mr. MALONEY. Yes, sir. I could give you the basis for my figures. We analyzed our entering class of last September which had 227 students in it. We took first those students that had military service already, we added the women, we subtracted those to get the number eligible. We took off 25 percent on the basis that there would be 25 percent of the remainder who would be physically ineligible. Then we took the PAGENO="0205" 711 balance and we divided it in half. This is the point where we were using a crystal ball. Mr. REID. Is that approximately 50 percent of an incoming class? Mr. MALONEY. About 30 percent. Then we guessed with the students already in school and in the second year, maybe 20 percent instead of 30 percent would be taken. In the third year they would continue their deferments. In the second year it would have a higher impact than the first but this is how we reached the rough figure of 100. Mr. OARDOZO. May I add a comment on this. Some of the schools have estimated a higher percentage but it is all guesswork on the same kind of statistics that Dean Maloney has mentioned. But we did write a letter to General Hershey at the beginning of this month, calling his attention to part of our resolution at the annual meting in which we urged that the students be permitted to finish the term in which they are taking the course and in the case of law students that t;his be done so that if they have a course that goes through the whole year they would be able to finish that course before being inducted. This is because we have a greater problem of through-the-year courses than most other graduates. Mr. REID. Mr. Chairman, I might ask that any documents they might have on this point be included in the record at this point. Mr. BRADEMAS. Without objection, it is so ordered. Mr. CARDOZO. I submit a copy of the resolution of the annual meeting for the record and a copy of a letter to General Hershey of March 1. (The documents referred to follow:) [AALS Newsletter, February 12, 1068J SELECTIVE SERVICE 1. RESOLUTIONS At the Annual Meeting of the Association, the following resolutions concerning the effect of Selective Service on legal education were pres~nted at the First General Session on December 28th, and duly adopted: 1. Whereas, the Military Selective Service Act of 1967 and Executive Order 11360, dated June 30, 1967, will have substantially disruptive effect upon the educational programs and career plans of many present and prospective law stu- dents; and, Whereas, the Commission on Federal Relations of the Ambrican Council on Education has urged a series of steps which, in our judgment, would alleviate the disruptive impact upon law students and facilitate advance planning by the law schools without detriment to the national security, Be It Therefore Resolved, that the Association of American Law Schools hereby endorses the following recommendations: (i) That for the immediate future a prime age grou.p (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. (ii) That legislation be introduced to provide a random selection system as a long-range solution. (iii) 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. (iv) 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 PAGENO="0206" 712 studying or teaching. By term is meant a quarter, a semester, or a tri- mester-not an academic year. 2. Resolved, that the Association of American Law Schools, in addition to the position taken by it on the recommendations of the American Council on Edu- cation, recommends that, if feasible, the I-S classification be restored and ap- plied to any student until the end of the term in which his current courses will be completed. 2. DEFERRED ADMISSIONS The Pre-Law Advisor at the University of Massachusetts recently directed an inquiry to all law schools concerning their position on applicants who are inducted into the armed forces after they have been admitted to law school. Of the 73 schools that replied, 44 indicated a favorable attitude to the proposal that their admissions be honored after their service is over; 11 indicated a nega- tive attitude; and 18 stated that they had the proposal under consideration. AssocIATIoN or AMERIcAN LAw ScHooLs, Washington, D.C., March 1, 1968. Gen. LEWIS B. HER.SHEY, Director, Selective Service System, Washington, D.C. DEAR GENERAL HERSHEY: Like the other institutions of higher education in which graduate students are enrolled, the law schools of the country are con- cerned over the possibility that substantial numbers of students will be inducted into the armed forces in mid-term rather than at the end of a term or academic year. Because of this concern, the Association of American Law Schools, on December 30, 1967, during its annual meeting, voted approval of the following resolution, as part of a general recommendation concerning the impact of the draft on law schools and law students: "Resolved, that the Association of American Law Schools, in addition to the position taken by it on the recommendations of the American Council on Edu- cation, recommends that, if feasible, the I-S classification be restored and applied to any student until the end of the term in which his current courses will be completed." The law schools are particularly concerned about this matter because a sub- stantial number of law courses, especially those in the first year, cover an entire academic year, instead of the more customary period of one term. For a student to be taken out of such a course before its normal termination can severely interfere with the continuation of his progress toward a degree after his return from military service. We hope that you will be willing to consider giving advice to local boards that would be helpful in this specific request. For your convenience, I am enclosing herewith a copy of the full text of the resolutions adopted on December 30, 1967, concerning the effect of the Selective Service System on law schools and law students. Sincerely, MICHAEL H. CARDOZO, Executive Director. Mr. BRADEMAS. Mr. Erlenborn. Mr. ERLENBORN. I am interested in your question on page 2 as to whether title III will be extended to law s~hoo1s. From your reading of the language of the bill, do you think that title ITT-B will be~onstrued to extend to law schools? This is on page 2 of your statement where you say in the last full sentence: We believe it should be made clear that this provision includes programs leading to a professional degree which would embrace candidates for law degree. Mr. MALONEY. The language "equivalent degree" was inserted in the legislation. At the time, I know we conferred with Mr. Gibbons and I believe the equivalent degree language was perhaps his. 1 believe that at the time he thought that it would include law students who had PAGENO="0207" 713 already an undergraduate degree. I am not sure of the interpretation of it. This is the reason that I suggested the language "professional degree" might assure that. I might add that it has oniy been this year, I believe, that even any of our doctor of juridical science programs have received any assistance in the fellowship area. Mr. ERLENBORN. I was curious whether this language would be broad enough to include it. Of course, your students who receive the S.J.D. degree are taking no different course of instruction than those who receive the bachelor of laws. Mr. MALONEY. Yes, sir; they are. They are taking a program that will take 2 to 3 additional years beyond the first degree in law. The J.D. is now the preferred degree in law schools and roughly two-thirds of the law schools have switched from the LL.B. to the J.D. recog- nizing the fact this is professional training beyond the first degree because most of our law schools require an undergraduate degree as an admission criteria. Mr. CARDOZO. Could I add a word to that? The language in the act in section 322(a) of the bill says, "Programs leading to a degree of doctor of philosophy or an equivalent degree." Now we think it is easy enough for this purpose to say that the LL.B. or J.D. j:5 equivalent because it is 3 years beyond the first uni- versity degree. But, of course, it is not equivalent in the sense that it is not a research degree such as the doctor of philosophy. If that clause there included an expression such as "degree for programs leading to a professional degree" as well as "and other equi- valent degrees," it would make it doubly clear and, of course, we would be delighted. Mr. ERLENBORN. Of course, you realize this part only applies to developing institutions? Mr. CAIW0z0. In section 321, part B of title III? Maybe I am inter- preting it incorrectly but title III originally applied only to develop- ing institutions. It seems to be a new part dealing with graduate programs generally. That is the way it looks. Mr. ERLENBORN. You would think that part B would apply to all graduate schools whether they are developing institutions or not? Mr. MALONEY. This is the way we were reading it, sit'. Mr. ERLENBORN. I am curious, if it did apply only to developing institutions, how many law schools do you think would fall into that category. Mr. MALONEY. Very few. Mr. CARDOZO. There are some and some with which we are some- what concerned. Mr. ERLENBORN. Because they are not developing? Mr. OARDOZO. No; because we want to see them develop, yes. Mr. ERLENBORN. I think we had some difficulty in the prior program of aid to developing Institutions in trying to decide what were devel- oping institutions. As I understand it, almost all schools, including Harvard and Yale, include themselves as developing and qualified for help under this title. PAGENO="0208" 714 I have no further questions. Mr. BRADEMAS. Mr. Quie. Mr. QUIE. I have no questions. Mr. BRADEMAS. I have one other question, if I may. As you indicated, Dean, you are concerned that not enough fellow- ships are being made available to law schools. And you also made the point that you were in support of the Public Service Education Act. That particular title authorizes fellowships for people planning to enter the public service, as you know. Looking at page 112 of H.R. 15067, the bill under consideration, I note that the programs to be approved there are to provide for the education of persons for the public service or the education of per- sons in a profession or vocation for whose practitioners there is a significant and continuing need in the public service. I should have thought that they would be a wide open door for lawyers, especially in view of, just to cite one example, I think the very fine leadership that American law schools and the American Bar Association have been giving in the poverty program, particularly in the provision of legal services for the disadvantaged. Do you have any comment on that? Mr. MALONEY. I would certainly agree, and this may be the way in which some of the fellowship aids will be equalized. Mr. BRADEMAS. Thank you very much, gentlemen. We appreciate your testimony. Mr. MALoNEY. It has been a real privilege to be here. (Mr. Cardozo's prepared statement follows:) STATEMENT OF MICHAEL H. CAnDozo, EXECUTIVE DIRECTOR, ASSOCIATION OF AMERICAN LAW ScHooLs The Association of American Law Schools, whose membership consists of 118 law schools in the United States, supports the Higher Education Amendments of 1968 because of the great importance to the national welfare of federal assistance to institutions of higher education. Such assistance makes it possible for them to carry out their responsibilities to society effectively and contributes to the aim of insuring that no student will be denied an opportunity to attend an instituion of higher learning because of lack of personal resources. Our Association recognized that law schools are among those institutions to which the President's message of February 5, 1968, was addressed, when he said that "The prosperity and well- being of the United States-and thus our national interest-are vitally affected by America's colleges and universities, junior colleges and technical institutes," and welcome his assertion that "their problems are not theirs alone, but the nation's." We believe that this legislation reflects the nation's aim to help solve these problems. Specific provisions of the bill have particular significance for legal education. The following comments will reflect the views of our Association on those provisions. TITLE II. LIBRARIES This Title extends the college library resources program, and we support it. Strong libraries are vital to legal education, and we welcome the direct benefits that law school libraries will be able to obtain under Title II in the acquisition of reading materials, training of personnel and development of mechanical aids to administration. TITLE III. DEVELOPING INSTITUTIONS AND GRADUATE PROGRAMS Part B of Title III of the House Bill, HR. 15067, provides for the improvement of graduate programs. Section 321 of that bill states that "The purposes of this Part are to strengthen and improve the quality of doctoral programs of graduate schools, and to increase the number of such quality programs." Section 322 (a), in PAGENO="0209" 715 furtherance of these purposes, provides for the Commissioner of Education "to make grants to institutions of higher education having programs leading to a degree of doctor of philosophy or an equivalent degree." Law study is a graduate program designed to train students to become members of the legal profession. We believe that it should be made clear that this provision includes "programs leading to a professional degree," which would embrace all candidates for a law degree who had previously received a college baccalaureate degree. Clearly, it also em- braces programs leading to the S.J.D. degree. Legal education should be able to receive some meaningful support under this provision in meeting its great needs, although we recognize that such support could not meet its total needs. It is for that reason that we are supporting the establishment of a National Foundation of Law under separate legislation. TITLE Iv. STUDENT ASSISTANCE As a general principle, we support programs of financial aid for students. Both the students and the institutions will benefit as a result of the strengthening of the student aid programs covered by Title IV, the Educational Opportunity Grants, National Defense Student Loans and Work Study Programs. The edu- cational opportunity grants help to prepare them for law and other graduate study. Both the National Defense Student Loan and the Work Study Programs have direct applicability to law students, and will help a significant number of law students to complete their legal education. In addition, law schools have successfully utilized the Work Study Programs in furtherance of their overall objectives in professional training. We are particularly interested in the new Part C of H.R. 15067, Special Services for Disadvantaged Students. The objectives of this Part correspond with the purpose of the newly established Council for Legal Education Opportunity, a joint venture between this Association, the American Bar Association, the National Bar Association and the Law School Admission Test Council, with financial help expected from the Ford Foundation and the Office of Economic Opportunity. It is through programs of this nature that the legal profession hopes to be able to attract into its ranks students from disadvantaged back- grounds who would ultimately be able to make valuable and significant contri- butions not only to the law but to society at large. We are gratified that this new Part C is incuded in this bill, and are confident that it would provide a valuable supplement to the programs being developed by the Council for Legal Education Opportunity. TITLE VI. INSTRUCTIONAL EQUIPMENT AND MATERIALS Part A of H.R. 15067, covering Equipment and Materials for Higher Education, no longer has subject matter limitations and is extended to graduate schools and departments. This is particularly important to the law schools, now that many of them are beginning to consider seriously a greater use of audio visual and closed circuit television equipment in the regular course of instruction. TITLE IX. NETWOI~KS FOR KNOWLEDGE We support the "Networks for Knowledge" program, which would provide for the sharing of educational and related resources among colleges and universities through cooperative arrangements. Particularly useful from the point of view of the law schools and their libraries would be the increased opportunities for the sharing of curriculum materials and information, joint operation of closed circuit television facilities, faculty exchanges, and the creation of electronic computer networks. TITLE XI. FACILITIES This Title, by extending the Higher Education Facilities Act of 1963 beyond the original expiration date, will be of great value to the law schools. Already we have seen these programs providing great aid to legal education by furnishing essential funds for buildings to accommodate the wave of students seeking edu- cation in the law. TITLE XII. EDUCATION FOR PUBLIC SERVICE The law schools are anxious to contribute as much as possible to the encourage- ment of students who desire to enter careers in public service. Law schools offer many courses that are relevant to students moving in the direction of such ca- 02-371-68-pt. 2-l4 PAGENO="0210" 716 reers. Under this Title, The Education for Public Service Act, many schools would ultimately be in a position to adopt stronger programs in the field of public law relevant to training for public service. Mr. BRADEMAS. Could we next hear from Mr. Cain and Mr. Godfrey and some other colleagues? Mr. CAIN. Mr. Chairman, I believe those will be heard later. Mr. BRADEMAS. If you would be kind enough to summarize your statements because we have only an hour and a number of witnesses to hear from and yours is a rather long statement. WTi11 you identify yourself and go ahead. STATEMENT OF IOHN L. CAIN, DIRECTOR, ENGINEERING EXTEN- SION SERVICE, AUBURN UNIVERSITY, AUBURN, ALA., PAST CHAIRMAN, COOPERATIVE EDUCATION DIVISION, NCCE, ON BE- HALF OF THE COOPERATIVE EDUCATION ASSOCIATION; ACCOM- PANIED BY GEORGE MILLER, PRESIDENT-ELECT OF THE COOPER- ATIVE EDUCATION ASSOCIATION Mr. GAIN. Thank you, Mr. Chairman. This statement is related to Federal support for cooperative educa- tion programs in the United States. Mr. Godfrey, who is referred to in the sta;temen't, was unable to be here and with me is Mr. George Miller who is president-elect of the Cooperative Education Association. I am John L. Cain, past chairman of the Cooperative Education Di- vision, American Society for Engineering Education. Mr. Miller and I represent the two organizations in the United States whose mem'bei~ are involved in cooperative education. Combined mciii- be.rship of these organizations is `approximately 1~5OO which includes faculty of institutions of higher education and indugtrial, business, and governmental agency representatives. Recent statements and reports have emphasized the need for and importance of more closely relating academic studies to the world of work and the community. Cooperative education is that. method of higher education which involves alteration of periods of full-time academic study with full-time educationally related work-experience assignments of students in industry, business, and government. Educational values of the work experience are stressed and respon- sibility for approval of the assignments of students rests with the educational institution. This work experience must be realistic and purposeful. Young people want and need genuine jobs which are meaningful, constructive, and a source of pride. Some of the distinct advantages of cooperative edu- cation includes stimulation of the establishment of higher personal goals for education and career. Experiences enable young people to learn to adapt and apply knowl- edge and gain experience and how to relate and adjust to individua] groups and situations in the adult environment of the workaday world. Experience also develops more fully personal qualities of self- reliance, judgment, initiative, ambition, and creativity which enables the individual to become a more productive and responsible citizen. PAGENO="0211" 717 Cooperative education also offers a gateway to education and career opportunities which otherwise might be financially unattainable to our youth and thus contribute significantly to the better, utilization of our human resources and manpower. It also provides year-round utilization of educational facilities and reduces the problem of peak student manpower availability during the summer. Recognizing that the Congress is considering legislation which affects cooperative education and the members of our organizations, the cooperative education division of the American Society for Engi- neering Education and the Cooperative Educational Association rec- ommend and request that any authorization for appropriations for expanding and promoting cooperative education in institutions of higher education be separate from authorization for funds providing part-time employment for students. It is essential we feel that a clear distinction be made between cooperative education and work-study in the legislation and its im- plementation. The purpose primarily of cooperative education is to provide edu- cationally related work experience for any student who may benefit while work-study programs primarily provide part-time employment and financial aid for economically disadvantaged students. It is also recommended that a committee of persons knowledgeable in the field of cooperative education be established to advise the Commissioner of Education regarding policies and regulations related to legislation which may be enacted. We are pleased to offer on behalf of our two organizations whatever assistance may be desired. We recommend that institutional support for cooperative education not be based on income criteria of parents or other financial support available to students who participate in such programs and that funds which may be appropriated for support of cooperative education by the Congress be administered by the Office of Education with a request for such funds submitted directly to this Office and grants made directly to institutions or through appropriate governmental agencies. The cooperative education division of the American Society for Engineering Division and the Cooperative Education Association believe that Federal support is both necessary and desirable for the expansion and development of cooperative education in institutions of higher education in the United States. Mr. Chairman, it is a pleasure for Mr. Miller and me to appear before the subcommittee and to offer this testimony on behalf of Federal support for cooperative education. (The documents referred to follow:) JOINT STATEMENT BY JOHN L. CAIN, PAST CHAIRMAN, COOPERATIVE EDUCATION DIvIsIoN, AMERICAN SOCIETY FOR ENGINEERING EDUCATION, AND JAMES G0oFREY, PRESIDENT, COOPERATIVE EDUCATION ASSOCIATION Madame Chairman and other members of the S~peeial ~vbcommittee on Ednea- tion: Mr. Godfrey and I represent the two organizations in the United States whose members are concerned with cooperative education. Combined member- ship of the organizations is approximately 1,500, which includes faculty of institutions of higher education and industrial, business, and governmental agency representatives. We appreciate the invltation to appear before the Committee to express the views of the two organizations regarding consideration PAGENO="0212" 718 which is being given to changes in the Higher Education Act which affect coopera- tive education. This appearance is the first time that representatives of the organizations have appeared before the Special Subcommittee on Education. The concern of the Congress regarding educational opportunities and the quality of education for our youth is indeed commendable. This concern, we assure you, is shared by the members of the organizations which we represent. Mr. Godfrey and I are very gratified that the Congress is addressing itself to support of cooperative education. Recent statements and reports have emphasized the need for and importance of more closely relating academic studies to the world of work and the com- munity. The Select Committee on Education of the University of California stated in its report that "It is evident that there are social and economic benefits as well as educational ones to be expected from a program of field studies", and Dr. Harlan Hatcher, former President of the University of Michigan said "The quicker we find ways of interrelating the student with the ways of the working world the better". Cooperative education is that method of higher education which involves alter- nation of periods of full-time academic study with full-time educationally-related work-experience assignments of students in industry, business, and government. Educational values of the work experience are stressed, and responsibility for approval of the assignments of students rests with the educational institution. Work experience of students must be realistic and purposeful. "It's gotta be for real, Man", is a familiar byline of today's youth, and it is relevant in educa- tion and work as well as other life situations. The report of Transcentury Corpo- ration on the study of federally-financed youth programs clearly indicated that what young people want and need are genuine jobs which are meaningful. con- structive, and a source of pride. Valid cooperative education programs require that the experience assignments provide genuine learning situations. It is essen- tial that the w-ork be useful and educational as well as related to the student's career preferences. Experiences of students through participation in cooperative education: 1. Increases awareness of the demands as well as the opportunities which lie ahead and stimulates establishment of higher personal goals for educa- tion and career. 2. Enables young people to learn to adapt and apply knowledge to beneficial ends in the solution of practical problems, and provides experience in how to relate and adjust to individuals, groups, and situations in the adult environ- ment of the work-a-day world. 3. Develops more fully personal qualities of self-reliance, judgment, initia- tive, ambition, and creativity, which lead to the individual's becoming a more productive and responsible citizen. 4. Imparts to young people a better understanding of rights, freedom, privileges, and opportunities, but also the responsibilities which are inherent and essential in an organization and in our society. 5. Enables business, industry, and governmental employers of students to participate directly in the educational endeavor and in the learning and maturation processes of young people. 6. Enables a young person to fulfill his innate urge to build and to do at an earlier age and provides him an opportunity to contribute to and enjoy the excitement of progress. 7. Offers a gateway to educational and career opportunities which other- wise might be financially unattainable to many of our youth and thereby contributes significantly to the development and better utilization of our human resources and manpower. 8. Provides year-round utilization of educational facilities and reduces the problem of the peak of student manpower availability during the summer. In 1966 a committee of the Cooperative Education Division of the American Society for Engineering Education was appointed to develop goals for cooperative education. At the Cooperative Education Conference in January of this year at Houston the preliminary report of the committee was presented and discussed. This national Conference is sponsored annually by the two organizations which we represent and was attended this year by more than 300 members of the two organizations and others interested iii cooperative education. Since it is timely and significant and represents the opinions of many who are involved in cooperative education, the preliminary report of the committee is attached to this statement as a matter of information. It should be recognized that this preliminary report may be modified, but it is expected that the final re- PAGENO="0213" 719 port, which will be completed this spring, will be formally approved by both orga- nizations. It is recognized that a significant reason for striving for higher education is to earn a better living and to achieve a better life; cooperative education offers young people the opportunity to begin earning and become productive members of society earlier. Recognizing that the Congress is considering legislation which affects coopera- tive education and the members of our organizations, the Cooperative Education Division of the American Society for Engineering Education and the Cooperative Education Association recommend and request: 1. That any authorization of the Congress for appropriations for expanding and promoting cooperative education in institutions of higher education be separate from authorization for funds providing part-time employment for students. It is essential that a clear distinction be made between cooperative education and work-study in the legislation and its implementation. The primary purpose of cooperative education is to provide educationally-related work experience for any student who may benefit, while work-study pro- grams primarily provide part-time employment and financial aid for eco- nomically disadvantaged students. 2. That a committee of persons knowledgeable in the field of cooperative education be established to advise the Commissioner of Education regarding policies and regulations related to legislation which may be enacted. We are pleased to offer, on behalf of our organizations, whatever assistance may be desired. 3. That institutional support for cooperative education not be based on income criteria of parents or other financial support available to students who participate in such programs. 4. That funds which may be appropriated for support of cooperative educa- tion by the Congress be administered by the Office of Education, with requests for such funds submitted directly to this Office and grants made directly to institutions or through appropriate governmental agencies. The Cooperative Education Division of the American Society for Engineering Education and the Cooperative Education Association believe that federal sup- port is both n~ecessary and desirable for the expansion and development of cooperative education in institutions of higher education in the United States. PRELIMINARY REPORT OF THE GOALS OF COOPERATIVE EDUCATION COMMITTEE, Co- OPERATIVE ErnJCATION DIvIsIoN, AMERICAN SOCIETY FOR ENGINEERING EDUCA- TION, PRESENTED AT THE 1968 COOPERATIVE EDUCATION CONFERENCE, HOUSTON, TEXAS-JANUARY 22-24, 1968 MEMBERS OF THE COMMITTEE Paul A. Bierwagen, Manager. Education Services, Allis-Chalmers Mfg. Co., 1126 S. 70th St.. Box 512, West Allis, Wisconsin. John L. Cain, Director, Engineering Extension Service, Auburn University, Auburn, Alabama 36830. Russell E. Dennis. Cooperative Education Coordinator, National Security Agency, Fort George G. Meade, Mr. 20755. James T. Godfrey, Coordinator. Cooperative Education Program, Lockheed Mis- siles & Space Co.. 599 N. Mathilda Avenue, Sunnyvale, California 94088. Harold P. Rodes, President, General Motors Institute, 1700 West Third Avenue, Flint, Michigan 48502. F. G. Seulberger (ex officio), Assistant Dean. The Technological Institute, North- western University, Evanston, Illinois. W. E. Stirton. Director. Dearborn Campus, The University of Michigan, 4901 Evergreen Road, Dearborn, Michigan. Cornelius Wandmacher, Dean. College of Engineering, University of Cincinnati, 101 Baldwin Hall, Cincinnati, Ohio 45221. James G. Wohiford. Chairman, Director, Cooperative Division, Georgia Institute of Technology, Atlanta, Georgia 30332. PREAMBLE Relating learning to career and life has become an increasing concern of higher education as well as of society in general. The preparation of students for their careers and their place in society should include exposure to the off-campus environment of which the young people will later be a part. Much PAGENO="0214" 720 important learning-perhaps more realistic and relevant than that in the classroom-takes place through extra-curricular or out-of-school situations. Rapidly changing and evolving technical developments in industry, business, government, and education which affect society make it increasingly difficult, but also increasingly important, to keep education intimately related to these developments. These demands place greater emphasis on cooperative education as a method by which this relationship can be achieved and maintained. Cooperative education is that method of higher education which involves regularly planned alternation of full-time academic study with essentially equal periods of full-time experience in career-related work assignments. This ex- poses the student to the world of work and provides a broader and richer preparation for work and life than does the conventional program. The experi- ence in an industrial and professional environment contributes to the maturity and breadth of the student and enables him more clearly to define his educa- tional and career interests and objectives. Experience is secured during the formative years of life which probably would not be possible after graduation, and this experience makes a significant contribution to the student's total education. This plan of education has been conducted successfully in the United States since 1906, and evaluation of the plan has confirmed distinct advantages of the study-experience educational method. Educational institutions and employers experienced in cooperative education welcome recent moves to expand the utilization of this concept to include additional educational institutions and additional academic and professional fields. In this situation, care must be exercised that overemphasis on size and quantity may jeopardize the improve- ment in existing programs as well as encourage initiation of ill-conceived or poorly administered programs. It is in the spirit of earnestly desiring to build effectively on the superior qualities of cooperative education for a greater fulfillment of well-established principles and objectives and a greater realization of the full potential of cooperative education that this statement has been prepared. PRINCIPLES The placement of the student is the most important ingredient in bringing about successful educational and personal development experience for the student. As a result, the foremost consideration in any cooperative education program should be to provide the student with educationally-related work ex- perience-experience that will enhance the student's knowledge, personal de- velopment, and professional preparation. Cooperative education should not be considered a financial aid program. Although students are paid during their work-experience terms-at rates established according to the work performed- the financial gain to the student is an incidental by-product of the cooperative system. The work experience in cooperative education programs often develops greater maturity of the student, along with higher motivation and improved academic performance. After initial placement, coordination of work experience with academic progress is essential. This is accomplished by visits of institutional representa- tives to the employers to discuss with employer representatives the student's progress, by visits with the students while they are at work, and by work re- ports which are written by the students. Interviews with students after their return to the campus are also important to assure successful progress of the student. Some institutions offer cooperative education on an optional basis, while other institutions enroll all of their students on a cooperative basis. In optional programs, scholastic requirements for continued enrollment in the cooperative program may be established which are higher than requirements for enrollment at the institution. It is not felt, however, that only students who are exceptional academically may benefit from the experiences which are provided by Co- operative education. Admission of students to a cooperative program is the responsibility of the educational institution and not the employer, whether or not the program is offered on an optional basis. The student must be accepted by the institution before placement with an employer. It is not felt that placement prior to corn- PAGENO="0215" 721 pletion of at least one period of residence at the institution is desirable. Any placement prior to this enrollment should be discouraged since it cannot properly be supervised by the institution, and adequate orientation of the student cannot be performed. It is the responsibility of the institution to conduct an orientation of students prior to placement. This orientation should include information regarding aca- demic requirements, supervisor's evaluation of students, required reports, place- ment opportunities, industrial safety, and other relevant matters, including the student's responsibility to his employer. It is essential that the student be aware of what to expect prior to his first work assignment. A bona fide cooperative program involves regularly planned alternation of full time academic study with full-time experience assignments. The academic arid the industrial periods should be of approximately equal length. Experience periods should be of substantial length in order to insure that the student will have the opportunity to assume and to discharge significant and responsible assignments during each period. Experience during normal summer vacations of students in conventional curricula is not considered cooperath~e education, how- ever meaningful the summer work may be for such students. In cooperative education programs, students should have a total of at least one year of institu- tion-supervised work experience in several industrial periods. Written reports by the student enhance his understanding of his work, and they provide practice in communication. The reports, when required, should have appropriate review and evaluation by the employer, including those reports in- volving security, and also by a faculty member. GOALS FOR COOPERATIVE EDUCATION The continuing progress and potential expansion of cooperative education require that rigorous appraisal be given to the future growth and development of this method of higher education. It is believed that the following goals will serve as a basis for the development of different and new approaches which will contribute to developing more fully the potential of cooperative education. Hopefully, these goals will open up new horizons and both institutions and employers will be encouraged to think imag- inatiVely about changes and improvements in existing and future programs. First: A desirable goal is to produce and promulgate a set of guidelines de- signed for the use of an employer or institution considering the initiation of a program of cooperative education for the first time. Second: The instructional value of a properly coordinated work experience is not only an integral, but a uniquely significant component, of any cooperative education program. The permanent institutional record of the student in a Co. operative education program should indicate participation in the program. Ap- propriate recognition upon graduation should be accorded students by designa~ tion on the diploma or other appropriate means. Third: In recognition of the educational value of a properly supervised coopera tive education program consideration might wisely be given at this time to the possibility of granting academic credit for the work experience of the cooperative student. Institutions should be encouraged to explore possibilities for granting such credit. As a first step, a committee might be appointed to explore present practices in institutions of higher education for the granting of credit for work experience. Such a committee might well consider criteria which could be recom- mended for use by institutions concerned. Fourth: The recognition of the professional aspects of the coordinator's posi- tion within the academic community as well as within the industrial community is necessary if he is to perform successfully the many tasks for which he is responsible. He serves as academic counselor, guidance counselor, career catalyst, as well as administrator of all phases of the program. Faculty rank should be accorded the coordinator which is in line with the level of his responsibilities. He should be encouraged to broaden his outlook by maintaining membership in national professional organizations as well as coop- erative education organizations. Institutions and employers alike should act to assure the coordinator of his professional standing. They should encourage the continued development of an attitude which recognizes the coordination profes- sion as one with uncommon rewards and as a desirable and exciting career in itself. PAGENO="0216" 722 Fifth: It is suggested that careful consideration be given to the possibility of more thorough accreditation procedures of cooperative education programs. Such accreditation procedures might provide a means of strengthening existing programs and might provide guidelines for institutions contemplating the initia- tion of a cooperative education program. The following criteria could be considered in contemplating a more thorough accreditation program: Does the institution maintain- A formalized alternation of periods of academic college training with periods of work experience of approximately equal length? Student work assignments which are closely related to academic and vocational aspirations? Continuing follow-up by both the college and employer on the training content, direction and quality, both academic and practical? Provision for progressively more responsible positions and increases in quantity and quality of work experience correlated with similar movement in the academic component? Undue haste in attempting to establish more thorough accreditation pro- cedures might lead to harmful results. Indeed, tt would be advisable to delay action in this area beyond the point of necessity rather than giving in to the in- clination to act too hastily. Without careful planning and consideration an ill- conceived accreditation program could result. Instead, a thorough and comprehensive study by qualified persons, aware of existing accrediting agencies and their practices, might conceivably develop a step-by-step plan which would ultimately lead to the type of effective accreditthg methods needed. Such a program would desirably be developed within the frame- w-ork of existing accrediting agencies. It Is felt that no new acerediting agency should be created for this purpose; at least not for several years, and after sub- stantial effort has been made to accomplish the goal through existing agencies. Sixth: As a means of achieving the above goals, it is recommended that a na- tional committee representing the entire cooperative community be formed. Such a committee might consider the establishment of a national office to speak for cooperative education on the national and international level. The national office w-ould have the responsibility for relations with the Selective Service System. the Internal Revenue Service, state and federal Unemployment Compensation Commissions, and similar groups. It would be desirable that such an office dis- tribute and make available to the public proceedings of various cooperative edu- cation conferences, as well as preparing and distributing nationally a list of all cooperative institutions. Considering some of the opportunities which cooperative education now faces and will face in the future, there is a need for those involved in it to work to- gether. So that a beginning might be made toward achieving the above goals, a national conference, possibly a White House conference, on cooperative educa- tion should be jointly sponsored by organizations which are concerned with cooperative education. Such a conference would include representatives of in- stitutions with coopreative education programs, industry and government rep- resentatives, and those members of the Congress who have been involved in legis- lative matters pertaining to education. The Cooperative Education Division, A. S. E. B., should invite the Coopera- tive Education Association to join in considering these recommendations. Both organizations could work together in implementing those goals which might lead to fuller realization of the best qualities and benefits available in cooperative education. Mr. BRADEMAS. Thank you very much, indeed, Mr. Cain. I want to say at the outset that I think your statement is one of the most lucid I have seen in explaining what cooperative education is and in particular in pointing out the distinction between cooperative ed- ucation and work-study programs, and we are very grateful to you for making that distinction. I know that the senior Senator from my own State, Senator Vance T-Iartke, has been a very vigorous champion of your cause, and I would like to take note of that fact here. PAGENO="0217" 723 I wonder if you could comment on the proposal that the distin- guished member of this subcommittee, who is unable to be with us to- day, Mr. Gibbons, of Florida, has suggested to the subcommittee with respect to cooperative education. I take it you are familiar with his proposal and perhaps you could describe it for us. Mr. CAIN. Yes. This proposal, Mr. Chairman, does essentially pro- vide what we request. I understand that this has not been officially sub- mitted to the House and as a~ consequence we had not expected to com- ment specifically on this particular proposal which is being considered for introduction in the House. But it is our feeling that the legislation as proposed by Representa- tive Gibbons, of Florida, would achieve what we feel should be achieved in distinguishing cooperative education from Federal support for part-time employment or work-study programs. Mr. BRADEMAS. At a time when we are moving in the direction of trying to streamline and consolidate various Federal aid to education programs, would you be fearful that this particular proposal is mov- ing in the wrong direction? Mr. CAIN. Certainly this is a consideration, Mr. Chairman. But it is our feeling that it would still be desirable in making this distinction in terms of administration of Federal funds within institutions of higher education since generally work-study funds are administered through the student financial aid office of an institution and cooperative educa- tion programs are administered through the academic segment of the institution. Mr. BRADEMAS. Thank you very much, indeed. Mr. QrnE. What are the particular costs of an institution provid- ing cooperative education that are not cost of operation of the tradi- tional university of higher learning? Mr. CAIN. These costs involve personnel who interview, counsel with students regarding their career interest and regarding the employment opportunities which are available in a particular program. It involves, of course, support for general office expenses, cominu- nications, travel, and expenses of that nature which are directed only to students in cooperative education programs. It must be understood that institutions may elect to offer coopera- tive education as an optional program to those students who are interested a.nd who may qualify, or it may be offered to all students within a particular institution and may in effect be required for all students within a particular institution. Mr. Qun~. In an institution where they move from the traditional type to cooperative education, what have been the additional costs per student or, in the case of an institution where they have both, perhaps it would be easier to make the comparison of what is the addi- tional cost per student for cooperative education? Mr. CAIN. I can really only speak for my institution in which we have over 600 cooperative education students and our budget for the cooperative education program is approximately $35,000. Mr. QUTE. Have you broken this down per student? If you don't have it here, I would be glad to have you put it in the record. PAGENO="0218" 724 Mr. MILLER. I will be glad to add this, that one coorc[inathr in a cooperative education program being particularly like we have at the University of South Florida handles 100 to 125 students and the coordinator is in the salary range of $10,000 to $13,000 a year plus approximately half of a secretary's time. Mr. QUIE. Do you break this down on a per student basis, comparing it with a student who goes through higher education not under a cooperative arrangement with one who does? If you would break that down on a per student basis, it would be helpful. Mr. MILLER. We will be glad to submit it to you. Mr. QUIE. How many institutions of higher learning have a co- operative education program as a part of the entire program and how many of them have cooperative education as their entire program for students? Mr. MILLER. There are approximately 119 schools that currently have a cooperative education program of some kind. However, I be- lieve only three schools have it more or less totally within the school, everyone being a co-op student. Northeastern, Drexel, and Antioch and Wilberforce, also. There may be others. There are a total of 119 that have some phase of cooperative education. Mr. Q~. Is there a trend in that direction, in other words, an ex- pansion? I am just checking through the statement on Wilberforce. There is an expansion of enrollment at Wilberforce, but, of course, there is an expansion in other universities, too. But is there a trend toward cooperative education? Mr. MILLER. I would say in the past 6 or 7 years the number of schools participating in this type of program have more than doubled and also the number of students participating have more than doubled. Mr. Qu~. Thank you. Mr. BRADEMAS. Mr. Erlenborn. Mr. ERLENBORN. I have no questions. Mr. BRADEMAS. Thank you very much, indeed, gentlemen. We ap- preciate your testimony. Mr. MILLER. Thank you for the opportunity to appear. Mr. BRADEMAS. The next witnesses represent the National Commis- sion for Cooperative Education. Will you please come forward and introduce yourselves. I hope, also, you will be kind enough to sum- marize your statements and enable us to put any questions we may have to you. STATEMENT OP REMBERT E. STOKES, PRESIDENT, WILBERFORCE UNIVERSITY, WILBERFORCE, OHIO, ON BEHALF OP THE NA- TIONAL COMMISSION ON COOPERATIVE EDUCATION Mr. STOKES. Mr. Chairman and distinguished members of this com- mittee: I am the first of three college representatives advocating this leg- islation, representatives of three diverse institutions, a private, pre- dominantly Negro college in the Midwest. the State College in Florida and the college in the inner city of Detroit. I am Rembert Stokes, member of tile National Commission on Co- operative Education and president of IVilberforce University, the PAGENO="0219" 725 oldest predominantly Negro college in the country, owned and op- erated by Negroes. In 1957, we adopted a program in cooperative education which has had great and meaningful and beneficial results to our student body. It is difficult, if not impossible, to conceive of a greater educational benefit to students from deprived background than the opportunity to work in career related jobs which enables them to find suitable vo- cational aims and to direct their academic studies and job experience accordingly. As our program has increased we now become the only predomin- antly Negro college in the country with the full-scale required co- operative education program. However, several other Negro colleges have some types of co-op programs and there is a conference being sponsored this summer which will include many of these predominantly Negro colleges to consider ways and means in which more of them may receive the benefits of cooperative education. I feel that this kind of education has great significance for these predominantly Negro colleges. I cannot overstress the impact and momentum which the introduction of a cooperative education program has brought to the regeneration of our college in terms of stimulating changes in curriculum, in the quality of teaching and in maturing the attitudes of students toward learning and becoming a productive member of society. One result was that we have had to liberalize all of our puritanical social regulations because st.udents have said you have thrown us on jobs in major cities without supervising us and then you bring us back to the campus and make us come in at 9 :30 in the evening. So that has been a side effect of co-op education. Up to date, we have had 1,191 students participating in the co-op program. The total enrollment of our college in 1964 was 415. Last fall, it was 939. We attribute much of this growth to the interest on the part of student.s and perhaps even a greater interest on the part of parents to give their children an opportunity to get exposed to the world of work as they receive their liberal arts education. On page 4 you will see the kind of significant jobs available to stu- dents at Wilberforce University. I think that the experience has con- vinced us that the following outcome for co-op education experience is reasonable. Dispelling of doubt and belief that real career opportunities exist and in our situation this has done much to span the credibility gap which young Negroes face as these expanding opportunities are opened to them. Fresh motivation for the student to pursue his education through study and related experiences and so forth. I will not read these other objectives but they are being realized through our program. The development of cooperative education at Wilberforce and elsewhere has been assisted vitally by the Federal programs under the Higher Education Act of 1965. A group of economically deprived students will particularly bene- fit from the opportunity to study and to have employment experience in a cooperative college. You have discussed with the previous speaker PAGENO="0220" 726 the expense and the necessity of staffing so I will not repeat what I have stated here, except to say that in colleges where work-study pro- grams operate for economically disadvantaged students within a con- ventional noncooperative program, the cost of administration will be in the range of $10,000 for 100 students served. Federal funds earmarked for cooperative and work-study programs are a tremendous help in making cooperative education available for the disadvantaged and for other students. The cost of developing this kind of education is relatively small when compared to the economic and educational benefits provided for stu- dents, employers, colleges, and for society. I, theref ore, urge the endorsement by the House Special Subcommit- tee on Education of the provisions in H.R. 15067 for the continued extension of student aid in the form of grants, loans, and work-study ouportunities for the economically deprived students and especially for the broadening provision to use work-study funds for these students in a coope.rative education program. I also strongly urge the endorsement of the new amendment, part E, of title IV, of the Higher Education Act, which is entitle.d "cooperative education programs." In my view, this new amendment will enable significant changes to be made in the quality of higher education throughout the Nation. Thank you very much, Mr. Chairman. (Mr. Stokes' prepared statement follows:) STATEMENT OF REMBERT E. STOKES, PRESIDENT, WILBERFORCE UNIVERSITY, MEMBER NATIONAL CoMMISSiON FOR COOPERATIVE EDUCATION Mr. Chairman and Distinguished Members of the Committee, I am Rembert E. Stokes, member of the National Commission on Cooperative Education and Presi- dent of Wilberforce University, the oldest predominantly Negro college in the country. Since becoming President of Wilberforce in 1957, I have experienced, with loyal faculty and administrative colleagues, a period of definite revitalization, one important feature of which was the decision taken in 1964 to add to our program the alternation of periods of full time study and of full time work experience, best known as Cooperative Education. I have discussed our progress in this new style of education before a National meeting of the Cooperative Education As- sociation, and before a "Plans for Progress" assembly in Atlanta, Georgia. I continue my strong support of Cooperative Education in this appearance before you on behalf of House Bill HR-15067, especially the provision known as the Educational Opportunity Act and Special Services for Disadvantaged Students. This provision enables not only direct financial grants and loans to needy students but also makes funds available to provide Cooperative employment experience jobs with non-profit agencies concurrent with their studies and/or during alter- nate work periods in a cooperative program. The practice by a college such as Wilberforce with a Cooperative Education Program provides practical oppor- tunity to test in the field students aspirations and prepares them for realistic careers. This is in addition to basic financial aid which permits college entry and continuation. It is difficult, if not impossible. to conceive of greater educational benefits to students from deprived backgrounds than the opportunities to work in career related jobs which enables them to find suitable vocational aims and to direct their academic studies and job experience accordingly. It is now an actual fact that a wide range of career opportunities beyond the older established pro- fessions are open to Negroes that did not exist a few years ago. They do need however the opportunity and guidance through actual experience to explore these widening possibilities and career alternatives. Wilberforce, with counsel and staff cooperation from a nearby college, intro- duced Cooperative Education in the Fall semester of 1964, with the help of a generous grant from the Ford Foundation and a private donor. An experienced professional was borrowed from an on-going program for a period of two years to initiate the program. The change wa~ not easy-from a traditional academic program of over 100 years duration, preparing students for limited opportuni- PAGENO="0221" 727 ties for Negro college graduates, to a deliberate attempt through Cooperative Education to expand career goals and possibilities for new generations of Negro students. Students, faculty and parents-all were uncertain of the wisdom of the de~ parture from known, safe educational procedures. Attempts at more rhetorical persuasion, what Cooperative Education had meant elsewhere, for other students, had little utility. It was necessary for students to move off campus to jobs, return, discuss their experiences with counsellors, faculty, and fellow students; it was necessary to live through the time required for crystallization and understanding by students of the values to be expected. As momentum has increased, Wilber- force now is the only predominantly Negro college in the country with a full scale, required Cooperative Education Program. At this point, I should like to suggest what Cooperative Education can do for the development of predominantly Negro colleges. I can not over stress the impact and momentum which the introduction of a Cooperative program has brought to the regeneration of our college in terms of stimulating changes in the curri- culum, in the quality of teaching and in maturing the attitudes of students toward learning and toward becoming productive members of society. What has happened at Wilberfore can happen in other colleges serving predominantly Negro students. Although the aim was clear, the beginning was gradual. Only 19 students were ready and willing to take the first plunge in February, 1965. After the first year of planning, employer recruitment, student and faculty education, the college changed to a triniester system, with academic terms all year round which could be interspersed with terms of full time employment. The following is a break- down on the student job placement for the periods indicated: Number Fiscal year: placed 64 to 65 82 65 to 66 168 66 `to 67 324 67 to 68 (plus) 332 Ant.icipated in spring 275 Total 1, 181 Total enrollment of the undergraduate college was 415 in 1904. By the Fall of 1967 the total enrollment, including students on jobs, had increased to 939. Over the 31/2 years of Cooperative Education development, a total of 1,181 stu- dents have been engaged in the cooperative plan. Earnings for Wilberforce stu- dents on cooperative jobs in 1967-68 will be approximately $983,000. All students entering in the Fall of 1967 and later are required to have at least 3 successful Cooperative work periods. Many will have more than three work periods by their own choice. A most important feature of Cooperative Education is the educational and developmental counselling which each student receives before and after each job holding, including staff visits with him and his employer while he is on the job and including also the culminating counselling for purposes of full-time plans after graduation. There is also special orientation of Freshmen to work-study. The post-job consultation on the employer's evaluation of the student's per- formance and on the student's own written evaluation of his educational gain during the job period is an integral part of the Cooperative Education process. Among significant jobs available to students are the following: The Ford Motor Company, Detroit/Rochester, Management Intern. Lockheed Missiles & Space Co., Sunnyvale, California, Management Intern. Grace Hill Settlement House, St. Louis, Missouri, Group Work Aide. Carnation Company, Oakland, California, Management Trainee. Manhattanville Community Centers, New York City, Group Work Aide. Metropolitan State Hospital, Boston, Mass., Mental Retardation Aide. Government of the District of Columbia, Washington, D.C., Program Aide. Cleveland Public Schols, Cleveland, Ohio, Teacher Aide. U.S. National Aeronautics & Space Administration, Cleveland, Ohio, Labora- tory Aide. Enough experience has been accumulated to know the profound educational improvement in the lives of our students and to predict the following educa- tional outcome from their cooperative work-study experiences. 1. Dispelling of doubt and disbelief that real, new career opportunities exist. PAGENO="0222" 728 2. Fresh motivation for the student to pursue his education through study and related experiences. 3. Development of a new pride and belief in oneself through practical achievement. 4. Usable knowledge of the requirements, expectations and rewards of being a productive member of society, including for many the stimulation to preparation for higher professional careers. 5. Greater facility for understanding how to live effectively in a com- plex society. 6. Creation of a campus environment which stimulates the development of the faculty and constructive changes in the growth of the college. The development of Cooperative Education at Wilberforce and elsewhere has been assisted vitally by the federal programs under the Higher Education Act of 1965-(1) through the provision under Title III for developing institutions; (2) through the student loan and grants provisions; and (3) through the fi- nancing of work-study programs for students with low income. This year, Wil- berforce has applied to the Office of Education for a grant to encourage the full utilization of educational talent under Section 408 of Title III of the Higher Education Act. Such a grant will enable us to identify worthy students in both rural and innercity areas who are not fully prepared for college, and to provide the guidance and tutoring which will enable them to succeed. This group of eco- nomically deprived students will particularly benefit from the opportunity to study and to have employment experience in a Cooperative college. It should be pointed out that a quality program of Cooperative Education in a college can not be developed without considerable initial additional expense. Good Cooperative Education requires additional professional staffing to manage it. It requires expense for travel and regular supervisory visits with students on their jobs, and with employers. It takes added time of advisors and teachers to bring about the learning potentialities in the work experience and the interaction of studies and job experience. At least a five per cent increase in the educational budget of the college is needed to manage a Cooperative Pro- gram for all students. Once a full fledged program gets under w-ay, it can be largely self-supporting. In colleges where work-study programs operate for economically disad- vantaged students within a conventional (non-cooperative) program, the cost of administration will be in the range of $10,000 for 100 students served, as- suming the work-study alternate periods of study in college with periods of full time work experience. Federal funds earmarked for Cooperative and for work-study programs are a tremendous help in making Cooperative Education available for disadvantaged and for other students. The cost of developing this kind of education is rela- tively small when compared to the economic and educational benefits provided for students, employers, colleges, and for society. I therefore urge the endorsement by the House Special Sub-Committee on Education of the provisions in HR 15067 for the continual extension of student aid in the form of grants, loans, and work-study opportunities for economically deprived students and especially the broadening provision to use work-study funds for these students in a Cooperative Education Program. I also strongly urge the endorsement of the New Amendment, Part E of Title IV of the Higher Education Act which is titled Cooperative Education Programs. In my view, this new Amendment will enable significant changes to be made in the quality of higher education throughout the nation. Mr. BRADEMAS. Thank you very much, President Stokes. STATEMENT OF DR. DEWEY BARICH, PRESIDENT, DETROIT INSTI- TUTE OF TECHNOLOGY, DETROIT, MIGH., ON BEHALF OP THE NATIONAL COMMISSION ON COOPERATIVE EDUCATION Mr. BARICH. Mr. Chairman and distinguished members of the com- mittee, I am Dewey Barich, president of the Detroit Institute of Technology. I am engaged in a higher education venture in the cen- ter of one of the most difficult areas needing good urban education that you can find anywhere in the United States. PAGENO="0223" 729 Education at Detroit Institute of Technology has always been interwoven with the life of the young people of Detroit who are struggling to advance themselves. Seventy-five percent of our 1,600 students are earning their way through school. Our classrooms are busy from 8 a.m. in the morning until 11 p.m. at night offering courses in engineering, business ad- ministration, and the arts and sciences. It has been said of us in a Parade magazine article that we are housed in drab office buildings in one of the drearier downtown sec- tions of this industrial city of Detroit, it has no campus, no dormi- tories, and no rah-rah college atmosphere. Detroit Institute of Technology, as an institution, had a hard uphill struggle to become an accredited institution in 1963, after 70 years of giving educational service to Detroit's people. Henry Ford taught blacksmithing three evenings a week in the early days. Starting as a YMCA-sponsored institution and having no endowment, its total income, the year before I became president in 1958, other than tuition and fees, was less than $2,000. During my years of service in Detroit industry, before I went to DIT, I had become keenly aware of the value of cooperative educa- tion programs for colleges and industry as well as for the students. It is out of this background that I came to the conclusion that institutions, like Detroit Institute of Technology, could assume a viable existence, serve their community best, and provide a real op- portunity for students otherwise unable to go to college by joining industry in programs of cooperative education. I call your attention to the previous testimony and statements to this committee by Dr. Ralph W. Tyler, chairman of the National Commission for Cooperative Education, and the testimony that was presented out of this publication on the usefulness of cooperative education in meeting many of our difficult educational problems. I was especially impressed by the relevance of the conclusions that Dr. Tyler has reported from a 2-year research study of cooperative education which found: Cooperative education gives a student an education qualitatively superior in some respects to a conventional college education. Oooperative education stu- dents, through their educationally related job experience, become more mature; and their records in graduate school and in employment show that cooperative education is a first-rate college education. A program which increases student motivation, helps the student to find more meaning in his school studies, attracts more able young people into higher edu- cation and enables more of them to go to college should be extended far beyond the relatively small number of colleges now using cooperative education. I agree with Dr. Tyler. As I studied the problems of how Detroit Institute of Technology could best serve our students and improve our educational program, and after I inspected the successful programs operated in Boston by Northeastern University-the largest of the institutions of higher education with cooperative education-I became convinced that the Detroit Institute of Technology needed to make this great change in its operations in order to become more useful and more relevant to our young people. But with our limited resources we could not hire the professional staff to organize a program of educationally related jobs. I was fortu- PAGENO="0224" 730 nately able, 2 years ago, to secure a small Ford Foundation grant to make a beginning at the Detroit Institute of Technology to reorganize it into a cooperative education institution. Through a cooperative education program, we provide the chance for students not only to work, but to work in meaningful jobs which help both to pay the cost of their education-and I want to emphasize this-also to provide an important and relevant educational and future job experience. I want to tell you about two of our young students who have just returned from their first work period. They began working for the Ford Motor Co. last September and finished their first work period this past February 1. They are each 20 years old. One is a Negro boy who graduated from a Washington, D.C., high school and came to PIT to learn to be an engineer. Last week, he told me about his job, which our PIT coordinator had arranged, at the Gas Turbine Research Laboratory at the Ford Motor Co. He was placed in the graphics section; and he executed drawings to picture the specifications of new parts for the turbine engine which the engineers wished to have made in the machine shop. He told me that he found himself surrounded by a staff of engineers who answered his questions, checked and Ok'd his drawings. He showed me proudly over 85 receipts from the machine shop for his drawings which had been used to manufacture new parts for the experimental turbine engine. By the way, he was earning $522 a month while he was there. He told me that he discovered that he could do this job in a very satisfactory fashion. He was transferred to a post of greater respon- sibility before he had completed this first work period. His supervisor has already arranged for the job in the research laboratory that they want this Negro student to have when he returns to Ford Motor Co. for his second work period. This student earned a very well paid income at Ford, but he told me that the most important thing he received from this work experience was the confidence that he now knows that he can become a success- ful engineer. He told me that he feels more comfortable with his schoolwork and has greater success with it now and that he is sure that he will complete his education. An educationally related job has ena.bled this student to feel sure about his career choice of engineering and confident that lie has the motivation to finish his education. He told me that he had never felt positive about this before and had previously been of the opinion that lie probably would stick it out to finish college. May I just add that I talked with his father last night on the tele- phone for half an hour and he is delighted with what is happening to his son. The second student is a Michigan boy who graduated from a Grand Rapids high school. He worked for the Ford Motor Co. Dearborn Iron Foundry at River Rouge. He was the foreman in charge of 47 men. At this point, gentlemen, I would like *to insert t~.li~is statement in the prepared statement. The foundry is n~t the best place in the world to work. It is usually associated with dirty, noisy, and hard work. PAGENO="0225" 731 Under the direction of this 20-year-old student, the production of the cores which they are producing tripled without any additional employees or new equipment. I asked him how he did this. He said that the men had not liked the previous foreman and would not work for him, but that he got the men to work hard for him by treating them fairly. This student told me that because of personal problems he had I)e- come convinced that he was not going to finish college. However, he had found this job a real challenge. He knew that he was a success at meeting it. The Ford Motcr Co. personnel officer wants him to return to their employ. His a.nThition now is to become a plant manager; and he be- lieves `that he has found hi's career. He also knows that getting a college degree is a needed step toward reaching his goal. May .1 sa that both these Students illustrate fully what Dr. Ralph Tyler points to as characteristic educational values of cooperative education. The information given to me by our students who have just returned from their first cooperative education job assignments has convinced me of the validity of our decision to transform the Detroit Institute of Technology into .a fully cooperative educational institution. I turn from these important educational considerations to some; ~f the economic facts about cooperative education. The dollar figures which are proposed `in the amendment that I understand Congressman Gibbons is introducing are modest. Bitt Con- gressman Gibbons' amendment to title IV of the Higher Education Act of 1965 for expanding cooperative education programs w-ould have significant results. Let me detail the following facts: 1. At the present time in 1968 there are 61,000 students `in coopera- tive education programs in 119 colleges, universities, and `community colleges (list is attached) earning `$104 million this year `in their full- time jobs in the alternative full-time work periods `away from the classroom. I point out that they pay at least 10 percent of this `total in taxes to the Federal `and State Governments. The remainder of this $104 mil- lion pays for all or n-most `of the cost of their education this year. 2. The proposed amendment `by Congressman Gibbons would enable more than 400 additional insti;tuti~ns of higher learning to move vigorously into programs of cooperative education and offer the oppor- tunity for an additional `250,000 students to become part of this edu- cationally valuable'program. Institutions could receive grants of up to $75,000 a year to arrange and establish programs of cooperative education for their `students. As a consequence, total annual student earned income from coopera- tive jobs would amount `to the impressive sum of `over $500 million a year, 6 to 8 years from now. `The expansion which would be made possible by Congressman Gib- bons' amendment would result in about 5 percent of the total of college and university students participating in cooperative education pro- grams. I believe that cooperative education is a multivalue educational in- novation which has advantages for many different people in many 92-371--CS-pt. 2-15 PAGENO="0226" 732 different kinds of educational programs presented by our diverse educational institutions. It has the advantage of great flexibility-the type of programs are so varied that each institution can adopt the kind of program and schedule it desires and adapt it to fit its particular needs, facilities, faculty, and existing programs. Cooperative education programs are at present at work in men's colleges, women's colleges, coeducational institutions, community col- leges, liberal arts colleges, universities, and so forth, and in the full range of curriculum offerings. In advocating the expansion of cooperative education we are not advancing one particula.r kind of education-we are urging that real experience be added to the existing educational offerings and that this be done by decision of the individual institution drawing on not. one-but on many different practical models of cooperative education. This proposal will, therefore, have a broad economic and educational effectiveness on wide and diverse levels. Let me cite an example: A grant to set up a cooperative program can organize an important new relationship in which potential student teachers have full-time work periods in schools as assistants to suc- cessful and experienced teachers-periods which will alternate with the needed academic work to establish their general education and their teaching skills. How are we ever to get enough good teachers when so many bright young people quit teaching jobs after the shock and frustrations of the first year of the difficult task of being a teacher in a typical urban slum teaching post? In a cooperative education program, a student works full time as an assistant to an experienced, competent teacher-then after this work period he goes back to campus and can discuss and reflect on how to meet the problems he has seen firsthand. Educational excellence and effective financial assistance-both are the true meaning and educational significance of a properly adminis- tered cooperative education program-staffed by qualified full-time coordinators who are negotiating, arranging, and supervising full- time educationally related jobs for young students. A relatively small total Federal outlay over a 5-yea.r period-$S mil- lion per year as the initiating fund in the first year rising to an annual funding of $15 million in each of the last 2 years, would make possible grants to a wide number of individual universities, colleges, and com- munity colleges. This is needed to take advantage of the educational usefulness of cooperative education for our youth. Funds from present budgets are just not available to pay for the initial outlays to start such programs. In my judgment, it is imperative that our institutions of higher education have the financial help to accommodate their programs to the needs of a vast number of potentially able young people who could come to college and continue in higher education if they could partici-. pate in programs of cooperative education. The public interest and the welfare of our Nation call for this kind of aggressive approach by the Federal Government toward making the mixture of experience and education available and effective for more and more of our young people. PAGENO="0227" 733 Therefore, I urge favorable consideration of the proposed amend- ment to title IV titled "Part E-Cooperative Education Programs" and the amendment broadening the authority given to the Commis- sioner of Education to enable him to authorize agreements using funds for work-study programs to explore and establish cooperative educa- tion programs. Thank you. Mr. BRADEMAS. Thank you very much. Dr. Allen, I hope you can summarize this statement; otherwise, we will not be able to ask you gentlemen any questions. STATEMENT OP DR. JOHN ALLEN, PRESIDENT, UNIVERSITY OF SOUTH FLORIDA, ON BEHALF OP NATIONAL COMMISSION FOR COOPERATIVE EDUCATION Mr. ALLEN. Mr. Chairman, I am president of the University of South Florida. This is a State university that is urban, in that we have a million and a half people within commuting distance of our campus. I welcome this opportunity of expressing my views on. cooperative education, and I urge your support of amendments to the Higher Education Act, which would give assistance to furthering the cooper- ative education movement. It is my belief we have not fully recognized the opportunities for education offered through the cooperative education programs, a plan whereby students alternate between terms of campus study and terms in paid professional training programs in their area of professional interest. It is an opportunity for blending of theory and practice. It is a worthy plan of education; even without its monetary value. The income to the student which is taxable income is not only a fringe benefit but is a means by which many of our students are able to continue their studies at the university, as the Florida west coast is an area where people have modest incomes. At the University of South Florida, as well as in selected `ireas of the other universities in Florida's university system, we have found cooperative education extremely useful At South Fbi ida, we have found it useful in nearly all disciplines in all colleges-the college of liberal arts, the college of business ~dministr'ition, the college of educttion, and the college of engineering While ~se currently have more than 300 students in our cooper'itive education piogr'im, more th'tn 3 percent of our full time equn~ `ilent enrollment, only the need for additional finances prevents us from developing more positions with additional employers increasing the size of this program to `it least 10 percent of our enrollment `md pro b'mbly more We believe `i cooper'mtive education program should not merely place the student in a 1ob but place him in a position in his aie'm of professional interest where he can work with others who serve as his field faculty in his area of study. This means that very few college and university co op progr'tms can serve the student's best interest by being only local in nature Our 300-plus co-op students are assigned training positions with busi- ness, industrial, and governmental employers in 17 States and the District of Columbia. PAGENO="0228" 734 There are more than 30 of our University of South Florida coopera- tive education students here in Washington today, two of them with Congressman Gibbons' office, who are productive in their assignments with their employers and earning taxable income which produces an average of more than $250 in Federal income taxes per student per year. None of them receive any money from financial aid programs while on these training assignments except for veterans receiving VA benefits. We have already had a report on the number of institutions that have been cooperative programs and the number it could be expanded to. Under the expanded program, these 240,000 students should have a gross income of more than $624 million and from this the Federal Government should have a return of $60 million in income tax based on $250 per student whose average co-op earnings are approximately ~100 per week. This would be approximately $40 million more than currently being returned to the Federal Government by the present 60,000 students. This is a very reasonable return on the proposed investment of $8 to $15 million a year when the educational value received by the stm dents is considered. Furthermore, the savings they have accumulated for their educa- tional expenses frees them from lining up for the various financial aid programs, including those federally sponsored. This would then allow others to make use of those financial-aid dollars. You are. probably aware that it has been determined that the `World `War II veterans who financed their education on the GI Bill educa- tional benefits are earning more on the average than high school graduates and the extra Federal income taxes they have paid reim- bursed the Federal Government for its expenditure by 1963. And these veterans are still productive and will continue to pay income taxes on their extra income for the remainder of their productive lives. Let me break down the average income of a cooperative-education student and show you where his gross earnings go. During our fall cooperative education term at the University of South Florida, a term 13 weeks in length, the average cooperative-education student had gross earnings of approximately $1,300, spent $180 on food, $206 on housing, $81 on transportation, had $220 taken out of his pay by withholding for income tax, social security, and retirement purposes, and had miscellaneous expenditures of $230. This provided the student with a savings of about $383 to cover his school expenses for the following quarter. As these cooperative-education trainee positions are filled the year round by an alternating team of students, the annual figure for a co-op position would be gross income of approximately $5,200, $720 for food, $825 for housing, $325 for transportation, $880 for with- holding for income tax, social security, and retirement, and a miscel- laneous expenditure of $920. This provides for the team of two students an annual sum of $1,532 in savings toward their educational expenses or $766 each. Many, after being assisted by NDEA loans and CWSP funds dur- ing their freshman year, have moved to our cooperative-education PAGENO="0229" 735 program, become self-supporting, and no longer need the support of these NDEA and CWSP funds. This gives me a feeling of great sat- isfaction, also. Mr. Gibbons is our Congressman; he has two teams of co-op stu- dents working in his office. These students are majors in political sci- ence, history, or present law. Mr. Gibbons knows the value of the co-op program. (Mr. Allen's prepared statement fOllows:) STATEMENT BY Dn. JOHN S. ALLEN, PRESIDENT, UNIVERSJTY OF SouTh FLORIDA EXPANDING COOPERATIVE EDUCATION Madame Chairman, members of the committee assembled here and distin- guished guests: I welcome this opportunity of expressing my views on coopera- tive education, and I urge your support of amendments to the Higher Education Act which would give assistance to furthering the cooperative education move- ment. It is my belief we have not fully recognized the opportunities for educa- tion offered through the cooperative education prograr,is, a plan whereby stu- dents alternate between terms of campus study and terms in paid professional training programs in their area of professional interest. The University of South Florida is a comparatively new university as we opened our doors to our first class on September 26, ltR3O. Before we opened our doors, it was my belief we should have a cooperative education program, one that would be available to every student desiring to participate. I had observed other cooperative education programs in previous years and noted that this plan gave a student an excellent opportunity of blending theory and practice and that when the hand and the mind are educated together the knowledge is never forgotten. I believe the cooperative education plan has the potentiality for increasing the meaningfulness of what the student studies on campus and what he observes while on the job, I believe, too, that cooperative education programs convey a distinctive role to an institution, contributing to the institution's personality. And as one of our deans at South Florida has said,. "A student in a university who is isolated from life is not likely to learn how to cope with and improve upon his society." Cooperative education, therefore,. is a worthy plan of education even without its monetary value. The income to the student, which is taxable income, is not only a fringe benefit but the means by which many of our students are able to continue their studies at the Univer- sity as the Florida West Coast is an area where people have modest incomes. At the University of South Florida, as well as in selected areas of the other universities in Florida's university system, we have found cooperative education extremely useful. At South Florida, we have found it useful in nearly all dis- ciplines in all colleges-the College of Liberal Arts, the College of Business Administration, the College of Education, and the College of Engineering. While we currently have more than 300 students in our Cooperative Educa- tion Program, more than 3 per cent of our full-time equivalent enrollment, only the need for additional finances prevents us from developing more positions with additional employers increasing the size of this program to at least 10 per cent of our enrollment and probably more. We believe a cooperative education program should not merely place the stu- dent in a job but place him in a position in his area of professional interest where he can work with others who serve as his field faculty in his area of study. This means that very few college and university co-op programs can serve the student's best interest by being only local in nature. Our 300 plus co-op students are assigned training positions with business, industrial and governmental em- ployers. in 17 states and the District of Columbia. There are more than 30 of our University of South Florida cooperative education students here in Wash- ington today, two of them with Congressman Gibbons' office, who are productive in their assignments with their employers and earning taxable income which produces an average of more than $250 in Federal Income Taxes per student per year. None of them receive any money from financial aid programs while on these training assignments except for Veterans receiving VA benefits. You may ask, "Why have we not developed this cooperative education program further if we believe in it so much arid i.t is so good ?" PAGENO="0230" 736 It has been determined that one faculty or administrative position can service between 100 and 125 cooperative education students while a university is in a growth position. At more established institutions, the figure increases to more than 150 and a national survey two years ago placed this figure at 147. With the demand for teachers in the classroom, it has not been possible to finance the administrative costs of an expanded cooperative education program even though most desirable. A progi~am that would assist colleges and universities in increas- ing their administrative positions in order to expand their cooperative education programs would not only serve hundreds of additional students at the University of South Florida but serve additional thousands throughout this country. Under the proposed amendment, I believe some cooperative education leaders visualize more than 400 institutions having cooperative education programs within six or seven years. serving more than 240,000 students. This is in corn- parison to some 116 institutions with cooperative education programs today serving some 60,000 students. Under the expanded program, these 240,000 students should have a gross in- come of more than $624,000.000 and from this the Federal Government should have a return of $60,000,000 in income tax based on $250 per student whose average co-op earnings are approximately $100 per week. This would be approxi- mately S40.000,000 more than is currently being returned to the Federal Govern- ment by the present 60,000 students. This is a very reasonable return on the proposed investment of $8 million to $15 million a year when the educational value received by the students is considered. Furthermore, the savings they have accumulated for their educational expenses frees them from lining up for the various financial aid programs. including those federally sponsored. This would then allow others to make use of those financial aid dollars. You are probably aware that it has been determined that the World War II veterans who financed their education on the G.I. Bill educational benefits are earning more on the average than high school graduates and the extra Federal income taxes they have paid reimbursed the Federal Government for its expend- iture by 1903. And these veterans are still productive and will continue to pay income taxes on their extra income for the remainder of their productive lives. Let me break down the average income of a cooperative education student and show you where his gross earnings go. During our fall cooperative education term at the University of South Florida, a term 13 weeks in length. the average co- operative education student had gross earnings of approximately $1,300, spent $180 on food, $206 on housing, $81 on transportation, had $220 taken out of his pay by withholding for income tax, social security and retirement purposes, and had miscellaneous expenditures of $230. This provided the student with a savings of about $383 to cover his school expenses for the following quarter. As these cooperative education trainee positions are filled the year round by an alternating team of students, the annual figure for `a co-op position would be gross income of approximately $5200, $720 for food, $825 for housing, $32.5 for transportation, $880 for withholding for income tax, social security and retirement, and a mis- cellaneous expenditure of $920. This provides for the team of two students an annual sum of $1532 in savings toward their educational expenses or $766 each. Many, after being assisted by NDBA loans and GWSP funds during their fresh- man year, have moved'to our cooperative education program, become self-support- ing, and no longer need the support of these NDEA and CWSP funds. This gives me a feeling of great ~a'tisfaction, also. It is my `belief those opening remarks establish a justification for the expansion of cooperative education, but I would like to bring additional points to your at- tention to strengthen the ease for cooperative education. A recent study at Northwestern University was aimed at determining the effect of the cooperative education program on the academic performance of the stu- dents. Two groups similar in academic potential in the Technological Institute of Northwestern University were selected and their general classroom performance was compared. This study showed that `approximately 10 per cent of the eo~pera- tive students dropped out of school while 25 per cent of the non-cooperative edu- cation students dropped out before completing `their degree work. In addition to this, the average number of hours failed per student was less for each academic term* for the cooperative education student than for the non- cooperative education student. The failure rate and times on probation were also lower for the cooperative education group. The study further showed that there urns continuous improvement in `the grade point average of the Cooperative education students as they progressed through PAGENO="0231" ,737 school, while `the grades of the non-cooperative education students fluctuated. This v~ ould indicate that cooperative education is a favorable influence in cut ting attrition motivates the student tov~ ard higher grades and in general h~is a maturing effect on his `icademic performance This Northwestern University survey is substantiated by a similar survey `at Virginia Polytechnic Institute. Students in the cooperative education program there had a lower attrition rate and seemed `to have fewer `problems pertaining to fin'mci'il difficulties and motivation E~ idence showed th'it participation in the cooperative education program influenced students in such a manner that they failed fewer courses and their classroom performance was' markedly enhanced. The survey concluded that the cooperartive education student excelled in each area of academic `performance `studied. ` ` While some cooperative education programs ,require the student to spend a longer period of time in school than the regular student, some do not. At the University of South Florida a student can earn a bachelor's degree in most areas within 47 months when on the cooperative education program, less than 4 years from the time he enters the University. At most schools, the regular student will earn a bachelor's degree within 45 or 46 months from the time he first `enters the institution. The student who iS in a cooperative education program which takes additional months of schooling is usually rewarded by an additional increment of income upon receiving his degree and entering permanent full-time employment. A survey by the College Placement Council in 19~7 showed that the average cooperative education bachelor's degree graduate in the technical field received an offer 2.5 per cent higher than the offer of his non-cooperative education class- mate and an offer of approximately 5 per cent more than his non-cooperative education classmate in the non-technical' field. As one industrial representative has said, "Cooperative Education allows the college graduate to' land on his feet running" at `both a higher rate of productivity and a higher salary level. And it should be pointed out that many cooperative education students report starting' salaries following graduation at 10 per cent or more above the salaries of their non-cooperative education. peers. I believe one of the best ways to evaluate a program is by testing the product. In a recent survey among those who had taken the cooperative education route at the University of South Florida, we found that the students really believe in cooperative education. The comments of the students were most gratifying. Of the survey sample, 100 per cent said they would take a co-op route again if entering the University and would advise others to do as well. They pointed out a number of specific things that made them rate' cooperative education most highly. Points upon which they placed extreme value included: Learning to get along with people, learning the responsibility of `living on their own, making valuable con- tacts, and getting a running start in their professional careers both from an experience and income standpoint, building contacts and references which helped them to get into graduate programs, and the satisfaction gained as they earned all or part of their educational expenses,while attending the University. To many, this latter point brought a high degiee of self satisfaction knowing they had paid their way and did not have to turn to any financial aid program. Just a few of the comments were: "It taught me how to better get along with and work with others." "Cooperative education gave me sOme practical knowledge upon which to build self-confidence." "My starting salary was about $1,000 a year higher than it would have been if I had not been a cooperative education student "It enabled me to complete my college education." "The training periods offered me a valuable insight into my chosen profession." "The experience was tremendous, priceless." "It taught me to live, to' `be responsible for paying my rent, buying groceries." "I see no finer way than cooperative education." "Cooperative education gave me a feeling of worth." It should be noted that industry, business, and government agencies whole- heartedly support this program, and as I noted earlier, Congressman Gibbons takes several of our cooperative education political science majors for work around his office and the House Office Building each term. Congressman Gibbons has seen our modest program grow at the University of South Florida and has expressed to us his satisfaction with the results. PAGENO="0232" 738 Sociologists and educators alike have recognized for a long time that as the years of formal education lengthen, the tensions in students build at an alarming pace. All of you have read articles about the increasing numbers of college and university students requiring psychiatric care and the grOwth of psychiatric counseling clinics on our campuses. Clarence Faust of the Fund for the Advance- ment of Education has observed that ". . . as the number of years of formal education are increased many young people are in school long after they have reached physical maturity and an even higher degree of social maturity. The tension between academic study and participation in the world's work becomes increasingly severe." Many believe that cooperative education offers the outlet for the maturing student who in a solely formal educational atmosphere develops a sense of frustration with the resultant tensions that we read so much about. Another point many persons overlook when they speak of cooperative educa- tion, is the value of becoming acquainted with the frequent periods of alternation. It is agreed by many that education in the future will be a continuing program during most of a person's lifetime. With growing emphasis on repeated periods of continuing education during a professional career, the experience of the coopera- tive education student in facing up to relative frequent alternation between campus and the employer's work-a-day environment may well have increased value. Certainly the successful cooperative education student is one who knows how to shift his base of operation readily from that of contemplative student to that of productive worker. Let me, in conclusion, say that I believe the proposed amendment which would make funds available for the administration of new cooperative education pro- grams as well as the expansion of existing programs in our colleges and uni- versities is most worthy of adoption. At the University of South Florida, if funds were available for additional faculty and administrative coordinators to work with employer representatives, I am confident our program could be doubled within one to two years and again be doubled within five to six years. I am sure if funds were available to other cooperative education programs in the Florida University System, similar growth could be shown. In turn, the junior colleges should not be overlooked and other four-year insti- tutions. I know of several junior colleges in Florida that are eager to start cooperative education programs but at the moment do not have funds to activate such a program. Inquiries to our university indicate four-year schools, currently without cooperative education programs, are anxious to establish such programs but again it takes seed money for the formation and administration of such programs in their early stages of growth. I believe in Senate testimony May 10, 1967, on today's subject, Mr. Hartke said, "In view of the fact that most of these students will have taxable income... it is a safe assumption that their income taxes alone will be sufficient to carry the cost of the program's authorization, and probably a good deal besides." The figure some cooperative education leaders project would substantiate this assumption. In turn, through self-help, additional thousands of students will be permitted to find paid training positions in their area of professional interest which will relieve them of seeking financial aid from present financial aid sources releasing those amounts for still other students. Many students are today seeking the self-satisfaction of such a program and I recommend it highly. I am most appreciative of the efforts of Congressman Gibbons and the other members of this committee who are putting forth their efforts in suppOrt of this legislation as I have been of you and others supporting Federal programs such as the NDEA loan program, and the College Work-Study program in the past. Mr. BRADEMAS. Thank you very much. I might observe, Mr. Allen, that Congressman Gibbons is one of the ablest members of our com- mittee, and you have a first-class man representing you in the House as well as on this committee. Mr. ALLEN. We are very proud of him. Mr. BRADEMAS. I would like to ask unanimous consent that the text of Mr. Gibbons' proposed cooperative-education amendment be in- cluded in the record, because reference is made to it in the testimony. PAGENO="0233" 739 I would like, also, to ask unanimous consent that we insert in the record, following the testimony of those of ypu who talked about cooperative education, the list of institutions that offer cooperative education programs. Mr. BRADEMAS. Looking at this list 1 see that nearly all the colleges and universities offering cooperative education programs are publicly supported, most of them by the States, some perhaps by local units of government. If it is such a good idea for us to be earmarking a special authoriza- tion for cooperative education at the Federal level, can you tell us to what extent funds are earmarked for cooperative education from local municipal and in particular State tax moneys. Mr. ALLEN. Mr. Chairman, in Our case, none are earmarked for this except in our own budget possibly. Whatever flexibility we have in our budget we think cooperative education is good and valuable, as I indicated. So we started from the beginning- Mr. BRADEMAS. Who is we? Mr. ALLEN. The University of South Florida-to plan for this. Mr. Miller, who represented the Cooperative Education Association here earlier this morning, came to head up our program. I-To has brought in other coordinators and as many of these as we can afford we have put out on the road to contact industry, to find places that would be a real education experience for our students. The point would be how can we get more of these people out on the road to make these contacts. This is where we would use these Federal funds. Mr. BRADEMAS. I think my question was not clear. My question is this: To what extent do the State legislatures in the United States earmark moneys for cooperative education programs at State-sup- ported uthversities? Mr. BARICIL Mr. Chairman, to my knowledge, although we are not a tax-supported institution, there are no such examples of specific earmarking of fund's for cooperative education. In our own case we have sought and after several years of effort we received a grant to underwrite the cost of the program for 2 years. This was the sum of $67,000. Mr. BRADEMAS. I am not being deliberately combative, I am just trying to `elicit your response. If cooperative education is `so good, why have you not `been able to gain more support from your State leg- islatures and your State universities since this is where you carry out most of your programs? Or have you tried? Mr. ALLEN. I am not sure it has been tried on a broad basis. At the University of South Florida, the cooperative program is in the college of engineering. In `our institution in all five of our colleges, it i's op- tional with our students. When they explain the advantages of it we find many takers for it. Mr. BRADEMAS. I am not getting my message across. Why do you want the U.S. Government to support cooperative education if you have not made an effort to support it at your State level? Why should we be doing with Federal funds what you could be doing at the State level? PAGENO="0234" 740 Maybe Mr. Cain wants to comment. Mr. CAIN. I think you have an excellent point, Mr. Chairman, that perhaps more effort should be made within our individual institutions to secure additional funds through State appropriated funds. But I think that Federal support perhaps on some matching basis would have a desirable effect in this direction. Mr. BRADEMAS. I have no questions about that. I wanted to know why you have not made an effort at the State level first. We `hear a lot about States' rights around this place. I wonder `w~hy you have not been exercising some of it. Have you tried? Mr. CAIN. We have. I have, `at least, in our office. But with the "crunch" as we call it, for educational funds, sometimes cooperative education does not have as high a priority as some other programs do. I would ~iso like to add th'at at least in our institution, Auburn University, we will begin this summer charging a special fee to stu- dents for each quarter they are in industry so that the students them- selves will be at least partially supporting the additional expenses of operation of our cooperative education program. Mr. BARICH. May I introduce George Proest, Executive Director of the Commission on Cooperative Education. STATEMENT OP GEORGE PROEST, EXECUTIVE DIRECTOR, COMMISSION ON COOPERATIVE EDUCATION Mr. PROEST. I might speak of one case. A `State `college, a predomi- nantly Negro college in Petersburg, Va., has this past summer taken `the decision to establish cooperative education there. Their position which has been fully described to me is that all of their budget requests for building, expansion, have been reduced. They do not have adequate library facilities. They are operating in a framework that for them to add a new feature would be taking dol- lars from a pooi that is already too little. Mr. BRADEMAS. Isn't that the Federal problem, also? Mr. PROEST. Yes. My argument is that this dollar will buy more for that institution than many other alternate expenditures of that dollar. I have been trying to assist `them in getting a grant from a founda- tion. They are applying in different places. It is this tight squeeze on the dollar which leads us' to emphasize the income from taxes that is a feature of this proposal. Mr. BRADEMAS. In all candor you have not really persuaded at least one member of this subcommittee that. any very serious or widespread effort ha~s been made on your part to lobby with your State legisla- tures and your Governors for the use of State tax resources for this kind of program. Mr. PROEST. I can describe the New `Jersey situation where, as a result of the efforts we put in there, `all of the community colleges that are being built in New Jersey are `going to be established on a co- operative education basis. ` The National Commission executed a study for the Governor's Com- mission on Higher Education of which I have a copy here and I can submit to you. I think it would be useful for the record. This was the document which led to this action here by the `trustees. We have PAGENO="0235" 741 worked in several States. We worked in Oregon; we supplied con- sultant services to the State University of Oregon and last fall they decided to start it. So we have worked on the matter. As you know, it is a large problem. Mr. BRADEMAS. Thank you very much. Mr. QUIE. Mr. Stokes, you mentioned you received a grant in Wilberforce from Ford Foundation and a private donor. What was the amount of that? Mr. STOKES. $46,000 from the Ford Foundation for an initial grant for the 2-year period which was happily renewed last July for another 2-year period but will not be renewed after that time. Mr. QUJE. How about the private donor? Was that very much? Mr. STOKES. Yes, it was considerable. It really was a foundation which chose to remain anonymous and it was for $50,000. Mr. QUIE. In other words, you got $96,000. Mr. STOKES. Seed money, that is right. Mr. QtrIE. Out of that $96,000 you have not only changed over but increased your students from about 415- Mr. STOKES. 415 to 915. We claim cooperative education as being one of the prime factors in the increase. Mr. QUTE. This would mean that you used your money to account- this amounted to close to $100 per student? Mr. STOKES. Right. Mr. QUIE. Somebody else mentioned here, I think it was Dr. Barich, it would amount to $10,000 in additional administrative costs per hun- dred students. The $100 per student is what you are talking about then as the additional cost of cooperative education. Mr. BARICH. Excuse me, sir, this fluctuates. At Northeastern Uni- versity it is $70. With us it is much more expensive because we are just getting underway. Mr. QUTE. Some of you haven't received a grant from Ford Founda- tion and so forth. Where does this additional money come from, Mr. Cain? You are going to make an extra charge to the students. How much will that extra charge be? Mr CAIN Were you directing the question to me Mr QUIE Yes, what is the extra charge you are going to levy ~ Mr. CAIN. This has not been finally determined but probably $15 per quarter in industry, 3 months quarter. Mr. QUIE. How many of those would you get. in a year? Do you get two quarters in a year in industry? Mr. CAIN. Yes, two quarters in the calendar year. So this is $30 per student in effect. Mr. STOKES. We charge $25 per student, per co-op period.. Mr. QuIR. Dr. Barich, were you going to say something? Mr. BARICH. In our case, it is $90 for a term. Like. a tuition charge~ It is equivalent to 3 semester hours. Mr ALLEN We simply took this out of our general budget for the university. We opened in 1960 with a freshman class only and we have now moved up to 11,000 students in our eighth year. We took a certain portion of our budget and allocated it to these coordin'itors This is `ill we thought we could `ifford under this We PAGENO="0236" 742 have a job getting money to take care of our terrifically expanding enrollment. Mr. QUIE. Have you figured out the added expense per student? Mr. ALLEN. No, we have not. Mr. MILLER. I might say on a per year basis this was $150 to $200 per student. We charge the student $40 per quarter when lie is out on these training assignments. Two quarters a year would be $80 that the student is paying toward this. Mr. QulE. Under the proposal of the Gibbons amendment, how much of the cost would you expect the Federal Government to pay and how much would be taken up by the. student and how much by these other sources of money? That would be $60 a student that you are talking about. Have you planned this out, what percentage of additional cost you want the Federal Government to bear? Mr. ALLEN. We are getting $40 a student. It is costing us $150 per year. What we need is more coordinators who will get places for more students. We need the. difference for these coordinators. Mr. QuJE. Would you use the Federal money to reduce the charge to the student or would you continue your present program. Mr. ALLEN. We would continue our present program. Mr. QuiE. Of course, you don't make a charge to the student? Mr. ALLEN. Yes, we do. Mr. PROEST. Mr. Chairman, in the startup cost the proper term to use for this money that we are talking about is seed money. You have startup cOst. For a year you don't have any students on this program because you have a staff going around hunting for the jobs, making the arrangements ~and getting them identified. So you have a startup cost. But after about 3 years our experience in places like Kala- mazoo and Beloit reveals that the program becomes self-supporting. What Congressman Gibbons is proposing is dollars given to an institution to let them hire these professional people to go out and make these enormously complex arrangements to establish a whole ros- ter of jobs. In the library at Antioch, the student can go in and there are right now a list of 3,100 existing jobs cross-indexed by fields. You see the description of the job, the name of the man you will report to, what the last student thought of it and so on. The startup cost to create that kind of system is what is solved by Congressman Gibbons proposal. Mr. QuIE. Does lie have anything in his proposal to make sure that the schools get weaned again afterward? Mr. CAIN. May I comment that it seems to me that the institution if it is committed to cooperative education should be expected to make some investment in this venture and that perhaps a reasonable con- tribution might be a 50-50 matching basis of Federal funds with in- stitutional, State or other funds which the institution may have. Mr. QuIE. I have one other question regarding Dr. Barich's state- ment. On page 7, you talk about the training of teachers which ap- peals to me, but yet it is very similar to the presentation for the Teachers Corps. Do you know if any of the cooperative education programs train teachers under the Teachers Corps program so that they are getting Federal funds under that program? PAGENO="0237" 743 Mr. DAWSON. There are a number of institutions which are using this program extensively for the preparation of teachers. The TJni- versity of South Florida does some of this. Mr. QuTE. Support for teachers. I have a list here of some schools that are training teachers. But what I meant was institutions that are receiving Federal money under the Teachers Corps program. Mr. DAWSON. I don't know that that is true. There is a very little amount of money available under the Teachers Corps tra.ining program. My impression is that for Northeastern, Cleveland State, Antioch and South Florida, most of the money comes from the operation of the regular program in the training of teachers. Mr. Quiu. Do you have programs for training teachers to work with disadvantaged children suffering these frustrations? Would you not in Detroit in your program have teacher programs? Mr. BARICH. No, except our students in the college of arts and sciences do in fact eventually get into the teacher education program through another program at Wayne State University, but we do not have our own. Mr. QuIE. Dr. Allen, could you prepare for us an elaboration of the kind of programs with these goals? How about Wilberforce? Mr. STOKES. We have teacher education, yes. Mr. ALLEN. You are speaking of teachers for the disadvantaged? Mr. QUIE. Yes. Mr. ALLEN. We have some programs like this. Mr. QUIE. I think it would be good to compare that with the Teach- ers Corps in its operation. I think it would be similar to it except yours would be an undergraduate program. The Teachers Corps, to date, has been a graduate program. Mr. DAWSON. We have masters of arts for teachers which is prepar- ing people in the inner-school system, Washington, Philadelphia, Baltimore. There I think they are drawing on money. This is a mas- ters program. They are drawing on money from the Teachers Corps. I could look that up and insert that in the record. Mr. QuIR. Thank you. (The information requested follows:) ANTTocII COLLEGE, Yellow Springs, Ohio, March 19, 1968. Hon. ALBERT H. QUIE, State of Minnesota, House of Representatives, Washington, D.C. DEAR CONGRESSMAN QUTE: As promised at the time of the March 6, 1968, hear- ing on HR Bill No. 15067, 1 am sending you the information you requested on the use of Teacher Corps funds in our Master of Arts Teaching Program at Antioch College. in 1966-67, a group of 18 Teacher Corpsmen were enrolled in our Master of Arts in Teaching Program in Washington, D.C. Because of the uncertainties about Congress' willingness to continue the program, three of the group undertook intensive studies during the spring and summer and completed the degree in August, 1967, and three others in December, 1967. Six remained for the academic year 1967-68, and are expected to complete their work this June. PAGENO="0238" 744 These six are serving in the Morgan School Project while finishing their related studies in seminars which we conduct in Washington. Four others should com- plete their work by August, 1968. The intern teaching and study for one group in the Antioch Program is located In Washington, D.C. Dr. David D. Darland is the co-ordinator for the program, and if you would like to call him (telephone 232-0300), he would be glad to give you further information. The Antioch-Putney office in Washington is located at 1744 Riggs Place NW., Washington 20009. It was a pleasure meeting you. Sincerely yours, J. D. DAWSON, Consultant for the National Committee for Cooperative Education, Vice Presiden t-D can of Students Em erit us. Mr. BRADEMAS. Mr. Erlenborn. Mr. ERLENBORN. I notice in the proposal there is no provision for matching funds. There has been the suggestion here that maybe a matching fund basis would be the. proper way to operate this. Most other of these Federal programs do community service-continuing education on a 75-25 basis-reduced this fiscal year to a. 50-50 match- ing fund basis. Work-~t.udy is now 85-15. Yet. this proposal by Congressman Gib- bons has no matching fund provision. Would you contemplate that the Office of Education could fund the full cost of these programs? Mr. BARICH. Excuse me, Mr. Chairman, and Mr. Erlenborn, in our case we just could not expect that these appropriations would cover our costs any more than it does any other part of our program. For example, in our case, 70 to 75 percent of our operating money comes from student fees, tuition, and so on. The rest of it then, 25 to 30 percent, must come from other sources. This is about the way we see this. Mr. ERLENBORN. My question really is, Why in your opinion is this amendment drafted without any matching fund provisions? Would you have any objection if a matching fund provision were added to this proposed amendment? Mr. ALLEN. We would look upon this as seed money to get these. pro- grams started in some institutions that did not have it and also get it expanded, our institution, for example. After it is underway it eventually would need less assistance, cer- tainly. One of the major points I tried to make was the income that this produces for the Federal Government in additional income taxes that these students pay. It is really a self -supporting project in that respect. Mr. ERLENBORN. Of course if this does. and I am sure it would, zen- erate additional revenue in the way of income taxes for the Federal Government, 1 am certain we would have deficits and other expenses that could readily use those funds. There is nothing in this proposed amendment that designates that these fund.s be used only to institute new programs or necessarily to expand present programs. In fact., page 2 of the amendment would allow these funds to be used for carrying out by such institutions programs for cooperative education. Mr. ALLEN. It says earlier in that sentence "to institutions of higher education for the planning, establishment, expansion or carrying out." PAGENO="0239" 745 Mr. ERLENBORN. That is right. It is not necessarily conjunctive. It could be any one of the four words there. I notice the funding here is proposed for a 5-year period. Do you expect that that would be the termination of the program? Or might there then be another expansion and continuation of the program? Mr. ALLEN. I just hate to predict what will happen 5 years from now, it changes so rapidly. It would be a great boost to our program to have it for 5 years. Mr. ERLENBORN. Part B, on page 2, provides for a $750,000 author- ization appropriation. This, under section 473 is to be used by the Corn- missioner for training of persons and planning, establishment, admin- istration and coordination of programs and for research in the methods of unproving, developing and promoting the use of cooperative edu- cation. It has no limitation as to whom this grant may be made, except it does limit it to public or nonprofit agencies and it does have limita- tions dollarwise, as to part A. It would appear to me that it might be possible, for instance, and I am only using this as an example, that the $750,000 could be granted by the Commissioner to the National Commission for Cooperative Education. That would be possible under this part B, would i:t not? An amount to any one corporation or organization? Mr. PROEST. Mr. Erlenborn, may I speak to that, what was intended there is to make it possible to set up some training centers to train the coordinators. Northeastern University has a staff of 22 full-time men who are placing these 8,800 students. While they are all pro- fessionals, trained for the field that they are placing the student in, the engineering students are being placed by a man who got his edu- cation and work in civil engineering, journalism students are trained by an appropriate person, these people, however, in addition to their academic background, need to have about 8 to 10 weeks of workshops in order to find out how to operate this kind of program. So, the expectation was that 4 or 5 of these institutions like the University of Cincinnati, Northeastern, Auburn, would set up pro- grams and receive grants to train the coordinators who would be needed to staff 400 university and college programs. To come directly to your question, it would be perfectly feasible, practical, and desirable to put in some top limit that no institution should receive more than x number of dollars for grants under this subsection. But the notion that we had, the thinking behind it, was that this money would probably be `broken up in among a dozen different pro- grams. In addition, we did want some research funds. We have 15 institutions that are training teachers using this system. They have different ways of doing it. For instance, at Northeastern University they have discovered they produce the best teacher by having the person have jobs out in industry for a couple of terms be- fore he `starts to work with the school system in the suburban Boston section, that they produce a more mature person who does a better teaching job if he has had some real experience. Well, we would like to discover and match that with other places where they keep `him in the school system all the way through and try PAGENO="0240" 746 to find out what is the best. formula for training and getting the best teachers. Mr. ERLENBORN. Under the legislation as drafted there is no limita- tion? Mr. PROEST. There is no limit.. It would be. quite appropriate to put a limit on it. Mr. ERLENBORN. Would you contemplate that the National Com- mission for Cooperative Education might be an applicant for funds under this section? Mr. PROEST. We would hope that there would be support for regional conferences. We have done three statewide conferences on cooperative education, in New Mexico, Indiana, and Oregon. `We have one coming up in southern California. We would hope that we could get some funds for that kind of conference function to get educators and businessmen to come and spend a day or two developing this. Mr. ERLENBORN. How is the national commission now financed? Mr. PROEST. We are financed as follows: `We have contributions from about 55 different corporations ranging from $100 up to $5,000. We have a grant of $65,000 a year from the Ford Foundation. But no college or university makes any financial contribution. Mr. ERLENBORN. Lastly, I would ask, iDo you think, if Federal funds become available to your commission, that this would augment the funds available to you or supplant some of the foundation grants? Mr. PROEST. I think it would augment.. Mr. ERLENBORN. I think we found in some of our Federal programs that Federal funds tend to drive out private funds. I am not certain under our present fiscal "crunch" that we are really doing much good if we use Federal funds and then find that discourages private donation. Thank you, Mr. Chairman. Mr. BRADEMAS. Thank you very much, gentlemen. We appreciate your coming and giving us this very helpful testimony. Mr. BArnCH. Thank you. Mr. BRADEMAS. Our final two witi~esses, and we are very grateful to them for their patience, are Carl J. Megel, director of legislation for the American Federation of Teachers, and Dr. Israel Kugler, president of the United Federation of College Teachers, New York. Gentlemen, if you will proceed to summarize your statements we will put the entire statements in the record. STATEMENT OF CARL L MEGEL, DIRECTOR OP LEGISLATION, AMERICAN FEDERATION OP TEACHERS, AFL-CIO Mr. MEGEL. Mr. Chairman, I assure you we will be very brief. Just for introduction nnd reference, may I say that I am Carl J. Megel, director of legislation of the American Federation of Teachers, a national professional union of more than 150,000 classroom teachers affiliated with the AFL-CIO. Our organization embraces more than `160 teacher locals. 82 of which are~ college, university, and junior college locals. Appearing with .me this morning is Dr. Israel Kugler, president of the United Federation of College Teachers, New York, Local 1460 of the Ameri- can Federation of teachers, to supplement my remarks. PAGENO="0241" 747 We are here this morning to testify in support of RH. 15067, a bill cited as the "Higher Education Amendments of 1968." We do so, however, with mixed emotions. While we support the general provisions of the bill, we regret that it does not contain the higher education expansion that is so necessary. Throughout our Nation, today, irresistible forces are pro- ducing social, moral, economic, and political changes which almost defy human comprehension. In the absence of readymade answers as to how to cope. with these forces, education is most frequently espoused as the solution. Accordingly, education assumes a new sense of urgency, and with this, the need for a new basis for evaluation. In this context, the proposed legislation fails to meet the emergency. Now, we support the combination of the Higher Education Amend- ments of 1968 and 1967, to renew the higher education grants of 1965, renew NDEA grants of 1958, and now the Higher Education Facilities Act of 1963 plus new programs, educational opportunities, new ideas, including graduate schools, assistance for advancement in colleges, and help for disadvantaged. We support all these. The Upward Bound program which brought many youngsters to our colleges now needs to be supplemented with funds to keep them there. These are all excellent. Networks for knowledge, we are all pleased with these programs, we support them, but we believe that the pro- posals again are too late, insufficient, and too far in the future. (Mr. Megel's prepared statement follows:) STATEMENT OF CARL J. MEGEL, DIRECTOR OF LEGISLATION, AMERICAN FEDERATION OF TEACHERS, AFL-CIO Madam Chairman and Members of the Committee, my name is Carl J. Megel. I am the Director of Legislation of the American Federation of Teachers, a national, professional union of more than 150,000 classroom teachers affiliated with the AFL-CIO. Our organization embraces more than 760 teacher locals, 82 of which are college, university, and junior college locals. Appearing with me this morning is Dr. Israel Kugler, President of the United Federation of College Teachers, New York, Local 1460 of the American Federation of Teachers, to supplement my remarks. We are here this morning to testify in support of HR 15067, a bill cited as the "Higher Education Amendments of 1968". We do so, however, with. mixed emotions. While we support the general provisions of the bill, we regret that it does not contain the higher education expansion that is so necessary. Throughout our nation, today, irresistible forces are producing social, moral, economic, and po- litical changes which almost defy human comprehension. In the absence of ready-made answers as to how to cope with these forces, education is most frequently espoused as the solution. Accordingly, education assumes a new sense of urgency and with this the need for a new basis for evaluation. In this context, the proposed legislation fails to meet the emergency. It calls for re-enactment and extension of existing higher education aid programs which are due to expire in the near future. The Educational Oppor- tunities Act of 1968 calls for a consolidation of existing student loan, scholar- ship grant, and work-study-aid programs designed to help college students pay for the cost of their education In this connection, the National Advisory Commission on Civil Disorders in the education section of its report recommended: 1. Re-orientation of vocational education, emphasizing work experience, training and the involvement of business and industry; and 2. Expansion of opportunities for higher education through increased Federal assistance to disadvantaged students. 02-37i-68-pt. 2-16 PAGENO="0242" 748 We concur with these recommendations. The increasing cost of higher edu- cation is readily apparent. The student loan programs should be liberalized and supplemented with a grant-in-aid program to disadvantaged students with ability. Unless we do so we will develop a nation in which only the children from affluent homes will receive an advanced education. Additionally, the proposals to increase assistance for graduate students and to establish a `Network for Knowledge" to encourage colleges and universities to share facilities and information are both worthy programs. The proposal to provide $15 million for tutoring and counseling the ill- prepared and economically deprived students in order that they may avoid dropping out is also to be commended. The Upward Bound program of the Office of Economic Opportunity has given many of these deprived young men and women inspiration to attend a college or university. Sustaining efforts to keep `them in the institution of higher education are essential and worthy. Yet, none of these programs begin to provide for today's needs. While most of the proposals provide advancement, a reduction of $500 million in funds for construction of higher educational facilities is most regrettable. The goal of eliminating all financial barriers to a college education should receive priority as this higher education legislation is prepared. However, we must have quality facilities ready for these students when they enroll. We consider it to be highly impractical to enlist and encourage higher education enrollment if inadequate facilities exist, which would only further deteriorate educational opportunities. We strongly urge the restoration of the cut in funds for construction. Perhaps, the most optimistic note in this year's higher education legislation is the President's proposal to develop a long-range plan for general aid to higher education. He has asked the Secretary of Health, Education and Welfare to com- plete such a plan within the year, and we in the American Federation of Teach- ers heartily endorse this proposal to develop a new strategy for aid to higher education. For many years the American Federation of Teachers has supported Federal aid to education at all levels in order to raise the quality of education and to make it a top national priority. The consolidation of the various programs into one act will be helpful. However, the President's program which emphasizes loans to students, construction of facilities, and research grants mainly to graduate schools must be supplemented with increased aid to the undergraduate and non-scientific graduate areas which will generally go toward the improve- nient of curriculums, faculties, quality of texts and materials. Most of us generally agree that the Elementary And Secondary Education Act's Title I formula for grants to the states to raise the general standards and quality of education has been successful. Perhaps, a somewhat similar plan for aid to higher educational institutions would be equally successful. Many small but potentially good colleges and universities need money. How- ever, they are often left out. The humanities, the arts, the social studies are areas that would certainly be strengthened by a general Federal aid program. In addition, we also endorse the other objectives of a new strategy for aid to higher education which would: 1. Eliminate race and income barriers to college; 2. Preserve the independence of private and public institutions; 3. Ensure that states and private givers continue to bear a fair share of support for higher education; and most of all 4. Encourage efficient and effective use of the nation's education resources. We are pleased to have the opportunity to appear before this Committee. We commend your efforts to advance educational opportunities in our nation. We are here again today to place strong emphasis upon further expansion to meet America's present and future educational needs. Mr. MEGEL. Now I would like to have Dr. Kugler tell you in a few words some of the deficiencies that he finds in New York City. STATEMENT OP DR. ISRAEL KUGLER, PRESIDENT, UNITED PEDER.. ATION OP COLLEGE TEAOIIERS, NEW YORK CITY Mr. KtTGLER. Mr. Brademas and Mr. Erlenborn, I am pleased to appear before this committee because my local which represents thou- sands of college teachers in the New York City area can place a stamp PAGENO="0243" 749 of practicality on some of the problems which you confront as coin- mittee members. As you know, we are committed to the ideal of quality education tied to the concept of universal higher education, to extend the ladder of education upward into the higher education field. In other words, we `believe together with the State university that the motto should read "Let each become all that he is capable of being." I would like to establish four points in my brief testimony here today. One is that I do believe that we must have an appropriation of Federal funds to all public colleges and universities to insure a tuition-free status. This would be supplementary to currently available funds from State, municipal, and county funds. This, I believe, is a necessary extension for this reason: All you have to do is read the newspapers to know that tuition-free universities are under constant threat to remove that tuition-free status. In my own State, sections of the State university which were tuition- free have had imposed tuition on these institutions. You must understand that in terms of educational cost, tuition is merely the surface aspect of the educational iceberg. There are non- tuition fees for room, for board, for clothes, for fares, for social par- ticipatiori, and to erect this barrier of tuition in the public institutions, I think is one that flies in the face of what our objective should be. The second thing is that we believe there should be an appropria- tion to enable all high school graduates from poverty-stricken areas to receive stipends equal to the Federal minimum wage. If you figure that a student should go and expend about 40 hours a week, at least, in terms of study, $1.60 an hour is not too much. The reason for this is very simple. It would encourage high school graduates to continue education and' avoid being thrown on the job market as unskilled and semiskilled workers. We know how this oper- ates because we do have a modest program in operation in New York City at the City University. It is called SEEK. This is an acronym meaning search for education, enlightenment, and knowledge. Mr. Brademas, you asked another witness what they did to try to get the State legislature to provide this aid. On page 54 of today's New York Times the Chancellor of the City University, Albert Bow- ker, went to Albany and asked for $7 million to expand that program. By the way, in that program we get kids from high school who do not have academic diplomas. They have what is called general diplomas and vocational diplomas. We encourage these kids to go to college. They have an 80 percent retention rate and their grades are in the C and B category. Now this is a remarkable feat. But in this program these people receive stipends so that their families are encouraged to keep them in college rather than to supplement the insufficient breadwinning opera- tion of that family and have them go on the streets unskilled. Now you know what this does, too. It creates a new culture hero in the ghetto, a person who goes to college and has made it. It has ele- vated the sights of parents so that their children can go to college. This motivation is very important. `The third idea that I would like to bring to your attention is that we should extend the aid of the Federal Government to all areas of PAGENO="0244" 7.50 higher education, not necessarily those that are connected primarily with space and defense such as the physical sciences but geological sci- ences, the arts and humanities and the social sciences. We have the ideal as a nation to try to create a. liberated, educated person. We cannot overemphasize one part of education to the neglect of others. I may say that this should extend to undergraduate and graduate institutions and public and private institutions. I regret very much that your associate Mr. Reid, who is a member of the Board of Trustees of Long Island University, was not here to note that that university which had a. center in Brooklyn and the heart of the ghetto area and had a. program to administer to the poor, reme- dial reading, nurse's training, speec.h, that that institution was offered as a piece of real estate for sale because they had insufficient funds. This is what is happening with some of our private institutions and that institution is now setting its sights on the affluent suburbs in Long Island. The fourth point that I want to bring up is the increasing lag of facilities behind the enrollment pressures. We are opening up oppor- tunities for young people but the facilities in terms of human beings, staff, buildings, lag behind. I could tell you of overcrowded classes where the teacher cannot recognize the student as a human being but as a. number. That increases impersonalization and alienation and discontent on the campus. I c.an tell you about faculty offices which are bullpens, 16 faculty members crowded into one room with not even a telephone or a secre- tary. I can tell you about some professors which are called briefcase pro- fessors, they have no desk at all and hop around with their briefcase from class to class. Now finally I would say t.his: The President's objectives a.re entirely laudable, they a.re commendable. But what disturbs me is that in the context of these objectives he used the words long-range concept. If the long-range concept is translated to mean delay and tokenism it would be indeed very, very deplorable. You heard about t.he report on the riots by that distinguished Com- missiOn. One of the ways in which we can avoid the difficult.y is to invest the money in education and that time is now. There is nothing so disconcerting as to raise t;he hope.s of people by incomplete pro- grams and then have these programs, because they are incomplete, dash the hopes of many, many people. We know that your investment in education now will enable you to avoid t.he rehabilitation process that goes on later on in prisons, wel- fare rolls, rehabilitation costs, where we have to take care of these individuals as social obligations of society in a negative way. If we had a free university-in City College, Dr. Jonas Salk was a graduate. Has he not repaid society by the Salk vaccine far in excess of the investment made in free tuition and the extension of opportu- nity to the poor? . This is what I hope this committee will do. I know part of its bill will be to set up a commission to study the financing, but these are some of the things that I thought I would bring to your attention as matters of practical reality that exist now. PAGENO="0245" 751 If you have any questions, I will be very happy to answer. I know you are pressed for time. Thank you for your courtesy. Mr. BRADEMAS. Thank you very much, Dr. Kugler, and Mr. Megel. We are grateful to you for both those statements. We are much aware of the strong support that the American Federation . of Teachers has given to improving education at every level from preschool through graduate school and your statements today are in line with that policy of the AFT. I have just one question. In the light of your statement concerning ~uitioii-free university education, do you envision the day when, in this country, there will be tuition-free college and university education for all those who have the talent to take such courses? Mr. KTJGLER. I do. It ha.s been my. ideal. It was the ideal by the way of the President's Commission on Higher Education that was ap- pointed by President Truman. Mr. MEGEL Unless we do so we are going to establish a stratified so- ciety in which only the students of affluent families will have the op- portunity to attend higher education institutions. The tuition rates of particularly the smaller private colleges have increased tremendously from $200 a very short few years ago to as much as $1,500, $1,600, $1,800 today, which makes it a sizable amount of money and beyond the limits of the financial ability of many of our people. Mr. BRADEMAS. Thank you very much. Mr. Erlenborn. Mr. ERLENBORN. I have just one question. I notice that you would be in favor of localizing or supplementing the student loan programs so that more disadvantaged students could take advantage of them. Would you also favor expanding the type of education that can be financed in this way? And I have reference to, say, vocational educa- t~on, those that go from high school to some type of vocational educa- tion rather than the typical school of higher education? Mr. KUGLER. We agree with that. Of course, when we say some kind of higher education we would include there community colleges with their technical program, the work-study program that the gentleman who preceded us made reference to, a variety of things designed to meet the needs and talent and ability of all our young people. I think we have to apply a spectrum approach rather than to con- centrate merely on liberal arts. I would say one thing, and this is a caveat, that all students re- gardless of the kind of education that they would want to get, should have some kind of general education combined with vocational educa- tion, some education in the social sciences and the humanities so they are brought to be whole people rather than narrow specialists who are unconcerned about the needs of society. Mr. ERLENBORN. I notice also in the prepared statement you made reference to the President's program. which emphasizes loans to stu- dents, construction facilities, and research grants mainly to graduate schools. How do you feel about the present bill before us in its setting of priorities between aid to students and the amount of money available for the construction of facilities? PAGENO="0246" 752 Mr. KUGLER. I thii~k there is an unfortunate dislocation there. One thing that always disturbs me and I am sure Mr. Megel joins me in this, is the fact that we do not plan in phase and sequence. You have to plan your facilities in harmony with the bodies that will occupy those facilities. Once you use one and push that and the other one lags behind you get what is called in sociology the cultural lag, which is a description of a crisis. You have overcrowding and you have harried teachers and you have a lowering of the quality of education. I am always emphasizing the fact that there is no contradiction be- tween expansion of education on the one hand, and the quality of edu- cation, that the two must go hand in hand. I think you raise a very, very important question. Mr. ERLENBORN. Lastly, do you have sufficient experience with Talent Search and Upward Bound to render an opinion as to the validity of having two separate programs rather than one? Both of these programs are reaching out for the same student. Mr. KUGLER. There is, I think, some measure of duplication al- though the funds available to both programs are so insufficient that the duplication has not in fact caused overlapping. I would say this, the principle of reaching down amoug the disad- vantaged, among the ghetto poor, whether they be, by the way, rural or urban, is a top priority item. One thing that disturbs me no end is to go into many colleges and universities and look at t.he student com- position which is all lily-white virtually, and that many of the people who should profit from education in our American society are de- prived from having that opportunity. This SEEK program, which I think the members of this com- mittee should study very carefully, I think is the most mature program of its kind. If you would get in touch with the City University of New York and ask Chancellor Bowker for a report of that program you would see there a model of how much a program operates and the re- tention rate and the quality of the student that comes into that program. I have seen at meetings of parents of these children how they raise their sights, how they are ready to counteract the narcotic addict, the pusher, the jailbird, the individual who carries a weapon around as the culture hero and replacing him with somebody who can make it. If you open up an opportunity you lift, the. sights of these kids and you diminish the destructive and antisocial forces in the ghetto. Mr. MEGEL. In spite of the fact that Upward Bound did no~ have the money to operate that they might have desired, yet the results have been excellent. We have suported the Upward Bound program through the OEO. are not in a position to say that it should be or should not be consolidated at this time. but. the program should' be expanded. Mr. KUGLER. I would like to bring to your attention this article in the Times. The City University, because' of insufficient funds, would like to have some funds for counselors to counsel 2,000 applicants for which they have no room. There are thousands of these high school graduates, they are high school graduates in name only, they are incomplete in terms of getting PAGENO="0247" 753 any kind of decent job, they add to the unemployment rate in the ghetto, they are frustrated, they have somewhat the kind of education that sparks that kind of militancy that creates this antisocial leader- ship. If we can channelize it in constructive channels it would be a remarkable thing and I think it would do more to alleviate and prevent riots and disorder and socially pay back the costs in terms of the avoidance of the obligations that we would incur in prisons and wel- fa.re rolls and everywhere else. Mr. MEGEL. We made a survey some years ago in WTashmgton. Twenty-two percent fewer boys and girls who graduated from Wash- ington high schools were able to go on to college and universities than the national average. Mr. ERLENBORN. Maybe this is not a fair question but I will ask it anyhow: Given a situation where you don't have unlimited funds and there is competition for the Federal funds that are available, would you say that programs such as you have described are more important, for instance, than developing the supersonic transport. or some of the other Federal programs that are competing for these dollars? Mr. KUGLER. If you are asking for my personal viewpoint, I would say absolutely yes, that this has higher priority than the supersonic and space programs and some of the other important scientific programs. We have to reorder our priority when we have a limited amount of funds. Mr. ERLENBORN. I would call to your attention that a group of Republican Congressmen in a press conference this morning were making the same point.. Thank you. Mr. BRADEMAS. I would like to make an observat.ion on what my colleague from Illinois has said, for I share his view and I voted against that supersonic transport appropriation but we were not many, either on my side or on his side of the aisle, I am afraid. I would like again to express our appreciation to Dr. Kugler and Mr. Megel for their having come this morning. Thank you very much, gentlemen. (Whereupon, at 12 :30 p.m., the subcommittee recessed, to reconvene at 10 a.m., Thursday, March 7, 1968.~ (The following was submitted for the record:) NATIONAL COM~1IssIoN FOR COOPERATIVE EDUCATION COLLEGES AND UNIVERSITIES OFFERING COOPERATIVE EDUCATION PROGRAMS At many of these 119 institutions, only some of the students are on the co- operative plan: it may be an optional plan, it may be offered in only some aca- demic majors, it may be an honors plan. The interested student should write to the Admissions Office of the college or university of his choice requesting infor- mation about their program, and to secure specific information about the require- ments for admission, scholarships, and possible financial assistance. Alabama Alabama Agricultural & Mechanical College, Normal Auburn University, Auburn Tuskegee Institute, Tuskegee Institute University of Alabama, University PAGENO="0248" 7,54 Arizona University of Arizona, Tucson Arkansas University of Arkansas, Fayetteville California California State College at Los Angeles California State Polytechnic College, Pomona College of San Mateo, San Mateo Foothill College, Los Altos Hills Golden Gate College, San Francisco San Jose State College Uaiversity of California, Berkeley Colorado University of Denver District of Columbia Howard University, Washington The American University, Washington Florida Florida A & M University. Tallahassee Florida State University, Tallahassee Florida Technological University, Orlando Manatee Junior College, Bradenton Miami-Dade Junior College, South Campus, Miami Peasacoia Junior College University of Florida, Gainesville University of Miami. Coral Gables University of South Florida, Tampa University of West Florida, Pensacola Georgia Berry College, Mt. Berry Georgia Institute of Technology, Atlanta Idaho University of Idaho, Moscow Illinois Bradley University, Peoria Illinois Institute of Technology, Chicago Northwestern University, Technological Institute, Evanston Southern Illinois University, Carbondale University of Illinois, Urbana In diana Indiana Institute of Technology, Fort Wayne Indiana State University, Terra Haute Purdue University, Lafayette Tn-State College, Angola University of Evansville Iowa Iowa StateUniversity, Ames Kansas Friends University, Wichita Kansas State University, Manhattan Kentucky University of Louisville Western Kentucky University, Bowling Green Louisiana Louisiana Polytechnic Institute, Ruston Louisiana State University, Baton Rouge PAGENO="0249" 755 Massachusetts Cambridge School, Boston Northeastern University, Boston Michigan Central Michigan University, Mt. Pleasant Delta College, University Center Detroit Institute of Technology, Detroit Ferris State College, Big Rapids General Motors Institute, Flint Kalmazoo College, Kalamazoo University of Detroit University of Michigan, Dearborn Western Michigan University, Kalamazoo Misnesota Concordia College, Moorhead University of Minnesota, Minneapolis Mississippi Mississippi State University, State College MissoUrI Rockhurst College, Kansas City University of Missouri, Columbia University of Missouri at Rolla W. & W. Technical Institute, Neosho New Jersey Bloomfield College, Bloomfield Rutgers University, New Brunswick New Mexico New Mexico Institute of Mining & Technology, Socorro New Mexico State University, University Park New York Adelphi University, Garden City Bard College, Annandale-on-Hudson Borough of Manhattan Community College, New York City Broome Technical Community College, Binghamton City College of the City University of New York, N.Y.C. College of Insurance, New York City Cornell University, Ithaca Elmira College, Elmira Keuka College, Keuka Park Mohawk Valley Community College, Utica New York Institute of Technology, Old Westbury Pratt Institute, Brooklyn Rensselaer Polytechnic Institute, Troy Rochester Institute of Technology, Rochester Vorhees Technical Institute, New York City Ohio Antioch College, Yellow Springs The Cleveland State University, Cleveland (formerly Penn College) Kent State University, Kent Ohio College of Applied Science, Cincinnati Sinclair Community College, Dayton University of Akron University of Cincinnati Wilberforce University, Wilberforce Wilmington College, Wilmington Pennsylvania Drexel Institute of Technology, Philadelphia St. Joseph's College, Philadelphia Temple University Technical Institute. Philadelphia The Pennsylvania State Universit;~, University Park PAGENO="0250" 756 Rhode Island Roger Williams Junior College, Providence Tennessee Tennessee A and I State TThiversity, Nashville Tennessee Technological University, Cookeville University of Tennessee, Knoxville Tewas Lamar State College of Technology, Beaumont Southern Methodist University, Dallas Texas A & M University, College Station University of Houston, Houston University of St. Thomas, Houston University of Texas at Arlington University of Texas, Austin Verin on t Bennington College, Bennington Goddard College, Plainfield Virginia Hampton Institute, Hampton Virginia Polytechnic Institute, Blacksburg li7ashington Washington State University, Pullman TVest Virginia Alderson-Broaddus College, Philippi Wisconsin Beloit College, Beloit Marquette University, Milwaukee Milwaukee School of Engineering. Milwaukee Stout State University, Menomonie University of Wisconsin, Milwaukee. Milwaukee Wisconsin State University-Platteville, Platteville LISTED BY FIELDS OF STUDY OFFERED Engineering and technology.-U. of Akron, U. of Alabama, Alabama Agricul- tural & Mechanical College, Antioch Coll., TI. of Arizona, Auburn U., Bradley U., Broome Technical Community Coil., California State Coil, at Los Angeles, Califor- nia State Polytechnic Institute, U. of California at Berkeley, U. of Cincinnati, The Cleveland State U., Coil, of San Mateo, Cornell TI., Delta Coil., U. of Denver, Detroit Institute of Technology, U. of Detroit, Drexel Institute of Technology, U. of Minnesota. Mississippi State U., U. of Missouri at Columbia, U. of Missouri Institute, Georgia Institute of Technology, Hampton Institute, Howard U., U. of Houston, U. of Idaho, TI. of Illinois, Illinois Institute of Technology, Indiana Institute of Technology, Iowa State U., Kansas State U., Kent State U., Lamar State Coil, of Technology, U. of Louisville, Louisiana Polytechnic Institute, Lou- isiana State U., Marquette U., U. of Michigan, Milwaukee School of Engineering, U. of Minnesota, Mississippi State TI., U. of Missouri at Columbia, U. of Missouri at Rolla, Mohawk Valley Community Coil., New Mexico Institute of Mining & Technology, New Mexico State U., New York Institute of Technology, North- eastern U., Northwestern U., Ohio Coil, of Applied Science, Pennsylvania State U.. Pensacola Junior Coil., Pratt Institute, Purdue U., Rensselaer Polytechnic Institute, Rochester Institute of Technology, Roger Wifflam Junior Coil., Saint Joseph's Coil., San Jose State Coil., Sinclair Community Coil., U. of South Florida, Southern Illinois U., Southern Methodist U., Stout State U., Temple U. Technical Institute, U. of Tennessee, Tennessee Technological U., U. of Texas at Arlington, U. of Texas at Austin, Texas A&M U.. Tn-State Coil., Tuskegee Institute, Virginia Polytechnic Institute, Voorhees Technical Institute, W & W technical Institute, Washington State U., U. of Wisconsin-Milwaukee, Wisconsin State U.-Platteville. Liberal Arts.-U. of Alabama, Alderson-Broaddus Coil., Antioch Coil., Auburn U., Bard Coll., Beloit Coil., Bennington Coil., Bloomfield Coil., California State Coil, at Los Angeles, Cleveland State U., Coil, of Insurance; Elmiro Coil., Friends U., Goddard Coil., Golden Gate Coil., Illinois Institute of Technology, Kalamazoo Coil., Keuka ~2-oii., Manatee Junior Coil., Miami-Dade Junior Coil., U. of Michigan, PAGENO="0251" 757 Mississippi State U., Northeastern U., Sinclair Community Coil., Southern Illinois U., U. of South Florida, U. of West Florida, Wilberforce U., Wilmington Coil. Soience.-Alabama Agricultural & i\'Iechanical Coil., U. of Alabama, Alderson- Broaddus Coil., The American U., Antioch Coil., U. of Arizona, Auburn U., Beloit Coil., Berry Coil., California State Coil, at Los Angeles, The Cleveland State U., Delta Coil., Drexel Institute of Technology, Florida A&M U., U. of Florida, Florida State U., Georgia Institute of Technology, Goddard Coil., U. of Houston, Illinois Institute of Technology, Kalamazoo, Coil., Lamar State Col. of Tech- nology, Mississippi State U., Manatee Junior Coil.,. Miami-Dade Junior Coil., U. of Missouri at Rolia, New Mexico Institute of Mining & Technology, New Mexico State U., New York Institute of Technology, Northeastern U., Pratt Institute, Rochester Institute of Technology, U. of South Florida, Southern Illinois U., Tennessee Technological U., Texas A&M U., U. of St. Thomas, U. of West Flor- ida, Virginia Polytechnic Institute, Wilberforce U. Business.-Adelphi U. (Graduate only), U. of Alabama, Alabama Agricultural & Mechanical Coil., Alderson-Broadthis Coil., Antioch Coil., Auburn U., Borough of Manhattan Community Coil., California State Coil. at Los Angeles, Cambridge School, U. of `Cincinnati, City College of the City U. of New York, the Cleveland State U., Coil, of Insurance, Coil. of `San Mateo, Concordia Coil., U. of Detroit, Detroit Institute of Technology, Delta Coil., Drexel Institute of Technology, Ferris State Coil., Golden Gate Cell., Hampton Institute, Illinois Institute of Technology, Kent State U., U. of Miami, U. of Michigan, Mississippi State U., Mohawk Valley Community Coil., New Mexico State U., New York Institute of Technology, Northeastern U., Rochester Institute of Technology, Rockhurst Coll., Sinclair Community CoIl., U. of South Florida, Southern Illinois U., South- ern Methodist U., Stout State U., U. of Tennessee, Tennessee Technological Institute, Tn-State Coil., Virginia Polytechnic Institute, Western Kentucky U., U. of West Florida, Western Michigan U., Wilberforce U., U. of Wisconsin- Milwaukee. Education.-Alderson-Broaddus Coil., Antioch Coil., Beloit Coil., California State Coil, at Los Angeles, Central Michigan U., The `Cleveland State U., Delta Coil., Drexel Institute of Technology, Keuka Coil., `Missis~ippi State U., New Mexico State U., Northeastern U., Rutgers U., U. of South Florida, Stout State U., U. of Tennessee, U. of West Florida, Wiiberforce U. Nursing.-Alderson-Broaddus Coil., Northeastern U., Keuka Coil. Pharmacy.-Auburn U., Northeastern U. Pre-med.-The Cleveland State U., Northeastern U., U. of Tennessee. Home Economics (Including Dietetics).-Drexel Institute of Technology, Stout State U Tennessee Technological Institute U of Houston ~~ew Mexico State I 4dvei tzs~ng Design -U of Cincinn'tti Drexel Institute of Technology Mohaw k Valley Community Coil. Industi ,al Design -(Fashion and Inteiior)-&ubmn U U of Cincinn'lti Drexel In~titute of Technology Arehitecture.-U. of Cincinnati, U. of `Detroit. Community Planning.-U. of Cincinnati. Agricultural Science.-Mississippi State U. AMENDMENTS TO BE PROPOSED TO HR. 15067 On page 44, line 13, strike out "(a) On page 45, gtrike out lines 4 through 19, inclusive. On page 77, line 1, strike out "PART D" and insert in lieu thereof "PART E". On page 79, lines 12 and 19, strike out "PART E" and `insert in lieu thereof "PART F". On page 79, line 17, strike out "part D" and insert in lieu thereof "part E as added by this title". On page 79, line 21, strike out "SEC. 471" and insert in lieu thereof "SEC. 481". On page 76, after line 25, insert the following new part: "PART D-COOPERATIVE EDUCATION PROGRAMS "GRANTS TO INSTITUTIONS OF HIGHER EDUCATION FOR PROGRAMS OF COOPERATIVE EDUCATION; GRANTS AND CONTRACTS FOR TRAINING AND RESEARCH IN COOP- after PART P the following new part: "SEC. 451. Title IV of the Higher Education Act of 1965 is amended by adding after PART D the following new part: PAGENO="0252" 758 "PART E-000PERATIVE EDUCATION PROGRAMS "`APPROPRIATIONS AUTHORIZED "`SEc. 471. (a) There are authorized to be appropirated $8,000,000 for the fiscal year ending June 30, 1969, $l0,000.000 for the fiscal year ending June 30, 1970, $12.000,000 for the fis~al year ending June 30, 1971, and $15;000,000 for each of the succeeding 2 fiscal years, to enable the Commissioner to make grants pursuant to section 472 to institutions of higher education for the plan- ning, establishment. expansion, or carrying out by such institutions of pro- grams of cooperative education that alternate, periods of full-time academic study with periods of full-time public or private employment that will not only afford students the opportunity to earn through employment funds required toward continuing and completing their education but will, so far as practic- able, give them work experience related to their academic or occupational objective. "`(b) The are further authorized to be appropriated $750,000 for the fiscal year ending June 30. 1009, and for each of the 4 succeeding fiscal years, to enable the Commissioner to make training or research grants or contracts pursuant to section 473. ``(c) Appropriations under this part shall not be available for the payment of compensation of students for employment by employers under arrangements pursuant to this part. "`GRANTS FOR PROGRAMS OF COOPERATIVE EDUCATION "`SEc. 472. (a) From the sums appropriated pursuant to subsection (a) of section 471, and for the purposes set forth therein, the Commissioner is authorized to make grants to institutions of higher education that have applied therefor in accordance with subsection (b) of this section, in amounts not in excess of $75,000 to any one such institution for any fiscal year. "`(b) Each application for a grant authorized by subsection (a) of this section shall be filed with the Commissioner at such time or times as he may prescribe and shall- "`(1) set forth programs or activities for which a grant is authorized under this section; "`(2) provide for the making of such reports, in such form and containing such information, as the Commissioner may reasonably require to carry out his functions under this part, and for the keeping of such records and for affording such access thereto as the Commissioner' may find necessary to assure the correctness and verification of such reports; "`(3) provide 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 part; and "`(4) include such other information as the Commissioner may determine necessary to carry out the purposes of this part. "`(c) In the development of criteria for approval of applications under this sec- tion, the Commissioner shall consult with the Advisory Council on Financial Aid to Students. "`GRANTS AND CONTRACTS FOR TRAINING AND RESEARCH "`SEC. 473. From the sums appropriated pursuant to subsection (b) of section 471, the Commissioner is authorized, for the training of persons in the planning, establishment, administration, or coordination of programs of cooperative edu- cation, or for research into methods of improving, developing, or promoting the use of cooperative education programs in institutions of higher education, to- "`(1) make grants to or contracts with institutions of higher education, or combinations of such institutions, and "`(2) make grants to other public or private nonprofit agencies or orga- nizations, or contracts with public or private agencies or organizations, when such grants or contracts will make an especially significant contribution to attaining the objectives of this section. PAGENO="0253" 759 "`DEFINITION OF INSTITUTION OF HIGHER EDUOATION "`Sue. 474. For purposes of this part, the term "institution of higher educa- tion" shall have the meaning assigned thereto by paragraph (2) of section 410, but without regard to the limitation on the purposes ~f application of clause (A) contained therein.'" In the TABLE OF CONTENTS, under TITLE IV-STUDDNT ASSISTANCE, amend "PART D" and "PART E" to read "PART E" and "PART F", respectively; and insert after the section title of section 441 set forth under PART C the following: "PART D-COOPERATIVE EDUCATION PROGRAMS "SEC. 451. Grants to institutions of higher education for programs of coopera- tive education; grants and contracts for training and research in cooperative education." PAGENO="0254" PAGENO="0255" HIGHER EDUCATION AMENDMENTS OF 1968 THURSDAY, MARCH 7, 1968 HousE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 2257, Rayburn House Office Building, Hon. Edith Green presiding. Present: Representatives Green, Hathaway, Burt-on, Quie, and Erlenborn. 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 further consideration of the Higher Education Amendments of 1968. Our first witness is our very good friend `and colleague `and extremely able member of the full Committee on Education and Labor of the House, Congresswoman Mink. We `are delighted to have you here. We are interested in your comments `and your `suggestions on this legislation. STATEMENT OP HON. PATSY T. MINK, A 1~EPRESENTATIVE iN CONGRESS PROM THE STATE OP HAWAII Mrs. MINK. Thank you very much. I appreciate this opportunity to testify before your committee and would like to ask that the statement that I presented to the chairman be inserted in the record. Mrs. GREEN. Without abjection, it may `be included at `this point. (The document referred to follows ) STATEMENT OF HON. PATSY T. MINK, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF HAWAII Madam Chairman `and members-of the Subcommittee: It is a pleasure for me to appear before this subcommittee to urge your consideration of H.R. 15067, a bill to am-end -the Higher Education Act `of 1965, the National Defense Education A-ct `of 1958, the National Vocational Student Loan Insurance Act of 1965,, the Higher Education Facilities Act `of 1963, and related acts. W-e are `all aware of th-e crisis in classroom and laboratory facilities and more so .this'yea-r because of the "pinch" in Federal funds. Nevertheless, the -need for -these facilities will increase-almost in reverse proportion to the funds to be ma-do available by the Federal government. - I "am advised that the U.S. Office of Education made its most recent survey of instructional facilities in April `of 1966. Its `report, based on the five year period ending in 1970 indicates~ that public and private institutions of higher learning say they will need facilities expected -to cost $8.8. billion during `this period end- ing in 1970. ` However, we know th'at the Congress `appropriated $450 million for Titles I & Ii to `the Higher Education Act for conStruction of undergraduate and graduate (761) PAGENO="0256" 762 instructional facilities for Fiscal Year 1908. Another $200 million was to be made available from the revolving fund for Title III loans for these facilities. What happened was that the Government reduced its actul obligations for Titles `I & II to a total of $300 million-as compared to the $450 million appropriated for the Titles, and will hold down the loans under Title III to $150 million as compared to the $200 million authorized. And the picture is not brighter for Fiscal 1969. The Government had requested only $75 million for Titles I & II and authority for only $100 million in new loans under Title III. We are told, however, that there will be an expenditure of the funds held back in Fiscal 68, bringing total obliga- tions for all Titles next year to $375 million. I believe the subcommittee is aware that this program will fall far short of the needs. Let me direct the attention of the members to my own State of Hawaii. In the survey conducted by the Office of Education, the private and public institutions of higher learning indicated they would need new instructional facilities by 1970 estimated to cost $49.5 million. And since 1965, schools in Hawaii have received a total of $5.3 million in grants and $6.1 million in loans under all Titles of the Higher Education Act. I believe you see the gap between the needs and the funds made available to satisfy these needs. The recommendation I make would be for a system of low-interest loans through private financial institutions to supplement the money made available by the Federal government through appropriations and government loans for construc- tion. I am not recommending a replacement for the grant funds. It would be an interest subsidy on facilities loans obtained through the private market in which the Federal government would make up the difference between three per cent and the rate colleges must pay on the commercial loans. This would be similar to the provision contained in H.R. 8647 which I Introduced last year for college housing loans and which will be considered this year by the House Banking and Currency Committee. Incidentally, a similar provision has been included in the housing' and urban development bill approved by the Senate Banking and Currency Committee. My suggestion is totally to supplement the existing loan and grant programs and to provide the needed facilities at a cost w-ithin the reach of the institutions without imposing a serious burden on the Federal budget. It would be done through private financing, with the government providing oniy that margin of assistance necessary to give colleges the benefit of the same three per cent financing available under the existing loan program of Title III. The `approach would be very rimple: The University would arrange to borrow these funds from the private market. Then the University and the Department of Health, Education, `and Welfare would enter into a contract whereby HEW would make an annual payment of the difference between the actual debt service and the debt service at a three per cent interest rate. `The th'ree per cent direct `loan authorization in existing law for Title III would remain available. An annual authorization should be stipulated in the legislation and should be made `available to institutions for this interest subsidy for each of the fiscal years. The impact on the Federal budget in any year under the supplemental interest payment approach would be very smalL For example, assuming an average private market interest rate of 5~ per cent `for private and public universities together, `an annual supplement of less than $10 million would achieve the effect of three per cent interest `subsidy for $300 million of college housing financing. I am pleased to have Mr. Keith Spalding, the President of Franklin and Marshall College, endorse this proposal for his own college and the many associations of educational institutions he represented in hi's appearance before this subcommittee. I am encouraged by the initial reaction to my proposal' and I believe that we do have with this suggestion a feasible and workable plan whose early inception at such a minimal cost to the government can do so much to relieve the present worsening situation in construction of new instructional facilities. I sincerely hope that this committee will give its careful consideration to this plan as a positive approach that will draw the approval of educators and the business com- munity in unison, while meeting an overlooked need in making a well-rounded education available to the hundreds of thousands of students who will be swelling college enrollments in the years ahead. PAGENO="0257" 763 Mrs. MINK. The specific matter that I wish to support and bring to the attention of the subcommittee is in reference to the method of financing for the college facilities. I am sure I do not need to tell the subcommittee of the very critical need for additional funding for higher education facilities. In line with this interest there is pending before the House and the Senate a recommendation which was put together with the Amer- ican Council of Higher Education and others interested in the field, a new concept for financing these facilities. The specific recommendation is now before the Banking and Cur- rency Committee with reference to the omnibus housing bill. It was also considered in the Senate. The basic theory behind the financing is to provide for interest subsidy payments by the Federal Government, recognizing that the Federal Government is unable to come up either with grant money or with loan money to meet this critical need. It seemed to several of us, at least, that a small investment, an output by the Federal Government, could go a long way toward meeting the need if we establish this kind of program for interest subsidy. If a college or university borrowed the money directly from the Federal Government there would already be involved a 3-percent in- terest payment to the Federal Government so that this would be the basic liability of the college and university in any kind of program. But if the college and university then is permitted to go to the private market to secure the financing rather than rely upon a very difficult financial situation in the Federal Government and the Federal Gov- ernment provides the difference in the interest payment that the college or university must pay, then this would allow them to seek an alternate method of financing the college construction program. I would hope that this subcommittee would consider the provisions which are now being considered for college dormitories and to amend the bill which is now before the committee to incorporate this idea, not a substitute for the direct grants or the loan provisions that already exist but to create this new avenue of resources for the university. I would be pleased to answer any questions and respond to any com- ments you wish to make. I would hope that these bills which I have called your attention to in my prepared statement would be considered very seriously by the subcommittee. Mrs. GREEN. Thank you very much, Mrs. Mink. I share your regrets and your concern that there is a proposed cutback in the facilities. This is not the time when we can afford to cut back. We need to plan for the years ahead. Your recommendations for financing will certainly be considered by this committee. Congressman Quie, do you have any questions? Mr. QUIE. No questions, but I should like to echo the words of the chairman. We are pleased to have you come in and make these repre- sentations. Mrs. MINK. Thank you very much. Mrs. GREEN. Thank you. The next person to comment on this bill that is before `the subcom- mittee is Mr. Allan Purdy, the chairman of the National Student 92-371-OS-pt. 2-17 PAGENO="0258" 764 Financial Aid Council and the director of the student financial aids, University of Missouri. Mr. Purdy will be accompanied by Mr. Gunness, director of student financial aids at Harvard, Mr. Davis of Tuskegee, Carroll Parish, Uni- versity of California at Los Angeles, and Mrs. Jean Hunt, director of financial aids, Lewis and Clark College, Portland, Oreg. May I express a special word of greeting and welcome to Mrs. Hunt. Mrs. HUNT. Thank you, ma'am. Mrs. GREEN. `We don't have as many people from Oregon as we have from Kentucky before this conimittee. I intend to devote my efforts to correct that. We are delighted you are here. Mr. Purdy, you are a friend of this committee. We read your letters and your comments and your recommendations that you make to us with a great deal of interest. We think it goes without saying that you have a lot of influence with the members of this committee on how the final legislation turns out in the student financial assist- ance part of the bill. So, we will let you proceed as you wish, Mr. Purdy. STATEMENT OF ALLAN W. PURDY, CHAIRMAN, NATIONAL STUDENT FINANCIAL AID COUNCIL, DIRECTOR, STUDENT FINANCIAL AIDS, UNIVERSITY OF MISSOURI; ACCOMPANIED BY PETER GUNNESS, DIRECTOR OF STUDENT FINANCIAL AIDS, HARVARD UNIVER- SITY; L. W. DAVIS, DIRECTOR OF STUDENT FINANCIAL AIDS, TUSKEGEE INSTITUTE; CARROLL PARISH, DEAN OF STUDENT SERVICES, UNIVERSITY OF CALIFORNIA AT LOS ANGELES; CHAIRMAN OF FINANCIAL AIDS COMMISSION FOR THE AMERI- CAN COLLEGES PERSONNEL ASSOCIATION; AND MRS. JEAN RUNT, DIRECTOR OF FINANCIAL AIDS, LEWIS AND CLARK COLLEGE, PORTLAND, OREG. Mr. Puiwy. Madam Chairman, let me say this to you and to the members of the committee: We not only feel that you folks are friends of financial aid and the students who need help but your actions in the Congressional Record have proved that we do have a financial aid program going which is very meaningful. It has grown over the years. Of course, we are here only to take a look ahead to the future to see what can be done to improve it even further. For the record, I would like to apologize for the fact that we did not get a written copy to you sooner and there is one mistake on the third page in which, part of the third page belongs on item 5 and I apologize for that but in the typing and Xeroxing we made a mistake. The facts were that we tried to assemble our council from all over the United States in Washington yesterday to finalize our discussion and thinking on the bills. So our written copy did not get done until late. You have already introduced the people who are here at this table. There is a list also of the other council members who are here to back up the testimony and to participate in questions and answers. PAGENO="0259" 765 We have before us the bill 15067. We will comment only on title TV which relates to the student financial aid. There are other titles there but we will confine our comments only to those parts having to do with the financial aid. First of all, we look back and see that financial aid has grown up in several parts. There has developed the loan program, the work-study program, and the EOG program. So it is encouraging to see the suggestion that we make a consolidation in funding and in administer- ing these programs from the standpoint of making the programs more effective and more efficient and to allow a little flexibility among funds so that the individual financial aid officer can use his good judgment in aiding the students on his own campus, making the dollar go farther and yet giving better service to the students who need it. Therefore, we think this is an excellent direct ion and an improve- ment on the programs generally. Of course, since the programs are growing and since administrative costs are going up, we also look upon the 3-percent administrative cost to the institution as being desirable and justified and we hope that as partners in this program that the institutions can carry their full share and yet not have it be a financial burden on the institutions so that institutions, large and small, re- gardless of how they happen to be financed, public or private, can participate. Naturally, when we combine the programs it would be logical to combine the advisory committee working with the Office of Education. So this also in part E, section 471, would receive our indorsement. The educational opportunity grants program is the new-est of the financial aid programs. We are just getting underway, this being our second year of operation, so we have a lot to learn about it but it has already proved its worth in helping the student from the low-income family. The proposed suggestions here we think are improvements all the way along the line. We think the idea of keeping the maximum grant at a thousand dollars is good. Tt adds up to that now when you take the maximum of $800 plus the incentive award. Mrs. GREEN. Are you in favor of that incentive award? Mr. Prnmi-. We are in favor of the $1,000 maximum but we would rather see the mandatory incentive award done away with. We have not found it to really accomplish what theoretically it might. We have not really found that it does that. Actually in many cases, I think it turns out to be a couple of hundred dollars. If we go ahead and meet the Fill need of the student and then give him $200 extra, some students even react to it as if, `Well, fine, so much gravy," and I don't really think this has accomplished the purpose that it was theoretically intended to accomplish. So we would like the provision as it is written to have the $1,000 maximum without a mandatory incentive award. Mrs. GREEN. How many institutions are keeping class rankings now? Mr. Puimy. This is one of the problems. In many instances, this has meant actually an additional operation in the administrative offices of the dean, the director of admissions, to find out just who is in the top half of the class. PAGENO="0260" 766 What do you folks think `about that? Mr. PARISH. We do keep the records carefully but I do feel this is a burden which is not oniy always fair and is not handled in a fair manner. Mr. DAVIS. It gives us some problems a't Tuskegee because our regis- trar sometimes does not cooperate. Then I have had calls from several other smaller colleges in which they in effect say, How do you arrive at this particular point? So, I am inclined to go along with Dr. Purdy that it would be better to give the $1,000 outright, let that figure in the need, and leave off the incentive award. Mrs. HtTNT. Class rankings are readily available at our institution but I do believe that the money that is now made available for incen- tive awards would better serve the purposes of students were it used in recognition of need rather than the incentive. I think this is especially so in institutions where funds are limited and programs are still, young. Frankly, I think that having to manage three budgets for an educa- tional opportunity grant allocation is cumbersome and the reward is not sufficient. Mr. GUNNESS. Harvard no longer maintains class rankings for any of its students, just a grade average. I second Jean's comment such as the needy students are concerned and de.sire to use it with EOG's rather than by incentive awards. Mr. PURDY. Even last year there has been an increasing number of colleges in some phase of the grading system going to pass-failure or satisfactory-unsatisfactory grading which leaves no room for class ranking. Frankly, a lot of the colleges got away from class ranks because they quit providing it for the draft boards. So, this combination of things is what we feel will make the suggestions that a.re already written into this bill very logical. Are there any other questions on that? Mr. QUIE. Don't employers ever ask for class ranks? Mr. PU1~DY. Yes, they do sometimes. Sometimes they are more in- terested in the course of study, the professor's recommendation, than they are the actual ABC grades. But class rank is asked for and this is, of course, the problem of the placement officer. After weighing all of the aspects, we like the way you have it written here. Mr. QmE. In the satisfactory-unsatisfactory method of grading, then, there is no way for anyone to tell if a person accomplished a great deal? Mr. PURDY. I would rather not get into that discussion, because whether I agree with that or not I am merely pointing out this is a fact of college life these days, that there are certain colleges who in one or more schools or in one or more portions of their education pro- gram are doing this and each time it is done that raises another prob- lem concerning the administration of the incentive award. I am not defending whether this is good or bad because that is not financial aid. That is an academic question. I might say that I could agree with you completely, but whether I did or not, I think would hive no bearing still on our stand here. Are there any other questions on that ~ PAGENO="0261" 767 Mrs. GREEN. You may proceed. Mr. PURDY. Now, there is another provision in here which we think is very sound, and that is recognizing the fact that certain colleges do have 5-year programs and that the disadvantaged student who comes into a college frequently needs additional help in the way of tutoring, maybe in the way of noncredit courses, to bring him up to a level where he can carry the work. Therefore, we think the extension of the fifth year where it is recom- mended by the institution is a recognition of the facts of the disadvan- taged student and, therefore, should logically be done. Now, I may not be enough of a lawyer to understand exactly the way it is written, but I have in here one other statement and that is the fact of the student who is carrying "essentially a full load," but who may be carrying 13 hours instead of 16 or 17 and in 4 years' time because he has come from a disadvantaged background may need nine semesters to graduate instead of eight. In that case, too, we would like to see this fellow or this girl have the same advantage of the EOG for his ninth semester or 10th semes- ter as he did for the first eight. In other words, he would not be carrying a noncredit course necessarily. He may be in a history course where he can't cover the 50-page reading assignment that the other students can carry. He is a little slower. He can carry the same course but he can't carry as many of them. Now we have worded it here so that if on the advice of the insti- tution he is carrying less than the 15- or 16-hour semester load and he is a disadvantaged student, that he still be given the extra time. I welcome any questions on that. Mrs. GREEN. What is the current draft policy if they don't carry the full load? Are they picked up? Mr. PURDY. Again, we are having to confine our testimony to the financial aid. The student might well run into a draft problem, but if he went to summer school, he would not. Mrs. GREEN. But there is no point of this committee putting this in the bill if they are going to be picked up unless they are veterans or unless they are people disqualified physically. Mr. PtrRDY. Yes, this is true, except that the student could go to summer school and still meet the draft requirement. Under this he would be going to summer school without any aid from EOG and he might very well need it very badly because he could carry 13 hours during the regular semester, pick up 8 hours during the summer ses- sion and come out with a 30- or 32-hour year very nicely. Mr. PARISH. We have discussed this with the boards in California. As long as they fulfill the requirement of the normal progress that would be getting their degree in 4 years, they will consider it. So they can take this any time during the year by examination or by other methods. Of course, then the large group of the young ladies will be involved, too. We need to support them. Mr. PURDY. Are there any other questions on that? Mrs. GREEN. No questions. Mr. PURDY. Now we did say that there is now a $200 minimum on EOG. I think that could be an administrative thing with the Office of Education, maintain that or lower it to a hundred. There could PAGENO="0262" 768 very well be a minimum. I think if we get a little bit more experience that figure could be more meaningful. After all, we are just in the sec- ond year of the program now. The way it is written, it is very satisfactory to us from our stand- point. Now, the elimination of the individual matching student by student we like. We do think that, as has been indicated, every institution must keep up its institutional effort in aiding the students. This should in no way be an out for any institution to slack up on the aid that has been given. But the bookkeeping for student-by-student matching is pretty mo- mentous, monumental. So we think that the program will actually serve a better purpose, at least administrative cost, the way it is written. So, we would like to endorse it wholeheartedly. Item 5, I admit we are getting into a controversial area here on the teacher cancellation. Whether it is politically expedient or not it is not for us to say. I think we have to react to the programs as we see it. Of all the studies and observations that we have made, we really can't see the advisability of continuing teacher cancellation on and on and expanding cancella- tion for more auid more categories of people in the loan area. Now, the program was started 10 years ago. `We were very conscious of the teacher shortage, and it was hoped that this kind of provision would maybe encourage students to go into teaching. `We have been unable to find any research or definite figures which show that this has actually happened. The college entrance examina- tion boards have made a rather detailed study this past year, looking to see if there are any figures anywhere that would prove that more teachers are going into it. Actually, the pattern is very similar now to that which existed before in NDEA in cancellation as far as the number of people going into teaching. The teacher cancellation idea, of course, does provide a little addi- tional monetary award after graduation. Now that we have an EOG which is taking care of gift help to needy students while in school we wonder if it is necessary to continue a program of gift help after graduation when they are wage earners. Now all of us read the papers and we know that there is unrest among teachers but I do not think that this kind of thing is going to cure that unrest because if you look at it the unrest is probably among those who graduated long before NDEA was a factor. Wage scales and other things do bring up questions- Mr. QuIE. `What did you sa? The unrest is among whom-those who were graduated before NDEA? Mr. PuRDY. I say if we would look at the teachers who are teaching today most of them graduated before NDEA. I can't see that teacher cancellation is a factor. The other thing, among them there would be one teacher getting cancellation, another teacher in the same school, the same salary level, not gettmg it. Maybe one worked her way through, chose not to borrow, another one borrowed. So it is discriminatory within groups as to whether they declared themselves to be needy when they were in school or didn't. PAGENO="0263" 769 Mr. QuIE. Madam Chairman, I fully agree with you because I tried for a long time to remove the teacher forgiveness feature. In fact, when the subcommittee reported out the EOG- the first time, we proposed, as part of it, to drop the forgiveness feature. I would, too. The only thing that surprises me is that the unrest is among those who were graduated before NDEA. That would be prior to 1958. I can't imagine that all these young teachers are completely satisfied. Mr. Puiirir. I don't intend to infer that all the young ones are satis- fied and all the old ones are dissatisfied. But I say among them are a lot, I wouldn't even say a majority, who aren't even included or affected by something like this. Mr. QUIE. Some of those I have encountered look like they must have been graduated after 1958. Mr. PURDY. The head of the union appearing for the teachers cer- tainly was a veteran, many years of teaching. But being as it may, get- ting down to the basic provisions- Mrs. GREEN. Before you leave the foregiveness feature, let me pose one question here. You are before a very friendly subcommittee this morning on the forgiveness cancellation. I opposed it in the original bill. I did not think it should be there and I have opposed it ever since. There is a new factor which has come to my attention that bothers me or gives me some concern. A person who graduates and is not in teach- ing is not eligible for forgiveness, but a person goes into any one of a dozen other disciplines and he takes a job in business or in- dustry and I am told that there is a growing trend on the part of busi- ness and industry to state to the individual, "If you will come to us we will absorb your college loan and we will pay it off," and then the busi- ness writes it off as a tax deduction, which is perfectly legitimate. If this develops and I must say that I do not have any particular opposition to it., then the only people who are going to be in college and who have loans and will not have a chance to have somebody else pick it up for them are those who go into public service. Now we have two bills, new ones, before this committee to try to encourage people to go into public service. If everybody else that goes to work for the private sector is going to have somebody pick up that loan and write it off as a business expense and we have only the teachers trod people in public service left, what will this do? Mr. Pmm~. It creates a grave problem. I don't know to what extent the buying of the loan or buying of the employee by paying off his loan, I don't know to what extent-I know that is done in some cases because shortages occur in manpower. The people seeking manpower will use any known incentive to get them. It is like paying a bonus. They do it for football players, baseball players, and so forth, and this becomes a type of bonus. I don't know the answer to that. Mrs. GREEN. This is the only thing that slows me down right now on the forgiveness cancellation. It is the first time that anybody has presented a. logical argument to me for the continuation of it. Mr. PURDY. Then you would have to say, well, you have private employment versus public employment and get into a whole new philosophy of cancellation which I think is an awfully broad field. PAGENO="0264" 770 Our Council really has not discussed this in view of the problem which you pose here. In fact, this being a~ problem on a national basis, I am sure it catches us a little bit unaware. WTe knew it was being done. We did not realize it was being done on a scale that would affect our thinking on this legislation. But we have felt for a long time that~ this is really a discrimmatory clause. The girl who goes into social work gets no consideration here. She is going into public service which is even lower paid than many teaching positions. The next girl goes into teaching. So one gets cancellation and the other does not. It is not fair. We can't make everything perfect, we realize, but we feel that there is a need here. Now, from the standpoint of the NDEA loan program itself, I don't know that the law ever specifically stated that once this built up the repayment would create a revolving fund, in reality this could happen, but with cancellation features then a good portion of the repayment each yea.r is siphoned off and we don't build up a revolving fund. The figures, going back to the end of 1966 year, there have been $28 million canceled at tha.t time. We are now canceling $12 million or $15 million a year and this will expand pretty rapidly. If this were phased out at this time then within a few years we would be saving $35 million or $40 million a year even by 1975. So these are facts and figures that we need to think of as we get into the program. I think we object to it basically on the fact that it is discriminatory within classes of students on our campus. This is our main objection to it. Mrs. GREEN. Have you seer the study made by the college entrance examination boards? Mr. PURDY. I have just barely seen it. I have not studied it in depth but we did go over it yesterday. Mrs. GREEN. They do recommend that the forgiveness cancellation be taken out of the bill? Mr. PURDY. Yes. Mrs. GREEN. Mr. Gaul has called my attention to a pilot study that was clone-it was only 109 borrowers nuder the NDEA. It asked, do you expect that any of your loans will be canceled because you are or will be in teaching? The total response, yes, 57 percent, and no, 43 percent. Then if yes, is the fact that you do not have to pay back all your loan influence your decision to go into teaching? Ninety-one percent, no. Mr. Pmmi~. We feel this is a valid response because the amount of cancellation is really not enough to influence the lifetime career deci- sion. I pointed out in April when I had the opportunity to visit with you that frankly it is unbecoming to a profession to dangle a small monetary advantage in front of a 17-year-old to try to influence him one way or another on a career decision. That is not good education. These are the fundamentals. Mrs. GREEN. Agreeing with you at least for the moment on this one factor, have you thought of helping this committee make this politi- cally feasible by suggesting an alternative that would be attractive to the teaching profession so that as we would phase out the forgiveness PAGENO="0265" 771 cancellation we would phase something else in that would make an awful lot more sense educationally and politically? Mr. PURDY. Do you have any words of wisdom, Peter? Mr. GUNNESS. I suppose one of the things I hear, at least from the education school at Harvard, is that they don't have any scholarship money for general purposes. Most of the scholarship funds that come to students in education go into special programs so that their general financial aid picture is pretty lean although certain parts of their program, guidance, for instance is pretty well fixed in a research sense. So you have to generate or think in terms of programs that generally help support students going into education careers but in the frame- work of other programs of Government service as you suggested other people in the Congress are thinking about. But I have not thought about a quid pro quo exchange but it might have to be in that range. Mr. Prnunr. Whatever it would be, it would have to be something I think that would be a uniform consideration for all teachers, not just the ones who were poor while they were in college. Mrs. GREEN. In a measure, we have a sabbatical in terms of the NDEA institute case, a kind of modified sabbatical? Mr. PURDY. Rig~ht. Mrs. GREEN. I think maybe more attention should be given to that than a straight sabbatical. At this point it seems to be the best way. Mr. Pi~imi~y. Are there further comments here concerning that? Mr. DAVIs. You take, for instance, by 1975, it would be something like cancellation cost to the Government of some $34 million. Now being from a small school and being associated with a num- ber of small schools in the southern area, I know how much of a problem it is. Some of them have to turn down the possiblity of con- tributions to the NDSL because they can't meet matching funds. If even a fraction of that, one-half of it, were made available, it would potentially make them eligible to receive something like $500 million in NDSL funds which they probably would have to turn down, not in any particular school but it would particularly affect the smaller schools. Mrs. GREEN. Do you think we ought to consider something like the GI bill for teachers that have to be in combat zones? Mr. Puiwi~. You are very wise in saying that, of course, once aid is established it is difficult to remove it from a philosophical and political standpoint. I believe it could not be done without something in its place. Agan, whatever is done should be for the teaching profession gen- erally and not for just individuals which then puts the financial aid person on the spot. Who gets it and who doesn't? This is the spot we don't really like to be in. We have quoted a few figures here all of which concern the cost* and so forth which is written out. Are there any further questions on this? Mr. QUIR. I would like to go back to the question of matching. I understand that one of the suggestions is to use the work-study fund as matching. But `also this legislation would not require matching at all. PAGENO="0266" 772 Is that what you have said? Mr. Pmmr. In there somewhere there is a statement which says- Mr. QUIE. Are you going to get to it? Mr. Puiwr. Let us take it up while you have it on the floor here. We have simply said this, the way we understand the bill as written we have a 1-year status quo of all programs. While we look ahead to beginning fiscal year 1970 to amend these programs the amended pro- gram would require no EOG- matching. But we still have 1 year of operation here in which institutions have to dig up matching funds for EOG. We are asking if even during this next year, fiscal year 1969, we couldn't use work-study as match- ing even while we are phasing out the matching requirement alto- gether. Do I make myself clear? Mr. Q.UIE. Y~; you make yourself clear. We made the requirement for matching to make certain that the institution would utilize its other resources and thereby look at the needs of that student and to its own resources as well as the Federal Government. Wrhat, is more. the use of loans was to be encouraged because the needy student should carry that responsibility as well as those who are less needy. I understand from your testimony that you ~liink that the colleges will handle EOG money as responsibly without. the matching require- ment as they have been with it. Mr. PIJRDY. I am sure there would probably be some abuse in some places. I don't think we can really write laws that. will avoid all abuse everywhere but I do feel that the colleges are just as interested in edu- cation as the rest of the country. That is our business. We make some mistakes. I have faith in the financial a.id officers or I would not. be in the business. ~Te would require and must require a continuation of the institu- tional effort.. Now the thing we have, since we can't use work-study, then we stack up EOG against loans. Mr. OPIE. Plus the private money? Mr. PIJRDY. Yes, plus the private money. Whereas, if a boy who was actually on work-study and a girl at. the typewriter on work-study or a girl working in the library could use that as part of her matching, her loan would not have to be quite as large. Mr. QuiE. We will accept that. I think we ought to drop the re- quirement or the prohibition on the use of work-study. But. I still don't see what would be wrong with continuing in the law that. the thousand dollars, or up to a thousand dollars should not. be more than one-half of all other sources of financial assistance to the student. Mr. Pu~DY. I think you probably would get a lot of agreement within the committee. Mr. PARISH. Yes. I would like to answer that, if I may. As far as a CPA is concerned, we were on record as saying that the instit.ution would guarantee the additional amount, in other words, how it was matched was not a question but we would see tha.t the student, if we were given an EOG would be taken care entirely in the remaining amount of money that is concerned. So I think that would answer your objection. PAGENO="0267" 773 Mrs. HUNT. I `think it would be int.eresting to the subcommittee to know that at the western regional meeting of financial aid officers held in Portland in January, there was a iather extensive discussion of the educational opportunity grant programs for the disadvantaged. Repeatedly during `the deliberation, the challenge was put. to the college people, how are you becoming increasingly flexible to work with these disadvantaged? How are you modifying your academic requirements? I-low are you modifying your counseling programs? So that the individual needs of this new kind of student on your campus are going to truly be met. Finally, someone said to David Johnson, who is chief of the educational opportunity grant program, what is being done to increase the tlexibili'ty of your program which is designed to help us work with these young people? And this, I think, i's w'ha't this legislation, this prcposed legislation, does. It increases the flexibility markedly and, yes, it does give more responsibility perhaps to the financial `aid officer but it also says to the financial a'id officer, if in fact you have a student who is culturally sepa- rated and who is not yet prepared to handle employment and who is going `to have to borr'ow very modestly at the beginning, whether this be for psychological reasons or ot'her reasons, then indeed, if this stu- dent needs to have more of his' heed met with gift aid, with a grant, than would be possible if you can only use the grant to meet half of his need, I think this is how we are really going to reach disadvantaged students, bring them to the campus and to keep them there once we have brought them, and I do think we are going to have to look at aid in a little different wa.y especially for this group of students. Mr. QUIE. Is there a difference between institu'tions which attract large numbers of economically disadvantaged `students and those which attract a very few economically disadvantaged students? Mrs. HUNT. There i's `a difference, quite frankly, Congressman. I don't think that any of us is so extremely successful in attracting really large numbers `of truly separated students yet. I think we have a long way to go. I think this legislation will help us. Mr. QUJE. Aren't all the EOG students suppos'ed to be the separated ones-those who would not otherwise go to college without the grant? Mrs. HUNT. Yes, and there are degrees of separation. We are trying to dip down increasingly bringing in g'reater risk students all the time. These programs generate their own momentum for growth and they have become increasingly effective. We are only in our second year on our EOG program. Mr. DAvIs. I am concerned about the loan aspect of the thing. Being from the deep south where the secondary schools don't always prepare as thoroughly as they might, their students, although gradewise they are outstanding. Now if we get a youngster I am not so sure that over the long run we are doing him a favor to load him up with $400 or $500 initially as a loan because `if he does not make good `he does not have any place to go, nor is he prepared to do anything other than `to go back to his home town to some menial job which in many sections, even today, means $15, $20, $25. Now you `are asking him to pay $15 out of a potential earning per- haps of $60 a month. Are we doing him a favor to saddle `him up with a PAGENO="0268" 774 loan? It would be far better to give him some work as a major part and match only where necessary initially his first. year with a loan. Mr. QUIE. Do you mean that the graduates of your institutions still are susceptible to those kind of jobs? Mr. DAVIS. I am talking about the dropouts. I am not talking about the graduates. Mr. QUIE. That is a subject we are handling over in the other Sub- committee today. I wish I could be there at the same time. Mr. Puimy. Are there any other comments or questions along this line? Now just a matter of legality on NDEA loan collection under item 6, the present law does not provide for the cancellation of liability for the national defense student loan only in cases of bankruptcy, death or permanent disability. Of course, anybody who operates a long program finally gets to the place in a collection procedure that there are times when you just have made every effort, you need to write something off the books. All loan agencies have some such provision. This is one of the first things that the legal office of our school que~stioned. Okay, we make every effort, we try for 4 or 5 years and the boy does not take bankruptcy, maybe he disappears and we have not been able to locate him a.nd so forth, that every reasonable effort whether or not it would be well to provide legally for a loan to be declared uncollectible. Then if desirable, let the Office of Education take this loan, either for collection or decision whether or not the institution had made a sufficient effort and get it off the books one way or the other. Now this is in termination of the really final case as a means of finally disposing of them. Our proposal would leave it up to the Com- missioner to make the determination, first, that the institution had made an honest effort over a sufficient period, then either to take the loan or jointly declare it uncollectible. I wonder if there are any questions on that? Our business officers who in most cases are handling the collec- tions for us because they are the people who have the accounts and handle the money, have sweated it under this provision quite a lot and have brought it up repeatedly except now 10 years have gone by since the beginning of the program and we are getting to the point where on some of these we have to make a decision because the 10-year time is up. The effort has been made. We feel that nationally the collection pro- cedures have been tightened up pretty well. The delinquency rate is not had. In fact, it is according to how you describe a delinquent. But the really hard delinquent percentage is very low in this program. Now ~hose who are delinquent a month or 2 or 3 months, we may have a boy in Vietnam that we can't get a certain paper from him saving that he is in the service each year. So lie is delinquent until we hear from him. It is amazing how many teachers are delinquent until they get their teacher cancellation in. In other words, they are delinquent on ,June 1. We may not get the signed paper from their principal until August 15. It may not be the teacher's fault. But during that 60 days they are delinquent. PAGENO="0269" 775 But those delinquents we are not really worried about. We are goad- ing them along and trying to keep our paperwork up to date. But we are talking here about the hard delinquent; there comes a time when you have to make a decision. If there are no further questions on that, we do have item 7 con- cerning the work-study program which we like very much. We think it is one of the fine student financial aid. It gives the student work opportunities under supervision, work experience which particularly many of the disadvantaged need. They have not some- times had a job before. They have not had the experience of showing up for work on time, doing a good job, and getting paid for it at the end. In fact, I per- sonally had one girl show up at the cashier's window `and she ended up in my office. I tried to find out why. The facts are these: She did not know how to endorse a check. She had never been paid by check before. The cashier did not really under- stand. She had earned something, she owed something which should be paid at the cashier's window. This shows you some of the experiences which a good work program will give these disadvantaged people so that they can learn to be a part of the working world. Again, it is a matter of matching. The program is set up to fiscal 1970 for all programs to be on, both the loan and work program to go back to 90-10 matching which we like. The rise in Federal wage minimums is catching up with some of the colleges. So with increased wages on the one end and increased matching required on the other end it is putting a squeeze particularly on some of the small colleges. It is a problem. If the matching could go back to 90-10 we would like it. Admittedly, it is still a good thing for the institution but it is only a good thing for the institutions which have the budget with which to carry their percentage and who have a well-established work program. Some of the smaller institutions that need the work programs the most are having some difficulties along this line. Mr. PARIsh. I just want to add one point which we have pointed out here somewhat but I point out that many of the offcampus agen- cies that are doing work toward helping the disadvantaged and doing work in the poverty areas are going to find great difficulty in the 80-20 formula that goes into effect on August 20. If something could be done temporarily to assist them until this comes into effect for the consolidated program, it would be very help- ful to those particular small agencies. Mrs. GREEN. I wonder if we could ask you to summarize on the bal- ance because we have a number of other witnesses. Mr. PURDY. I have an item on the guaranteed loan program. Let me leave that for the last because I know you have hearings on that more specifically coming up in the next hour. There are a couple of other points I want to bring into this. I call your attention to the fact and I know you are not the appropriations committee but the recommended administrative level of appropriations for next year which is main- taining that which we ha.d last year, with increasing numbers of stu- dents, maintaining the level of appropriations leaves a gap. PAGENO="0270" 776 So, all programs will essentially be squeezed down a little if appro- priations cannot increase with enrollment. `We know what the problems are but we ha.ve this statement concern- ing the fact that this is what will happen if we just maintain appro- priations. Now you have an item in here, part C, Special Services for the Dis- advantaged Students. `We feel this would be a wonderful addition to the EOG program. Many of these students come to us needing special counseling, special tutoring. Anything that can be done so that the institution can provide this would be a great improvement on the program and it would be a good companion to the EOG bill. Naturally, we think that any funding that is done on the programs, as you have a.greed with us many times, if we could get it done in time in the 1970 extensions, the number of years and the forward funding would be a great improvement so that we can tell these students in time for them to make their plans. On the guaranteed loan program- Mrs. GREEN. Before we leave this, in the House bill unfortunately, the extention of the talent search was left out which is in the Senate bill. `What is your view and the rest of the members of the panel for combining the new program for the disadvantaged and the talent search and Upward Bound? Mr. PURDY. My own feeling is that talent search and Upward Bound have been fine pilot programs. It has been on contracts. The city has had it, this city ha.s done it, this State has done it. It has been done in different ways. I think we have learned something out of each one. I think from that experience there could very well be a combining of these two because frankly they are both working toward the same end. One is saying we are going to go out and find this student. The other is saying we are going to keep track of him and give him every help to success after he gets there. This is a combined program and I think there is some logic in not making it two different sections. I think the administrative cost of a combined program would be less than having an administration out here hunting students and a col- lege in here taking care of him. Mrs. GREEN. They both also go out and seek the students? Mr. PURDY. Yes. In reality they are seeking the same student using duplicated funds to go out and seek the same students. So I think there would very well be great wisdom in combining them. Mrs. GREEN. May I have comment of the other members of the panel on this point? Mr. GUNNESS. I react very similarly to Allan. One of the worries I have is that Upward Bound programs have attracted some really exciting kinds of people with ideas that are not usually accepted among educators. I do not mean to slight my profession but I think sometimes we have tended to not look to new ideas as fast and as quickly as and in as an adaptable a way as we might. Insofar as Upward Bound could maintain some of its real honest excitement and enthusiasm, combining would not worry me at all. But if it lost some of the very people who made it exciting and I understand they have difficulty keeping good people. PAGENO="0271" 777 Mi's. GREEN. Don't you have to balance keeping the exciting people and those who made it very dismal? Mr. GUNNESS. Yes. Mrs. GREEN. We have four Upward Bound programs in Oregon. Two of them are very good and high school principals are excited about them. Two others of the program, the educational community out there tells me they won't even cooperate. They won't take the stu- dents. They are dismal failures, and have most unfortunate impli- cations. Mr. GUNNESS. Insofar as the system can really police itself well and keep the good ideas coming to the top, I think I would support the notion that the two do have a kind of logic that makes some sense. Mrs. HUNT. My colleagues in Oregon have urged that we try to bring these programs together. Mrs. GREEN. The Talent Search and Upward Bound? Mrs. HUNT. Yes. Mr. DAVIS. I agree. We have had some wonderful experience with students in Upward Bound but I agree with Dr. Purdy wholeheartedly. Mr. PARISH. We have coordinated the two programs. In some cases the directors are doing both. Actually we feel that the coordination is working very well now and we hope it will be extended. Mr. GUNNESS. In Boston, all the Upward Bound programs are con- nected with the 408 program we run. Mrs. GREEN. You agree that the goals are the same, it would cut down the administrative cost? Mr. QUIE. You say "coordinated." What do you mean by that? We have had some complaints come in here on Upward Bound and Talent Search. It looked to me as though there was virtually no coordination. So it would not be on the national level, it would be down to a local level. Mr. GUNNESS. In Greater Boston we have a center, storefront guid- ance center essentially which tries to get in contact with students from various segments of the population in the city. We m'ake routine visits, for instance, we being the staff of the center or members of the educa- tional community who are associated with the center, visit Upward Bound programs and try to help them place students. We ha.ve not coordinated it so tightly that all the students in the Upward Bound program come into college through the 408 program. We do visit programs, we do work closely with the college people and act as kind of liaison in many cases. Mr. QUIE. Do you have the same people working in both programs and coordinating or do you have an artificial coordination? Mr. GUNNESS. The same people in an advisory capacity, not the same professional staff but the people at Brandeis, for instance, who are in- volved in the Upward Bound program are also the same people in- volved in the 408 program in an advisory way. Tufts the same way, Harvard the same way. There is a tremendous overlap in this respect. Mr. PARISH. The head of our 408 program in the University is the person who was director of the summer program for Upward Bound. He works all year along very closely with the people who are doing the Upward Bound year-round operation. PAGENO="0272" 778 Mr. QtTIE. You also mentioned the fact you did not want to lose good people who have exciting ideas. This is tossed out to us whenever we suggest coordinating programs, especially taking anything away from OEO. Why is there ever a danger of losing those people if an- other agency handles it? I never could understand why that would be t:he.case. It seems to me that innovative individuals would work in the program because they believe in it and have an opportunity of trying out something new. Mr. PTJRDY. I think all of us have to admit that the education com- munity is growing and it takes these ideas a little time to get our support. I include myself in the educational community. I think we can say things now and see avenues now that 3 years ago we did not. I think the thing that you have said here is that there are some people who have done some things that maybe I would have said 3 years ago could not be done, yet they have shown they could. The educational community is opening its eyes to many of the potentials, the exciting things that are happening, and we don't want to lose this. Now I am not indicating that, I hope I am not classified as one of the backward ones but I think our education generally has its spots in which given institutions, given individuals are just beginning to see what can be done here. Mrs. GREEN. What is the comparative amount of money that you people have for Talent Search and Upward Bound? Mr. P~RDY. I doubt if I can answer that. We have two Talent Search programs in the State, one centered in Kansas City and one in the Ozark areas, total financing this year is around $150,000. I do not know what the total financing is on Upward Bound in our State. Does anyone know? The Upward Bound generally is actually more than that but I couldn't say more than that. Mr. QUIE. Upward Bound is an expensive program? Mr. Puiwy. That is right. As I say, I do know that in Missouri we are spending around $150,000 on two 408 programs. But it does not cover the whole State. Mrs. GREEN. In terms of the Federal appropriation, Upward Bound is financed much more generously than Talent Search? Mr. Puimr. Right. Mrs. Grn~N. That might have something to do also with the "PR" expenditures down there; they come very high. Have any of you had calls from the Director of the Upward Bound program or people in that office asking you th set aside money in the other student financial aid programs for Upward Bound program stii- dents that are coming to your college? Mr. Puiwy. Yes. Mrs. GREEN. From whom do you get those calls? Mr. Puimr. I don't know whether it is the assistant director or whom. Lloyd Brooks in my office has been in close touch with Upward Bound programs around the State. He is my contact man. But it gen- eral~v comes from sort of the assistant director level, the people who are kind of out working with the students and say, "Look, I have three students, one wants to come to the University of Missouri. What can you do in the way of making sure they have finances?" Maybe this is 6 months ahead of time. PAGENO="0273" 779 Mrs. GREEN. Did this come from the national office? You all have had these calls? Mr. PARISH. We actually went out and asked them to call us, and we insisted that they do this so that we could be prepared to have cer- tain allocations set aside for this type of student. Mrs. GREEN. Tell me the justification for setting aside money under the Work-Study or EOG or NDEA or anything else for a person who is enrolled in Upward Bound. Mr. PURDY. To me it is just another disadvantaged student who has a potential in college. We promise it to him just like we do an EOG student, whether he comes through Upward Bound or not. Mrs. GREEN. Do you have enough EOG money and enough Work- Study to go around to all the needy students? Mr. PmiDY. No, we don't. Mrs. GREEN. Then will you tell me the justification for having to spend a thousand or more dollars, sometimes a great deal more than that on an Upward Bound student and that you set aside money under the other student financial aid programs and Joe Doakes, who is making good and who was motivated and who came from an equally poor family and who worked just as hard, maybe harder, and there is no money in Work-Study for him and there is no money in Economic Opportunity Grants and there is no money under NDEA. Will you tell me the justification in a Federal program in having ieople in Upward Bound set the money aside? Mr. PURDY. There is none, I agree. In my own case, speaking for my own institution, we have not had that many Upward Bound people call in to us. We are still out seeking them. We look for Upward Bound and we look for the Joe Doakes who have no con- nection. We work through the high school counselors. I would say we are still taking care of the Joe Doakes that we can get in contact with as well but our Upward Bound population, frankly, is disap- pointingly small, very small. I hate to admit this but I don't believe we have 10 Upward Bound students. Mrs. GREEN. Is it not true that if you are asked to set aside money and if indeed you do so, a practice which is not required by law and a practice which I intend to amend the law to prohibit, you are putting an Upward Bound student at the head of the line and as a result you are putting others farther down the line and the funds may run out? Mr. PARISh. That is right. Mr. GUNNESS. I was not aware that colleges were in fact putting money aside. We make it a point to use Upward Bound information as an identifier just as we would information- Mrs. GREEN. I am talking about preferential treatment. Talking of Upward Bound, Washington, and directors in the State as a matter of policy are asking for preferential treatment for students enrolled in Upward Bound. Is that correct? Mr. PARISH. We would think so, particularly since there is some Federal money spent on this program we feel we would give pref- erential treatment to the person if we were short of funds. The, only funds we are short of are the EOG funds themselves. Sometimes we go out and raise our own educational opportunity grant funds. 92-371-6S-pt. 2-18 PAGENO="0274" 780 There is no question about it, they would be given preferential treatment because so much money is being spent in recruiting these students. Mrs. GREEN. They already have had that advantage sometimes to the tune of several thousand dollars. Then we say because you have been enrolled in that we will put you at the head of the line on everything else. Mr. PURDY. Right. Mrs. GREEN. Mr. Davis, do you want to comment? Mr. DAvIs. I am just like he is. In many instances, I have not had the funds with which to give preferential treatment. We have, I be- lieve, some 14 or 15 this year. We had other calls and were asked to give preferential treatment but the calls did not come until 10 days before school opened. I told them I was sorry, I was committed all the way. Mrs. GREEN. My own personal feeling is that this kind of policy is really in conflict with congressional intent. I see absolutely no justifica- tion for this at all. I regret that the National Director of Upward Bound has had this policy for some time. Are there any other questions on the disadvantaged? 1~fr. Pmwy. I think we will just wind up with one brief statement on the guaranteed loan program. First of all, the guaranteed loan pro- gram is still in considerable need for credit. It has its problems. We are interested in finding again the college boards study shows that 3~ percent of the borrowers under guaranteed loans are under the $6,000 income, which means that we do have students who need loans who are being helped. Fifty-eight percent are under $9,000. Then we go on up to where there are those maybe who have no need at all. From the financial aid standpoint when the student who does need a loan goes to his bank and cannot get it either because the bank is not participating at all or because the bank has loaned out $100,000 and the directors have de- cided that is all they can loan or because that the student's parents do not have an account at that bank, basically we feel that the program is being limited because the lender feels that he is not getting compensa- tion for the service rendered or fair compensation. Now we can say that we would like to see the program work. There are financial experts far better than we to say what the changes should be to make it work. It has been suggested, of course, increase the in- terest, a handling fee. Now the financial aid person under the current regulations has very little to say about it. All we can do is rubberstamp, he is in school, period. That is really all we can say about it at this time. Frankly, I think we would like to have a little bit more to say a.bout it if it is to be a program to help those who need credit. I think we are in a position to help out considerably. I had a situation in December in my own office in which we had some applications piling up, 25 to 30 of them. We were short on guar- anteed funds. I said, call each of these in and talk with them a.nd see what their real needs are. The applications were for around $22.000. After talking with these kids we took care of all of them with $16,000. They were well taken care of but they had asked for the traditional $1,000 apiece when many of them could really get along on less than that. PAGENO="0275" 781 So we can say that there are several suggestions here. We are not wise enough to say which is the best plan. We would be glad to enter into any conversation that might come up with your next hearing that is coming up. Do you have further questions? Mr. HATHAWAY. On your figures, you mean 58 between the $6,000 and $9,000? Mr. PtTRDY. No, a total of 58 percent under $9,000. So the difference between $6,000 and $9,000 would be the difference between 3~ and 58 percent. Mr. HATHAWAY. Forty-two percent who have come over $9,000? Mr. PURDY. Yes. Mr. HATHAWAY. You don't have any breakdown above the $9,000? Mr. PURDY. I don't have. This came from that study which you have. Mr. HATHAWAY. We will find it in there. Mr. PURDY. We do appreciate the opportunity to visit with you on these things. We are open for questions at any time, anyway. Mrs. GREEN. Mrs. Hunt, you did not comment on this prefereiitial treatment. Mrs. HUNT. We have not had that kind of request but I certainly agree with you that any time that preferential treatment is given when we have the funds that we presently have to work with, it means that someone else is going to be denied. Mrs. GREEN. Do a.ny of the others-I think there was some head shaking which does not show up very well on the record. Do you want to comment on that? Mr. GUNNESS. We give preferential treatment to the 408. We don't see many Upward Bound children in numbers large enough to have this be a problem right now. Mrs. GREEN. If you just have one, if you have one Upward Bound that is given preferential treatment and one other that comes from the same socioeconomic group that does not get it, isn't that important? Mr. GUNNESS. It sure is. Mrs. GREEN. Do you favor preferential treatment? Mr. GUNNESS. No; I don't. Mrs. GREEN. Would the rest of you like to comment for the record? This might be important. Mr. PURDY. I certainly would say from the standpoint of myself that I would take every student on the merits of his situation rather than whether he had been an enrollee in an Upward Bound program or not. I would give no preferential treatment. Mrs. GREEN. My thanks to all five of you for your comments. (Mr. Purdy's prepared statement follows:) STATEMENT OF ALLAN W. PURDY OF THE NATIONAL STUDENT FINANCIAL COUNCIL Madam Chairman and Members of the Committee, the National Student Financial Aid Council appreciates the opportunity to discuss the provisions of H.R. 15067. Our Council is composed of representatives of regional organizations of student financial aid administrators in both private and public institutions, large and small, throughout the nation. I am Allan W. Purdy, Chairman of the Council, from the University of Mis- souri. I am also Chairman of the Financial Aid Commission of Student Per- sonnel Associations. With me today are: Mrs. Jean Hunt, Lewis & Clark College; L. W. Davis, Tuskegee Institute; Peter Gunness, Harvard College; and Carroll Parish, U.C.L.A., who is also Chairman of the Financial Aid Commission of the American College Personnel Association. Other members of the council PAGENO="0276" 782 attending are: James G. Dwyer, Marquette University; John D. Jones, Arkansas A & M; Jerome R. Murphy, University Montana; James B. Sanderson, Univer- sity of Utah; Hugh Voss, Washington University, St. Louis; Ken Wooten, Uni- versity of Mississippi; and Arch W. Hunt, Baylor University. 1. Our comments will deal only with Title IV of HR. 15067 concerning aid to students. Financial aid has grown up in several parts-loans, work, and gifts. We heartily approve the amendments which would consolidate these pro- grams for the purpose of funding and administration. The flexibility provision of the 20 percent transfer of funds between the programs of course places a greater responsibility on the individual financial aid officer. It also enables him to exercise his best judgment in making the aid dollar effective and in giving the maximum help to deserving students. 2. Since the programs are growing and the administrative costs are rising, it is encouraging to the institutions to see the provision of three percent for administrative costs. 3. With the consolidation of the programs, it is logical to combine the advisory committees into just one committee instead of three (Part E, Section 471). 4. Since its inception in the 1966-67 academic year, the Educational Oppor- tunity Grants Program has brought increasing numbers of exceptionally needy students to institutions of higher education. We recognize the value of the existing EOG Program and we see in the proposed legislation [Section 404, subsections (a), (b), and (c)] the opportunity to more fully achieve the pur- pose of this aid. We support retention of the maximum award at ~1,000 per year, and endorse an award minimum subject to review by the Commissioner. The provision to extend awards to students in regular five-year degree pro- grams is a needed refinement. We are especially enthusiastic about grants for students who require remedial or noncredit courses. An extension beyond the four years would also be justified for the disadvantaged student w-ho is "essen- tially a full time student" but who on the advice of the institution carries some what less than the normal semester or quarter hour load. The elimination of an individual grant matching requirement provides for in- stitutional flexibility in the packaging of student aid, and certainly institutions should be required to maintain their efforts for aid as each has done in the past. We feel an immediate urgency exists for the deletion of the restriction against using CWS funds as a source of matching aid for the EOG for the 1968-69 school year approval of such an amendment effective Jviy 1, 1968, on the basis of average borrowing habits, under this program over a five year cancellation period, cancella- tion would be afforded the average student in amounts between i$400 and ~425. These averages will likely get larger. Even if it were sound educational philosophy to motivate a student to choose his career on the basis of loan forgiveness, we doubt that $400-~425 is a sufficient amount to accomplish that purpose. More that ~28,000.000 in principal and interest had been cancelled by the end of the year 65-66. If cancellation were phased out, it is estimated that savings an- nually will exceed ~34,000,000 by 1975. If it was ever hoped that NDSL repay- ments would create a revolving loan source, this annual attrition w-ouid prevent such a plan from succeeding. 5. As reported in the testimony by the National Student Financial Aid Council before this Committee on April 27, 1967, we strongly question the advisability of continuing the teacher cancellation provisions of the National Defense Student Loan Program. Currently the gifts to many potential teachers under the EOG program logically reduces the need for a gift program which continues after graduation. Cancellation for full-time teaching service was introduced with the anticipation that this provision would affect significantly the number of college youngsters who choose teaching as a career. It has been determined from analysis that teacher cancellation provisions 1~ave not resulted in an appreciable increase over and above the normal number of students entering the teaching field. In a 1968 study of Federal Student Loan Programs conducted by the College Entrance Examination Board which has been made available to this committee, it was shown that no evidence could be found to support the contention that the cancellation provision has materially contributed to an increase in either the number or quality of teachers. The report states that during the nine years the National Defense Student Loan Program was instituted, the rate of increase in the number of classroom teachers has closely paralleled the rate of increase in the number of high school graduates, the number of college graduates, and the num- ber of college graduates with bachelor's degrees in education. Moreover, stutistical information indicates that this same parallelism existed during the four years preceeding the National Defense Student Loan Program. The original thesis was that teacher cancellation would be instrumental in PAGENO="0277" 783 shaping vocational career choices. In 1965 and 1966, the average teacher cancella- tion benefit was ~84 and $85 respectively. Various proposals to extend cancellation to other critical manpower needs, to veterans, and other groups makes the total anticipated cost of this provision somewhat staggering. The present law discriminates against these and other groups as well as against teachers who do not borrow, and against potential teachers who borrow from other funds. With the cancellation of either 10 percent, or 15 percent, for certain groups with an extended list qualifying each year, an inordinate amount of time and energy has been devoted by colleges and the Office of Education staff to the can- cellation feature. We feel that the cancellation provision has not accomplished enough to warrant this expenditure of time and money. Therefore, we are of the opinion that Section 205(b) (3) of the National Defense Education Act should be deleted, thereby: (a) eliminating the discriminating provisions of the Act, (b) eliminating the paper work and ever increasing problems of collections asso- ciated with cancellation privileges, and (c) otherwise restoring the program to a true loan program for students. 6. At the present time the law provides for the cancellation of liability for a National Defense Student Loan only in cases of bankruptcy, death or permanent disability. By the very nature of the program, which provides financial encourage- ment to impecunious students, some difficulties in collection are to be expected since usual credit standards are ordinarily inapplicable in the awarding of Na- tional Defense Student Loans. Currently, institutions have no mechanism for re- moval of uncollectable accounts and, thus, they remain as "deadwood" in the institutional records. It is thus recommended that under Section 405(c) (1) the Commissioner be granted specific authority to determine the uncollectability of National Defense Student Loan accounts and specify by regulations a mechanism for assigning such accounts to the United States Office of Education for collection or cancel- lation as circumstnces dictate. 7. We support the provisions in HR. 15067 relat.ing to College Work-Study. It brings the program in step fiscally with the other major student aid programs. it is considered that the College Work-Study Program is one of the most vital parts of financial aid and is of particular value for the disadvantaged student. it provides work experience of a caliber which is seldom matched by other employment opportunities and permits the disadvantaged student to gain job training which would in most cases be unavailable to him elsewhere. Some problenis are created for both off-campus public agencies and institutions of higher education in meeting the existing 85 percent Federal and 15 percent matching formula. Even greater problems are anticipated when the present f&r- mula is changed to 80 percent Federal-20 percent matching on August 20, 1968. Some campuses will have difficulty in meeting the wage scale imposed by the Fair Labor Standards Act while at the same time the institutional matching share is greater. This will in effect cause a reduction in the number of students on the Work-Study Program in some schools. It is strongly recommended that provisions be implemented permitting the formula to be amended to 00 percent Federal and 10 percent matching for fiscal year 1969. 8. The Guaranteed Loan Program has proved `to be a valuable part of the Student Aid program. In an 18 month period ending December 1967 over 685,- 000 loans totaling more than $550,000,000 were made to `students. An analysis of 287,000 guaranteed loans shows that 32% of the borrows came from fami- lies with income levels under $6,000 and 58% under $9,000 annual income. The Student Financial Office is daily confronted with the situations of the students who do not have access to a guaranteed loan. This lack of opportunity is due primarily to the fact that a sizeable portion of the potential lenders are not participating in the program. In addition a sizeable majority of those who are participating have placed restrictions on the amount of funds' available for this purpose. Most are restricting the loans to students whose parents have an established account with the lending institution. It appears that the reluctance of many potential lenders is primarily due to the fact that the program does not provide a reasonable return for the service rendered. Changes in the program which would improve the lender return seem quite justified. The financial aid officer `has another concern which may have a direct bearing on the program. Under current practices, the interest subsidy cost to the Federal government will mount rather sharply. Assuming that there is an upper limit of total funds available for financial aid to students, we wonder if the guaranteed loan program will in time siphon off funds badly needed in other programs? PAGENO="0278" 784 The removal of all interest subsidy at the beginning of the payoff period would save a substantial amount of Federal dollars and would place a greater degree of responsibility upon the borrowers. In addition it would add an incentive for the loan to be paid off readily after graduation. A further advantage would be the simplification of administrative detail for the lender during the pay out period. The guaranteed loan program offers many problems and as you know, it is difficult to get a general agreement on the best way to improve it. Since a de- tailed discussion will be presented by the National Conference of Executives of Higher Education Loan Plans later in this hearing, we will reserve further comment at this time. 9. We believe the present level of funding as recommended by the Administra- tion is inadequate to enable Student Aid programs to keep up with expanding enrollments. This recommended level might seriously handicap the newest of the programs, the Educational Opportunity Grants. EOG will be serving a new group of students next year, the first class aided will not graduate until June of 1970, and the funds suggested will not adequately meet the needs. By comparing the recommended levels of funding ($190 million for the NDSL Program, $140 million for the CWSP Program and $148 million for the EOG Program) with the requests of the colleges and universities ($247 million for the NDSL, $227 million for CWSP, and $220 million for EGG), one can visualize the number of needy students who will be unable to receive aid. Under the EOG Program, colleges and universities have been urged to make advance commitment of funds to students in the eleventh and lower grades. The projected curtail- ment of funds will discourage colleges from making these commitments. Three of these programs, NDSL, CWSP, and EOG, are designed for needy students. In contrast, the Guaranteed Loan Program was designed as a program of convenience. It is our assumption that a large number of borrowers under the GLP would be able to attend college without these loans. Hence, if there are shortages of funds, we strongly urge that funding priorities be given to those programs wthich are the most effective in enabling students to secure higher education. 10. While we are on the subject of funding. we sincerely appreciate all efforts at all levels to provide advance funding so the institutions can get the word to their students in time for them to plan for the coming year. This is vitally important. The National Council heartily endorses Title IV, Part C, Special Services for Disadvantaged Students. The stated purpose highly complements the other pro- grams of student financial aid and will enable the institutions to assist and en- courage students of limited financial, social, and educational backgrounds in realizing educational objectives to which they are entitled. When a significant number of such students are included in a student body, it presents special prob- lems of counseling and tutoring. Funds from this act will help the institution meet these problems as well as other social and financial responsibilities to the highly disadvantaged student. 12. Again we thank you for the opportunity of presenting our thoughts and of working together with you and with the Office of Education in a unified effort to keep the door of educational opportunity open for those who need help. Mrs. GREEN. The next person that we have before the. committee is our colleague, the able Representative from New York, the Honorable Bill Ryan. Mr. Ryan, I regret that we have kept you waiting. STATEMENT OP HON. WILLIAM P. RYAN, A R~E~PRESENTATIVE IN CONGRESS PRO1\~ THE STATE OP NEW YORK Mr. RYAN. I enjoyed the discussion, Madam Chairman. Mrs. GREEN. Will you proceed on the point. I am aware of your particular problem, Congressman Ryan. I don't know whether you want to have your full statement placed in the record at this point and you summarize it or whether you want to read it. Mr. RYAN. Suppose I proceed. I think the statement is concise and explains the problem with which I am concerned and which, of course, PAGENO="0279" 785 I have brought to your attention from time to time over the past several years. I appreciate, Madam Chairman, the opportunity to appear here in support of the concept of my bill, H.IR. 1248, which would guarantee relocation payments for persons and businesses displaced as a result of construction under the Higher Education Facilities Act. I hope that the substantive provisions of this bill can be made a part of the bill which this distinguished subcommittee recommends. Par- ticularly in urban areas, where vacant land is not available, the expan- sion of colleges and universities often conflicts with other interests. My bill is intended to soften a side effect of university expansion- the dislocation of families and businesses in the surrounding coin- munity. Institutional expansion in a city causes great personal hardship and expense to individual residents of the community, who are displaced from their homes. This is compounded when there is no relocation assistance. A university's plan for expansion, however desirable from an educa- tional standpoint, must be balanced against the displacement and inconvenience to residents of the community. Where Federal funds enable `an institution to expand, thereby contributing to the displacement of persons from their homes and businesses, the Federal Government has a responsibility to require that relocation assistance be provided. In my district in New York City, Columbia University during the past few years has purchased some 93 surrounding apartment dwell- ings for conversion to dormitories or academic facilities or for demoli- tion in order to clear sites for new construction. The owner of the dwelling, of course, is compensated. But the resi- dents are not entitled by law to relocation benefits or assistance with moving expenses, and are usually unable to find comparable housing. Similarly, proprietors of small businesses are frequently displaced on short notice, and receive no compensation for the burden of having to relocate. If they are forced to move to another neighborhood, they will probably lose the goodwill of their familiar customers. They face moving expenses, higher rentals, or may be driven out of busi- ness entirely. Where Federal funds finance the expansion of universities at the expense of tenants and businessmen, there should be Federal reloca- tion guarantees. Ironically, there are guarantees when urban renewal funds are involved. Section 114 of the Housing Act of 1949 requires local public agen- cies to pay benefits to families, businesses, and nonprofit organizations displaced `as the result of urban renewal action. These benefits include moving expenses and relocation benefits. They are reimbursed by the Federal Government. In the Housing and Urban Development Act of 1965, relocation provisions were expanded to include displacement as the result of low-rent public `housing, mass transportation, public facility loans, open space land and urban beautification, and neighborhood facilities, as well as urban renewal. It is inconsistent that relocation benefits are not required where displacement results from federally financed construction under the Higher Education Facilities Act. PAGENO="0280" 786 But there is another anomaly. If land for educational facilities is acquired through urban renewal and turned over to an institution, re- location benefits are provided. This has happened in a minority of cases. The University of Chicago is one. If on one block in a city, a university expands through the use of Federal urban renewal funds, the families and businesses displaced receive relocation compensation. But, if in the next block, which is not part of an urban renewal plan, the same university purchases build- ings which it intends to demolish for the construction of classrooms using Federal grants or loans, families and businesses displaced are not compensated. My bill would essentially extend the benefits of section 114 of the Housing Act of 1949 relating to relocation payments to construction under the Higher Education Facilities Act of 1963. What it does is to bring to people who are displaced under your legislation the same. benefits that those people would get if they were displaced under urban renewal action. The text of the bill is before the committee. I have one suggested change in it which I could take up with counsel or cite here very briefly. On page 2 of that bill, line 6, I would add language after the word "displacement," which will read "and other relocation adjustment payments," making it perfectly clear that all the benefits of section 114 of the Housing Act of 1949 would be available. I will not relate what those benefits are because they are available to the committee. They are spelled out in the act and in my full state- ment. I urge then that, as you consider amending the Higher Education Facilities Act, you take cognizance of this very real problem which exists in any area., whether it. is a. major city or a small town, where vacant land is not available and where a college or university acquires land in order to construct facilities under your act, and the result is the dislocation of people and businesses. This is a very serious prdblem, and I think in all equity that indi- viduals so affected ought to have at least the same benefits that they have under the urban renewal program. I am glad to expand on this in any way the members of the corn mittee desire. (Congressman Ryan's statement referred to follows:) STATEMENT OF HON. WILLIAM F. RYAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK J am pleased to appear in support of H.R. 1248, which I introduced to guarantee relocation payments for persons and businesses displaced as a result of construc- tion under the Higher Education Facilities Act. Grants and loans have steadily increased since the inception of this program. In FY 190T. $T8T.89~5.OO0 was allocated (S537.O~3,OOO in grants: $200842000 in loans). r have been a firm supporter of Federal assistance for higher education facilities construction. But particularly in urban areas, where vacant land is not available, the expansion of college and university facilities often conflicts with other inter- ests. My bill is intended to soften a side-effect of university expansion-the dis- location of families and businesses in the surrounding community. Jn~titutiona1 expansion in a city causes great personal hardship and expense to individual residents of the community, who are displaced from their homes. This is com- pounded when there is no relocation assistance. PAGENO="0281" 787 A university's plan for expansion, however desirable from an educational standpoint, must be balanced against the displacement and inconvenience to residents of the community. Where Federal funds enable an institution to expand, thereby contributing to the displacement of persons from their homes and businesses, the Federal gov- ernment has a responsibility to require that relocation assistance be provided. In my district in New York City, Columbia University during the past few years has purchased some 93 surrounding apartment dwellings for conversion to dormi- tories or academic facilities or for demolition in order to clear sites for new construction. The owner of the dwelling, of course, is compensated. But the residents are not entitled by law to relocation benefits or assistance with moving expenses, and are usually unable to find comparable housing. Similarly, proprietors of small businesses are frequently displaced on short notice, and receive no compensation for the burden of having to relocate. If they are forced to move to another neighborhood, they will probably lose the goodwill of their familiar customers. They face moving expenses, higher rentals, or may be driven out of business entirely. Where Federal funds finance the expansion of universities at the expense of tenants and businessmen, there should be Federal relocation guarantees. Ironi- cally, there are guarantees when urban renewal funds are involved. Section 114 of the Housing Act of 1949 requIres local public agencies to pa~ benefits to families, businesses and non-profit organizations displaced as the result of urhan renewal action. These benefits include moving expenses and relocation benefits. They are reimbursed by the Federal government. In the Hous- ing and Urban Development Act of 1965 relocation provisions were expanded to include displacement as the result of low rent public housing, mass transpor- tation, public facility loans, open space land and urban beautification, and neigh- borhood facilities, as well as urban renewal. It is inconsistent that relocation benefits are not required where displacement results from federally financed con- struction under the Higher Education Facilities Act. But there is another anomaly. If land for educational facilities is acquired through urban renewal and turned over to an institution, relocation benefits are provided. This has happened in a minority of cases. The University of Chicago is one. If on one block in a city, a university expands through the use of Federal urban renewal funds, the families and businesses displaced receive relocation compensation. But, if in the next block, which is not part of an urban renewal plan, the same university purchases buildings which it intends to demolish for the construction of classrooms using Federal grants or loans, families and busi- nesses displaced are not compensated. My bill would essentially extend the benefits of Section 114 of the Housing Act of 1949 relating to relocation payments to construction under the Higher Education Facilities Act of 1963. It provides: "RELOCATION PAYMENTS "SEc. 408. The Commissioner shall not approve any application for a grant or loan under this Act unless he shall have first obtained adequate and enforcable assurances that the institution, board, or agency to which such grant or loan is made will pay, to persons displaced from their places of residence or business by or as a result of the construction to be financed with the proceeds of such grant or loan, amounts covering the moving expenses and direct losses of property incurred by such persons as a result of such displacement within the same mone- tary limits and subject to the same conditions as those applicable to the relocation payments provided for under section 114 of the Housing Act of 1949." Section 114, in summary provides that a family displaced from its residences shall receive assistance in finding suitable housing, and that a relocation ad- justment benefit shall be paid to it for up to one year, totaling not more than $500.00, where a family is unable to find suitable housing within twenty per- cent of its income. The payment works in time same w-ay as the rent supplement program, except that it cannot total more than $500.00, and it extends only one year. It is similarly available to single individuals over sixty-two years of age. In the case of a small business or a non-profit organization meeting specified criteria, a "small business displacement benefit" of $2500 and in addition, moving and property loss compensation up to $3,000 are to be paid. It is important to note that, in the case of urban renewal, relocation benefits paid in FY 1967 totaled $37.5 million or 8.5 percent of a total program expenditure of $370,600,000. PAGENO="0282" 788 In order to ensure equitable treatment for persons displaced by construction under the Higher Education Facilities Act, I urge approval of H.R. 1248. Mrs. GREEN. I am very, very sympathetic to this problem. I am keenly aware of it not because of college construction in my own dis- trict but because of highway construction where the renters, the busi- nessmen who are renting property suffered losses a.s high as $40,000. Their business was done away with by a Federal program and be- cause they were renting they received no adjustment costs or no benefits. I think that something must be done about it. I am wondering, have you given any thought to legislation which would have the same kind of benefit for a person who is renting, whether it be because of high- way dislocation or college construction or housing or some other Fed- eral program? Mr. RYAN. Yes, I think ultimately what is desirable is an overall relocation program which would cover any federally assisted con- struction, whether it is highways or hospital construction or education facilities construction. However, we face the proposition that historically the Congress has acted in this area in terms of the particular piece of substantive legislation which was before a. committee which was confronted with the side effects of the principal legislation. For instance, in housing when the HHFA was confronted with the consequences of displacement of a large number of people through renewal action, then relocation benefits were written into the law and were expanded from year to year as the consequences became more ap- parent to the Federal housing authorities. So in this situation, if we really want to bring about a result, it should be done by the committee which has jurisdiction over the par- ticular kind of construction which results in displacement. If we wait until Congress is prepared to consider a bill which will reach across the board, we are unlikely to see any results for many more years. Mrs. GREEN. Are there any questions'? Mr. Qun~. Would this apply to both private and public institutions? Mr. RYAN. This would apply in any case where a loan or a grant is made under your bill. Mr. QUJE. It is only public institutions that have the. right, of eminent domain. That is, anybody can be moved out against his wishes. Mr. RYAN. Oh, wait. The problem is more acute with a private in- stitution which, although it may not have the right of condemnation, nevertheless, for all practical purposes, does exert similar power in a community. If a university with large financial resources acquires an apartment building in a private transaction, the tenants in that apartment build- ing are sub jec.t to being vacated immediately. Immediate eviction faces them. So they are in exactly the same position a.s individuals whose residences may have been acquired through public condemnation. The effect on individuals is exactly the same. Mr. QUIE. Can they be evicted before the termination of their lease? Mr. RYAN. In New York City, practically no one has a. lease any more. In rent. controlled buildings, which are the usual obstacles to institu- tiona.l expansion, people are statutory tenants. A university in New York City may evict a statutory tenant on 30 days' notice. PAGENO="0283" 789 Mr. QUIE. With respect to the public institutions where there is only State money involved, has there been provision made for relocation of the tenants? Have the public institutions used this condemnation right? Mr. RYAN. Where the State university acquires land by purchase or condemnation, I understand there is provision for moving expenses. Both public and private institutions in New York may use the State dormitory authority law for the purpose of constructing dormitories and faculty housing. In that situation there are no relocation benefits available. Mr. QrnE. That is all. Mrs. GREEN. Congressman Hathaway. Mr. HATHAWAY. Just one question. Would you consider cost sharing since this is not all Federal money that is going into it? Mr. RYAN. I have left open in my bill the question of how the relo- cation benefits are to be paid. I would suggest that the Administrator could by regulation either include the cost of the relocation benefits in the loan or grant or re- quire as a condition of a loan or grant that the institution itself put aside funds and give assurances that they would be spent for reloca- tion benefits. A loan or grant could be conditioned on such assurances. This is a question for counsel and the committee-how to effectuate this. The important point is that either as part of a loan or grant the cost of relocation be included or that, before the loan or grant is made, assurances be given by the institution that it has the funds from what- ever source to make these payments and will make them. Mr. HATHAWAY. Or on some kind of matching basis? Mr. RYAN. Or on a matching basis. In other words, the issue I am raising is the plight of the displaced person who has no recourse, does not get assistance. And there is no legal requirement that he get assist- ance now. Mr. GREEN. I know that you have not made any study of the cost of this but have any members of your staff made any study of what it would cost if this were done at Columbia University which I know is your primary concern at the moment? Mr. RYAN. We looked at what the percentage was in terms of urban renewal. I don't think it would be as high in this case. In fiscal year 1967, relocation benefits amounted to about 8½ percent of the total urban renewal program in the country, a program of $370,600,000. It is going to vary with the locality, what the cost of housing is in the locality and the availability of housing. Mrs. GREEN. Thank you very much, Mr. Ryan. This will be taken up by the committee. I think we are faced with the equity which you pose to the person who is renting and has his business destroyed and who suffers a great loss personally. We are also faced with the dilemma that grows out of the fact that construction facility funds are cut from $150 to $75 million for next year and how we balance one against the other. Mr. RYAN. I think there is this problem; but at the same time if we are going to finance construction and the result of that construc- tion is severe hardship and inconvenience to individuals, we also have to take that into account. In one way or another, as Congressman Hathaway suggested, there PAGENO="0284" 790 are ways of accomplishing this and insuring some measure of protec- tion for displaced persons before approval of an application. The procedure might he left to the judgment of the Administrator if he has flexibility, and if there. is a university or college. that does not have `the funds, then the Administrator might take that into account. A more wealthy mstitut~on would be able to make its own financial arrangement.s in this regard, if required to do so in this legislation. Sometimes legislators `have to instill a. conscience in universities. Mrs. GREEN. Thank you very much. Mr. RYAN. Thank you, Madam Chairman. Mrs. GREEN. The next panel before the committee is a representative from National Conference of Executives of higher education loan pro- grams: Kenneth R. Reeher, executive director of the Pennsylvania Higher Education Assistance Agency. He will `be accompanied by sev- eral of the Federal liaison executives. Would you like your colleagues with you? Mr. REEHER. If we may. Mrs. GREEN. Mr. Lee Noel. vice chairman of the National Confer- ence and program director of the Illinois State `Scholarship Commis- sion; Duffy Paul, executive director `of the College Foundation, Inc., in North Carolina; Elwood Hollister, acting `executive director, New York Higher Education Assistance Corp.; Richard Petrie, executive dire~t'or, Louisiana Higher Education Assistance Commission; Wil- liam Nester, assistant director, New Jersey Higher Education Assist- ance Corp., and Edward McCabe, Washington counsel, United Student Aid Funds, Inc., New York City, N.Y. Mr. REEHER. ~`Ia:dam chairman, Mr. Cosgrove, from Massachusetts, was omitted from the witness list but he is on our cover sheet. Mrs. GREEN. Mr. Reeher, will you proceed in the manner you wish? STATEMENT OF KENNETH R. REEHER, EXECUTIVE DIRECTOR OF THE PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, ACCOMPANIED BY LEE NOEL, VICE CHAIRMAN OF THE NATIONAL CONFERENCE AND PROGRAM DIRECTOR OF THE ILLINOIS STATE SCHOLARSHIP COMMISSION; DUFFY PAUL, EXECUTIVE DIRECTOR OP THE COLLEGE FOUNDATION, INC., IN NORTH CAROLINA; EL- WOOD HOLLISTER, ACTING EXECUTIVE DIRECTOR., NEW YORK HIGHER EDUCATION ASSISTANCE CORP.; RICHARD PETRIE, EXECUTIVE DIRECTOR, LOUISIANA HIGHER EDUCATION ASSIST- ANCE COMMISSION; WILLIAM NESTER, ASSISTANT DIRECTOR, NEW JERSEY HIGHEB~ EDUCATION ASSISTANCE AUTHORITY; JDSEPH COSGROVE, EXECUTIVE DIRECTOR, MASSACHUSETTS HIGHER EDUCATION ASSISTANCE CORP.; AND EDWARD McCABE, WASHINGTON COUNSEL, UNITED STUDENT AID FuNDS, INC., NEW YORK, N.Y., ON BEHALF OF THE NATIONAL CONFERENCE OF EXECUTIVES OF HIGHER EDUCATION LOAN PROGRAMS Mr. REEHER. Mr. M'a.rmaduke from California was scheduled to appear but is not `here. I would also like to call the committee's atten- tion to the fact that Mr. Evans. from Pennsylvania.. Mr. Meoco from Connecticut. and Mr. McCabe from the United Student Aid Funds are in attendance and will be. available to answer any questions. PAGENO="0285" 791 Mrs. GREEN. Thaak you. Mr. REEHER. I would like to thank you for `the invitation to appear. 1 would like first of `all to ask that the written testimony as presented be placed in the record thereby permitting us to brief our testimony at this time. Mrs. GREEN. Without any objection, that is so ordered. Mr. REEHER. Thank you. (The document `deferred to follows:) STATEMENT BY KENNETH R. REEHER, CHAIRMAN, NATIONAL CONFERENCE OF EXECU- TIVES OF HIGHER EDUCATION LOAN PLANS Mrs. Green, members of the Committee, my name is Kenneth H. Reeher. I am Chairman of the National Conference of Executives of Higher Education Loan Piaths and Executive Director of the Pennsylvania Higher Education Assistance Agency, Towne House, HarriSburg, Pennsylvania. Our Conference is an association on a voluntary basis of both state and private guaranty agency directors. All of our meetings, as well as our joint efforts outside of the basic employment we follow, are geared to the improvement of the student guaranty loan program. With me today are Lee Noel, Vice Chairman of the Na- tional Conference and Program Director of the Illinois State Scholarship Coin- mission; Duffy Paul, Exectaive Director of the College Foundation, Inc. in North Carolina; E'lwood Hollister, Acting Executive Director, New York Higher Educa- tion Assistance Corporation; Richard Petrie, Executive Director, Louisiana Higher Education Assistance Commission; William Nester, As'sistant Director, New Jersey Higher Education Assistance Authority; Joseph Cosgrove, Executive Director, Massachusetts Higher Education Assistance Corporation; and Edward McCabe, Washington Counsel, United Student Aid Funds, Inc., New York City, New York. We appreciate the opportunity extended to the National Conference of Higher Education Loan Plans to support H.R. 15007 which contains amendments to, and extension of, the Higher Education and Vocational Education Acts. The time schedule for consideration, enactment and implementation of amendments to the guaranty loan law is now critical. Throughout the Nation, high school graduates are in the process of applying for or being accepted by colleges for entrance in the fall. Thousands of these students are planning upon guaranteed loans to assist them to meet the expenses of these courses. Congress must act now if these stu- dents are to be able to include a guaranty loan as part of the aid program they must possess if they are to accept the admissions offer tendered by the colleges and non-degree schools. Students must know that the guaranty loan provisions are still available, the aid officer must have knowledge that it can be considered in the construction of the student's "aid package", and the lenders must have definition of both program and administrative requirements so that they may properly determine their continued participation. It is extremely doubtful that the participating lenders who advanced $499,387,000, covering 609,911 loans from July 1, 1966 through October 31, 1967 will expand their portfolio of student loans to meet the need for second semester loans and renewals for the fall of 1908 with- out enactment of certain proposals which have been before the Congress since July, 1967. The number one issue in the success of the guaranty loan program is adequate income for the lenders. Proper return is necessary to assure their subsequent participation at a level which will afford students a guaranty loan whether it is guaranteed through a state or private guaranty agency, a program of federal certificates of insurance, or from a guaranty fund consisting of `both state re- serve funds and federal insurance certificates through the reinsurance proposal. Although most of the leadership for enactment of the guaranty loan program came from the American Bankers Association, the current "tight money" situa- tion makes it unrealistic to assume that lenders will devote any sizable portion of their investment portfolio in these student loans at 6% simple interest. They are up to 15-year loans, advanced in units of $1000. Lenders can receive the same earning rate through large size investments of short term nature, thereby giving the lender the advantage of any improvement in interest rates and a substantial reduction in the administrative burden necessary to manage the investment portfolio. The proposal of the Administration to improve the return to the lender and lender participation through the establishment of a federally PAGENO="0286" 792 financed placement and consolidation fee payable to lenders is fully endorsed by our Conference. These fees should be on a sliding scale with the rate to be established `by the Commissioner so as to continuously make loans advanced under the guaranty loan program competitive with the other investments avail- able to participating lenders. All loans guaranteed under federal guidelines should be eligible for the lender fees so lenders will not be required to segregate eligible and ineligible loans in `the bank records. This fee should be payable directly to the lender and not "on behalf of the student", although in certain states it may be routed through the state agency. Payments on behalf of the stu- dent borrower may be interpreted in some states as being in violaion of usury laws and will then fail to encourage lender participation in those particular states. The lender placement arid conversion fees should cover all loans disbursed or converted on or after June 1, 1067. Many lenders have given program support during the 1067-68 school year in anticipation of these fees and failure to pro- vide the expected return could sharply curtail lender participation in 1068-69 regardless of the further payment of fees. The value of lender fees is illustrated by Georgia which enrolled 42 new "participating" lenders since they implemented their 1% fee to lenders in July, 1967. The second most critical problem facing success of the guaranty loan program is the maintenance of a strong agency designated at the state level to enroll and service lenders, to administer the guaranty function, to disseminate program information to potential student borrowers and to enlist and coordinate the par- ticipation of state governments in this and assocated programs of financial aid to students. It is extremely critical as the credit of the country tightens that `each state have a strong state agency with its basic objective the enlistment of sufficient lenders which will participate at the level required to provide a guaran- teed loan for each student who is willing to encumber his future earnings to secure an education. The National Conference recognizes that is some situations, lack of reserve funding makes necessary the extension of the direct federal insurance program on a temporary basis. Row-ever, we see litle evidence that `the extension as pro- posed will result in the attainment of strong state programs. It should be obvious that the "standby" status of the direct federal insurance program during 1966 and 1967 said to state legislators that "if you do not legislate a program, the federal go~ernment will finance one in your state". The availability of such a pro- gram has slowed the formation of new state programs and seriously hampers the continued existence of the state programs which existed when the federal- state guaranty loan pa'rtnership came into existence in late 1065. During fiscal year 1967, the first full year of operation of the guaranteed loan program, more than 60% of the money advanced under the program came from New York, Pennsylvania, New Jersey, Illinois, Connecticut, Massachusetts and Texas. These states, with the exception of Illinois, bad state agencies prior to the establishment of the federal program; during fiscal 1908, in the period July- October, 1967 these states exceeded their entire volume for the previous 12 months but continued to carry 00% of the new money advanced under the program. Our Conference, except for TISAF, Inc., strongly recommends the reinsurance proposal as a method to establish a strong permanent state or private agency in each state. However, care must be taken to reinsure all loans disbursed after October 22, 1065 under the Vocational Act and after November 8, 1965 under the Higher 1~ducation Act. We are concerned that the wording of the proposed amend- ment may exclude those loans granted subsequent to the effective date of the act and prior to the effective date of the referenced agreements. The plan should also reinsure all eligible loans without regard to eligibility for interest subsidy. We would suggest deletion of "which meet the conditions of Section 423 E (5) of H.R. 15067," all of line 11, and line 12 through the comma. Under reinsurance. an interim agreement is necessitated by the fact that several states have con- stitutional barriers and many states will have to enact legislation appropriating loan reserves under the reinsurance or coinsurance program. In those cases where states have provided no funds, multiplying nothing by four still equals nothing. State and private guarantee agencies will in most cases find it necessary to execute new agreements with each of their lenders because most guarantor- lender agreements call for reserve funds rather than possession of federal cer- tificates of insurance to be maintained by the guarantor. PAGENO="0287" 793 It should be clearly understood that a strong permanent type of program is being established so that existing and new lenders will know precisely what type of program they are going to participate in when they execute an agreement to grant student loans. The "standby" federal program has slowed lender participation in many of the states which were confronted with possible early implementation of the federal program. Lenders have expressed a reluctance to negotiate loans under two different types of student loan programs. For example, in certain states a student could have a 5% simple interest loan guaranteed by the state prior to November 8, 196'5 and not subject to interest subsidy, both a 5% and 6% loan guaranteed by the state since November 8, 1965 and subject to federal interest subsidy, and a 6% loan guaranteed by a federal certificate of insurance sub- sequent to the consumption of state reserves and federal advance money. If and when states in the direct federal insurance program return to the guaranty loan business, their lenders must know that they participate in a permanent program which will continue to function through the state agency. Federal advance funds for state reserves must be appropriated to assure that additional states are not temporarily drawn into the direct federal insurance program prior to im- plementation of the reinsurance proposal. Additional lenders must not be required to become temporarily involved in the federal program in order to afford student access to the program for the second semester of 1907-68 or 1968-69. There have been 17 states drawn into the federal program under the higher Education Act and 7 under the Vocational Act. The extension of federal activities such as this hamper both lender and state participation. The Conference which we represent strongly endorses the balance of the Ad- ministration's proposed amendments subject to the condition that implementa- tion of the direct federal insurance program, even on a temporary basis, should be implemented through the existing state designated agencies and should be operated in the same manner as the existing state or private non-profit program. We feel that many stops have been taken administratively for coordination and cooperation. Last year, as a result of meetings with the Office of Education, directors of state plans and the American Bankers Association, most of us were able to reduce the paper work involved in handling student loans. The follow- ing changes are suggested to encourage further lender participation: 1. Amendments must not create additional categories of borrowers to be main- tained within the lender's accounts. For example, provisions to provide adequate deferment for military service, VISTA and so forth should cover all loans under the programs and not establish some arbitrary effective date such as July 1, 1967 which will create additional eligible versus non-eligible loans in *the interest subsidy program. Why exclude servicemen who entered the service between November 8, 1965 and July 1, 1967? 2. Failure to make the loans program competitive through these recommended changes may require the development of a "secondary market" for student loans to provide turnover of lender investments as a possible means of enlisting con- tinued lender participation. This would prevent continued expansion of student loans within the lender's portfolio. 3. The grace period should be reduced from 9 to 6 months and the student should be required to negotiate a repayment schedule within 90 days after leaving school to become effective at the end of the grace period. In addition, the `following amendments will assist to encourage `and develop strong state designated agencies: 1. The federal advance funds ("seed money") should be `designated as a grant to the states rather than as an advance which is to be returneed to the U.S. Commissioner at some future date "in light of the solvency of the reserve fund". Present procedures discriminate against those states which exhibit state initia- tive. For example, in New York w'here the legislature has made firm and exten- sive commitments to the reserve fund, the full federal advance will one day be returned `to the federal government if defaults are less than 10 percent. On the `other hand, the federal advance in Colorado will `be used to finance defaults and if they run to 10 percent there wil'l be no return of funds to the federal govern- ment, a real reward for the inactive state. 2. The costs of the guaranty loan program should be shared `by the state and federal governments in proportion to the ends to which `the program meets both state and federal educational objectives. It would, therefore, seem in order that the federal government should pay a more proportionate share of the `adminis- trative costs if strong state agencies are to be developed by the state legislatures. PAGENO="0288" 794 This is extremely critical with implementation of the reinsurauce provisions which call for certificates of insurance rather than federal advance funds. The reinsurance proposal will assist the loan program to experience the growth explo- sion that we all have anticipated. Congress should be aware that the very costly provisions of the program such as lender enrollment, dissemination of program information, loan application and program regulation distribution, and pursuit and collection of defaults are carried on by the state agency. Plans for the states to carry the full administrative costs do not seem in order. Currently the state programs may use the earnings from federal advance funds to partially defray costs of administration. Under the reinsurance program advance funds will at best experience a "controlled" growth. With a reduction of federal advance funds comes a reduction of earnings from investment of such funds. Financial support of the administrative costs of a program expanded principally on federal guide- lines is not properly placed on the state legislatures. 3. The integrity of the program and the reserve capacity of the state desig- nated agency should be protected by inclusion in the Act of a determination whether the applicant has a need for loan funds to `meet the costs a~sociated with enrollment in an educational program. The officer at the institution of higher learning who is administering other programs of financial aid should be per- mitted to make a recommendation to the lender whether the loan is needed to meet costs `associated with the educational program. Computation of "financial need", as historically applied should not be the criteria. Final determination of the size of the loan should continue to be established by the lending institu- tion and guarantor should be permitted to determine whether to guarantee a loan and to establish the `amount of the guarantee it is willing to underwrite. 4. The states, not necessarily the state designated agency, should have more jurisdiction in the determination of approved schools. Many states have de- veloped strong, stable and experienced state departments in the Srea of the licensure of non-degree schools and in the approval of licensure of degree grant- ing institutions. Jurisdiction should be vested in the state department wherever possible so as to assure the maximum coverage of eligible students in the guar- anty loan program. For example, the Commonwealth of Pennsylvania prepares 10.5 percent of the registered nurses in the United States and has 95 diploma hospital schools of nursing approved by the State Bdard Of Examiners. Only 72 of these programs have been approved by. the National League for Nursing, the national `agency designated by the U.S. Commissioner for approval of nursing programs. It would seem that the success over the years of `graduates of the state approved programs `and the caliber of standards required for a state license should merit approval of all such licensed schools. In the program cited, it could be assumed that approximately 25 percent of students enrolled in such programs are being denied access to the state guaranty loan program and possible subsequent interest subsidy. This, of course, is true in all other states except the `one which enjoys approved status. Examination of state procedures for approval `of schools should be conducted on a state by state basis and ap- proval of state accreditation should be granted in those states where quality exists. At the institution of higher learning level several changes will facilitate the function of the financial aid officer and permit the guaranty loan program to be handled in a fashion which will be more compatible with other programs of aid to students financed by the institutions, private enterprises, state legislatures ai~d the federal government. The operations at the institution of higher learning level would be improved by: 1. Determination of financial need for educational loan funds, as previously reviewed in this paper, should be authorized to `be performed by the financial aid officer. The aid officer must be free to counsel those students who are often incurring loans for the first time. 2. The features of all federal student loan programs should `be compatible so that the financial aid officer may utilize any loan program without day-to-day analysis of its various features. The variations such as grace periods and defer- ment for military and similar types of service must be standardized in the various lan programs. 3. Confirmation of student status on all accounts of all student loans should be performed by the Office of Education to reduce both school and lender paper work. PAGENO="0289" 795 4. Authorization should be given to allow use of all guaranty loans as part of the matehin~ requirement in the EduCational Op~ortunity Grant Program. The National Defense Student Loan Program and the "college contribution" phase of the guaranty loan program administered by the United Student Aid Fumin, Inc. are now used to satisfy the matching requirement. The College Work-Study Program is not eligible for EOG matching and should be declared eligible along With the state guaranteed loan program. The fact that these programs are not eligible for EOG matching complicates the financial aid packaging `at the col- legi'ate level aud quite often deters the development of other programs of finan- cial a~sistanee for students. Cases can be cited where demands on the National Defense Student Loan Progi~am have been increased bCcau~e scho'ols could not use the guaranty program for matching. I want to thank you, Madam Chairman, and memiers of the Committee for this opportunity to present the views of our Conference. Any of the state direc- tors present will be glad to answer your specific questions relating to their experience in administering the program in their state. Mr. REEHER. The time schedule for consideration, enactment, and im- plementation of amendments to the guaranteed loan law is now critical. Students are currently receiving admission offers from colleges and nondegree schools. Students must know that the guarantee loan pro- visions are still available. The aid officer must have knowledge that it can be considered in the construction of the student aid package and lenders must have definition of both program and administrative re- quirement so that they many properly determine their continued participation. The No. 1 issue in the success of the guaranteed loan program is adequate income for lenders. Proper return is necessary to insure their subsequent participation at a level which will afford students a guaranteed loan. Although most the public leadership for enactment of the guaranteed loan program came from the American Bankers Association, the current tight money situation makes it unrealistic to assume that lenders will devote any sizable portion of their investment portfolio for student loans at 6 percent interest. Lenders can receive abOut the same earning rate through large in- vestment of short-term nature thereby giving the lender the advantage of any in~prQvement in interest rates and a substantial reduction in the administrative burden necessary to manage their investment portfolio. The proposals of the administration to improve the return to the lender and lender participation through the establishment of fed- erally financed placement and consolidation fees payable to the lender is fully indorsed by our conference. `We have landed on this particular recommendation because it is the one in which all parties involved could agree upon. All loans guaranteed `under the Federal guideline should be eligible for lender fees so lenders will not be required to segregate eligible and ineligible `loans in the bank records. Madam Chairman, I have a folder here that I would like to present following our testimony and it contains some correspondence that sets forth some of the problems that lenders have expressed as far as a return and the administrative procedures are concerned in the program. The second most critiCal problem facing the success of the guaranteed loan program is the maintenance of a strong agency designated at the 92-371-68-pt. 2-19 PAGENO="0290" 796 State level to enroll and service lenders, to administer the guarantee function, to disseminate program information to potential student borrowers and to enlist and coordinate the participation of state gov- ernments in this and associated programs of financial aid to students. Once again, in the material that I will leave with you, we have letters from students and so forth that cite some of the problems that are encountered by students trying to `participate in the program. It is extremely critical that each State have a strong agency with its basic object of enlistment of sufficient lenders that will participate at the level required to provide a guaranteed loan for each student who is willing to encumber his future earnings to secure an education. I have included in this portfolio a summary of the Pennsylvania program which shows that over 50 percent of the lenders that are under agreement with our agency have less than 10 student loans. Many of them do not have any. So it is one thing to enroll a lender, it is a day-by-day process to keep them participating. The national conference recognizes that in some situations lack of reserve funding makes necessary the extension of the direct Federal insurance program on a temporary basis. However, we see little evi- dence that the extension as proposed will result in the attainment of strong State programs. It should be obvious that the standby status of the direct Federal insurance program during 1966 and 1967 said to the State legislators that if you do not legislate a program the Federal Government will finance one in your State. The availability of such a program has slowed the formation of new State programs and seriously hampers the continued existence of State programs which existed when the Federal-State guaranteed loan part- nership came into existence in late 1965. Our conference, except for United Student Aid Funds, Inc., which operates 28 programs, strongly recommends the reinsurance proposal as a method to establish a permanent State or private agency in each State. However, care must be taken to reinsure all loans disbursed after October 22, 1965, under the Vocational Act, and the effective date under the Higher Education Act. We are concerned that the wording of the proposed amendment may include those loans granted subsequent to the effective date of the act and prior to the effective date of the referenced agreements. Under reinsurance an interim agreement' is necessitated by the fact that several States have constitutional barriers and many States will have to enact legislation appropriating loan reserves under the rein- surance or coinsurance program. State and private guarantee agencies will in most cases find it nec- essary to execute new agreements with each of their lenders because most guarantor lender agreements call for reserve funds rather than the possession of Federal certificates of insurance to be named by the guarantor. We are saying here that we will need some leadtime to move into the reinsurance proposal. It should at this time be clearly understood that a strong permanent type of program is being established so that existing and new lenders will know precisely what type of program PAGENO="0291" 797 they are going to participate in when they execute an agreement to grant student loans. The standby Federal program has slowed lender participation in many States which were confronted with the possible early imple- mentation of a Federal program. Lenders have expressed their reluc- tance to negotiate loans under two different types of student loan programs. For example, in certain States a student could have a 5 percent simple interest loan guaranteed by the State prior to November 8, 1965, and not subject to interest subsidy, both a 5 and 6 percent loan guaranteed by the State since November 8, 1965, and subject to Federal interest subsidy, and a 6 percent loan guaranteed by a Federal certificate of insurance subsequent to the consumption of State reserves and Federal advance money. If and when States in a direct Federal insurance program return to the guaranteed loan business their lenders must know that they participate in a permanent program which will continue to function through the State-designated agency. Federal advance funds for State reserves must be appropriated to assure that additional States are not temporarily drawn into direct Federal insurance programs prior to the implementation of the rein- surance proposal. Additional lenders must not be required to become temporarily involved in a Federal program in order to afford student access to the program for 1968-69. There have been as of today, 19 States drawn into the Federal pro- gram under the Higher Education Act. The extension of Federal activities such as this hamper both lender and student participation. The conference wtiich we represent strongly endorses the balance of the administration's proposed amendments subject to the condi- tion that implementation of the direct Federal insurance program even on `a temporary basis should be implemented through the existing State-designated `agency. We fee' that many steps have been taken administratively for co- ordination and cooperation. Last year, as a result of meeting with the Office of Education, the directors that are before you serving as a liaison committee, and the American Bankers Association, most of us were able to reduce the paperwork involved in handling student loans. We' realize there is still a lot of work to `be done in this `area. Failure to make the loan program competitive `through these recommended changes may require the development of a secondary market for stu- dent loans to provide turnover of lender investments `as `a possible means of enlisting continued lender part-participation. This would prevent continued expansion of the student loan section within the lender's portfolio. The Federal advance funds commonly referred to as seed money should be designated `a's a grant to the States rather than `as an advance which is to be returned to the U.S. Commissioner `at some future date in light `of the solvency of the reserve fund. Present procedures discriminate against those States which exhibit State initiative. For example, in New York where the legislature has made firm and extensive commitments to the reserve fund, the full PAGENO="0292" 798 Federal advance will one day be returned to the Federal Government if defaults are less than 10 percent. On the other hand, the Federal advance in Colorado will be used to finance defaults and if they are under 10 percent there will be no return of funds to the Federal Government. This we feel is a real reward for the State which is inactive. The integrity of the program and the reserve capacity of the State- designated agency should be protected by the inclusion in the act of a determination whether or not the applicant has a need for loan funds to meet the costs associated with enrollment in an edu- cational program. We share this with Mr. Purdy's group and we feel that it cannot be a traditional need criteria in that there is need, we feel, in some cases, in the above $15,000 level while in other cases below the $15,000 level there may very well not be need. Final determination of the size of the loan should continue to be established by the lending institution and the guarantor should be permitted to determine whether to guarantee a loan and to establish the amount of the guarantee that he is willing to underwrite. Madam Chairman, that concludes my summary of our formal testi- mony. I thought that possibly the chairman and members of the committee would welcome the opportunity to question the number of representatives that we have here from our organization since we feel that the program does function differently in different States. Mrs. GREEN. Thank you very much, Mr. Reeiher. Have you people turned your attention to the kind of needs test that you would put into this program? Mr. R~nRE. We discussed this at some length but we feel that the financial aid officer would perform this function and might properly make this determination. Our position is that the total resources of the student should not exceed what it takes him to go to school. Beyond that we feel that should be trimmed down by the ffnancial aid officer, the details of it. Mrs. GREEN. Are you suggesting in the legislation we should be si- lent on the need test except to say that each university should re- quire some evidence of need before that student is recommended for a guaranteed student loan? Mr. REEHER. I would not personally attempt to word the legisla- tion but what we are mterested m is that a student is able to receive whatever money he needs to go to school, even independent of his parents' wishes, possibly, since it is going to be on the student's signa- ture, but that neither he nor his parents should be able to make money because the loan is subsidized. If they need the money for educational purposes, any costs associated with his attending school, be it travel, justified spending money, his tuition fees, bodks, room and board, and so forth, that should be there; if he is willing to encumber his future earnings it should be available, hut it should not be something that encourages parents to borrow under the program for the interest subsidy and not to be used for educational costs. Maybe someone wants to elabOrate a little more on that. * Mr. PETRIE. I strongly recommend that the student aid officer be given the opportunity to make a recommendation and counsel with PAGENO="0293" 799 the student. We know that some students go to school and they are advised to ask for a thousand dollars or $1,500 and with the counsel- ing of the student aid officer saying, "Well, do you really need this? What will it take you to go to school?" and the student aid officer could make a recommendation, not a limitation but a recommendation with the understanding that this recommendation can be considered by the lender to either increase that or if the lender has information, then in his own right he might reduce the amount because he may have finan- cial information available to the lender as a banker which is not avail- able to the student aid officer or the student didn't mention anything like that. I would certainly, strongly suggest that the student aid officer be given the authority to make a recommendation, not necessarily a limitation. Mr. NOEL. Realizing it is a massive program it seems to me it needs to have a fairly tight guideline. While as a group we oppose the tradi- tional need assessment of parents, it seems to me there might be some middle ground of possible self-help concept meaning that a student could borrow a certain percentage of his unmet cost, taking his col- lege expenses, and subtracting his scholarship and then whatever is remaining he could borrow, let us say for practical purposes, two- thirds of that. Meaning, if the student has a $1,500 college budget, maybe we should not permit him to borrow $1,500 but restrict it to two-thirds of this in which case it would be a thousand dollars. It would be the self-help concept. Mrs. GREEN. Mr. Purdy, will you comment on this needs test, the involvement of the student financial aid officer? Mr. PtTRDY. I hardly know where to start on this. We as financial aid people are traditionally geared to loaning money where it is needed. We have seen the bank loan program we think use money where it probably was not needed or not needed very much. We would be con- cerned if it continues to be a program in which it might siphon ofF large sums of money where there was no needs test; one way of holding the program within bounds would be to have a needs test at least on loans which receive Government subsidy in the form of interest payment. Now I think Mr. Reeher's comments here saying not the traditional needs test, I believe most financial aid people if we are going to have a needs test would have one way of doing it but then make a differ- ent decision after we get the need. In other words, I don't really think we need to go out and develop something we don't have, I think we have everything we need in know- ing how to ~o about this in determining whether a student has need. But then if we wanted to, as Lee Noel has said, be different in the recommendation that we have made, I think that could be done on the basis of the needs test we already have. So we have almost got to say, what is the philoshophical purpose of the loan Is it to help those who need help and, if so, we are prepared to make the needs test and recommend the amount of loan. If it is a loan of con- venience, then it might be that the student should pay his own interest. PAGENO="0294" 800 ~If we cannot determine that he really needs the loan, then 1 expect we would rather stay out of the picture because we are, I think, profes- ~sionally committed to help the student who needs help. If it is a loan of convenience, then we would hope that not too much Government money would be siphoned off for that type of loan. I may not have answered your question. I will be glad to clarify it. Mrs. GREEN. We were given an example the other day of a person who qualified for a guaranteed student loan program and he used it to exchange his 1968 Firebird for a 1969 model. Mr. Puiwy. This can be done under the current arrangements. Mrs. GREEN. Now the part that troubles me is that when I talk to student financial aid officers who say the student financial aid officer should be involved in the guaranteed student loan program and in the recommendation and there should be some need but we don't want a needs test, I just don't understand really what you are saying. Mr. REEHER. Madam Chairman, if I might comment on that, I think Mr. Purdy's point is correct that we are not trying to go out in left field and come up with some new way of determining need. The procedure would be the same but maybe what we used to call a strike would no longer be called a strike. Currently, the financial aid concept starts with a determination of how much assistance can be expected from the parents from the cur- rent income and from the net assets regardless of whether or not those parents have planned on this student going to college. So, in many cases a student arrives at college and there has been no parental planning and in the past if the student had to come up with a parental contribution and there was not any planning, the parents were expected to borrow on their own signature. One thing that we are saying in this needs test, the idea would be that the student could borrow to put in the parents contribution to the aid package. This is dangerous, we know. I sat in a meeting in New York where they were talking about a quarter of a billion dollars in aid to students on a loan program without any real concern of what it does to the student when he graduates and he has this indebtedness. I should not cite New York because we have this in all of these programs where the bill is going on the student's signature. There is this problem of transferring the burden from the parents to the student. But if you are going to have student loans on student signatures then we are saying he could possibly finance what is normally expected from the parents. Mrs. GREEN. Would you gentlemen knock out the interest subsidy after graduation? Mr. REEHER. We looked at this problem. When we looked at it we also looked at the lender return. We, I think, almost unanimously lean toward knocking it out during the repayment period. We did not take a stand on that because we felt that we would take the stand that the lender fees could finance the paperwork involved if the fee were proper and since Congress had enacted that benefit to the student that we would take the more positive approach toward the fees. PAGENO="0295" 801 I think individually we agree with the idea that elimination of the fees would solve a lot of paperwork and encourage lender participation. Incidentally, there is some correspondence from a few of the lenders that points that out in this portfolio. Mrs. GREEN. If we go, and I suspect we will, toward an involve- inent of the student financial aid officer at the college in making the recommendation, have you given consideration to what kind of reim- bursement should be made to the college or university if we are going to allow the banks to make money, at the same time require the colleges to lose money? Mr. REEHER. We do not have that in our position paper. We talk about the burden. We know this and the State scholarship programs, EOG, and so forth, have caused a real shortage of financial aid people, which causes the price of them to go up for the institutions, plus the volume of the programs. We personally felt that that is secondary to such things as a strong State agency, proper lender participation and maybe that should come from organizations such as the American Council on Education, the National Financial Aid Officers Group. So we did not include it in our position although we are aware that that is a critical problem. Mrs. GREEN. May I ask Dr. Sanders to comment on these last three points? Will you identify yourself? STATEMENT OF EDWARD SANDERS, COLLEGE ENTRANCE EXAMINATION BOARD Mr. SANDERS. Edward Sanders, of college entrance exanflnatiofl board. For 15 years colleges and universities have been trying to de- velop procedures for originally awarding their own money equitably and wisely as possible. We now, I think, are able to achieve more precision, more equity, by several different systems of needs analysis than we could have earlier. If the act asks college financial aid officers to speak to the need of prospective borrowers, I think they have the instruments for doing this. if on the other hand you ask them to speak to the need without a needs assessment or to speak the need casually, so to speak, I think this contradicts the whole direction of our effort to use our funds wisely. So I would feel puzzled to know how we could do this, we could express the need without the kind of needs assessment we are accus- tomed to making. I think the group can do this if it is required. Mrs. GREEN. What about interest subsidy? I believe you recommend that the interest subsidy be knocked out. Mr. SANDERS. Mr. Pappert is here. I would prefer he speak to that point. Mrs. GREEN. What is your feeling, Dr. Sanders? You are an expert in this area. PAGENO="0296" 802 Mr. SANDERS. I don't quite know where to start. This seems to me to depend on the purpose of the legislation. If the legislation is to give a considerable amount of aid to a considerable number of people, then I think you could make a case for the needs subsidy. I think in the original administration bill actually there was vir- tually no subsidy provided. I think at this point this is an opinion matter on which I would not value my own judgment very much. Mrs. GREEN. We disagree. We would. Mr. SANDERS. If you use the loan based on a rather sharp definition of need and if you continue NDEA, I would think then there should be a needs interest subsidy on this program also, if the needs assess- ment test is very liberal. That is, if you go much higher than the in- come level, then I think the need for the subsidy is fairly small. I would find it very difficult to defend it. Mrs. GREEN. In your judgment., if the interest subsidy after gradu- ation were knocked out, do you think it would reduce the temptation to borrow money and make money ~ Mr. SANDERS. Let me say I would favor the interest subsidy during the period of college years. Obviously, most students have no way to produce revenue at that point. It is almost deceptive, it seems to me, to make hians and require the immediate payment of interest. I think without any question the pressure to take loans that are not absolutely necessary would be reduced if there were no interest subsidy after graduation. Mrs. GREEN. Dr. Kirkpatrick, would you comment on these points and may I say to you we are going to look forward to this document that you have just had published with a great deal of interest. I am sure it will be very helpful to us. STATEMENT OP J~OHN I. KIRKPATRICK, COLLEGE ENTRANCE EXAMINATION BOARDS Mr. KIRKPATRICK. John I. Kirkpatrick, College Entrance Examina.- tion Boards. May I talk for just a half moment on the second point about the removal of interest subsidy during the payout period. Because the study attempts to speak for quite a few groups, not only the colleges and universities, even the bankers and State agencies and the others that are all involved, I had to say this on the subject. If the staff hazarded an opinion it would be something more than a simple majority of all the groups would not object to the removal of the interest subsidy during the payout period. However, there was not a sufficiently strong case made to warrant recommending the removal of the subsidy. The discussion is offered here for possible further examination in the future and we show the three or four reasons why the interest subsidy might be eliminated in the payout period. But we had to straddle t:he fence on this because we were trying to speak for a half dozen different kinds of groups throughout the country. . . . I personally came out of the whole study feeling that the ehimnation of the interest subsidy during the payout period would be a good thing PAGENO="0297" 803 and that this also would carry through for all six Federal loan pro- grams, including the national defense. On the matter of the financial needs test, I have got to explain that as we view the guaranteed loan program as it exists now, it is really taking care of two kinds of loans, one with Federal subsidy of interest, that is your under $15,000 adjusted gross income, and then the loans to those above $15,000 without interest subsidy, we think that because the national defense loan apparently will not ever be able to reach the real needs, the real levels needed by the colleges and universities, that a guaranteed loan program, the loan of necessity, part of that has to be there as a very, very valuable supplement to the national defense loan program and the study urges that in every way possible that part of the guaranteed loan program that we define as a loan of necessity be made similar to the national defense loan program as possible and hence just as you have asked the colleges and universities to use their judgment of need on the national defense and on EOG and on college work-study, we would plead that the loan of necessity under the guar- anteed loan program be given the same treatment. The loan of accommodation is for those parents who cannot or will not meet their parental contribution. This we would suggest handling as a loan to the parent, not to the student, have it be guaranteed, no Federal subsidy. It could be through direct Federal insurance path and let it be at the market rate. That would still be favorable with the Federal guarantee just as your FHA loan is a favorable rate. The Federal guarantee permits bringing the interest rate down to a more attractive level. So there are parents who want the 10 and the 12 and the 15 years in which to pay off indebtedness and provide a loan of accommodation for them. But at the moment, $15,000 dividing line in the present legislation, which is really $20,000 gross income for a man with three children, is such an artificial line that there are so many, many thousands of parents and students who do not need financial aid and the colleges and universities would determine that they should not be entitled to this Federal subsidy. But go beyond this and set up a loan of accommodation for those parents that you want to help and give them everything except the Federal subsidy. Mrs. GREEN. Congressman Quie? Mr. QmE. I have no questions. Mrs. GREEN. Are there any other comments from the members of the ~panel? Mr. Hathaway has asked me to ask the members of the panel on ~what basis do you approve of the placement and conversion fees? Is it on your own research or on what other- Mr. REEHER. I think, Madam Chairman, it may be a combination ~of these. In this portfolio that I am going to leave with you, I have extracted from our own State files a number of letters from students. This really, to our way of thinking, tells the story. It really is not so much a matter of whether or not the lenders are making money. It is a matter of whether or not they are willing to put money into this loan program with the money they are making in this program. PAGENO="0298" 804 We have every day large numbers of students throughout the country-I know we have it in Pennsylvania, and I know from talk- ing with the other people involved-students go to three, four, five, six banks and cannot get loans. Their portfolio is filled, they have reached their quota. Maybe they are just making loans on a renewal basis, because they feel they must restrict the volume of 6 percent simple interest loans that they make. In some cases, it is paperwork. But there is wide evidence of incoii- venience and unavailability on the part of the students. We think this is even more important than many of the surveys that are made of the lenders. When the student goes in they just aren't always able to get a loan. Maybe some of the other panelists can comment on that. Mr. NOEL. Perhaps I am impressed by the harassing I get on the phone daily from lenders that are complaining. Equally impressive is the harassing that takes place with the uninterested, non-self-serving group and that is our colleges that Mr. Purdy pointed out, that daily they are confronted. with students who cannot obtain loans because we don't have full lender participation. I also came across last week a questionnaire circulated last July- July 1967-by the Association of Reserve City Bankers which in- cludes about 150 of the largest banks in the country and this ques- tionnaire was sent to their student loan officers, sent out to 152. Ninety- five replied. Of the 95 who replied, only 73 are participating in the guaranteed loan program. Now perhaps some other bit of evidence to add to the results of their questionnaire is that they were asked: What is the most crucial or how can the guaranteed loan be improved, and 63 pointed to yield and 39-this is a multiple-response kind of question-and 39 referred to paperwork and primarily the item there is the split billing of inter- est during the repayment period. Granted the fact that lenders would like to have greater return, the fact that 63 said they wanted greater yield is probably not as impres- sive as the fact that of the 73 participating, 53 required that the parent or the borrower have an account relationship with that bank. Mrs. GREEN. Say that a~ain. Out of how many? Mr. NOEL. Out of the i3 that responded, "and are participating," 53 indicated they had a limitation, in other words, they would only make loans to students who had an account or whose parents had an account at that bank. Fifty-three out of 73 have that limitation. Mr. REEHER. This is almost universal. Mrs. GREEN. This is true in every case. Mr. Nom~. This is very true in Illinois for all size banks. Mr. CosoRovE. Having been in the Massachusetts loan program for some 12 years, we have a history of the loaning of the various banks in our program. We can definitely show that in the last 2 years since the loans hav~ expanded so much, that various banks have cut down the percentage of loans in their lending portfolio. If you go into it a little deeper you will find that the reason they have cut down is the yield on the loans. If we could have these conversion fees which would go into the pot of the yield, I am very confident that these same banks in Massachu- PAGENO="0299" 805 setts that have cut down their percentage of lending funds would im- mediately increase the percentage of loaning funds which would make the availability of funds at the source much greater which we feel is the crux of the whole program. Mr. NESTOR. Madam Chairman, the experience there has been that in. the words of the lender when I have to appear before our board and defend our loan portfolio in terms of profit and loss, it becomes rather embarrassing. When I have to lighten the load in terms of the nonprofit types of business venture, this is one area that I can reduce. Now this has been expressed by a number of lenders at the present time. Let us remember that some of them do not have too heavy a port- folio perhaps this year but they are building it in New Jersey very rapidly. We can see almost as they tend to build their portfolios they begin to place restrictions, as has already been pointed out, on those to whom they wiN make the loans, that they must have an account with them and indeed in a couple of instances they must reside in the im- mediate area or even attend the local high school. This has caused some serious problems throughout New Jersey. In one county a student can't get a loan. In other counties the situations are very tight. I must say, however, that I do not feel that this matter of the fee business would be argued as strongly by all lenders. I think there is some difference of opinion among the lenders. I think there are some lenders in the program who are in it because. they believe in the program, in the necessity for providing some assistance to the kinds of students that are getting these loans, in all honesty will stick with the program. Mrs. GREEN. Accepting what you have just said, you say they are in it because they want to help these kinds of students to get loans to go to colleges, I find that is a bit of conflict that they require the parents to have a bank account there. Mr. NESTER. Excuse me, I say some are in it this way. What I tried to do is to point out that there is a difference. In other words, simply to say that by increasing the fee to the lender is not going to solve~ the problem, this is a problem with a great many lenders but there are other problems involved, too. Mr. H0LLISTER. We happen to have more outstanding than other States do. I believe if we could identify, on this reserve city formula ~there was a large group of reserve city banks which were not re- stricting loans to children whose parents had accounts there. I do know in the State of New York, at the moment, of only three commercial banks which so far has a restriction. The largest lenders we have in Metropolitan New York are not making such a restriction but they are constantly calling my office and asking the question, "Has anything happened on this fee parts" I think they are getting quite critical now, wondering what they are going to do for this next academic year. I would expect in our par- ticular State we have had more restrictions come in than we have had in the past. Unless some better return is provided for the lenders, I think they would continue with the students they started with but I think the student just starting his program would have more difficulty. PAGENO="0300" 8G6 I can tell this from the phone calls from large and small banks. It is getting to the point where it is a liquidity problem. It is a portion of their assets which they need to earn more money in order to pay the interest to the depositors and do the other things they should do in their community. Mr. BROADWAY. Madam Chairman, North Carolina's operations of this program is slightly different from some of the other States in that the financial institutions of the State pool their resources in a pool of credit rather than making the individual loans themselves. And have that fund administered for them as the major eligible lender in the State by an educational foundation. We have done some original research in response to your question. Mr. Paul is here today, the director of the foundation; it might he useful for this committee to have the results of the research he has done on his own lending activity. Mr. PAUL. I am Duffy Paul, director of the College Foundation of North Carolina. The foundation is a private nonprofit corporation and acts as a collective lender for the North Carolina banking and life insurance industry. We have 78 participating banks and 12 participating life insurance companies. Smce June 1, 1966, we have made 4,000 guaranteed loans. It has cost us $25 per loan to place these loans on our books. The foundation, although nonprofit, we understand it is non- profit, but we are actually losing money by operating the guar- anteed loan program for the bank and life insurance industry. Mrs. GREEN. Do you think there ought to be the same fee for each loan or do you think there ought to be a larger sum, say $35 for the first loan and maybe $20 or $25 for succeeding loans? Mr. PAUL. I would think that the fee should be the same for each loan. Mrs. GREEN. There isn't the same cost; is there? Mr. PAUL. Practically, yes. Mrs. GREEN. You don't have to investigate the individual and his family? Mr. PAUL. We do this on an annual basis when the student reapplies. Mrs. GREEN. The same depth? Mr. PAUL. Yes. Mrs. GREEN. Is that a matter of preference or a matter of necessity? Mr. PAUL. We feel it is a matter of necessity. Mr. PETRIE. When we started our program in 1964, we began with the Legislative Act of 1964 and started the program the same year. We began paying interest on all the loans we had approved. Then the Federal Higher Education Act came into effect. We made an agreement so that the Federal Government would take care of the interest on the loans after November 1965. But since the beginning of our program we have sold our lenders on the basis of a community and public relations effort, a community service effort, because I tell many of them who bring up the point of "We can make more money on other loans," "Well, if you are going to look at it that way you are not going to make the first loan." This is the only way we have been able to keep our banks in the program. PAGENO="0301" 807 In,July 1966 we increased our interest. We started off on the program ~of 5 percent. We increased our interest to 6 percent because of the effect of the Federal Reserve Board changing the requirements for the banks and the discount went up to four and a half percent in December of that previous year. Now we are considering, and I have legislation prepared to increase our guarantee from the present 90 percent to 100 percent, to continue to do what we think is worthwhile and what will hold our program together. Now I have constant calls-telephone calls and correspondence- which point up the fact that these lenders are looking for the apphca.. tion fees and those conversion fees. About a month ago, I had a conference with one large bank, a major bank, which had stopped completely making student loans. They were carrying the ones on their books but they were not making new loans to those people in continuing their education. In a conference with the president of the bank and a couple of his vice presidents, they told me that as soon as the conversion fees and payout fees were approved they would come into the program. In September of last year, I talked to one of the bankers and he said, "By the way, Dick, I just bought $4½ million at 61/4 percent and I am making your loans at 6 percent." I said, "You are our friend." It was just a conversation but this was an actual situation where he had actually paid a quarter of a percent more for money he was loaning out. Traditionally, banks do not loan on a long-term basis. This is some- thing that has to be overcome. It constantly comes up. Mr. REEHER. Madam Chairman, I would like to add for the record that the State of Georgia initiated a State fee of 1 percent for lenders in ~July 196?. In the last 6 months of 1967, it enrolled 42 participating lenders, 42 new lenders that were actually making loans rather than simply signing agreements they were enrolling. Mrs. GREEN. The College Entrance Examination Board report states: It is extremely difficult to demonstrate accurately the general availability of NDEA loans to students. Participation by lending institutions does not necessarily mean a high volume of lending activity. Mr. REEHER. This is true. Pennsylvania, if I may cite my own case, is looked to as one of the leaders in this area. We are the second largest in the country. But we did a survey 2 weeks ago and 50.8 percent of our lenders have fewer than 10 loans. Many of them have none. Mrs. GREEN. You mean participating lenders have no loans? Mr. REEHER. Those that are under agreement with us to participate in the program. They get their name on the book and the revenue is not there so they do not actually grant the loans. Mrs. GREEN. Let me ask you, Mr. Petrie, do your banks require that the prospective borrower's parents have an account at the bank? Mr. PEnilE. Sometimes this happens. On each occasion I contact the banker and tell them that there are many of these students who are needing assistance to go to school who never have a bank account. They live from week to week on a cash basis. In this particular case I say, "I hope you will ask them if they do have a bank account somewhere else and if they don't, help that par- ticular student, because he is a future customer of your bank." PAGENO="0302" S08 Mrs. GREEN. Now, the testimony of Mr. Noel was that 53 out of 73 required a bank account. ~ou1d you make an e~timate of what percent- age of yours require it? Mr. PETRrE. I can't make any estimate. I know when this has hap- pened, I acted upon it immediately to get that across to them and they agreed with me in our conversation that certainly they did not want to penalize someone who did not have a bank account. But if they had bank business with another bank, then they would encourage them to consider going to them. Mrs. GREEN. If the board of directors have arrived at this as a policy decision, could the person with whom you talk change the policy of the bank? Mr. PETRIE. The decision of the board of directors has never en- .tèred into our conversations. Mr. QUTE. Madam Chairman, would you yield? Mrs. GREEN. Yes. Mr. QUTE. Was it the decision of the board of directors in those 53 ~banks? Mr. NOEL. I am not sure. It was a simple question. This is what they responded to: "Do you require borrowers or their parents to main- ~thin accounts at your bank? Yes or no." And 53 out of the 73 said "Yes," they require it. ~1r. COSGROVE. Madam Chairman, there isn't any question but what Mr. Noel's figures are correct. In fact, they are an understatement. I would go so far as to say 65 to 70 percent of the banks require an account either of the. youngster or of their parents. Going back to Mr. Reeher's comment about having lenders in a program that do not make loans, so do we. But we have found out as a rule if we call them up and say, ~~WThat is the matter? Why don't you get going?" They frequently reply, "We have gone as far as we can go along with the community idea." In other words, as Mr. Petrie says, sure, you can get a lender in your program on the basis of appealing to What is he going to do for the youth of his city, and so forth, and they will come in like they give a certain amount to the Community Chest every year. But just as soon as they get beyond that percentage of their lending funds in a `bank, the board of directors sits around and they say, "That is enough. We are making too many loans now at a rate of interest which is not competitive with the rest of our loans." Mr. NESTOR. I wanted to emphasize a point that should be made, and that is the fact that assuming a freshman `borrows $1,000 this year and remains in school for 4 years, plus 3 years of graduate study, may `even borrow in each of these years, the $1,000 loan is made at 6 percent simple interest and there is no payment on princi- pal, no return or anything for at least 8 years. This is the kind of loan problem that I think is of concern to many. Mrs. GR~N. I am sympathetic to what you have just said. I also read farther in the study that the critical area, talking about guar- anteed student loans, the critical areas appear to be in large popula- PAGENO="0303" soc~ tion centers with a concentration of lower economic level families, predominantly Negro. I think this committee has to weigh what you say, that the banks are not going to make money on it, with whether or not it is going to accomplish the purpose of providing funds for kinds that need funds to go to college. I think this has been one of the most damaging bits of testimony of how successful this program has been. Mr. QmE. Madam Chairman, this makes me wonder about any attempt to shift the ND'EA student loan program over to the guaran- teed loan program. So far, the banks have been making their decisions as to whom they will lend money in the traditional concept of who pays the best interest gets the money. When you talk about center city and problems of the minority race, here we have had really an outstanding example of student aid officers in colleges encouraging them to accept the loans, which has not been in their family tradition to ever do. Some of them have to have loans of larger amounts than their par- ents ever earned in a year It seems to me that the lender programs w ould have to make certain that for low income people we do have the NDSL. Perhaps there are some State programs, but I imagine the State-guaranteed loans programs are essentially like the Federal ones. Mr. HoLLIsi~R. May I say something about the New York program ~ `We have a mixture of savings banks, savings and loan associations, and commercial banks. I have to talk about large city areas, I have to talk about New York, Buffalo, Rochester, Syracuse, just a few large areas. There are none of those areas that I have any knowledge of where we are not able to take care of these people under the guaranteed loan program. We have been going a little longer. We have had impetus from the State education department, the type of thing we have been working with. We have college financial aid advisers. They all recog- nizc the problem. I don't know of a bank in New York State that has a board ruling which says you must restrict it this way. I do know a policy, we can put this much money out this year in student loans, so we will restrict it to the parents who are customers of those particular banks. I have been told by them, and I `have seen cases coming to my office where people who don't have accounts are taken in the real needy cases. Where it is just a litle more convenient, they are saying, "No, you don't happen to have an account here." This is what we are finding as far as our State is concerned. I also note that this `fall I was called by almost every financial aid officer in the State and the figure again hits me, the largest was NYU, said "We have $500,000 less than we expected in Federal funds to help ~ur students this year. Can you take up this gap for us i?" `To the best of my knowledge, from the number we put on for NYU students this year, we have picked up the money they expected to have available for the programs they directly administer. I have this in school after school. PAGENO="0304" 810 Mrs. GREEN. Mr. Petrie, do you know how many Negro students have borrowed under the guaranteed student loan? Mr. PETRIE. Yes, ma'am. Mrs. GREEN. How many? Mr. PETRIE. I don~t have the exact figure here. I do know, because I keep a record of them, and I always have. The figure is relatively equal to the population ratio in Louisiana. There might be a difference of a few figures one way. I can supply that to you, Madam Chairman, Mrs. GmuiN. Will you do that? Mr. PETRIE. I will be glad to do so. (The information to be furnished follows:) LoUISIANA HIGHER EDUCATION ASSISTANCE OOMMISSION, Baton Rouge, La., March 22, 1968. Hon. EDITH GREEN, Chairman, House Subcommittee on Education, Rayburn House Office Building, Washington, D.C. DE~u~ CoNGnEsswoMAN GREEN: I want to again express to you my appreciation for your courtesy to me and members of our Federal Liaison Committee of the National Conference of Executives of Higher Education Loan Plans when we appeared before your commitee in the Rayburn Building on Thursday, March 7, 1968, in connection with hearings on H.R. 15067. During the hearing you requested information on the Louisiana student loan program insofar as the number of loans to women students, as well as the number of loans by race and sex. I advised you during the hearing that we had this information and would be glad to furnish it to you. We have requested this information from our central data processing system in the state government, which we use in our program although that complete information on all of the loans has not been made available at this writing. It will be forwarded as soon as possible. However, we just received in the mail from the Division of Student Financial Aid of the U.S. Office of Education a statistical report of the guaranteed Stu- dent loan program, which was taken from their computer early in March and from which they prepared a chart showing state breakdown by race and sex of 377,260 loans. This shows the cumulative statistics which the USOE has com- piled from information furnished to them thru the Form OE 1070. This form is an individual report on each student loan which is required to be made by USOE and forwarded to Washington. A photocopy of that chart is forwarded to you herewith. This chart shows that the Louisiana program provided 3,883 student loans to female students and 4,268 to male students out of a grand total for all of the states of 122,797 loans to female and 225,523 loans to male students in all of the states. It also shows that Negro students in Louisiana received 3,388 loans out of a national total of 18,615 and ~ur white students received 4,763 loans out of a national total of 329,705. Nineteen of the loans were unidentified as to race for Louisiana, which is the lowest unidentified percentage of any state when compared to the total number of loans in any state. These almost complete statistics on Louisiana show that 3,388 loans went to Negro students compared to 4,763 loans to white students as against the national statistics of 18,615 loans to Negro students com- pared to 320,705 loans to white students. The 1960 census figures in the World Almanac shows that the Louisiana total population at that time was 3,257,022 with 2,211,715 white and 1,044,857 iion-white. As we tried to emphasize during the hearing the lenders must receive more compensation in one form or another for handling these nonprofit student loans; We continue to encourage our lenders on the basis of community service and public relations activity, but even this honorable attitude wears thin in the face of rising money costs and the additional administrative cost over and above a normal commercial loan. PAGENO="0305" 811 The argument that lenders throughout the country have increased the number of loans during this fiscal year over and above previous activity without addi- tional compensation is a rather hollow argument. At meetings of our National Conference of Executives of Higher Education Loan Plans and subsequent meetings of our Federal Liaison Committee, representatives of the state pro- grams confirmed that they bad been advising the lenders in their states that additional compensation to lenders was provided in the amendments to the Higher Education Act which are now contained in H.R. 15067 in the form of application and conversion fees. We have also continued to advise the lenders that these fees were to be available to them since June 1, 1967. As I stated in my testimony before the committee, we have had letters and many telephone and personal conversations with our lenders and they are anx- iously awaiting this additional compensation. They have advised us time and again that the processing of a student loan and securing the repayment thereof is much more complex and requires much more administration and detail than a normal commercial loan. Students who receive a loan often leave their orig- inal addresses to seek employment away from home and the collection of the loans becomes very complex as compared to the normal collection of commercial loans from adults who normally stay in a local community. Mr. Hermann Moyse, President of the Louisiana Bankers Association, fur- nished to me the results of a cost analysis of loans in the Sixth Federal Reserve District which involved bankers in a fifty to two hundred million dollar cate- gory. He advised that the Sixth Federal Reserve District includes the southern half of Louisiana, Mississippi, Alabama, Florida, Georgia, and East Tennessee. These statistics were furnished by nineteen bankers in the District based on a two-week period in October, 1966. No cost of the money for loans was considered nor was a loss factor considered in the cost of these loans, and it was based on their cost for a normal commercial loan. The analysis was based on an average loan of $1,027. The average cost of mak- ing this installment loan was $20.45 and this cost was projected on the original and repeat loan cost of the average loan for a period~ of four years ($20.45 X 4 =$81.80). The collection cost based on a sixty-month repayment period was estimated to be $1.20 for each monthly payment which would amount to $72 over the sixty-month period. This produces a figure of $153.80 average cost ($81.80+ $72.00) for making four loans of $1,027 each for four years and collecting the total over a period of sixty months. Since no money cost or loss factor was considered, if the money cost to the lender bank is more than the 6% interest provided, then the lender must assim- flate total cost of the loan. If the lender can secure money at less than 6%, then the difference between the cost of the money and the 6% return would have to overcome the $153.80 average cost to provide this loan assistance in order for the lender to break even. Mr. Moyse advised that the geographical factor for the collection of these loans was also not considered. He told me that this referred to the situation where the student may be most anywhere in the United States and the corre- spondence and other expenses entailed in making collection from a former stu- dent who was delinquent in payments was difficult to determine but sometimes becomes very costly. I feel sure that the American Bankers Association can pro- vide more statistics from other Federal Reserve Districts, as I understand this same type of statistical information was requested by ABA. In other testimony before the committee I emphasized the key role that the Student Financial Aid Officer at the school must play in order that the financial assistance for educational expenses be geared to actual education expenses. The non-profit guaranteed loans should `be reserved for students who really need the money to meet the cost of their education. We agree with the position of Allen D. Marshall, President of United Student Aid Funds, Inc., w'ho states, "a reason- able provision directing the financial aid officer of the educational institution to recommend the amount of the loan based on his evaluation of the student's real need must be at the heart of the bill." The lender will still have the privilege he has at `the present time of decreasing the recommended amount or moderately increasing this amount, based on his probably more accurate inforihation of the financial condition of the student and his family. However, the recommendation from `the student aid officer should be the guide for the lender although it need not be a limitation. 92-371-68--Pt. 2-20 PAGENO="0306" 0 ~ ~ CD CD ~ CD 0~ ~I2 ~ ~-t-. CD ~ p ~D CD 0 ~ H~ L :~ Pp o ~ rt- 0 ~ op fl~, ~ 0 c+ W CD 0 ~ri~ CD P ~1 ~*~` CD~ C) C) C) C)C) C) CC ~C~) C~) CO CO CO CO N) N)N) N) N) N) N) N) N) N) C) Co N) CCC)) 00 -JC) C)) ~CO N) C) C) ~ Co ~j CO N) C) C) C) ~ CC ~CO N) - C) C) 00 ~J 0) CC ~CO N0C) C) CO CO ~O 0) CC ~ CO ro C) I ~ O~ -CCC fl--CC )0-~J1 ~ N)N)(OC)o- 0) $ C), 0) C)QC)CO C)N)C)-JCOCOCCCO ~ ~ C)C)N)C) C)C)C)0)0)00N)roC) CC~- QCC~C) ~ 0) C): : C)~COC)CC00o))0Qq~ 400) C0N)C$)C)CCC)C)C)~N)N) ~-)CC~J CC C) N) C) C) C) C-' Co CO $41 Co C)C)~C)C-~C) N) 400) C) N)0000 C-C)C)COC~C)CoC)C-~C)C)C)N)COC)C)CCC)CC) N)COCCC)-JCC ~j C) 000) ~ ~CoC)C) N) C)COC)C)C)~~ ~ 0)~CoCo~Co0)C)CoN)C)C) CC ~~C)C)40~~0): ~ C) C-'C)) N) CC C) C) C) C) CO C) N) CO CO N) ~ N) I C) C) CC Co ~, CC CCC) ~ C) C) N)C) ICC) N) ~ CO o-' Co CC COO) C) C) C) Co CCC) CC 0 C) N) N)C) C)) ~ ~ N) ~j C): : ~ C)40C)C)~C)~COC-'CON) 00 ~~~C)CC$0C)U,40C)00 ~ C).): : 10'~'U'''JN)N))$C)C$C)C)CoCoC)C~Co$J1C)N).CoC))C)Co)J,C)JCoC-~..JN)C00),N)C C0C)-JCo.N--J--'C) N) CC~N)COCC-JO0OC)00Co4~C)40~N)C)C)C-~C)C)C)C)CCCCO)CC0COLC ~ C~) :0 :0 C) Ci, -1 C) -~ C) C) C, :10 :0 ~) ~` ~ ~ ~ ~ CD CD ~CD ~ C1 CD CC ~ ~ _;4)NC ~ H g ~` L~ ~ tI:1 ~CD~ ~` N~ CD ~ Ho CD 3 CC ~ -~ C$. 30 -1 PAGENO="0307" 813 (The material referred to follows:) SUMMARY OF RECOMMENDATIONS IN COLLEGE ENTRANCE EXAMINA- TION BOARD STUDY WITH COMMENTS OF OFFICE OF EDUCATION DEPARTMENT OF HEALTh, EDUCATION, AND WELFARE, OFFICE OF EDUCATION, TVashingtOn, D.C., March 15, 1968. Hon. EDITH GREEN, Chairman, Special Subcommittee on Education, Committee on Education and Labor, House of Representatives, Washington, D.C. DEAR MADAM CHAIRMAN: This is in response to your letter of March 7 and your Tequest for the Office of Education position on the recommendations and pro- posals contained in the "Study of Federal Student Loan Programs" conducted for the Depaitment by the College Entxlance Examination Board. Inasmuch as your subcommittee is currently considering H.R. 15067, which addresses itself only to programs now under the jurisdiction of the Office of Education, the attached commentary follows the same direction and does not refer to such findings and recommendations as may pertain to programs within the Public Health Service area of responsibility. For ease of review, we have followed the same outline as that contained in chapter III of the CEEB study. Each specific recommendation is followed by a statement of the position of the Office of Education. We believe the staff of the College Entrance Examination Board and its ad- visory and consultant groups have done an exemplary job in conducting the study. It is proving to be of real value to the Office of Education staff, and we trust it will be of like benefit to your subcommittee. Sincerely yours, HAROLD HOWE II, U.S. Commissioner of Education. OFFICE OF EDUCATION RESPONSE TO SUMMARY OF FINDINGS AND CONCLUSIONS FROM A STUDY OF FEDERAL STUDENT LOAN PROGRAMS FOREWORD It will be noted that many of the recommendations made in the College En- trance ExaminatiOn Board study have been incorporated in proposals for legis- lative amendments contained in H.R. 15067. For ready reference appropriate sections of this bill have been included wherever pertinent. A. ADMINISTRATION 1. As discussed in chapter XI it is concluded here that the advantages of cen- tralizing the administration of the six Federal loan programs would outweigh the disadvantages. The Federal loan programs will continue to grow further apart under administraitiOn divided between the U.S. Office of Education and the U.S. Public Health Service. It is recommended, therefore, that the operation of the sico Federal loan programs be brought into a single administrative agency. It is further recommended that appropriation requests for the health professions student loan program and the nursing student loan program continue to be sub- mitted as separate budget items by the Public Health Service. (See ch. XI.) OE position The recommendation to consolidate the various loan programs, administered by DHEW, is being explored by the Department. However, every effort is being made by both OE and PHS to keep the programs in as similar an administrative frame as possible. A step toward this `objective will be taken by OE in 1970 when the Cuban loan program is consolidated with the NDSL program. 2. In all the recommendations that follow it is assumed that the six current Federal student loan programs should be reduced to four. This reduction can be accomplished by merging the vocational student loan program with the guaran- teed loan program and by subsuming a modified Cuban refugee loan program PAGENO="0308" 814 under the national defense student loan program, the health professions student loan program, and the nursing student loan program. As a logical followup of the centralization of adminiStration of all the Federal student loan programs,. which is recommended in Recommendation 1, and as a subsequent step, it is be- lieved feasible and desirable to merge into one loan program the national defense student loan program, the health professions student loan program, and the nursing student loan program. The major precaution that would have to be taken is the development of appropriate allocation procedures to reflect the differing- needs of the various institutions. Such merger would leave only two Federal stu- dent loan programs: the merged program as recommended above and the guar- anteed loan program. OE position As previously stated, it is not deemed feasible to consolidate the PHS and OE programs, ~t this time. However, the incorporation of the Cuban loan program by the national defense student loan program is endorsed. Since the elimination of a State allotment formula is proposed in the "Higher Education Amendments of 1968," one of the major problems confronting this action may be disposed of. As institutions have already filed their applications for funds for fiscal year 1969, the Cuban loan program should be merged with NDSL for fiscal year 1970. Due notice will be given to those institutions concerned, so that they can increase their applications for funds for fiscal year 1970. The need for reaching agreement with, and transferring appropriations from the Welfare Administration to the Office of Education is apparent; obviously a program of this magnitude could not be absorbed by the NDSLP at present levels without additional funding. NoTE-Reference recommendation No. 38 and recommendation No. 21 concern-* ing the guaranteed loan program merger. 3. Under the national defense student loan program, it is recomflje~ed that the U.S. Office of Education continue to simplify and to standardize reporting procedures and also to make every effort to avoid frequent changes. (See ch. IV,~ p. 10.) OE position The Office of Education has and will continue to make every effort to stand- ardize and simplify reporting procedures. 4. Under the guaranteed. loan program, it is recommended that the U.S. Office of Education, in collaboration with the State agencies and educational institu- tions, work toward the standardization of policies, procedures, and forms among the various States. (See ch. VIII, p. 43.) OE position The Office of Education has and will continue to make every attempt to work toward standardization. The variety of forms and procedures used by each State loan agency director and requirements of State law make this an especially difficult area to coordinate. The reinsurance proposal should enable States to adopt more uniform procedures. B. NEED FOB STUDY OF MAXIMUM BORROWING 5. It is recommended that an economic, educational and social analysis of the impact of borrowing be undertaken by the institutions of higher education an4 their associations, with the assistance of the U.S. Office of Education, to deter- mine what might be considered reasonable mawimum indebtedness that students from various family income levels, students preparing for low paying occupations, and women might be enpected to assume. (See ch. X, p. 5.) OE position The Office agrees that it would be most desirable to conduct a study to deter- mine the impact of borrowing on the student after he has graduated or dropped out of school. It is hoped that such a study may be started during the next fiscal year. The fiscal year 1969 budget contains a request for $429,000 to support an "analysis of student financial aid programs and of the universe of students that these programs are designed to aid." A second study in the amount of $175,000 en- titled "Analysis of the Recipients of Educational Opportunity Grants," and still a third study, to cost $75,000, entitled, "Analysis of the Effect of the College Work~- Study Program on the Educational Experience of Aid Recipients" are also planned. for fiscal year 1969. These studies will jointly overlap the question of student - debt load. PAGENO="0309" 815 C. NEED FOR MORE STAFFING AND TRAINING OF FINANCIAL AID OFFICERS 6. It is recommended that the U.S. Office of Education urge institutions to pro- ride adequate staffs to administer student financial aid programs and off er to sponsor training programs to provide the institutions with better trained staff. (See ch. IV, p. 4.) OE position The Office agrees that additional training is necessary for personnel currently employed in student financial aid activities. We are encouraged to note that this need has generally been recognized by institutions of higher education. Some schools, such as Indian~a University, are currently conducting training programs for financial aid officers. We encoui~age and promote this type of activity and in addition, we endorse the creation of Stalte and regional student finan'cial aid councils throughout the United States. These councils generally tend to upgrade the profession and this, hopefully, will be instrumental in initiating additional training programs, as, for example, under the higher educational personnel train- * ing provisions of the Education Professions Development Act. The need for additional training is especially acute in vocational and technical institutions. D. NEED FOR ESTIMATES OF FUTURE STUDENT LOAN DEMANDS 7. It is recommended that the U.S. Office of EduOation prepare projections of the demand for student loans during the neat 5 years, with the assistance of the State loan agencies and educational institutions. (See ch. IV, p. 10; and ch. VIII, p. 37.) OR position The office currently does make 5-year projections of the demand for loans, a part of the PPBS system used within DHEW. These projections will become more relevant to actual loan volume as a broader national experience base is developed. E. ROLE OF THE NATIONAL DEFENSE STUDENT LOAN PROGRAM 8. It is recommended that the annual direct appropriation for the national defense student loan program not be decreased below its 1968 level for at least the near future. OR position If the implication is that the direct annual appropriations for the NDSLP should be held at the 1968 level, we do not concur in this recommendation. There is, as yet, no evidence that annual contributions of NDEA loan capital should be held at a constant level. F. REVOLVING FUND AS A SOURCE OF PRIVATE CREDIT 9. It is recommended that the U.S. Office of Education sponsor regional meet- ings of the college and university officials to determine what additional factors, if any should be considered and developed to make the revolving fund acceptably operable for the national defense student loan program, the health professions student loan program, and the nursing student loan program. (See ch. IV, p. 10; and ch. IX.) OR position This recommendation is no longer applicable since the administration has withdrawn its proposal to utilize borrowing authority for capital in the NDEA loan program. G. GUARANTEED LOAN PROGRAM 10. Steps should be taken to strengthen the ewisting State agencies and to continue to encourage the creation and maintaining of strong State agencies by (see ch. VIII, p. 20) (a) Removing the present provision for direct Federal insurance as a weakening force for strong State agencies, after continuing it on an announced temporary basis from its present eapiration date of June 30, 1968, to a new eapiration date of June 30, 1970. (See ch. VIII p. 21.) This recommendation applies only to loans of necessity and should not affect the possible use of direct Federal insurance for loans of accommodation, as covered in recommendation 12. PAGENO="0310" 816 OE position The Office of Education concurs and has suggested a new expiration date of June 30, 1970, as noted in HR. 15067, title IV, part B, section 431: "EXTENsION OF FEDERAL LOAN INSURANOE PROGRAM "SEC. 431. Subsection (a) of section 424 of the Higher Education Act of 1965 is amended (1) in the first sentence by inserting after `June 30, 1968' the following: `and such limitation in the two suceeding fiscal years as may be specified in appropriations Acts'; and (2) in the second sentence by striking out `1972' and inserting in lieu thereof `1974'." (b) Bringing `in incentives to encourage the creation of strong State agencies where they do not now exist. The combination of two of the pro- prosals now before Congress (the 80-percent reinsurance plain, and additional "seed" or reserve money) should be sufficient to give such encouragen?~nt. wit/i. the additional encouragement of the Federal Government's sharing the costs of administering the State program. (See ch. VIII, p. 21.) OE position The two pertinent proposals contained in H.R. 15067, section 423 are: "(d) (1) The Commissioner may enter into a guaranty agreement with any State or any nonprofit private institution or organization with which he has an agreement pursuant to subsection (b), whereby the Commissioner shall under- take to reimburse it, under such terms and conditions as he may establish, in an amount equal to 80 per centum of the amount expended by it in discharge of its insurance obligation, incurred under its loan insurance program, with respect to losses on the unpaid balance of the principal of any insured loan (other than interest added to principal) resulting from the default of the student borrewer ~` * * "(b) (1) Subsection (b) of section 421 of such Act is amended by striking out `and' before `(3)', and by striking out the period at the end of the first sentence of that subsection and insertion `, and' in lieu there of, and by adding thereafter the following new clause: " `(4) there is authorized to be appropriated the sum of $12,500,000 for making advances, after June 30, 1968, pursuant to section 422 for the reserve funds of State and nonoprofit private student loan insurance programs.' * * * "(2) No advance shall be made in any fiscal year ending after June 30, 1968, unless matched by an equal amount from non-Federal sources. Such equal. amount may include the unencumbered non-Federal portion of a reserve fund. As used in the preceding sentence, the term `unencumbered non-Federal portion' means the amount (determined as of the time immediately preceding the making of the advance) of the reserve fund less the balance of the proceeds of prior advances under this part and earnings thereon, and less such other amounts as may be maintained in such fund pursuant to State law or regulation, or by agree- ment with lenders, as a reserve against the insurance of outstanding loans." Under the reinsurance proposal, the State agency retains the insurance pre- mium which may be used for administrative cost. (c) Holding conferences on the guaranteed loan program with State offli- cials, preferably at the State or regional level-but if time and staff do not permit, at the national level. (See ch. VIII, p. 22.) OE position The Office of Education agrees that such conferences are necessary and holds them frequently. In addition, State, regional, and National organizations of bankers, college personnel, and guarantee agencies uniformly include the guar- anteed loan program on meeting agenda. 11. Financial need should be required as a criterion in the guaranteed loan. program. The present guaranteed loan program legislation states that there shall be no financial need criterion other than defining those adjusted family incomes under $15,000 as eligible for federally subsidized interest payments. This arbitrary line provhles interest subsidy benefits to some students from families that cannot demonstrate financial need, while ot.her families that have higher incomes but large numbers of children and special finan- cial problems have financial need but are unable to obtain the Federal PAGENO="0311" 817 interest subsidy. The overwhelmingly large majority of the people involved in the program is in favor of requiring financial need as a criterion for Federal interest subsidy in the guaranteed loan program. It is felt also that this restric- tion is necessary to keep the program under reasonable control. (See ch. VIII, pp. 22-20.) OE POSITION We do not concur in this recommendation and believe that the current financial need criterion in the legislation is in accord with the broad purpose of the guaranteed loan program. We have taken steps to insure that loans granted under the program are for meeting higher education costs and that the recipients do not receive additional student aid in excess of stated college costs. The financially needy student is given special consideration in the combined grant-work-loan authority contained in title IV, part A, of Hit. 15067. 12. Loans of necessity (see recommendation 11), which are intended to meet the student's financial need after parental contribution, should be separated from loans of accommodation, which are intended to meet or help meet the parental contribution toward the enpenses of higher education. Loans of accommodation should be made to the parent, not to the student, should be guaranteed by the Federal Government, and should not receive Federal interest subsidy. Loans of accommodation should be retained as a feature of the guaranteed loan program and administered through the device of direct Federal insurance, or they should be handled by a Federal agency, patterned after the Federal Housing Adminis- tration established for the purpose of guaranteeing such loans (See ch. VIII, p. 29.) OE PO5ITION We do not agree with this recommendation. We believe that the purpose of this loan program is to provide low-interest, long-terrn loans to middle and upper income families who are not able to obtain financial assistance through the coliege~based programs. The financial burdens families now face, if they are to provide education beyond the high school levels for their children have become increasingly heavy. The cost of obtaining postsecondary education continues to increase each year. The financial pressures now bear heavily not only on the low middle income family, but also on middle and upper middle income family who only a few years ago were capable of paying for their children's education. We believe the insured loan program was established to meet this need. The loans of necessity referred to in the OEE.B study should be Obtained from the college financial aid officer and should be provided largely through the existing NDEA loan program. Further, we see a little point in a further proliferating of student loan insurance activities among other Federal agencies. 13. Colleges and universities, acting under ground rules established by them- selves, the lending institutions, and the State guarantee agencies, should be re- sponsible for determining which students should receive loans and recommending the amounts that they should receive. (See ch. VIII, p. 33.) OJil position We concur in the spirit of this recommendation; namely, that the college does bOar responsibility for certifying information to the lender concerning the student's enrollment status, amounts of assistance he may have been granted, and an appropriate pattern of costs incurred by the student. Negotiation of the precise amount of the loan, however, should remain between the student and the lender. We believe sufficient authority exists in thO present statue to allow the Oomniissioner to issue guidelines descriptive of thO role of the college. 14. Steps should be taken to provide a reasonable profit to lending institutions. The burden of evidence indicates that 6-percent simple interest is not yielding a reasonable profit to most lending institutions. This study recommends, therefore, that the return be set to yield a reasonable profit, the method and amount to be determined by financial eceperts. (See ch. VIII, p. 36.) OE position The Office of Education concurs that a reasonable return should be provided to the lending institutions and believes this can be accomplished by the following proposal which is contained in HR. 15067, section 426: "(B) The Secretary shall from time to time establish appropriate schedules of maximum application fees and consolidation or other conversion fees (as defined PAGENO="0312" 818 by the Secretary) that, subject to the limitations of this paragraph and subject to such other requirements and conditions as the Secretary may prescribe, shall be paid by the Commissioner to eligible lenders with respect to loans made by them and insured under this part by the Commissioner or under a program of a State or of a nonprofit private institution or organization. No such application fee and no such other fee shall exceed ~35. No more than one such application fee may be paid by the Commissioner to any such lender with respect to all loans to the same student borrower for the same academic year (or its equivalent) of study and no more than one such consolidation or other conversion fee may be paid to any such lender in respect of the total insured indebtedness of a student incurred for the pursuit of his entire study program (as defined by the Secre- tary). In establishing such schedules, the Secretary may take into account among other factors the reasonable and necessary administrative costs (not adequately compensated for by allowable interest charges) to eligible lenders of making and servicing loans to be insured under this part. "(b) (1) There is added after the first sentence of paragraph (1) of section 428(a) the following new sentence: `In addition, the Commissioner shall pay, when due, such authorized application fees and consolidation or other conversion fees as may be provided pursuant to subparagraph (B) of section 428(a) (2) with respect to loans to any such student but without regard to the student's adjusted family income.'" 15. To project future needs, a task force s/to ald be assigned to identify all the elements involved in estimating future requirements of guaranteed loans, and each State should be requested to prepare its projections for the newt 5 years. (See recommendation 7.) Oil] position The Office of Education currently makes projections of demand and supply for the guaranteed loan program as well as all other programs. We believe the esti- mated needs and loan availability in each State could be made a part of this projection. 16. To increase participation from the present potential sources of individual lending institutions, the Office of Education should be cue bled to enter into agree- ments with those larger nationwide insurance companies, credit unions, univer- sities, and others who would commit themselves to designated minimum amounts of loan funds over a period of years. (See ch. VIII, pp. 37-38.) OE position We endorse this recommendation and will seek to encourage any potential lender to make guaranteed loans available to eligible students, when lenders with a national clientele do not fit into a pattern of State guarantee activity. This is now permissible in any State in which Federal insurance is available. 17. Greater efforts should be made on the part of States to gain new and in- creased participation by individual lending institutions wit/tin the States. States should be advised also of methods for providing new and supplementary sources of loan funds and encouraged to give these sources consideration in anticipation of greater demands for loans to be made upon them. (See ch. VIII, p. 38-39.) OE position We agree with this recommendation and hope that additional OE field staff can be provided, so that a determined effort can be made to encourage greater lender participation in each State's program. 18. To make loans available to students now finding it difficult, if not impossi- ble, to obtain loans, States should be encouraged to set up a central service division and, where necessary, a central pool of credit to provide loan funds for such students. (See ch. VIII, p. 39-40). OB position Basically, this concept has been explored in several areas of the country. North Carolina was the first to do this and was followed by Washington, D.C. The idea thus far has proved very ineffective, since lenders tend to use such pools as an excuse for extremely limited participation in the program. 19. Guaranteed loans should be made eligible as matching funds for grants under the educational opportunity grants program. (See cli. VIII, pp. 40-41.) PAGENO="0313" 819 OE position As proposed in H.R. 15067, the Educational Opportunity Act of 1968, there is no requirement that institutions match educational opportunity grants. See excerpt from HR. 15067, below: "EDUCATIONAL OPPORTUNITY GRANTS "SEC. 404. (a) An institution of higher education, in accordance with its agree- ment under this part, may award educational opportunity grants to under- graduate students under which the institution shall pay to any such student not to exceed $1,000 for each academic year over which such grant, as provided by subsection (b), shall ex~tend. The Commissioner shall, subject to the foregoing limitation, prescribe for the guidance of participating institutions basic criteria or schedules (or `both) for the determination of the amount of any such educational opportunity grant, taking into into acount the objective of limiting grant aid under this part to students of exceptional financial need and such other factors, including the number of dependents in the family as the Commissioner may deem relevant. The Commissioner may also prescribe a minimum amount payable for any academic year under any such grant." 20. Five procedural changes should be effected to standardize forms and poli- cies within the States, ma/ce proceeds of loans payable in two installaments per year, have proceeds sent to students in care of their institution, and and so forth. (See ch. VIII, p. 42.) OB position (a) The Office of Education agrees with the recommendation that the proceeds of the loan should be sent to the student in care of the educational institution. We do not believe that the lending institutions should be forced to do this, but we will strongly recommend that they follow this procedure. (b) We believe that the recommendation for loan disbursement in two pay- ments should also be left to the opinion of the lenders and the guarantee agencies. Multiple disbursements not only increase the costs to the lender, but also in- crease the paperwork for all parties concerned. (c) The Office of Education `has and will continue to make every attempt to work toward standarization. Last year, for example, we made efforts to stand- ardize inclusion of form 1070 in all State applications. (d) The recommendation to supply education institutions with forms that students might fill out and submit to lending institutions is not practica'ble as long as we have many varied forms among the State agencies. We agree that it would be a tremendous job for any educational institution to try to stock all of `the various forms necessary to serve its students. But as we indicated in the above recommendation, this is an especially difficult area to coordinate. The Office of Education would prefer to `have one uniform application and guarantee form, but as long as the program's are State oriented, we cannot specify the information~ a State form must contain. (e) The Office of Education is currently sending to all educational institution's, student confirmation reports. The information from these repo'rts' will be sup- plied to all lending institutions. We are also willing to make this information available to any guarantee agency, which should eliminate the necessity for the State agency to request identical information from the schools. 21. The proposed merger of the vocational student loan program with the guaranteed loan program should be enacted. (See ch. VIII, p. 48.) OE position The Office of Education concurs, as is recommended in H.R. 15067: "MERGER OF NATIONAL VOCATIONAL STUDENT LOAN INSURANCE ACT OF 1965 WITH LOW-INTEREST INSURED LOAN PROGRAM OF HIGHER EDUCATION ACT OF 1965 "SEC. 430. (a) (1) Paragraph (a) of section 435 of the Higher Education Act of 1965, as amended by this Act, is further amended (A) by striking out'"eligible institution" means an educational institution' in the first sentence and inserting in lieu thereof ` "institution of higher education" means an education institu- tion"; (B) by redesignating the paragraph as subparagraph (2) of paragraph (a) and clauses (1), (2), (3), (4), and (`5), and subclauses (A) and (B) and PAGENO="0314" 820 references thereto wherever they may appear, as clauses (A), (B), (C), (D), and (E), and subclauses (i) and (ii), respectively;. and (C) by inserting before the so redesignated subparagraph (2) the following new paragraph (1) `(1) The term "eligible institution" means an institution of higher edu. cation or a vocational school as defined by this section.' "(2) Paragraph (a) of such section 435 is further amended by adding, as a new paragraph (3), the text of paragraph (a) of section 17 of the National Vocational Student Loan Insurance Act of 1965, as amended in the first sentence thereof (A) by striking out `eligible institution' and inserting in lieu thereof `vocational school', (B) by amending the word `Act' in clause (4) (C) to read `part' * * * "(h) (1) The National Vocational Student Loan Insurance Act of 1965 is repealed." H. TIMING AND NOTIFICATION OF ALLOCATION 22. It is strongly recommended that Congress revise its schedule of appropri- ations to permit notification. of institutions at least 3 months before the beginning of the fiscal year in which funds are to be made available to the individual institution.. (See ch. IV, p. 15, ch. V. p. 5; and cli. VI, p. 5.) OE position The Higher Education Amendments of 1968 contain provisions for forward funding of all Federal student aid programs. The passage of this bill will alleviate many of the probems facing the colleges in administering these programs locally. Advance funding is asolutely essential to sound planning and program manage- ment at the campus level. J. COLLECTION OF LOANS. 23. The method of computing the rate of delinquency should be changed in order to indicate the status of arrears and potential losses through default. (See ch. IV, p. 22; ch. V, p.6; and ch. VI, p. 5.) OB position The method of reporting and computing the rate of delinquency was revised in fiscal year 1967. The rate of delinquency is now reported on the basis of ratio of past due accounts to all accounts in collection. Further, the division is currently studying the problem of separating late payments from outright defaulted accounts and has requested extensive information from those institutions which have a large number of delinquent accounts. 24. An effective writeoff procedure should be adopted. Resorting to the collec- tion of loans by the Federal Government is not recommended. (See cli. IV, p. 22; ch. V. p. 6; and ch. VI, p. 5.) OE position The Office concurs with part of the recommendation that an effective writeoff procedure should be adopted. We are currently developing administrative rules which would establish the necessary steps an institution must take before a note could be considered uncollectible by the institution. We do not, however, agree with the second part of the recommendation, namely, that the loans not be col- lected by the Federal Government. We believe that after the institution has made diligent efforts to collect, but has been unable to do so, that the institution should be permitted to transfer certain loans to the Office of Education. It is not our intent to collect NDEA loans for the institutions, however, we believe we have a responsibility to the taxpayer to seek all possible means of collecting funds owed to the Federal Government. It is believed that the Federal Govern- ment, as a last resource, may be able to collect funds from an individual who would not otherwise pay them to educational institutions. 25. IS'trong encouragement should be given to the use of central collection agencies. Central collection should be urged particularly for those institutions with continuously unsatisfactory records of collection. The enforced use of cen- tral collection agencies, particularly in the cases of institutions with unsatis- factory records, would be difficult to administer unless there were "accredited" agencies or unless the Office of Education sponsored the establishment of collec- tion agencies on a State or regional basis. The State-guaranteed loan agencies are already in the loan collection business and might be willing to add the cOllec- tion of national defense student loans, health professions student loans, nursing PAGENO="0315" 821 student loans, and Cuban refugee student loans to their efforts on behalf of their own loans. (See ch. IV, p. 27; ch. V, p. 6; and ch. VI, p. 5.) OE position We endorse this recommendation and are encouraging the creation of central billing and collection agencies. 26. An incentive plan for the reimbursement of administrative ewpenses should be adopted. (See ch. IV, p. 29; ch. V, p.6; and cli. VI, p. 5.) OE position The Office does not endorse this recommendation because we feel it would not achieve the desired objective. We do not believe that the small schools which have poor administrative records would be induced by this method to improve their program administration. We do agree that a change in the method of reimbursement for administrative cost is necessary and we have recommended in HR. 15007 that institutions be paid 3 percent of their yearly grant for admin- istrative overhead in all three college-based student aid programs as well as in the PHS programs. K. CANCELLATION OF LOANS 27. The teacher cancellation provision of the national defense student loan program should be phased out. (See ch. IV, p. 35.) OB position The information in that portion of the CEEB study which deals with the effectiveness of partial loan cancellation as a means of recruiting teachers, is inconclusive. We have no additional information or data which will or will not support the recommendation made by. the college board. Further study and evaluation of this aspect of the NDEA loan program might be done although the array of attitudes and opinions in the educational community on this point is sharply divided, as for instance, among deans of education, financial aid officers, or loan recipients themselves. 28. The nursing cancellation provision of the nursing student loan program should be phased out. (See ch. VI, p. 8.) OE position No comment. 29. The forgiveness (or cancellation) concept should not be ea~tended to the guaranteed loan program. (See ch. VIII, p. 41.) OE position We are in complete agreement with the recommendation that the teacher cancellation provision not be extended to the guaranteed loan program. L. UNIFORMITY OF PROVISIONS 30. Mavimum borrowing. Limits of $1,500 per year and $5,000 aggregate should be set for undergraduate students, and limits of $2,500 per year and $10,000 aggregate should be set for graduate students (including undergraduate loans). These limits would apply for borrowing in each Federal loan program and, in addition, for borrowing under more than one Federal loan program. (See ch.X, p.3.) OE position We concur in the recommendation and have requested a change in the limit of borrowing in H.R. 15067, since the $10,000 limit could be unduly restrictive for some graduate students. We have proposed a maximum of $11,000. There is no need to modify the Cuban regulations, since it is proposed that this program be incorporated with the NDEA. 31. Loans should be made available to half-time students. (See ch. X, p. 5-6.) 0111 position Half-time students may currently borrow under the NDEA and the Federal insured student loan program. Under the guaranteed loan programs, this is at the option of the State loan agency. 32. Interest paymsnts during the repayment period should be standardized. (See cli. X, p. 6.) PAGENO="0316" 822 OR position This recommendation pertains to Public Health Service programs. 33. Removal of some or all of the interest subsidy during the period of study is not recommended. Removal of interest subsidy during the payout period is,. however, a matter of possible future consideration. (See ch. X, pp. 6-7.) OR position We agree and will give consideration to the matter of removing the 3-percent interest subsidy on the guaranteed loan program during the payout period. 34. Numerous deferment provisions should be standardized. (See ch. X, pp. 7-8.) OR position The Office of Education concurs and has proposed in H.R. 15067 that deferment provisions be extended to all loan programs under OE jurisdiction: "SEC. 421. (a) (1) Section 428 of the Higher Education Act of 1965 is amended by adding at the end of such section the following new subsection: "`(c) The Commissioner shall encourage the inclusion in any State student loan program or any State or nonprofit private student loan insurance program meet- ing the requirements of subsection (a) (1) (B)~ or (C), of provisions authorizing: or requiring that in the case of student loans covered by such program periodic installments of principal need not be paid, but interest shall accrue and be paid, during any period (1) during which the borrower is pursuing a full-time course of study at an eligible institut.ion (or at a comparable institution outside the States approved for this purpose by the Commissioner), (2) not in excess of three years during which the borrower is a member of the Armed Forces of the United States, (3) not in excess of three years during which the borrower is in service as a volunteer under the Peace Corps Act, or (4) not in excess of three years during which the borrower is in service as a full-time volunteer under title VIII of the Economic Opportunity Act of 1964.'" 35. The grace period should be shortened to ~ months. (See ch. X, p. 9.) OR position We agree with this recommendation and believe that it will result operationally in better collection efforts on the part of the institution. 36. Reimbursement to Institutions for administrative expenses should be pro- vided. (See ch. X, p. 10.) OR position A recommendation for reimbursing educational institutions for administrative expenses incurred in administering all Federal programs of student assistance is contained in H.R. 15067. We do not believe that any reimbursement should be provided to the educational institutions for loans made under the guaranteed loan program because their role is much less complic.ated. The reimbursement for administering expenses which they receive from the college-based programs should cover any costs they incur from the insured loan program. 31. Three provisions affecting cancellations and late payment charges should be sta'ndardized. (See ch. X, pp. 10-11.) 0117 position This will be brought under joint OE-PHS review, looking toward further recommendations. M. CUBAN REFUGEE STUDENT LOAN PROGRAM 38. The separate Cuban refugee student loan program as it now ezists should be phased out of existence and subsumed by the national defense student loan program, the health professions student loan program, and the nursing student loan program, subject to the conditions discussed in chapter VII, page 7. OR position As mentioned in recommendation 2, we propose to merge the Cuban student loan program with NDEA in 1970. Mergers in the PHS programs should be made the topic of joint review. PAGENO="0317" 823 N. NATIONAL DEFENSE STUDENT LOAN PBOGRAM-OTHER RECOMMENDATIONS 39. It is recommended that the procedure for allocating the Federal capital contributions be based on a State or regional allocation to take into considera- tion the number of students enrolled in high-cost institutions and the income dis- tribution of college-going students, as well as on the number of full-time students in higher education, which is the only factor now used. (See ch. IV, p. 14.) OR position A change in this procedure is recommended in the Higher Education Amend- ments of 1968, with creation of national pooled funding. Factors of institutional cost, income distribution of students, enrollment changes, etc., are best developed within the individual institutional request, rather than superimposed by formula. 40. Further, it is recommended that no allocation to a State or region be al- lowed to lapse, that funds not used in a State or region be reallocated to States or regions where insufficient funds have been allotted. (See ch. IV, p. 14.) OR position This recommendation has been met by provision in HR. 15067 in which there is no State allotment formula. Accordingly, all institutions are treated on an equal basis and the amount of money which would not be utilized by institutions, would be reduced to a bare minimum. 41. It is recommended that additional restrictions on needy students be called to the attention of financial aid officers as possible sources of discrimination. (See ch. IV, p. 17.) OR position We steadfastly support the right of the instiution to determine the students to whom they make aWards. Whenever it is brought to our attention that financial aid officers are not following the rules or regulations, we do take appropriate action, primarily through site visits by our regional personnel. 42. It is recommended that the provision in the national defense student loan program legislation requiring that special consideration be given to students "with a superior academic background" be eliminated (See ch. IV, p. 17.) OR position This provision of the NDEA will be eliminated by amendments contained in HR. 15067. 0. OTHER RECOMMENDATIONS 43. It is recommended that the institutional allocation procedure in the health professions student loan program be revised to take into consideration not only the proportion of students involved, but the relative student ea~pense budgets. (See ch. V, p. 5.) OR position No comment. 44. It is recommended that additional efforts be made to disseminate informa- tion about the nursing student loan program: (a) among high school guidance counselors; (b) among currently enrolled students in nursing programs to en- courage them to continue into advanced studies; and (c) among married nurses to encourage them to take on advanced studies. (See ch. VI, p. 8.) OR position No comment. Mr. PETRIE. In connection with our particular State, when any student advises me that he cannot find a bank, I determine that he has actually made contacts with the various banks. If he cannot find a bank or lender to provide the loan, I ask him to send the application on to our office and we find a place for him. Mrs. GREEN. Will you also give us the number of women who are borrowers under this? Mr. PEmu~. I have this in my program, too. Mrs. GREEN. I thank the members of this panel for appearing today. PAGENO="0318" 824 I am especially grateful to you, Mr. Reeher and members of your panel, and also to Dr. Purdy for accommodating us on the committee. You were all scheduled to testify last Friday. We felt we had another matter that was of greater urgency. You were kind enough to agree to come several days later. Our thanks to all of you. Mr. REEHER. Thank you, Madam Chairman. Mrs. GREEN. The meeting is adjourned until tomorrow morning at~ 10 o'clock. (Whereupon, at 12:40 p.m. the subcommittee recessed, to reconvene at 10 a.m., Friday, March 8, 1968.) PAGENO="0319" HIGHER EDUCATION AMENDMENTS OF 168 FRIDAY, MARCH 8, 1967 HOUSE OF REPRESENTATIVES, SPECIAL SuEcoMMrrnE ON EDUCATION OF THE C0MMIrPEE ON EDUCATION AND LABOR, Was/ii~igton, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 2257, Rayburn House Office Building, Hon. Carl D. Perkins (chairman of the full committee) presiding. Present: Representatives Perkins, Brademas, Hathaway, and Quie. Staff members `present: William F. Gaul, associate general counsel, and W. Phillips Rockefeller, minority research specialist. Chairman PERKINS. The committee will come to order. A quorum is present. In the absence of Mrs. Green, I will convene the committee this morning as cx `officio chairman of the subcommittee. Mrs. Green will be here a little later, and perhaps Mr. Brademas. The first witness is Dr. Woodrow Strickler, acting president of the University of Louis- ville. Come around, Dr. Strickler. We are glad to welcome you here this morning. I know that you have been carrying great burdens down there in recent months as acting president `of a great university. From all reports you have been doing some outstanding service there for many years. I am delighted to welcome you here this morning and we are de- lighted to receive your views on a most important piece of legislation, H.R. 15067, the Higher Education Amendments of 1968. We will be delighted to hear from you, Doctor. STATEMENT OP DR. WOODROW STRICKLER, ACTING PR~ESIDENT, UNIVERSITY OP LOUISVILLE Mr. STRIOKLER. Your words are very kind. I am grateful for them. I have had some other comments that have not been so kind in the past months or so but this is to be expected. I am very much complimented by the privilege of appearing before this special siThconimittee of the House Committee on Education and Labor. And, to Congressman Perkins, I bring special greetings from fellow Kentuckians. I appreciate the fact that higher education has been well represented and well served by the individuals who have appeared before this committee during the past several weeks and have given their interpre- tatioin of the significance of higher education legislation, H.R. 15067. I' realize that there is little which I could add in the form of fresh or even novel concepts which might be helpful to you in your further deliberations. (825) PAGENO="0320" 826 I suspect that the only real purpose which I can serve is emphasize or reemphasize evaluations which you have already heard. Perhaps they will have some extra meaning as representing the point of view of an individual coming from an institution somewhat different from those represented by the individuals you have hear<1. I represent the University of Louisville, an institution of some 9,000 students, an institution consisting of the schools including an arts and science college, engineering, law, medicine, dentistry, and so forth. It is an institution of longstanding with a founding date of 1790. It is organized under a charter of the State, with a board of directors appointed by the mayor of the city of Louisville. It receives financial support from the city, the county, and the State, but of only a limited amount in terms of its total budget. Student tui- tion, which is high ($1,200 for county students, $1,800 for those out- side) accounts for over one-third of its income. We represent, really, a dying type of institution, an institution which is so frequently identified as a municipal institution. The Higher Education Facilities Act, the National Defense Educa- tion Act, and the Higher Education Act of 1965 have been of tremen- dous importance to an institution of our type. The 5-year extension `of these programs is essential to the healthy future of higher education in this country and to an institution such as mine. In order to be selective in my thoughts and considerate of your time I should like to speak only of the new aspects of the act. I should like to comment first about graduate education, and par- ticularly as it relates to the Nation's future. In all of the interactions which exist `among nations, it is essential to have `a strong cadre of highly trained experts in all fields. If we are `struggling for `the minds of men, we must have those who can create a viable society, and this means not only the scientist `and engineer, but the social scientists, the humanist and the teacher. Without such experts, no modern nation can survive, and the train- ing of these people is what graduate education is all about. It is the mechanism by which are produced the nuclear physicist, the organic chemists, the clinical psychologists, the mathematicians, the political scienitsts, the educators, the philosophers, the advanced schol- ars in every field who form the basis of expertise on which the future of this Nation must be based. Graduate education may have its faults, but it is the only way we have yet devised to satisfy the basic needs for these indispensable peo- ple. For my kind of institution, one with a solid, but relatively small, and yet growing Ph. P. program, the provision of the bill concerned with the improvement of graduate schools is very important. It is expensive instruction, but as one of only two institutions in the Commonwealth offering doctoral programs it is imperative that we continue to improve the quality and range of our work. We are an urban institution, involved with the advantages, and at the same time, the tensions and stresses of an urban society. The production of highly trained professional people is essential to urban areas if they are to continue to be the foundations upon which this country has risen to greatness. PAGENO="0321" 827 The provision of increasing educational allowances to graduate schools brings to my mind the general problem of financing which faces higher education today. It is a simple fact that a great number of institutions are having great difficulty in maintaining the quality of education they are presently providing. Each additional student increases the severity of the problem, each step forward in an institution's teaching and research program may well bring it closer to insolvency. `What is needed is comprehensive support for an institution's basic operational needs: funds for academic and service facilities, for in- structional and research supplies and equipment, for those things which are essential to keep an institution in business. Challenge or matching grants for new experiments are fine in theory, but they can be murderous in their effect upon the financial stability of a university. The part in title IV which would provide intensive remedial and counseling services for the disadvantaged college student could have great impact upon our national sociaJ and economic scene. As a matter of fact, the need for these services is not limited to the disadvantaged, in the accepted meaning of that term. I honestly be- lieve that great numbers of our students today are quite uncertain as to why they are in college. To many I believe it is a matter of their pursuing education without purpose. Here again, I feel that if the program were available to all students who have a need for this service, regardless of their disadvantaged status, a great contribution could be made to the economic, social, and political life of this country. All institutions are aware of the need for these services, but all too frequently the press of other needs precludes their development. The concept of sharing educational resources, as set forth in title VIII, is relevant to these days. It. is becoming increasingly evident that the only way some colleges can remain in existence is by the process of pooling resources. Certainly the only way many of them can continue to improve their quality is by joining forces to get maximum use out of their combined resources (plant, faculty, books, equipment) and to avoid duplica- tion of facilities. In my own community two colleges are combining this coming year and another may well be forced to seek an alliance of some sort in order to keep operating. This new title is opportune for a trend of in- creasing cost pressures which is becoming increasingly evident, if in- stitutions will recognize its possibilities. Title XII, "Grants and Contract To Strengthen and Improve Edu- cation for Public Service," has far-reaching possibilities for institu- tions such as mine located in large metropolitan areas. It is inevitable that we become more and more involved not only in the training of people for public service, but in actual decision- making experiences. No urban university of any consequence in these complicated times can be without its urban studies center. May I comment briefly about several other points relating to the future of higher education. The $200 million allocated for 1968 col- lege housing loans will be far from adequate. While the proposed rate 92-37i-68-pt. 2-21 PAGENO="0322" 828 formula will undoubtedly cause some hardship, I feel compelled to recognize the fact that a ceiling of 3 percent in loans is unrealistic in today s economic scene. I note many of my colleges will disagree with the points I am making here. The difference between the rate of 3 percent and the goino market rate must be borne by someone and I am inclined to believe~that the student might properly accept a share of that responsibility. A rate high enough to be competitive for those institutions which can issue tax-exempt bonds might well make it possible for the amount funded for 1968 to go much farther in meeting needs. For those institutions not eligible to issue tax-exempt bonds a pro- gram whereby the Government would subsidize the difference be- tween the Government-set rate and the going market rate would be desirable in order to make it possible for public and private institu- tions to borrow at comparable ra.tes. What I am saying, I suppose, is that the rate of 3 percent requires the Government to make a subsidy that is too great in our present financial market. Perhaps a rate of 4 to 41/2 percent would be fairer with the Government guaranteeing t.he difference between that rate and the going market rate. All sorts of legislation pending before the Congress is of concern to higher education in addition to such obvious bills as the College Housing Loan Act, the Economic Opportunity Act., the Student Loan Act. Even the act on the reproduction a.nd use of copyrighted material in automatic systems for dat.a processing may impinge on higher education. Legal education has been excluded from current Federal programs supporting higher education. To remedy this, Congressman Celler introduced a bill on H.IR. 13584 (90th Cong., first sess.) to create a National Foundation of Law. Senator Dirksen introduced an identical bill, and Senator Tydings introduced one that is similar. These bills were assigned to the Judiciary Committee rather than the one before which I am appearing, but because the National Foun- dation of Law Acts seek to include legal education in a meaningful way in the Federal higher education program, I want to mention it as deserving of support. This vital piece of legislation already has the support of t.he Amer- ican Bar Association and the Association of American Law Schools. More Federal support is needed in dental education. Reliable pro- jections of health manpower needs for the next 10 years far exceed the availability of professional and ancillary health personnel. Federal legislation has partially met this challenge with the passage of the "Health Professions Teaching Facilities Construction Grant," the "Health Professions Educational Improvement Grant," the "Al- lied Health Professions Educational Improvement Program," and other health-related bills. . However, the closing of St. Louis University School of Dentistry for lack of operating fimds is but one example of a serious defect in the health manpower effort. We need Federal support of legisla- tion to meet the increasing operating deficit experienced by educa- PAGENO="0323" 829 tional institutions charged with the responsibility of training the Na- tion's health professions personnel. Let me summarize by saying H.R. 15067 is extending and enriching a program of Federal assistance that has been more successful in its operation than any of us in the business of education had ever even hoped for. It has been well conceived and it has been well executed. We look forward to an even more significant experience in the next 5 years. Thank you, sir. Chairman PERKINS. Dr. Strickler, let nie first compliment you on an outstanding statement. I think you have pointed up the great need for the legislation. Now the bill proposes amendments to improve and strengthen the programs which you have so ably stated to provide support for stu- dents, for the construction of academic facilities and certain types of other programs and other services. Now is the overall Federal involvement in higher education a well- balanced one or are there needs at your institution which are not being met by existing programs and programs to be established under this legislation? Mr. STRICKLER. I think the programs are in a well-balanced order. I think I would emphasize that which all people in the business of education emphasize. That is the need for broad support of undesig- nated character in terms of purpose. In other words, the problem facing my kind of institution, and it faces `all others I think, is the business of meeting the day-to-day operating cost requirements. For example, so frequently I think we provide aid for the student that is in terms of fellowship aid, scholarship aid, loans, and the like. As I mention here almost every time a new student comes into the institution our problems become more severe. Chairman PERKINS. On that particular point I know it has been mentioned over and over `again before this subcommittee and sugges- tions have been made by various witnesses, first, the loan forgiveness feature of the NDEA student loan program be deleted and that the interest subsidy during the repayment period `of the guaranteed stu- dent loan be deleted. May I `have your comments on `these proposals? Mr. STRICKLER. Yes, sir. I don't believe I would stress the need for deleting it. I might stress the need for modifying the period of time. `Chairman PERKINS. In what respect, would you say? Mr. STRICKLER. I `think at the present time the exemption runs for a peri'od of 11 years. This is a fairly substantial period of time. In this day when a well-trained person has a chance to get generally a job of fair income, I doubt whether you would need this length of time. I would suggest 5 years. Chairman PERKINS. Assuming that the interest subsidy were deleted, would it affect the `student body `at your institution? Mr. STRICKLER. I don't believe so. Chairman PERKINS. I have one further question. I know that one of the great objections that we have had over the period of years in enactment of legislation is the problem of late funding. This PAGENO="0324" 830 legislation, of course, provides for advance funding. Related to this matter is the question of how many years the program should be extended. How do you feel on this point and should we authorize programs for a long period of time or make them permanent? Mr. STRICKLER. I am a man of compromise. I hesitate to make com- mitments for too long a period of time in almost every area because we live in a world of such rapid change. Again, I come to a point of compromise. We have had too short a period of time in viewing the future of this kind of assistance. Chairman PERKINS. What tenure would you suggest? Mr. STRICKLER. I talk in terms of a 5-year program. Chairman PERKINS. Again, Dr. Strickler, let me compliment you for being an outstanding witness. You have been very helpful to this committee. Mr. Quie, do you have any questions? Mr. QUIE. I have only one on the guaranteed loan program, with reference to the breaking point; that is, the benchmark of $15,000 adjusted gross income. Just how does that fit into the observation that you have made out- lining the need for a subsidized loan? Mr. STRICKLER. I am sorry, I am not qualified to answer that ques- tion. I do not quite understand. Would you mind repeating it again? Mr. QrnE. You know that the guaranteed subsidized loan program is for a person whose family has less than $15,000 of adjusted gross income? Mr. STRICKLER. Yes. Mr. Qum~. Do you think that hard and fast benchmark of $15,000 adjusted gross income in your area is an adequate figure? Do you think there ought to be more flexibility? Mr. STRICKLER. I believe that if a benchmark is set, a benchmark that is a reasonable benchmark, a benchmark is helpful to have at this figure. I would prefer at the present time to continue to work with the financial aid officer. Mr. QUIE. In other words, you would prefer to have the financial aid officer make that decision? Mr. STRICKLER. Yes. I am in favor of this. My reason for taking this position is that I have noticed you could have and do have wide ranges of opinion among your financial aid officers. I think in order perhaps to have the program operate in a steady manner, in a manner of fairness to the greatest number of institutions, some kind of benchmark is extremely helpful. Mr. QmE. How about the educational opportunity grants? Do you have statistics on the number that utilize them? Mr. STRICKLER. No; I do not. It has been extremely useful to us. By the way, my financial aid officers tell me that it is a joy working with the procedure. The procedure is quite adequate. Mr. QmE. We prohibit the use of work-study money in matching EOG. I am confident, though that this committee will change that so that you can count on work-study money. Do you think, in all cases, you will be able to find additional money to match the EOG money, if we still continued the limitation that it PAGENO="0325" 831 would only amount to half of the students' needs, with the other half to be filled in another way-either through a loan or a private grant? Mr. STRICKLER. We would have trouble in our area. Mr. QUIE. I would not have difficulty getting this answer in some other parts of the country. Mr. STRICKLER. We would have some trouble. Mr. QUIE.. Why do you say the municipal colleges are a dying type of institution? Mr. STRICKLER. All you have to do is look around the country and see what is happening to them. Mr. Q1JIE. Are they dying? Mr. STRICKLER. That is not the proper choice of words. They are be- coming another kind of institution. For example, you talk about, the University of Houston, the University of Omaha, the University of Wichita, University of Kansas City, Unive.rsity of Cincinnati, all of them go struggling to get a broader basis of financial support. In this day and age, this means moving into the State system of higher education.. At the moment our legislature is meeting and we have a resolution in that legislature asking that the University of Louisville be brought into the State system. If I may say, frequently lawmakers do something out of the goodness of their heart and spirit but it increases difficulty for the institution. For example, we `have always had support for our medical and dental schools in part from the State. In this present legislature, the budget included a $2 million increase in our appropriations for us but it was based upon the principle that we reduce our tuition rate so that we save $2 million. So here we are with a $2 million increase in appropriations but we are in a much worse financial bind now because we are simply sub- stituting one form of income for another and we are not in a position to raise our tuition to meet increased costs for next year. So we are going to have to do some negotiating on this because otherwise I can't make a budget next year. It is wonderful for the students because it means that the tuition has dropped from $1,200 to $900 a year. It is terrible for us. Mr. QUIE. That is all. Thank you. Chairman PERKINS. Did I understand you to say that you were having trouble with the guaranteed loan program in Louisville at your institution? Mr. STRICKLER. No, we are not having trouble. Chairman PERKINS. Do you feel that the fee that is being proposed' is reasonable? Mr. STRICKLER. Yes, sir. Chairman PERKINS. Or do you feel that it would make it work better at your institution? Mr. STRICKLER. I `asked my financial aid officer yesterday. by tele- phone what his reaction was on this. He said he would have no objec- tion to this. He t.hinks it is perfectly `all right. I am not acquainted with the details of the the operation. Chairman PERKINS. Have you been somewhat disappointed with the participation of the banks up to the present time that serve your in- stitution and students? PAGENO="0326" 832 Mr. STRICKLER. Yes, we have. We ifud negotiations are complicated, perhaps more complicated than we hoped they might be. This has re- suited in delay in the negotiations of the loans. I think it is a matter of education. Now we have moved forward in more recent times in a much more workable way. Chairman PERKINS. Do you feel the fee will accelerate or encourage the banks in making more loans to the students? Mr. STRICKLER. I can't make a judgment on that. Chairman PERKINS. You cannot make a judgment ? Mr. STRICKLER. No; I cannot. Chairman PERKINS. But you suggest to the committee that this pro- vision be retained notwithstanding in the long run it may cost more money because of world conditions at the present time and because it will open up a source of worrying for the youngsters now, the college students now, that could be suspended when world conditions improve? Mr. STRICKLER. That is right. Chairman PERKINS. Would that be your thinking or not? Mr. STRICKLER. Tl~at is my thinking. This is the reason why, for example, I even will go along with the raise in the basic rate of inter- est from the 3-percent figure to a higher figure. I am not saying that this is something that we will always continue to accept, that is the challange of competitive bidding rates. But with the severity of the world situation and the calls for service and funds from our Government at the present time, I would be will- ing to make this share of sacrifice. Chainnan PERKINS. Thank you very much, Dr. Strickler, for a good statement. Mr. STRICKLER. Thank you, sir. Chairman PERKINS. Mrs. Green hopes to be here a little later this morning. She is tied up in *an important conference at the present time. In the meantime, the clerk of the commitee will see if he can get Mr. Brademas or someone else to preside. I have to make arrangements to get down to Kentucky, myself, this morning. Will Dr. Luke Lamb, Director of the Educational Media of the Oregon State Board of Higher Education, and John Wit.herspoon and James Fellows come around. Who is the chairman of the panel? STATEMENT OP JAMES FELLOWS, DIRECTOR OF RESEARCH AND DEVELOPMENT, NATIONAL ASSOCIATION OP EDUCATIONAL BROADCASTERS Mr. FELLOWS. I am, Mr. Chairman. My name is Fellows. Chairman PERKINS. Identify yourself for the record. Mr. FELLOWS. Mr. Chairman, I am James Fellows, Secretary of the National Association of Educational Broadcasters and Director of its office of Research and Development. Mr. Witherspoon and Mr. Lamb have prepared testimony which has been submitted to the committee and we have abridged it on the as- sumption that the full testimony will be in the record. PAGENO="0327" 833 Chairman PERKINS. Without objection, your testimony will be in- serteci in the record as prepared. Mr. FELLOWS. Mr. Chairman, the NAEB is the organized profes- sional association of institutioi~s and individuals engaged in areas of educational radio and television in the United States. Its membership consists of universities, colleges, public and private schools, and nonprofit community corporations which operate or hold construction permits for 170 educational radio stations, more than 150 educational television stations, and over 200 closed-circuit television systems and program production centers. Its membership also includes individuals who are classroom~ and studio teachers, producers, directors, technicians, and researchers involved in educational application of radio andtelevision. The NAEB enthusiastically endorses the concept of networks for knowledge that is articulated in the amendments to the Higher Educa- tion Act. This is an important and explicit initiai response to the President's suggestion on the occasion of signing the Public Broadcasting Act of 1967. He said: We must consider new ways to build a great network for knowledge, not just a broadcast system, but one that employs every means of sending and of storing information that the individual can use. The entire concept of educational "networking," the full range of interconnection, from broadcasting to computers is expanding very rapidly. Under sponsorship of the U.S. Office of Education, the NAEB con- ducted in 1965-66 a study of the potential for an educational com- munications system. The central thesis of the NAEB's educational com- munications concept is that electronic communications systems de- signed for institutional cooperation reach optimum efficiency if they are multiple-purpose facilities rather than separate, unrelated tech- nical arrangements. Within the framework of that study, the State of Oregon has de- veloped plans for an ultra-State educational communications plan, and the Committee on Institutional Cooperation of Midwest Univer- sities has established the basis for a regional plan. My two colleagues, Mr. Witherspoon and Mr. Lamb, will provide additional information about the basic components and concepts of the study. Individual States are giving serious study to information networks designed for multiple-purpose use. Among current developments are those in Texas, Minnesota, Indiana, Iowa, Illinois, Missouri, and New York. The establishment of the Joint Council on Educational Telecom- munications, of which NAEB is one of eight constituent members, was a direct outgrowth of the NAEB's educational communications system study; the development of the Inter-University Communica- tions Council, known as EDUCOM, paralleled the NAEB's study and both projects have been mutually beneficial. Regional associations, such as the Southern Educational Communi- cations Association provide further evidence that this is an increas- PAGENO="0328" 834 ingly prominent area of concern and development among educational rnstitutions. What is most encouraging about these developments is that they suggest that educational use of electronic communications is being seen both as a. means for improving current practices and as a means for implementing desired procedures that could not be undertaken with customary traditional patterns of organization, administration, and deployment of personnel. By affording the means, electronic communication technology pro- vides the opportunity to implement new and different procedures, con- cepts, systems, organization, and administrative structures. Technology is not a solution in itself but it aids in esta.blishing a new framework in which educational needs can be confronted and resolved. The NAEB's position and its support of networks for knowledge are based on two assumptions. 1. It is not financially feasible for each educational institution to provide high-quality instructional materials in all topics and in all subjects that it is called upon to offer. 2. It will therefore be necessary to share human and material re- sources among institutions according to their institutional require- ments and educational needs and without limitation of geographic contiguity. These assumptions, while broadly stated, underlie the need to chart a legitimate place for educational technology in dealing with broad educational problems. Their implications affect institutional manage- ment and educational opportunity. They require the effective imple- mentation of modern communication teclmiques, and not merely the addition of them, and they indicate that academic chauvinism is in- compatible with educational excellence as the dominant goal and char- acteristic of 20th-century education. Networks for knowledge have no particular value in themselves, but are important because of what they enable institutions to do. They can make it possible to implement and strengthen other por- tions of the Higher Education Act. Properly designed, communica- tions systems that enable institutional cooperation can be used for library training, research, exchange of library resources, strengthening developing institutions, providing instructional materials, and lan- guage development all of which are important elements of the present efforts in Federal assistance. to higher education. Apart from the inherent strengths of the proposed amendment to the Higher Education Act providing funds for the basic development of networks for knowledge it is also important to recognize that this part of the act supports and reinforces other decisions made by the Congress with regard to the effective use of technology for meeting educational, cultural, and social objectives. It is important, therefore, that the present proposals be seen in the context of the Public Broadcasting Act of 1967 which authorizes funds for educational television and radio facilities, a corporation for public broadcasting and a study of new instructional uses of radio and tele- vision to meet increasing demands for educational quality and oppor- tunity. The components of the Public Broadcasting Act are, in prac- PAGENO="0329" 835 tical terms, prerequisites to networks for knowledge. For without the capacity to develop and produce materials there will be little of value to interconnect. Educational broadcasting is not only a matter of providing cultural programs for the educated audience, it is a matter of extending the school curriculum beyond the school and into the home. Professional education, vocational development, literacy education, inservice training for teachers and school administrators, and other fundamental educational needs have been dealt with by educational stations. We would urge, therefore, that nothing in this legislation should be used to prevent grants which include the interconnection of broadcast facilities. It is, in fact, one of the central advantages of an educational communications system to embrace whatever television and other com- munications services need to be shared among institutions, without re- gard to whether the last step in reaching the viewer or consumer is made by open- or closed-circuit transmission. Our experience shows that institutional cooperation facilitated by radio and television broadcasting stations is frequently not only a valid means of sharing educational resources but, in some instances the only means. Much has been learned in many areas around the country in this regard. Broadcast radio and television are important partners with closed- circuit television systems in providing the most flexible arrangements for sharing resources and should not be omitted from this important development. Although networks for knowledge is a comparatively new idea, the fact of the matter is that through traditional means such as the auto- mobile, the bus, and the mail system, there is already an extensive his- tory of institutional cooperation. Networks for knowledge can greatly advance and accelerate this cooperation. They can make it a functional and structural part of de.- veloping colleges and universities and they can enable cooperation among institutions that have more in common than geographical loca- tion in the same or nearby communities. This will be only a first step, which through endorsing the principles of institutional cooperation and providing demonstration dollars, will move forward an understanding of what it is possible to do, even with existing technological resources. Future steps will involve education at other levels whidh can receive benefits of institutional cooperation in the same manner and through the same facilities as those envisioned for higher education. Training centers in industry and the military could also benefit from cooperation and sharing among instructional personnel and resources. The present amendment for networks for knowledge proposes in- stitutional exchange of educational resources. Specifically books, mate- rials, library collections, catalogs, and so forth, are cited for sharing on an electronic basis through computers and other systems. At present, legislative hearings on the copyright law are attempting to identify ways in which copyrighted materials may be used in just such networks. The House has passed legislation in copyright which would exempt instructional use of materials for broadcasting but would severely restrict them for computer linkages. PAGENO="0330" 836 The Senate is considering identical legislation. In the meantime, the Senate ~has passed a bill establishing a. study commission for the specific purpose of reviewing computer materials so that legislation can be developed several years hence w~hich will take care of copyright materials with particular reference to computers. The House presumably will hear this matter and make its decision. In the meantime, the knowledge network provides for the exchange of materials while the proposed revision of the copyright law (unless it is amended) restricts use of these materials. It is important that the basic conflict in the two positions be resolved in favor of the expanded use and opportunities which are made avail- able through the application of modern communication technology to today's educational dilemmas. Mr. Chairman, I would like to turn our presentation over next to Mr. John Witherspoon. STATEMENT OP JOHN WITHERSPOON, MANAGER OP BROADCAST- ING SERVICES, SAN DIEGO STATE COLLEGE, CALIFORNIA, ON BEHALF OP NATIONAL ASSOCIATION OP EDUCATIONAL BROAD- CASTERS Mr. WITHERSP0ON. Mr. Chairman, I am ,John Witherspoon, gen- eral manager of KEBS television and radio providing educational broadcasting service to San Diego from San Diego State College. I am board chairman of the National Educational Radio, Division of the National Association of Educational Broadcasters. In the context of today's discussion perhaps my most relevant qualification is that between 1964 and 1966 I directed the educational communications system project of NAEB under a grant from the Office of Education. The findings of that study lead me to support strongly the Net- works for Knowledge Act which is before you today. This act is rooted in the idea of interinstitutional cooperation, a.nd that is also the foundation of the ECS study. A few words about the project may help lend perspective to may own testimony and to the act itself. The educational communications system project is a four-phase need and feasibility study to examine the establishment of a network of multipurpose electronic interconnection for American colleges and universities. The four phases are: I. A brief examination of the state of institutional cooperation and interconnection. II. A personal interview survey of approximately 50 colleges and universitie.s throughout the country, in order to learn the views of administrators and faculty members concerning the need for electronic interconnection. III. The design of three model systems or networks that would test some of the ideas derived from phase II and examine more clearly the commimication requirements of academic institutions in selected areas. PAGENO="0331" 837 IV. Experimental operation of phase III models. Phase I and II were completed in March 1965. Phase III was reported in October 1966. Phase IV awaits funding. The educational communications system project is part of a grow- ing complex of such developments. Interconnected networks for edu- cational broadcasting are operating or are in advanced planning stages in approximately 20 States. Under the impetus of such developments as Project MAC and Intrex at MIT, time-sharing computer techniques demonstrate the wisdom of interconnections for computer use. Projects such as Medlars at the National Library of Medicine ob- viously tend toward interconnection. The work of Educom-the Inter- University Communications Council-likewise underscores these developments. Within the educational communications system idea, our maj or tech- nical premise was that more and increasingly valuable communication services might be feasible if transmission facilities were used on a multipurpose basis, shared where necessary. In phase III, technical and administrative designs were developed for three model systems, or networks for knowledge. Participating in- stitutions included several of interest to members of this subcommittee. One objective was to cover `several kinds of institutions within one State. This intrastate model was developed in association with the Oregon State system of higher education, and `it involved all institu- tions in the system. A second objective was to plan for coverage of major institutions scattered over a broad region. This design was in association with the member institutions of the Committee on Institutional Cooperation, the Big Ten Universities and the University of Chicago. Among these, of particular interest to members of this `subcommit- tee, are Indiana University and Purdue in Indiana, in Illinois the University of Illinois and the Univer.sity of Chicago, in Michigan the University of Michigan and Michigan State, and in Minnesota the University of Minnesota. The third model system, or network, was aimed at the idea that uni- versities would `find it valuable to communicate more effectively not only with each other, bu't also `with institutions having related in- terests, such `as research laboratories of various kinds, major re- search libraries such as `the New York Publ'ic, and major research museums such as the Smithsonian. Working `closely with us in this effort was the Eastern Educational Network, our Nation's leading regional educational television network, and the then president of the network, Donald `Taverner of `station WQED, Pittsburgh, was a member of our advisory committee. With regard to the purposes of the `act before you, our major finding might `be simply that there is increasing `acceptance of i,n:terinstitu- tional cooperation, and that ideas like this will be welcomed en- thusiastically by many colk~ges and universities. Of `about 50 colleges `and universities in all parts of `the country visited by the ECS survey team, not one expressed serious reserva- tions abou't the idea. Second, the Networks for Knowledge Act may properly be seen `as a companion of the Public Broadcasting Act of 1967. It is worth PAGENO="0332" 838 noting, as Mr. Fellows did, that the term "Networks for Knowledge" was first used nationally on November 7 of last year. The President included the idea in his remarks on the signing of the Public Broadcasting Act at the White House. On the following night, Leonard Marks, the Director of USIA, developed the idea of a world- wide information grid. The occasion was the convention banquet ad- dress before the National Association of Educational Broadcasters. In connection with the previous point, it should be recalled that title III of the Public Broadcasting Act provides for `a major study of the uses of electronic educational telecommunication media in the United States. This study should certainly be taken into account in the development of projects based on the Networks for Knowledge Act. This partnership with the Public Broadcasting Act is weakened somewhat by the fact that the present `act provides for establishment and joint operation of closed-circuit television or equivalent transmis- sion facilities. Certainly the modern university does not stop working at the bound- aries of its campus, nor is it limited particularly to broadcasting by television. 1~Te recommend that the sense of section 801(b) (4) be broadened to include establishment of joint operation of educational broadcasting transmission facilities. The intent of such a change would be to avoid `artificial barriers between modes of transmission; the important thing is the job at hand, and not whether a signal is delivered by cable or by conventional broad- cast transmissi'on. With regard `to modes of information exchange~, we should `also point out a section of the `act that is likely to be subject to considerable stress. That is section 801(b) (7), which provides for such other projects as in the judgment of the Commissioner will promote the purposes of this title. The act specifically mentions television and computer networking. In conducting the educational communications system project, how- ever, we found a number of educational requirements that probably call for teletypewriter, or facsimile, or audio transmission, or slow-scan television, or electrowriter techniques, all of which may be valuable and all of which are much less expensive than television or computers. We would anticipate a number of projects along these lines, and all would serve the purposes of the title without being responsive to those parts of the legislation that deals with specific techniques or specific hardware. I want to invite your attention now to a major and highly relevant part of the educational communications system study. This is the prem- ise that networks for electronic transmission should be utilized fully. Among universities there is little point to establishing a computer net- work and a broadcast network `and various other kinds of networks. Within appropriate technica.l limits, the network, if you will, has no interest in the kind of electronic information that is transmitted on it. A high-speed computer network, for example, has about the same tech- nical requirements as a television network. Given proper terminal hardware, a high-quality `audio network can as well transmit a large number of ordinary voice channels and even PAGENO="0333" 839 more teletype channels. It seems to us that simple logic and economy require that transmission channels be used fully. It must be observed, however, that this approach is at variance with the traditional tariffs of major common carriers. By and `large, the carrier does not `lease facilities; he provides a specific service, suoh as telephone or teletype or facsimile or television or data transmission, although the carrier himself may well carry these separate services on a common transmission system. The educational communications system approach, in effect, is to ask carriers to provide transmission capacity in bulk form, to be used in a number of alternate modes which are under the customer's control. There are various other anomalies in the traditional common carrier tariffs, and they should eventually be worked out. The key restriction, however-the provision of multipurpose circuits under control of the educational user-could be addressed by this subcommittee. It may be recalled that a similar step was taken in the Public Broadcasting Act, a portion of which specifies that preferential rates may `be provided to educational broadcasters under common carrier networking tariffs. Thus far, I have pointed out that the logic of the Networks for Knowledge Act goes beyond those items that are specified in the wording. Whi'le recognizing that the present act has reference only to higher education, we should point out that networks for knowledge must eventually include elementary and secondary education as well. It is to this area that most instructional broadcasting is addressed; it is in these schools that major instructional uses of computers are being explored; it is in elementary and secondary classrooms that the most crucial problems of American education are found. The networks for knowledge idea has great application to elemen- tary and secondary education, and in the long run should not be artificially restricted to higher education. Similarly, the principle extends beyond our national borders, as the President `and Mr. Marks `both stressed in their introduction to the concept. I should comment briefly `on section 801 (`c), which contains restric- tions on the use of project grant funds. The gist of `this section is to provide that the costs of terminal hardware at participating institu- tions shall not qualify for project grants. `The idea that the individual institution should have a material commitment and financial `stake is a good one, and terminal equipment is generally a good place to attach such a proviso. Some thought should `be given, however, to the fact that we are dealing with techniques that are just now being explored. It is not always obvious what constitutes terminal equipment, and there may be times when unusual and valuable projects should include terminal equipment. To write the present restrictions into the bill may well hamper some future development. It seems to us that it would be better to include such principle in the legislative history and future administrative guidelines, so that specific adjustments may be made more readily to accommodate changes in the state of the art. This is an area which is changing very rapidly. PAGENO="0334" 840 And one final comment. You have before you legislation that is wisely conceived. Properly funded, it can be of great importance to American education and the society as a whole. But while the concept of networks for knowledge is relatively new, it is not entirely unexplored. A substantial amount of conceptual work has been done, and a few operational projects, including the new Indiana Higher Education Telecommunications Network, are beginning to make use of existing knowledge. The funds authorized here should be used for operations and for development, and not for multiple reinventions of the wheel. May I add my voice to those who urge passage of this important and imaginative legislation. Thanks very much for the opportunity to discuss these ideas with you today. (The diagrams accompanying the statement are as follows:) PAGENO="0335" ~1 ~1 ~fl t~i~ t~1 MICROWAVE TERMINALS I I~é-~_~>1 I I TERM. f1) [`1 111 E!1 r1i C1(IS. Izclas VOICE (TELEPHONE) ____________ ~ ___/ -~ ____________ ____________ TERMINATIONS TIT1T~ ~ 4CKTS. EACH s- T_i~iI~ ~ ------~ ~- ~I- - -6' ~ &- *~ - i A -A -6 -. ~ 6 - a -----djb_____-__ ~J r& 1~L FACSIMILE I W. 9. DATA TERMIATIONS TELETYPE / N~9. DATA TERMINATIONS I t~t~ ~- IL 4.5 MC TELEVISION TERMINATIONS IS KC TV. SOUND TERMINATIONS SERVICE CHANNEL TERMINATIONS FAULT ALARM TERMINATIONS NOTE: O a INSTITUTIONAL TERMINALS O SYSTEM CONTROL/SWITCHING TERMINALS __ - -o --C ~ ~a___~_~~ ________ _________ - ----A o- ~1 FAULT INDICATORS MIDWEST SYSTEM CHANNELIZING DIAGRAM FIGURE 12 PAGENO="0336" 842 UI LIE C D TER~cL - MADI 0 (L'~0) (~S) E. ~r~SING(LNs) 52 R SWITCUIMG C o HETCRODYf4E RELAY ~ I ~OA~ARBER(~RB} * REMODUL4TIMG RELAY IOWA CITY LAFAYETTE C~F~ ~ 203 cOLUr~BUSCcLB) (ICC) 7Om~~'~ URBATA(URB) ~ 92m1. OLOGSINGTOIJ (BElT) SUMMARY: Six end terminate One fivc-~ay tcrminal Three thru lerminala Nina remodutolinU repoaters One three-way terminal Thirty holerodyne ropeoters MIDWEST MICROWAVE SYSTEM FIGURE 13 PAGENO="0337" 843 ~r.~.LIS RADIO ~..O, RADIO ~u2Z W.S~ER FIGURE 30: EXISTING OREGON EDUCATIONAL BROADCASTING MICROWAVE ROUTES HRALY BEIO}f8 Xc~APTV PROSPEO~ HILL RE7~J~Y HILL 3ADIO TELEVI8IO~ cr~ CORVALLIS TV STUDIO 92-371-68-pt. 2-22 PAGENO="0338" 844 Mr. `WITHERsPoON. Our final panelist is Dr. Lamb of Oregon. STATEMENT OP DR. LUKE P. LAMB, DIRECTOR OP EDUCATIONAL MEDIA OP THE OREGON STATE BOARD OP HIGHER EDUCATION, ON BEHALF OP THE NATIONAL ASSOCIATION OP EDUCATIONAL BROADCASTERS Mr. LA~IB. Mr. Chairman, my name is Luke F. Lamb, and I am direc- tor of educational media for the Oregon State System of Higher Education. I am also president of the Western Education Network and a member of the Board of Western Radio & Television Association. I am respon- sible for administering for the Oregon State Board of Higher Educa- tion the educational television and radio networks of the State and the State film library. An additional responsibility under my jurisdiction is that of elec- tronic communication information coordination among the institutions of the Oregon State system. I am responsible to the vice chancellor for continuing education of the Oregon St.ate system. The two radio and two television stations currently in our State network are members of the National Association of Educational Broadcasters. We join with the NAEB in endorsing the networks for knowledge amendment in H.R 15067. Oregon participated with the NAEB in 1965 and 1966 in conducting a study of the potential uses of electronic communications systems under a grant from the U.S. Office of Education. The majority of my statement will deal with some if the specifics we discovered as part of the Oregon study. It is encouraging to note that the networks for knowledge proposal will supplement and reinforce previous legislation such as the Public Broadcasting Act of 1967 and its predecessor the Educational Televi- sion Facilities Act of 1962. It seems most important to me, as someone involved both in educa- tional broadcasting and the broader area of electronic information exchange among institutions of higher education, that nothing in this legislation should prevent grants from including the interconnection of broadcast facilities. Oregon has been able through some of the previous legislation to improve its broadcasting facilities, and I would hope that under the proposed networks for knowledge amendment that we would be able to broaden and encourage interinstitutional cooperation through inter- connection as well as continue to upgrade our broadcasting service capabilities. I should also point out that although we are heartened and encour- aged by the networks for knowledge proposal we are concerned that this new program not detract from the adequate funding of legislation passed during the last session of the Congress. As a specific example, we are already plamming to request funds for Oregon in both the radio and television areas under the Public Broad- casting Act of 1967 and it is in our earnest desire that this legislation be funded at the authorized levels. PAGENO="0339" 845 Let me explore specifically some of the areas in which the networks for knowledge amendment would allow us to provide some of the inter- connection services already requested by the institutions of higher edit- cation in Oregon. Oregon was one of three models studied as part 0± the educational communications system study already described by Mr. Witherspoon, conducted during 1965 and 1966 by the National Association of Educa- tional Broadcasters under a contract from the U.S. Office of Education. The total findings of this study are reported in a document titled "Educational Communications System: Phase III" Project No. 450A, Contract No. OE-5-16-014, October 1966. Phase III of the project consisted of designing three model systems that wOuld test some of the ideas derived from earlier phases and examine more closely the communication requirements of academic institutions in selected areas. Oregon was the site of the intrastate model of the study which gathered information from the Institutions of the Oregon State Sys- tem of Higher Education, and worked closely with other branches of State government, private institutions and elementary-secondary education. The results of the Oregon study led to the conclusion that there does exist in the Oregon State System of Higher Education a need for more effective means of educational communication, both for administration and for instrtuctionaJ uses. The smaller components of the Oregon State system particularly expressed a need to be in closer touch with larger institutions, not only for administrative functions, but also to avail themselves of greater instructional potential through access to larger centers of academic activity. The system of electronic interconnection designed and proposed by the ECS study would initially link the nine institutions of the State system of higher education and the State capital. In addition to the already existing radio and television networks, the system was designed to meet the following specific requirements: 1. Permit libraries to exchange materials and information, particu- larly graphic materials, more rapidly and more efficiently. 2. Allow administrative offices in the Oregon State system of higher education to be in more direct contact with each other. 3. Provide for exchange of instructional information such as lectures, course segments, and demonstrations, so that faculty members would have access to a broader range of resources and the opportunity for greater utilization of teaching capabilities. 4. Extend the capability of the office of independent study, division of continuing education, to provide lecture and other course informa- tion to individual enrollees. 5. Expand transmission capabilities for intercampus use of electronic data processing equipment in research activities and administrative functions. 6. Allow for individual faculty access, probably through depart- mental offices, to the educational communications system for a variety of transmission and reception uses. 7. Include the Capitol Building at Salem in the basic interconnection system in order to expedite appropriate liaison activities. PAGENO="0340" 846 Some of the devices contemplated for use on the proposed intercom- munications system were: 1. Facsimile. 2. Teletype. 3. Dataphone. 4. Tele-lecture/electrowrjter. 5. Slow-scan TV. In sum, the educational communications system intrastate model was designed with the intent of aiding and encouraging effective communication, using whatever medium is appropriate, throughout the Oregon State system of higher education and with related State government activities. Unfortunately, phase IV of the ECS project, which provides for the experimental operation of the phase III models, has not yet been activated as there has been no identifiable source of funding. The proposed networks for knowledge amendment would provide funds for this purpose, and I would hope that activities which have already been designed and researched as I have outlined would re- ceive early consideration for funding under this legislation. Notwithstanding the advantages of coordinated development of electronic communication systems, we found in Oregon that many projects were conceived, ftmded, and developed using one or more methods of electronic communication, without consultation or coordi- nation with similar, related, or even duplicative projects. Realizing that phase IV if the ECS project was temporarily stalled, and having updated our survey of communications activitie.s as of the spring of 1967, we recommended and had approved by the institutional executives of the Oregon State system of higher educa- tion the establishment of an electronic communications information coordinator. This position, locally referred to as the "common desk," provides for a continuous gathering of information on electronic information projects within and without the State system of higher education and feeding it back to the institutions so that everyone is aware of similar projects and opportunities for sharing. We see this as an interim step to the activation of a total communi- cations system able to provide for all of the needs of the potential users. Perhaps it would be helpful to you to have some examples of projects currently going on in one State under various agencies and under various support systems. All of these examples are using some sort of electronic interconnec- tion for educational communications purposes, and most would be served by the ECS model I described earlier at a much more optimum use rate of facilities. 1. A tele-lecture and electrowriter system for teaching graduate engineering courses between Oregon State University at Corvallis and students in the city of Portland. 2. Interconnection of regional colleges with the Oregon State Uni- versity computer center for shared-time computer use. 3. Interconnection of the Pine Mountain Observatory in central Oregon with the computer on the University of Oregon campus in Eugene. PAGENO="0341" 847 Other projects in the planning stage are: 1. Interconnection of all computer centers within the State system of higher education. 2. Central data processing for elementary and secondary schools of the State. 3. State library information system. 4. Interconnection of various television and radio facilities on the campuses of the State system of higher education. Survey work that was conducted with faculty during phase III of the ECS project pointed out an interesting consideration. The instru- ment that most faculty reported that they would be willing to use is the telephone. We determined that this was due in large measure to the fact that it was the most familiar and readily available device. My point here is that familiarity breeds acceptance, and it would be unfortunate if an electronic intercommunications system at each end were excluded. Much of this equipment is still experimental and it might be diffi- cult to determine at this point what is terminal and what is not, the intent is valid but the administration might be difficult. I would encourage also a broad definition of "institution" to include central boards or other coordinating bodies. It is often through groups such as these that cooperative sharing projects are generated, and it is usually through such groups that operation of cooperative projects is most easily facilitated. Although most of the testimony I have presented has dealt with one State it is important to note that the capabilities of interconnecting with other similar State electronic communication systems enhances the potential of each facility. I appreciate the opportunity to present these views, and I am con- fident that the committee will produce another bill to assist us in im- proving the quality and quantity of educational opportunity. Mr. BRADEMAS (presiding). Thank you very much, gentlemen. I ap- preciate a great deal your thoughtful ~tathments. I hope you will understand that the absence of other colleagues on the subconunittee this morning is in no way `an indication of the lack of interest in your comments but very `often the subcommittee system, at least of this com- mittee, is so busy that it is as if we had a network against knowledge for the members of the subcommittee. So I will go ahead and fire several questions at you and invite your comments. I think it is fair to say that members of this subcommi'ttee are prob- ably less familiar with `the substance of the kinds `of proposals that you are discussing here today, programs with which you are involved, than other areas that are touched by this bill. So if `some of my own questions, `and I don't think I am unusual in this respect, seem rather basic, I hope you will indulge me. What would you say is the principal distinction between the net- works for knowledge proposal and the Public Broadcasting Act of 1967? Mr. FELLOWS. Mr. Chairman, I think that the distinction is one of dimension and depth. It seems to me that the Public Broadcasting Act specifically authorizes construction, it provides funds for educational PAGENO="0342" 848 radio and television facilities. It sets up a wholly new corporation for the development of program support for public broadcasting. In title III it authorizes the Secretary of HEW to conduct a study of the ways in which radio, television and related communication technology can be used to meet some of the basic educational problems that we are confronting at various levels and elements of our society. The networks for knowledge proposal is an extension of that in many respects. It provides ways in which material may be broadcast or may be disseminated through statewide closed-circuit systems or may be disseminated through a variety of display techniques. It can be interconnected. I think it probably relates more to the structural and overall academic program of institutions of higher education at this point than the Public Broadcasting Act does but I do not see them as competitive or as conflicting proposals. It seem to me they are very much related. Mr. BRADEMAS. Would you contemplate that the persons in charge of Operating the programs that would be funded under the Public Broadcasting Act, of a particular college or university, would be the same person charged with the responsibility for carrying out pro- grams under the Networks for Knowledge Act? Mr. WITHERSPOON. Mr. Chairman, I would guess this would vary considerably from place to place. In Dr. Lamb's situation, for instance, the answer is very likely yes. In the case of many institutions, however, the Networks for Knowledge Act would serve areas which are touched rather little by broadcasting activities per se. For example, one of the most exciting possibilities is in the area of libraries, the future of library science. This is an area in which those of us who are specifically involved in broadcast media may or may not have responsibility, depending on the individual institution. Mr. BRADEMAS. I mention this because I can see many opportunities for conflict as well as cooperation. I am struck by what you have said about libraries. A couple of years ago I attended the Brasenose College, Oxford Conference on the Automation of Libraries. I was much struck there by the considerable work toward automating libraries that is being done by the Library of Congress in this country, by the British Mu- seum, and by the Universities of Oxford and Cambridge and some others. But I don't have the impression at all that anything like this kind of effort is being undertaken by the major research libraries and universities in this country. Mr. WITHERSPOON. Mr. Chairman, I might suggest that a subse- quent set of witnesses before you this morning representing the Inter- University Communications Council, have done substantial work in this field and you might wish to address that question to them. Mr. BRADEMAS. All right. We are talking about interinstitutional cooperation. Would you say something about the kinds of institutions that would be involved? For instance, are we talking about cooperation on the part of State uni- versities and small private church-related colleges? Are we confined only to institutions of higher education or are we wiring in elementary and secondary schools, junior colleges, technical PAGENO="0343" 849 institutes, private industries that may have some kind of training com- ponent in some of their undertakings, museums, art galleries? There is only an $8 million authorization in this title. What do you have in mind? Mr. LAMB. I would say that everything you have described is the optimum. As far as Oregon, if I can use that as an example because I am more familiar with that, the study we did there WECS was limited for this very reason, to the State system of higher education which con- sists of nine institutions, universities, medical schools, regional col- leges, teacher institutions, and so forth. We found one of the greatest desires was for the smaller colleges to have access to the larger schools to take advantage of either their com- puters or their larger staff, or what have you. Mr. BRADEMAS. What concerns me when I raise this question is that in any given State of the country where you may have one or two or three major land-grant universities, with very great power, with very great political power in the State legislature, along with the small pri- vate colleges or even smaller public institutions, there may he no con- sideration whatsoever given to the needs of the smaller institutions. The major ones can then ea't up all of the money and those institutions who, because they are smaller and less affluent and thus less able to maintain major libraries and very expensive faculty, are, therefore, in greater need of the fruits of this kind of network, may be left by the wayside. What do you say to that? Mr. WITnEesrooN. In the study which we conducted in phase II we addressed ourselves to this kind of question by deliberately visiting with colleges and universities of various sizes. It is true the study was restricted to institutions of higher education. We found that the smaller colleges and universities by and large have a contrary view, that they have great needs in the areas of library resources, for example, in the area of access to modern computer machines, in the possibilities that exist in administrative recordkeep- ing of various kinds done on common systems and they see this idea as an economic benefit. I think the question you raised is one that does need to be kept in mind but I would say that our experience so far has not indicated it is a major point. Mr. BRADEMAS. You know, the big fish eat the little fish. Do any of you other gentlemen have comments on that? I am not fully persuaded by what you have said. I know that in many States, there are all kinds of tensions between the major land-grant universities and the smaller colleges. Indeed, I should think this pattern is repeated clear across the United States. Mr. LAMB. We are exceptionally fortunate in Oregon in that we have an organization in the State called the State coordinating council which brings together not only the public institutions but the private institutions in the community colleges so in one focal point we can work this way. In one study we did make with the ECS in Oregon, we did cooperate with the private institutions. Some expressed great interest in it. We PAGENO="0344" 850 kept it to State systems because it is all within one border and rather easily controlle.d in a demonstration situation but we did not exclude the thinking or even involvement eventually of the private institution. Mr. FELLOWS. I would like to reinforce that, Mr. Chairman. It seems to me when the opportunity is there to facilitate cooperation we find that the institutions are much more likely to undertake it. Some of us have just come back from some work in West Virginia where three relatively small church-related colleges and two relatively small parts of the State system of higher education in West Virginia, which are in a geographical working area, within a 30-mile radius, are at- tempting through a communications system to work together to provide some courses that each one of them can offer, which they are called upon to offer. I think the problems are becoming severe enough that some of the old lines of authority are becoming less meaningful than they used to be and the institutions are becoming aware of the fact that they simply will not survive, as the opening witness said, unless they can work out ways to cooperate in many of their activities. Mr. BRADEMAS. Some months ago, Commissioner Howe made a wideiy quoted speech in which he warned the manufacturers of elec- tronic, audiovisual, and other forms of teaching equipment, that they had to give greater attention to software and not be carried away with a preoccupation with hardware. To what extent do people like you make an effort, as you develop the use of such equipment, to wire into your thinking the people who are doing the actual thinking? Or to what extent is there a great divide wherein they really are not sure what you are up to and you are not sure what they are up to because you are so preoccupied with putting the new equipment together? Do I make myself clear? Mr. WrrHERsP00N. As a practical fact, many of us are the same peo- ple. It is true that many of us are specializing in one area or another. But a considerable number of people a.t RCO have crossed lines back and forth several times along the way. As a working matter in the development of software, which is what we generally are doing, we work very closely with people who are actually involved in classroom work and in the development of learning theory. Mr. LAMB. There is also a situation where you are working with new t.echnoloe~y here or innovation. You sometimes have a difficult time communicating with faculty about what it is you are talking. We have a theory called critical mass. You have to reach a certain point of availability of material before they even know what you are talking about.. In our experience in Oregon in a study we did, in a survey of faculty, we found that the thing they would be most interested in using is the telephone. It was primarily because it was there, it was easy to use and they knew what it was about. Before you get them to use new technologies you have to make that available to them and then they will use it. Yes, certainly, this is involved. Mr. BRADEMAS. I have two other quick questions. PAGENO="0345" 851 What about the amount of money involved here? I really don't know but I would have thought that a program of the kind supported by this title could cost far greater amounts of money than the $8 million figure we have in the bill. Mr. FELLOWS. I will start answering the question. I agree with you~ I think ultimately that will be so. I think what is needed now is what Dr. Lamb suggests, and that is a comprehensive demonstration of what is possible to do with the networks for knowledge concept. Within that framework I think it is fair to say this is perhaps a reasonable begimiing. Mr. WITHERSPOON. To reinforce your point, Mr. Chairman, I can give a specific example. After having worked a couple of years on the education communications system idea under the Office of Education grant which we had, we came up with a report that includes a number of technical options. If one were to go for the most sophisticated of the options all along the way and execute this in its entirety it would use just about the amount of money you propose for the first year. That is an overstatement in some ways. Of course there are ways and means of dealing with projects in their execution. But the fact of the matter is that the idea here is by far the most important part in the establishment of a trial so that we can develop this facet of education. Mr. BRADEMAS. Are you getting significant cooperation from the State legislature and State government in providing funds for State universities to encourage your institution's cooperation? Mr. LAMB. I can speak to this specifically. Once again we are slightly unique in Oregon in that we have one board of higher education for all the nine institutions. Yes; we do get significant support at the present time. Most of the institutions of the State system are in- terconnected right now by telephone, the telpac system. It is conceivable many of the things we are talking about here with the addition of some new terminal equipment might be facilitated on the existing interconnection. This, of course, increases each time. Some of the specifics I mentioned in my testimony, of course, are going on right now. Unfortunately, one man has a line over here and another man over here, and they may not know the other one exists. We are trying to overcome this at the present time. Mr. BRADEMAS. This is the reason I raise the que.stion. I realize that Oregon may be particularly strong in the field of higher education. I only observe that I would think it would be persuasive with Congress if one could demonstrate that there is increasing support on the part of the State governments for programs of this nature, as I know there is in my own State of Indiana, for example. Mr. WITHERSPOON. I was about to say, Mr. Chairman, your own State is now developing an educational communications network and is leading a movement which is also going somewhat more slowly in adjacent States. My guess is that one great use of the Networks for Knowledge Act would be to encourage these various State groups to get together and make common uses of their resources across State lines as well as within. Mr. FELLOWS. Mr. Chairman, I might suggest for the committee NAEB could submit a list of the State authorities and commissions PAGENO="0346" 852 that have already been established that will move in this direction of educational communication. Mr. BRADEMAS. That will be very helpful. Thank you very much gentlemen. Your testimony has been very useful indeed. We appreciate your coming. Mr. FELLOWS. Thank you. Mr. BRADEXrAS. Our next witness is Harry G. Green, president of the Phillips Business Oollege, Lynchburg, Va. Mr. FULTON. Mr. Chairman, we also have Mr. Murray T. Donoho, president of the Strayer Junior College. STATEMENT OP HARRY G. GREEN, PRESIDENT, UNITED BUSINESS SCHOOLS ASSOCIATION; ACCOMPANIED BY RICHARD A. PULTON, EXECUTIVE DIRECTOR AND GENERAL COUNSEL, AND MURRAY H. DONOHO, PRESIDENT, STRAYER JUNIOR COLLEGE, WASHING- TON, D.C. Mr. GREEN. Mr. Chairman and members of the committee, my name is Harry G. Green. I am president of Phillips Business College of Lynch- burg, Va. For more than 30 years I have been associated with business education in independent schools, but my interest has not been limited solely to private or independent education. I served for more than 10 years on the Lynchburg school board and for 7 years as its chairman. Currently I am serving on the Lync-hburg Interracial Commission and the Lynchburg Urban Development Committee. Presently, I am serving as president of the United Business Schools Association which is the one association of educational institutions in which some 500 of the quality business schools and colleges of this Na- tion hold membership. The roots of UBSA go back more than half a century to 1.912. However, many member institutions have been serving students for well over a hundred years. UBSA itself is an affiliate of the American Council on Education. Administrators and teachers in our schools hold membership in a variety of professional organizations such as the National Business Education Association, the American Personnel & Guidance Associa- tion, and the American Vocational Association. Also, by way of background, the Accrediting Commission for Busi- ness Schools, a professionally independent body, was founded in 1953 by UBSA. It was designated in 1956 as a "nationally recognized ac- crediting agency" by the U.S. Office of Education. In that capacity, it has accredited more than 325 independent educational institutions after careful review and inspection. It is on behalf of the students enrolled in these accredited schools that we appear today. We are here to talk about a very large and important problem which continues to confront a relatively small number of students. They are the approximately 15,000 to 20,000 needy students in this country who, for a variety of reasons, choose to select independent proprietary in- stitiitions of education rather than public or nonprofit institutions. Today, there are a variety of specialized Federal programs designed to aid students and in all of which the principle of eligibility to attend accredited proprietary schools is long established. Attached as exhibit PAGENO="0347" 853 No. 1 is a list of these 20 programs providing financial benefits for students in specialized categories such as war orphans or social secu- rity dependents. However, needy students in accredited proprietary schools are currently ineligible to participate in the three major programs designed for needy students; namely, national defense student loans, educational opportunity grants, and work-study pro- grams, which up to this time have not been made available to our accredited students. The only broad-based across-the-board program for which they are eligible today is the guaranteed loan program. It should be noted, however, that t.he guaranteed loan program, as Commissioner Howe pointed out in these current hearings to this subcommittee, is designed "to assist middle-income families" who have bank credit. Students en- rolled in accredited proprietary business, trade, and technical schools come predominantly from families of a lower income socioeconomic background. Thus they continue to be excluded from the very programs which are designed to help students in need. They only have access to the guaranteed loan program which is admittedly designed to help middle- class students. Our statement in this series of hearings is rather short beca.use of the detailed testimony presented to the subcommittee last year on H.R. 6232 and H.R. 6265. It begins at page 245 of the hearings of April 27, 1967. We pointed out that there are some students, a small percentage of the total student population, who feel they are better served by getting an education in their community at an accredited proprietary school. The present exclusionary language of the educa- tional opportunity grants, national defense student loans and work- study programs denies these needy students from getting the aid which they need to further their education. V\Te recognize the difficulty in trying to describe the merit of the programs offered in independent accredited proprietary schools and the special needs which they meet without appearing to challenge the predominant and overriding role of the public vocational institutions. But some students do choose these independent schools for a variety of good reasons and with satisfactory results. Historically these schools have been a small but important complement and supplement to the mainstream of educational effort. We think they will continue to make this contribution in such a role. Attached as exhibit 2 is a reprint from the April 1967 issue of the USOE publication American Education that discusses why some stu- dents choose proprietary schools and quotes some student answers. The article also refers to a report of research financed by the Office of Education with the Stanford Research Institute which discusses pro- prietary school operations. An excerpt from that SRI report is attached as exhibit No. 3. I would like to make it very clear that we are not asking this com- mittee to make a value judgment or a choice between the relative merits of independent versus public education. All we are asking is that you open up an additional avenue of opportunity for some needy students who, from our experience, we know can be well served in accredited proprietary schools. PAGENO="0348" 854 After research on thousands of students in business schools, the former president of American Personnel & Guidance Association, Dr. Kenneth B. Hoyt, concluded that there should `be no special com- mitment to any particular post-high school educational opportunity by saying: A counselor's proper function is to supply students with an understanding of opportunities and then to help the student arrive at his own decision. A good high school counselor should not feel a special commitment to a business school, a junior college, a public vocational school, or any other type of post high school educational opportunity. In discussing educational opportunities, the good coun- selor seeks only to communicate accurate information to the students. The student should be the primary decision maker. I call your attention at page 17 of the bill to the proposed language for section 400. (a) of the student assistant title. Under the statement of purpose clause it points out: It is therefore the purpose of this title to provide substantial assistance to students in order that no student of ability will be denied an opportunity to develop his talents because of financial inability to meet basic higher educa- tion costs. Your bill proposes to consolidate the administration of the three programs of financial aid to needy students which I have been dis- cussing. Furthermore, under the proposed new definitions limited to part A in section 410, `at page 46 of the bill, the measure already rec- ognizes the needs of students in accredited proprietary schools insofar as it proposes to give them this freedom of opportunity with respect to the work-study program. We ask you to grant these student.s the same freedom of opportunity for the educational opportunity grants and the national defense student loans. This provision is admirably drafted so that it continues the dis- tinction between aid to students (including those in accredited pro- prietary schools) and aid to the institution itself. Clearly what we seek here is to aid students only. Consistent with the purposes which I have just cited, what we urge today is that the definition at page 46 be expanded `to include the remaining two programs as well; namely, the national `defense student loan program and the~ educational opportunity grants program. To accomplish this purpose, may I suggest the following very simple change in the bill: "At page 46, line 5, strike `Work-Study' and insert after the word `program' and before the comma, `authorized by this part'." In closing, let me state that we feel that we are asking this com- mittee to do, that is, to open up access to educational opportunity grants, national defense student loans, and the work-study program is completely consistent with the stated purposes of the measure itself and of the testimony of the Commissioner of Education. Thank you for this opportunity. Mr. BRADEMAS. Thank you very much, Mr. Green. I have a couple of questions. You use the phrase in your testimony that independent accredited proprietary schools represent. a small but an important complement to the mainstream of our educational effort. Can you give me any generalization on the percentage of enroll- inents in such schools as distinguished from enrollment in public vo- cationa.l schools? PAGENO="0349" 855 Mr. GREEN. We have approximately 125,000 in the accredited sector of the proprietary schools. Now that does not give you a percentage. Mr. Fulton, do you have the figures? Mr. FULTON. Mr. Chairman, at the last count there were 80,000 approximately full-time ~tudents, `and about 40,000 part time. Of course not all of these people need access to these programs. We did testify on this narrow point last year. It was our estimate that possibly, since these people come from predominantly lower income families, the fa~tor might `be a little higher than the normal college student. 1 think they use a 5-percent figure. We tend to think it might run as hig~h as 10 percent. Mr. BRADEMAS. In any event, it is rather small compared to the 1 etal? Mr. FULTON. We feel it is. Mr. BRADEMAS. As I understand it, you are now in the vocationa~ student loan program. Mr. FULTON. There is the eligibility for it. But after 3 years, according to the Office of Education, January figures, I think 877 loans were made or another figure I get is 1,600, but the eligibility is there. But many of these people come from families that just don't have bank credit. Mr. BRADEMAS. What you are really asking ~ that students who a:re to attend independent `accredited proprietary schools be allowed to take part in the NDEA program and the educational opportunity grant program, and in the work-study program. Mr. FULTON. That is right, sir. Mr. BRADEMAS. As I understand it, in the proposed bill before us, and I speak now with respect to the work study program, if we amended the bill to allow your students to take part in the work-study program, the students would have to work in some area other than for your school. Is that correct? Mr. GREEN. Right. Mr. FULTON. That is completely in sympathy with the philosophy that you are not aiding the institution. We think there are some terri- bly interesting productive work-study programs in hospitals, legal aid centers. This sort of thing. Mr. GREEN. This has been going on for the 30 years that I have been in this field in this phase of education. Many work studies that would be comparable to this have been in existence. Mr. BRADEMA5. I think you have given a very clear picture of your proposal. Just speaking for myself, it seems to me to make a certain degree of sense. Thank you very much for coming this morning. Mr. GREEN. Thank you. (Documents submitted by Mr. Green follow:) UNITED BUSINESS SCHOOLS AssocIATIoN, WASHINGTON, D.C., TANUARY 8, 1968 From: R. A. Fulton. To: Federal Legislation File. Re: Involvement of proprietary business schools with Federal programs re- lating to education which provide: (a) "Under Contract" training, or, (b) financial aid to students without discrimination to the student by reason of the corporate structure (i.e. public, nonprofit, or proprietary) of the school. PAGENO="0350" 856 (A) "UNDER CONTRACT" TRAINING 1. Vocational Rehabilitation. Act of June 2, 1920, as amended, 29 LT.S.C. 3~ et seq. 2. Manpower Devclop'ment and Training Act of 1962; as amended, 42 U.S.C. 2571; P. L. 89-792 3. Indian, Adult Vocational Education; 25 U.S.C. 309, 452, 823(c) 4. Economic Opportunity Act of 1964; as amended, 42 U.S.C. 2701 et seq; P. L. 89-794 5. Government Employee's Training Program; (P. L. 89-554) 5 U.S.C. 4101- 4118 6. Economic Development Administration (P. L. 89-15) 42 U.S.C. 2583 7. Veteran's TTocational Rehabilitation, 38 U.S.C. 1501-1511 8. Vocational Education Act of 1963; P. L. 88-210; Sec. 8(1) 9. Social Security Title II, Public Welfare Work Training Programs (AFDU) P. L. 90-248 STUDENT FINANCIAL GRANTS, LOANS OR TAX BENEFITS *10. Social Security Student Dependents: P. L. 89-97; See Sec. 202 (d) (8) (C), ~11. P. E. (I. A. Student Dependents; P. Ti. 89-488; See Sec 10(M). *12. Railroad Retirement Student Dependents: P.L. 89-700; See Sec. 5(1) (1). *13. Student Dependency and Indemnity Compensation for Vetfr~rans Children; 38 U.S.C. 104,414(c). *14. Civil Service Retirement Student Dependents; P. L. 89-504; 5 U.S.C. 2251-2268; See Sec. 2251(j) and Sec. 2260, and P. L. 89-554; Sec. 8341. *15. TVar Orphans Educational Assistance; 38 U.S.C. 1701 et seq. *16 Veterans Readjustment Benefits Act of 1966; P. L. 89-358; See Sec. 1652 (c). 17. Vocational loans to Indians; 25 U.S.C. 471. 18. Vocational Loans to Eskimos; 25 U.S.C. 479. 19. National Vocational Student Loan Insurance; P. L. 89-287. 20. Income Taco Deduction for Student Dependents; 26 U.S.C. 151(e) (4). [American Education, April 1967, Vol. 3, No. 4, Published by Department of Health, Education, and Welfare, Office of Education, Washington, D.C.1 THE JOB'S THE THING Why do so many young high school graduates-more than has generally been suspected-pass up low-cost public education to go to proprietary schools? Stanford Research Institute investigator Edward A. Podesta put this question to proprietary school students in a survey of vocational education planning in Santa Clara County, Calif., funded by OE's Cooperative Research Program. "Here I don't have to bother with English composition, physical education, history or science." said a girl enrolled in secretarial training. "I spend all of my time on business courses, and after all, that's what I need for a job." Time (course length and ease of enrollment), placement service, individual attention, and relaxed classroom atmosphere were other major reasons mentioned Podesta explains: "Students begin classes when they want to and get to work much sooner than in public schools where they see courses added `to drag out the time.' They feel the early paychecks compensate for high study costs." Instructional programs were similar to those of public schools, Podesta found. Students felt, however, that proprietary school teachers were "closer to the job market, more aware of conditions, better able to help them find jobs." [An excerpt from Final Report, Contract No. OE-5-85-068} SUPPLY AND DEMAND FACTORS AFFECTING VOCATIONAL EDUCATION PLANNING (A Methodological Study in Santa Clara County, Calif., October 1966, U.S. Department of Health, Education, and Welfare, Office of Education, Bureau of Research, Stanford Research Institute, Menlo Park, Calif., Pages 44-45.) 5Outright grants of money paid monthly direct to student. PAGENO="0351" 857 PROPRIETARY SCHOOL OPERATIONS The following discussion briefly summarizes the salient features of proprietary school activities, which are covered in more detail in Appendix B. On the basis of enrollment data, it appears that the proprietary schools might be making a more substantial contribution in instructional areas that are also in the public school domain than had been suspected. The effectiveness with which these schools prepare students for employment and place graduates in jobs could iiot be as- sessed with any high degree of confidence, but fragmentary data indicated that the majority of students from certain schools had little difficulty in finding employment related to their training. Since it appeared that most students in the proprietary schools could meet the admission requirements of the junior colleges or the evening adult education programs, one must ask why an individual would invest a substantial sum for a study program that was also being offered at no charge in a public institution. Students most frequently mentioned time convenience and course content in ex- plaining their decision to enroll in a proprietary school program. They observed that they usually could start class within a week after enrolling, and that the course length set completion within a relatively, short period of time-less than a year and often under six months. They pointed out that the curriculum was entirely skill-oriented and free of what they considered to be nonessential sub- jects. Finally, many students mentioned placement service, believing that the school's continuation as a commercial enterprise would depend on the degree to which its students were successful in securing employment after training. The detail developed on instructor educational background. and employment experience suggests that most proprietary school instructors could satisfy the basic qualifications for teaching assignments in those public school vocational programs that do not require a general education teaching credential. Yet, the teaching experience reported by most proprietary school instructors seldom in- cluded a public school affiliation; and, similarly, few public school teachers indi- cated that they had proprietary school teaching backgrounds. Further investi- gation into the characteristics of proprietary school teachers might provide some rationale for this apparent lack of interest on the part of each teacher group for employment in the other's field. The operation of a number of these schools as vendors in local, state, and federal government-sponsored training program suggests that they might also represent a potential for expansion of public school vocational programs, particu- larly in areas of short term or modest student demand. Dr. BRADEMAS. Is Dr. Meaney here? Dr. Meaney, I am particularly pleased to welcome you this morn- ing, one of my constituents, and a member of the faculty of one of the greatest universities in this country, the University of Notrc Dame. STATEMENT OF DR. JOHN W. MEANEY, PROFESSOR OP COMMUNI- CATION ARTS, AND ASSISTANT TO THE ACADEMIC VICE PRESI- DENT FOR EDUCATIONAL MEDIA; ACCOMPANIED BY HAROLD WIGREN, PRESIDENT OF THE JOINT COUNCIL ON EDUCATIONAL TELECOMMUNICATIONS, UNIVERSITY OF NOTRE DAME Dr. MEANEY. Thank you, Mr. Chairman. I am accompanied this morning by Dr. Harold Wigren, who is president of the Joint Council on Educational Telecommunications. Mr. BRADEMAS. Thank you. We are glad to have you here. If it is any reassurance to you, you will be pleased to know that the very able adviser who sits on my right here and who serves our whole Committee on Education and Labor with great skill as its associate general counsel is a graduate of the University of Notre Dame, Mr. William F. Gaul. So you are among friends. Mr. WIGREN. Thank you, Mr. Chairman. PAGENO="0352" 858 Dr. MEAXEY. My name is John W. Meaney. I am a professor of conmiunication arts and assistant to the academic vice president for educational media at the University of Notre Dame. I am also a hoard member of the Joint Council on Educational Telecommunications, Inc., in which I represent the American Council on Education. Perhaps it would be well to explain briefly what the Joint Council on Educatioiia~I Telecommunications is and how its membership is made up. The JCET has, as its constituent members, the American Associa~ tion for Higher Education, the American Association of School Ad- ministrators, the American Council on Education, the Council of Chief State School Officers, the National Association of Educational Broadcasters, the National Association of State Universities & Land- Grant Colleges, the Nationai Education Association, and National Educational Television. JOET serves its members, and all of American education as a coordinating agency by which education may keep abreast of the growing opportunities provided by telecommunications tecimologies, and by which industry, Government, and the public may be apprised of education's interests and needs in this area. It is most appropriate, therefore, that the Joint Council on Educa- tional Telecommunications concern itself with the proposals for the establishment of networks for knowledge which are now before this subcommittee, and I am happy to be here today as a representative of the JCET in order to give the support of this organization to the concepts which these proposals embody. There is a growing recognition, as these proposals evidence, that telecommunications technologies provide vastly wider opportunities for interinstitutional cooperation than have heretofore been feasible. The idea of interinstitutional cooperation is not new, but in the past it has often been slow to develop in practice-probably because it has seemed to go against the grain of many of our institutional traditions and patterns. In our pattern of budgeting, for instance, it is generally easier and more acceptable to all concerned to give priority of attention to inter- institutional programs rather than to those that are interinstitutional in nature. Perhaps this kind of traditional fact in higher education makes it all the more appropriate to consider now a possible Federal program such as Networks for Knowledge aimed specifically at the stimulation of interinstitutional cooperation. Certainly the new technology now available reduces practically to insignificance the physical difficulties of such cooperation. We used to have to move people to the information wherever it existed, and that posed a serious problem for many institutions which were geographically rather isolated. Now we can move the information to people and eliminate much of the travel problem. Small colleges can seek the aid of the leading scholars, scientists, and teachers in the fields of their interests, wherever they may be. The developing institutions can gain intellectual reinforcement for their programs, not only from their own State universities but from other established institutions as well. Consortia can be implemented which transcend geographical limitation and are based solely upon the common interests and goals of the member institutions. The JCET strongly endorses the idea represented in the networks for knowledge amendment but wishes to point out to the subcommittee PAGENO="0353" 859 certain qualifications and emphasis which it feels ought to be taken into account, primarily in the administration of such a program. First of all, one of the basic conclusions that we have drawn from our observation of earlier educational media support programs at the Federal level-such as the National Defense Education Act, title VII, program for research on new media-is that software is far more important and should have higher priority than hardware. In terms of the networks for knowledge proposal this experience would suggest to us that it would be very easily and rapidly possible to set up new electronic links between institutions but that these in- terconnections might not be very efficiently used until the institutions had had the time to plan and prepare within their departments the in- put and use of exchange materials. Of course there is something of the chicken and egg problem here. How do you stimulate exchange and cooperation until you have the network which makes it possible, and, on the other hand, how do you set up a network unless you first of all have evidence of a readiness for exchange and cooperation? It seems to us that the resolution of this problem would lie in an initial program emphasis on the planning function. Such an emphasis might well extend through much of the 5 years proposed. Secondly, there is need for a maximum flexibility in the adminis- tration of such a program. In this fast moving technological field it is impossible to anticipate and specify `by name all of the new media that may make an important contribution within the next 5 years. Some of them are probably not even on the drawing boards yet. There- fore, we feel that two of the most importnnt lines in the draft legisla- tion are those which provide for the planning of "such other projects as in the judgment of the Commissioner will promote the purposes of this title." Such discretionary authority to promote the purposes of the title could and should, we assume include the utilization of other media and combinations of media, in addition to television and computers. It should include authority to work out cooperative projects not only among institutions of higher education but wherever a valid commu- nity of interest seems most likely to get the job done. Some network ar- rangements thould perhaps include, besides colleges and universities, any school systems libraries, museums, State, county, or national agen- cies, and research lwboratories of private industry which are willing to bear their part of the matching fund expense and thus further re- duce the cost of participation per `institution. It seems to us appropriate that the networks for knowledge pro- posal be considered as an amendment to the Higher Education Act of 1965 because our institutions for higher education seem to be ready, willing, and able to take leadership in this type of development. They have important facilities to share. They are showing increasing in- terest in interinstitutional cooperation. They have a constantly deep- ening conirnitment to participate in the affairs of the communities they serve. Therefore, we urge the Congress to begin here, to place this building block as the cornerstone upon which can be constructed a full network knowledge which will have the capacity not only to connect the junior college with the university, but the high school with the college, the kindergarten with the school of education, the hospi- 92-371--GS-pt. 2-23 PAGENO="0354" 860 tal with the medical school, municipal services with those of other cities, rural villages with the opera house, and each with the other- a network for knowledge which will eventually serve not only higher education but all of the health, education, and welfare needs of our Nation. Furthermore, with the facilities provided by such a network and the pre:sently available teclmology of the satellite, it should be possible and within the discretionary authority of the Commissioner to plan for the interconnection of this network with those of other nations in order to create the kind of world knowledge network to which the President made reference in his state of the Union message last January. Mr. BRADEMAS. Thank you very much, Mr. Meaney. Yours is a most `helpful statement. There are three things that stand out in your staiement to me. They are, first, your stress on the importance of software; second, your emphasis on careful planning; and third, yom~ concern that institutions that are not necessarily colleges and :uni~ersi'ties he brought into the network. S I think this question of planning is especially important and I would hope, speaking for myself, `that if we can get' any money for this title., at the outset, we put stress on the planning. In this connection, let me raise a cOuple of questions with you in rhetorical form. Would it not be essential for colleges and universities `who are interested in taking part in such, a, network to make an inventory of their Own resources in terms of faculty, in terms of cur- riculum, in terms of student body as well as in terms of equipment and facilities; not only at their own institutions but clear across the `State: or region which would `participate in any proposed network? I would have thought that kind of inventory or self-evaluation would be essential, otherwise, you would not know what it was you wanted to do. , , Would you make any comment on that and then maybe make. a `comment on the extent to which this kind of planning is already going on in the hope that we will' move in this direction? Mr. MEANY. I can specifically for two States. Last year I was codirector of a feasibility survey for a State network, telecommuni- cations network in Texas, and at the present time I am in the State of Indiana overseeing the development of this network. In Texas I found that with a minimum amount of study funds from our coordinating board for higher education, only $20,000, approxi- mately, we could make only a very surface kind of survey to determine the interest of the institutions around the State, public and private, in such interconnection possibility. The kind of in-depth survey that you are referring to that would get reactions from departments, from faculty, inventory equipment, on the local campuses, and so on, is exactly the kind of planning func- tion that should be done but which requires more money than was available in this instance in Texas. Now in the State of Indiana. more funds were available. As you know, the legislature provided $600,000 for the biennium to begin this telecommunications network. The leading thinkers in this de- velopment at Purdue, at Indiana University, `have done more of an PAGENO="0355" 8~1 indepth survey of the cities at the State institutions. However, they have not had time~ or funds as yet to extend such a survey to the private institutions. I would hope that, from such legislation as this there might he made available funds for `this kind of planning and survey, particu- larly `at private institutions which do not have access to State funds. Mr. BRADEMAS. Once that kind of planning is undertaken within a State, how do you decide what institutions take part and in what particular fields? What kind of decisionmaking apparatus do you have for this end, secondly, what kind of administrative arrangements would be necessary to maintain such an interinstitutional program? Dr. MEANEY. The `actual activity of making such decisions `has not yet come about. We are not at that state. In Indiana particularly the facilities are `available' to do more than is yet being asked to be done. There will come a time when some choice will have to be made and some priorities set. At the present time there is simply a rule of thumb that we try to do what seems to be `best to include as many institutions as possible. In `the Texas situation,' the pl'an that we developed there addressed itself to this problem through a structure which we called the Texas Educational Communications Commission. This would be a body set up with respectives of the Tex'as education agency and the coordinating board for higher education'. It would allocate time on such a network and take just this problem into account, assuming of course always, very careful attention to ,the' numbers of students involved in each particular proposal `and allocation' of time. Mr. B'RADEMAS. It just occurred to me that the third point you made in your statement with respect to involving other institutions such as municipal' government or hospitals or whatever in such a network, is perhaps `directly related to the principal purpose of title I of the Higher Education Act of 1965, the Community Service Title, because one outgrowth of a network for knowledge of this kind could be that you would help provide `local governments, let's'say, `with very badly needed technical and professional and' expert advice that otherwise might, be unthinkable for ~them t'o purchase because they could not afford it. ` ` ` Dr. MEANEY. That is right, `and access to `large computers. Mr. BRADEMAS. Thank you very much for a most interesting state- ment, Professor `Meaney. Mr. QUTE. Professor Meaney, I have only one additional question. How do you get a "handle" on the cost of a survey of materials that they could sh'are, `and on the pl'anning p'hase? You said Indiana appro- priated $600,000. How fa'r did that go? Dr. MEANEY. This is being expended primarily `at the present time for lease of interconnection faCilities from the telephone company, connecting campuses together, Purdue, Indiana University, and the medical center in Indianapolis. Legs of this network are being ex- tended to other regional campuses of the State as well. The amount of money pl'anned for this kind of survey activity is, I believe, usually based on-well, the number of institutions in the State, how far apart they are, how much travel money would be needed to send a person around to see the local situation and talk PAGENO="0356" 862 to key people on the campus, staff money required to prepare the survey instruments and so forth, projects of such figures on a State basis. Mr. QiJIE. Do we have a breakdown available from Indiana? Dr. MEANEY. We can send you information regarding that tele- communications network. Are you specifically interested in the budget breakdown? Mr. QUIE. Yes; I think I would get a better idea about this. Dr. MEANEY. I will request that it be sent. Mr. WIGREN. I think one of the previous witnesses, Dr. Wither- spoon, had this as part of his telecommunications system study that was done in Oregon. I think that was considered as part of it, If I remember correctly. Mr. QUTE. Is that included as a part of his testimony? Mr. WIGREN. I don't think it was in the testimony but I think this would be available through the NAEB if it was needed. Mr. QUIE. It would be interesting to see that. You ended up, I believe, Professor Meaney, at the end of your statement, if I remember corI~ectly, on the international aspects, sort of a world knowledge network. I know some of the universities have a relationship with a university in another country. Is there anything being done on that, that you know of to develop that kind of network? Dr. MEANEY. I don't know of any specific plans at the moment to connect this with European institutions but I know that there are some plans underway with Latin American institutions, coordinating developments of library and curriculum. Mr. QIJIE. Learned societies and research groups `and so forth get together on an international basis. Mr. WIGREN. UNESCO has some exploratory work going on in this field through its mass media unit. Also they have had some satellite conferences recently which have touched on this as well as some con- ~ferences on the whole business of copyright. As was mentioned earlier, this is one of the most serious parts of the whole exchange possibility because, you see, if you don't have the kind of copyright law that will permit exchange of materials one with the other without putting undue restrictions both in obtain- ing the lease of these materials and paying the cost of this, then you are in a bit of trouble. Another bill that is `being considered right now by the House, of course, is H.R. 2521 and the copyright revision `bill, sets up some areas and sections of the bill that would be very detrimental to this legisla- tion here that we are considering today. In other words, ~n a way it is inhibiting `legislation to this particular bill that we are talking about. Mr. QUIL. Have you people sent in testimony to that committee? Mr. WIGREN. Yes, we have. Mr. Q,UIE. Those are all the questions that I `l~ave at this time. Mr. BRADEMAS. Thank you very much, Professor Meaney and Mr. Wigren. Dr. MEANEY. Thank you, Mr. Chairman. Mr. BIiADEMAS. Our last witness is Dr. Joseph Becker, accompanied by Mr. James Miller of Educom. PAGENO="0357" 863 STATEMENT OP JOSEPH BECKER, DIRECTOR OP INPORMATION SCI- ENCES FOR TBE INTERUNIVERSITY COMMUNICATIONS COUNCIL, INC.; ACCOMPANIED BY DR. JAMES MILLER, VICE PRESIDENT OF EDUCOM Mr. BECKER. My name is Joseph Becker; I am director of informa- tion sciences for the Interuniversity Communications Council, Inc., usually known as Educom. First, I want to express our gratitude for the privilege of appearing here today to speak to you about title IX of H.R. 15067-the Networks for Knowledge Act of 1968. This is a matter which is closely related to Educorn's own focus of attention. Next I want to describe briefly the background and work of our council. It is a voluntary consortium of universities w~hose function, in its broadest concept, is to facilitate the extra-organizational comrnuru- cations of its members through multimedia, resource-sharing networks. It now has 88 iuem~bers, with over 260 campuses distributed throughout the United States and Canada. Educom was conceived and lncorpo- rated in 1964 by the deans of the medical schools of six leading umver- sities. They were deeply concerned with the problem of providing con- tinuing education in the healthsciences field in the face of the prolifer- ation of information, but they immediately realized that their own pr~blems were universal and that the solution lay in the improvement of intercommunication for the purpose of sharing resources. As the volume of information and raw data increases both in pub- listhed literature and from research, it becomes clearer that no one university can hope to store an adequate representation of it in its own traditional form of library or even in its modern data banks. Educom's role is to give its members options for ~haring their resources, whether they be printed pages or the ideas of faculty members through every form of useful communications network-from the transfer of books by statioi~ wagon to the exchange of data in digital form by linked computers. There are already many local, State, and regional groups responding to the challenge and seeking intercoiumirnication to fill their specific disciplinary or functional needs, and you have heard about some of them this morning. Yet, the orverall need for the external communica- tions of the university to supply the many specific needs remain un- planned. It is in this area that Educom hopes to function. We have already made a start on this program through our research activities; for example, one of our projects is a study of the entire range of biomedical communications, which will result in recommenda- tions to the National Library of Medicine for a systems design to meet future needs. Another is a study of the exchange of agricultural infor- mation involving land-grant colleges and universities, their libraries, and the National Agricultural Library. A third approaches the prob- lem of transmission of material from libraries to remote users in digital form, in comparison with its transfer in graphic form. We also have plans for working with universities to develop a beginning educational information network-a network for knowledge. The basis for this planning is contained in a book, Edunet, which resulted from a summer study session held at the University of Colorado, Boulder, Cob., in 1966. I have brought several copies of the book along, and PAGENO="0358" 864 I will leave them for the members. The substance of the volume is in such accord with the apparent intentof title IX that other testimony along those lines on our part would be superfluous. It may be helpful, however, if, as a representative of Educom, I try to pomt out areas of economy which should encourage the passage of the Networks for Knowledge Act, and bring to your attention some areas of questionable language which may make its administration difficult if and when it is passed into law. Industry has long found that it is frequently necessary to "spend money in order to make money." At a time when the national economic posture makes it necessary to cut back expenditures in many pro- grams, we feel that the money provided under title IX can well be spent "in order to make money." By providing a means of tying university resources together so that the whole becomes greater than the sum of the parts, by reducing duplication, by marshalling the available means to meet the increasing educational needs of our country, and by providing an organizational umbrella under which intelligent broad planning can be done. The Networks for Knowledge Act will, we believe, insure the reasona!ble growth of our systems in size and quality at minimum cost. The word- ing of the bill is specific enough to make us aware that the committee must already understand these things, and we need not dwell on them further. Turning to the question of wording, we would like to draw the sub- committee's attention to some possible need for clarification. On page 94 starting with lineD, we find: (c) (1) Grants pursuant to Clause (B) of paragraph (3) OF subsection (b) may not be used to pay the costs of electronic transmission terminals. It is entirely possible, for example, that our evolving technology will make it possible for universities to subscribe to a service which, for a fixed fee plus an additional fee representative of use, will permit them access to remoted bibliographic facilities. Such a service, pro- vided by a nonprofit corporation, would clearly fall under the intent of the act, but no specific item of cost would be broken out of the elec- tronic transmission terminals themselves. It would seem that some additional language would be necessary in the legislative history in order to clarify the subcommitee's thinking on this matter. Again on page 94, starting with line 13: * * * grants may not include- (A) the cost of operating administrative terminals or student terminals at participating institutions * * * Here the change of language from the costs of electronic transmis- sion terminals to the cost of operating administrative terminals would imply that a great many not include payment for the labor required to operate the terminals but would be available to pay for the termi- nals themselves. Here again we feel that additional language is neces- sary in the legislative history to make clear the subcommittee's feel- ings concerning such details as: Rental cost for terminals dedicated to this use; the purchase of terminals and the depreciation charges re- sulting therefrom; the maintenance costs associated with terminals; and, finally, the labor cost associated with actual operation of the terminal. PAGENO="0359" 865' Again on page 94, line 21: "The administrative and program sup- port costs of the central facilities of the network * * ~" are permitted as costs under a grant. In the design of modern time-sharing systems, much of the administration of the central computing facility is done by the central computer itself. It should be part of the legislative his- tory that where this administrative use of the central computer can be sequestered, it does not form a part of the institution's pro rata share of the cost of using the central computer, but is, rather, a cost of the administrative and program support. `With the realization that the foregoing comments are relatively insignificant considering the extreme national importance of the act itself, our primary input to you today is in the form of applause and encouragement for the passage of the Networks for Knowledge Act of 1968. Thank you. Dr. Miller, my colleague, who is principal scientist for Educom and who is also vice president of academic affairs for Cleveland State University, is one of the authors of the "Edunet" book and a man who is very strongly involved in the concept of educational network. He has some brief remarks to make also, sir. Mr. BRADEMAS. Go right ahead. Dr. MILLER. Mr. Chairman, in making five maj or points I would like to attempt to respond to some of the questions that both members of the committee have asked of those who have testified earlier. First of all, I would strongly support the need for further inten- sIve planning in this area. I would also like to point out that planning has been going on rather intensively now in this area since 1961. In 1961 I was working as special consultant for the Surgeon General of the Public Health Service and a conference was held in November of that year with representatives from the National Science Founda- tion, Dr. Waterman was present, and with representatives from the Office of Science and Technology, Dr. Weisner was present, and many others, in which it was agreed at the conclusion of the conference that development of such a network was imperative for HEW, the em-. phasis at that time being particularly on health aspects. As you know, our organization of Educom was formed out of a strong sense of need of many universities in 1964. There has been con- tinuous planning going on since that time. In 1966 a conference was held which was sponsored jointly by the Office of Education `and National Institutes of Health, National Science Foundation, and the National Library of Medicine, which resulted in this book "Edunet." There were representatives of all the Educ'om universities, of about 15 Government agencies, `and of . the relevant industries, publication industry, computer industry, television and communications industries, and I think it is fair to sa.y it was essen- ti'ally the unanimous agreement not only that there was a deep need for this sort of planning and implementation but also that it was technically feasible and. that it was possible to proceed. Specific plans were laid out, the last chapter being a. proposal which has now been informally before a number of Government agencies and we expect that there will be beginning funding of a planning grant for it in the near future. PAGENO="0360" 866 So, the emphasis is on the fact that much more planning is needed for such a vast undertaking as envisioned in this title but nevertheless it ha.s been going on for a period of years. The question was raised concerning the costs of such a proposal. I would agree with those who have testified previously that the funding suggested in this bill is adequate for the present year because a great deal of planning needs to be done and the development of staffs and so on, who are capable of expanding these programs as they are worked through. But it should be recognized that in the future years the costs will be much greater. This proposal is for a prototype Edunet, educational network, which requests $1 million for the first year, $3 million essen- tially for the second year, and $6 million for the third year. In the second year, after a first year of planning and collecting of staff on at least three campuses in five parts of the United States which would integrate regional networks, the narrow band network, a number of telephonic connections would be implemented. In the third year a two-way television wide-band network would be implemented as well. So these costs are the costs of interconnection and of administration. The basic principle of this bill being included in this book as well that the universities pay their own costs for the local terminals and for the local activities that they carry on. I would like to emphasize that the suggestion here is the develop- ment of a prototype. The prototypes should put major emphasis on software. This is unquestionably true. The advancement of software technology is not so great as the advancement of the hardware tech- nology. It is not a question of one or the other. It really must be both at the same time. Our proposal and the bill includes opportunities for both the soft- ware and the hardware development. The emphasis is on the colleges and universities at first. We would point out that small private colleges as well as large uni- versities are associated with our organization and certainly will be concerned with it. There is one regional group, for example, in Pennsylvania of over 50 colle~es. all of whic.h are small, that are interconnected by a regional network of this sort. The universities can contribute in their traditional research and development role. Once it has been demonstrated that there are effective uses of such programs possible, then it is the hope, I am certain, of all of the institutions conc~rned that the network will snread to small colie~es, to libraries, to museums, to hospitals, and indeed very likely ultimately to private homes. I was requested by Governor Romney, when I was a nrofessor at the University of Michigan, the last year or two, to plan for the develop- ment of a statewide network for Michigan among the three major universities. It was his request at that time and our expectation that once it was worked out among the three main universities in Michigan the other colleges and universities, public and private, would be asso- ciated and then the State government system, the libraries and so on throughout the community, were industry, incidentally, subscribing PAGENO="0361" 867 to local terminals which would help them get access to the latest scientific and technical information. I would like to say as quietly but as forcefully as possible that this is undoubtedly the wave of the future in higher education. There are many vast problems in cost of higher education. It is not going to be possible for all colleges and universities to have major libraries, to have the best professors, to have other sources for individualized educa- tion that is necessary to provide the best type of education. `We believe the country should give serious consideration to the possi- bility of implementing these methods as very fundamental aspects of the educational process. We should not delude ourselves into thinking that the costs will be saved immediately. There will be large costs in the development of programs of this sort in the long run. But the potential for improving the quality of education and for cutting down some of the costs which cannot at the present time be met by small colleges and universities is great and it may well be as years go by this relatively new innovation which has surfaced only recently in the national con- sciousness, can become one of the maj or contributions of the ad- ministration. I would like to make three other brief points if I may. One in terms of the question that was asked by Mr. Quie about the international interconnections. There have already been experiments to do this with satellites and undoubtedly as the satellite technology advances this will be possible. For example, in the medical educational field, reading of electro- cardiograms in Paris by computers in the `United States has already been carried out. Educom has developed a group for the interna- tional implications. Universities from `at least eight other countries besides Canada and the United States have asked to join Educom but we have said this is a development for the future and first it must be organized locally. Mr. QUIR. May I interrupt, Mr. Chairman, because I have to leave. Are you familiar with the work that the Mayo Clinic is doing in the field? Dr. MILLER. Dr. Howard Rome is doing it. I am a physician myself, and I am a friend of his. Mr. QUTE. I would say it is an example of a similar area of inter- change. Dr. MILLER. Exactly. Mr. QUIR. And this is a most exciting thing to watch. Dr. MILLER. That is right. As a matter of fact, you can't tell where these things are going in the long run. The important thing is to de- velop slowly and develop it in a sound fashion. We would like to emphasize the multimedium character of the bill. It does not emphasize just computers or television or programed instruction or the administrative records system of the libraries but all of them. This is the way I believe it fits into the public television bill, that the special aspect of the public television bill for planning of instructional television emphasizes primarily one medium. It is be- coming more and more apparent to us as educatorsthat these media are interchangeable. One day it may be a lecture, the next day a textbook, the next day a small conference, then programed instruction. PAGENO="0362" 868 What is important is to view the entire educational communication process as a unity and then to compare the advantage of various media. This is what this bill makes possible and we believe it is a farsighted bill for that reason. In terms of the costs, I am sure the question will be. asked, should you start a new program of this sort in this particular year? I think the answer would be it can be started profitably in a modest way. It is very important to make it. clear that the government policy support developments in this area. In addition, I think it is important to recognize as t.he other testimony made clear, that regional and State networks are being developed at the present time and Federal and State money in relatively large amounts is going into these regional networks at the present time. There is a great deal of duplication in what. is being done in these different regional networks. The Federal Government is paying for a good deal of this. In addition, incompatible networks are being de- veloped which would be natural, unavoidable, if there is not clear-cut continuing technical discussion among the developments of these net- works. If we do not begin now to bring this into a national picture, pro- gressing cautiously until we a.re certain of the most effective form of network to developed, we will have a problem a very few years down the road comparable to the incompatibilities between NBS and CBS color television at the beginning or incompatibilities between the var- ious forms of phonograph records, only multiplied many times, in- combatibilities both of hardware and software which will be so great that it will result in tremendous costs to the country as a. whole. Finally and my last point, I would like to refer to the situation of a new university like the one .1 am in at the present time. About a year ago I joined the staff of Cleveland State University which was found- ed .by the State of Ohio just 3 years ago to become a comprehensive State university in t.he major city in the State where there has never before been State support for higher education. It is a developing university and its needs are very great.. In the past I have been associated only with major universities. I have never seen from the inside the problems of a small university or college or the tremendous problems of a developing university as they exist. Not only is our faculty small and in need of great development, but also our library is almost nonexistent. While we are building a large physical campus we have the needs in almost every direction to build an adequate quality program. This will take 10 or 20 years, by our master plan, to get anywhere near the quality of education of institutions with which I have been associated in the past unless it is possible for us as a have-not organization to take advantage of the selection of the haves. This is the essence of the net.work concept whether it be a. network for transferring professors from one university to another, or electronics. We are not interested in the educational realities of the situation. We are already talking with the University of Michigan about connecting a network between their library and ours so that we can get over this network documents which we do not have in our library, and interconnecting by classroom television, closed circuit television with some of the distinguished PAGENO="0363" 869 lecturersof the University of Michigan so that OUr students can have access to them, too This is a small example, a single case of the sort of thing which nationally can be done, I believe, by such planning. I believe it will' have tremendous impact on higher education. Mi BRADEMAS Th'uik you very much indeed, Dr Miller Your st'ite ment is most helpful. I have just two or three questions, and one observation at the out set. One, `I am glad to see both of you place as much stress as you do and as Professor Meaney did on the importance' of the software side of this thing. I grow very apprehensive about the' prospect that we are so preoccupied with the mechanics of it that we lose sight of the purpose of developing a network. The title in the bill reads, "Net- works for Knowledge," which is* a catch-phrase, but also a very sig- nificant one if one reflects on it. Is Educom confined to medicine? Dr. MILLER. No. It happened to be started by deans and'vice presi-' dents of medicine of several universities simply because they as in- dividuals first got interested. I happen to be a physician. As soon as these deans took the question to their presidents without exception the presidents said, "But this applies across the board, not just to health science." We were aware of that. It just seemed like a big bite to start with. So we dropped the phrase "health sciences" out of the organization's name before it was incorporated. It is across the board and `at the present time our board of trustees represents all disciplines in the university. Mr. BRADEMAS. So that in effect the planning of the kind which earlier in our discussion other witnesses and I expressed the hope would take place in this whole area has already been going on in the United States. Mr. BECKER. It is considerable, `and `it is outlined extensively in this document. Dr. MILLER. This document has lists of software now `available. Of course, once the universities are interconne'cted they will develop soft- ware for use by each other and share their resources. The interdisci-' plinary notion is fundamental to this proposal. When the question was raised by the Office of Science ~tnd Technology to what government agency the primary cognizance, of this proposal ~houl'd go, it was not sent to the medical part of the Government, to NIH or Public Health Service but rather the Office of Education. Mr. BRADEMAS. I appreciated `also your concern about the problem of compatibility. I made reference earlier to the conferencee of a couple of years ago that I `attended at Oxford University and one of the common prdblems about which all of the librarians and the com- puter experts there were expressing their concern wa's the develop- ment of common languages for their tapes. W'hat you really want in effect is some kind of Esperanto `so that everybody is talking the same language. We don't want to develop in this world of computers a kind of Belgian language problem all over the country. How do you prevent that?' Dr. MILLER. Educom has received a small grant from the Office of Naval Research for the purpose of stu'dying what we call the author PAGENO="0364" 870 languages for computers of which there are a dozen or more at the present time. The purpose of an author `language is to make it possible for a professor or teacher to develop computerized program instruc- tion. This is the `language that he uses to put the information in the courses `into the computer and `to make it possible for the computer to answer questions of the students. These were incompatible author languages and inappropriate for an interuniversity organization like ours. We have now a grant where Dr. Carl Zinn is comparing these and trying to see if the Esperanto language, and that `is a good phrase, can `be developed whkth accom- plishes everything that these other languages do accomplish, and yet can be uniform and universal. Mr. BRADEMAS. I remember that in my high school we used to take for granted a course in typing, and I can well contemplate that we will soon have to have a high school course in computers or automatic data processing or something of that sort, at least for everybody who plans a college education. I should have thought a very important task for a group like Educom would be to educate the educators in the use of compu'ters `and all the techniques that we have been discussing. Do yo have any comment on that? Mr. BECKER. No, we certainly are attempting to do that. We have various `task forces that are focusing on just that issue. Dr. MILLER. I am sure that the use of computers will become a grade school or high school subject in the near future just as writing and use of the slide ruler are taught at the lower levels of education. Mr. BRADEMAS. I must say that I agree very strongly with what you have said, Dr. Miller, that this Network for Knowledge proposal is a very modest one in this bill. It `does represent the wave of the future in higher education. I agree with the thrust of what nearly every witness this morning has said, that we are at the beginning of what is going to be a very great adventure. This is the last day `of hearings on H.R. 15067. The record of the hearings will `be kept open for a period of 2 weeks if anyone wishes to submit any further statement for the `hearings. Thank you very `much. We are adjourned. (Whereupon, at 12:10 p.m. the committee was recessed `subject to call.) (The following material was submitted for the record:) STATEMENT OF lox. CLEMENT J. ZABL0CKI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN FAIRPLAY FOR ALL SCHOOLCHILDREN UNDER NDEA TITLE III Thank you, Madam Chairman, for providing me with this opportunity to con- tribute a statement to the deliberations of this subcommittee on proposed amendments to the National Defense Education Act. I am here to urge that the committee adopt as an amendment to NDEA a proposal which I have made in H.R. 8203. In short, this measure would allow laboratory and other mobile educational equipment to be provided to pupils in nonpublic schools on a loan basis, just as textbooks and library materials are now provided under title III of the Ele- mentary and Secondary Education Act. That is, the equipment itself would be owned by a public agency and loaned to the nonpublic schools for use by their students. PAGENO="0365" 871 In order to satisfy the matching provisions of NDEA title II, the nonpublic schools would be required to prove that they had spent an equal amount them- selves for laboratory equipment or the kind of remodeling authorized under the act. As you will recall, I made an extensive statement on this same subject during the subcommittee consideration of various education act amendments last year. My testimony can be found on page 390 of part I in the printed hearings. For that reason, it is not my intention to make a detailed presentation on this occasion. The arguments and statistics advanced last year are still valid and pertinent. I simply want to point out to the subcommittee that developments over the past year have made an even more compelling ease for amending the National Defense Education Act along the lines suggested by H.R. 8203. Considerable support for such an amendment was generated during congres- sional consideration of the Elementary and Secondary Education Act of 1067. Several proposals were made, one of them to me, to amend ESEA to provide laboratory and other mobile equipment to students in nonpublic schools. Because of the circumstances which prevailed at that time, however, I did not press that amendment on the undertsanding that both the leadership in the Education and Labor Committee and the administration would give full con- sideration to an amendment to title III of NDEA. I am, therefore, hopeful that this subcommittee will give such an amendment the hearing it richly deserves. If this program is extended for 5 more years, as has been proposed, an attempt must be made to end the discrimination against nonpublic school children. Statistics for fiscal 1967 which I have just received show that the situation has worsened. As I have pointed out before, about 7 million American boys and girls attend nonpublic elementary and secondary schools. That is about 14 percent of the total national school population. Up to and including fiscal 1966 that 14 percent of American youngsters has received little more than 1 percent of the funds which the Federal Government has expended under title III of NDEA. And even that amount must be paid back-with interest. In fiscal 1967, a total of $79,200,000 was appropriated under title III of NDEA for grants to public schools. All of its was obligated. No amount lapsed. In contrast, $1,500,000 was appropriated for title III loans to nonpublic schools. Of that amount only $465,422 was obligated and $1,043,578 lapsed. This indicates once again the failure of the present loan program to adequately and equitably meet the equipment needs of these American children. Madame Chairman, I know that you and your fellow subcommittee members fully recognize the failure of the nonpublic school equipment loan program under NDEA. You are aware that it has defeated its very purpose by placing nonpublic school children in a relatively weaker position with respect to defense-related subjects than they were in 1958, when the National Defense Education Act was enacted. Those 7 million children are no less important to the future defense and secu- rity needs of our Nation than those who attend public schools. The Congress must quickly indicate its recognition of that truth by amending title III of NDEA `to end the present discriminatory system and to bring equitable benefits to all school children. In order to provide members of the subcommittee with a ready reference, I ask permission to append to the end of this statement the text of my bill, H.R. 8203. Thank you. [HR. 8203, 90th Cong., first sess.~ A. BILL To amend the National Defense Education Act of 1958 to make equip- ment purchased under title III thereof available to all children attending public and private nonprofit elementary and secondary schools. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) section 303(a) (1) of the National Defense Education Act of 1958 is amended (1) by striking out "public" after "or reading in", (2) by inserting "public" after "of local", and (3) by inserting PAGENO="0366" 872 immediately before the semicolon at the end thereof the following: "in public schools". (b) Section 303(a), of such Act is amended by renumbering paragraph (5) thereof as paragraph (6), and by inserting immediately after paragraph (4) the following new paragraph: "(5) provides assurance that such laboratory and other special equip- inent will be provided on an equitable basis for the use of children and teachers in private nonprofit elementary and secondary schools in the State which comply with the compulsory attendance laws of the State or are other- wise recognized by it through some procedure customarily used in the State, but such equipment shall be provided for use in such a school or group of schools only if such school or group of schools has expended an equal amount of its funds derived from private sources for equipment or remodeling described in paragraph (1) ;". SEC. 2. (a) Section 304(a) of such Act is amended by inserting after "except that" the following: "(1) the payment on account of equipment provided for use in private nonprofit elementary and secondary schools shall be equal to the full amount expended for such equipment and (2) (b) Section 304 of such Act is amended by adding at the end thereof the fol- lowing new subsection: "(c) In any State which has a State plan approved under section 303(b) and in which no State agency is authorized by law to provide laboratory or other special equipment for the use of children and teachers in any one or more public or private nonprofit elementary or secondary schools in such State, the Commissioner shall arrange for the provision on an equitable basis of such lab- oratory and other special equipment for such use." SEc. 3. Section 305 of such Act is amended to read as follows: "PUBLIC CONTROL OF LABORATORY AND OTHER EQUIPMENT WHICH MAY BE MADE AVAILABLE "SEC. 305. (a) Title to laboratory and other special equipment furnished pursuant to this title, and control and administration of their use, shall vest only in a public agency. "(b) The laboratory and other special equipment made available pursuant to this title for the use of children and teachers in any school in any State shall be limited to those which have been approved by an appropriate State or local ed- ucational agency for use, or are used, in a public elementary or secondary school of that State." STATEMENT OF lox. CLAUDE PEPPER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA Madam Chairman and members of the subcommittee; once again it is my honor to testify before this distinguished committee on proposed higher edu- cation legislation of the most important nature. As you know, three milestones in the history of higher education legislation are due to expire at the end of the present fiscal year, and another major enactment will expire in 1969. The Higher Education Act, the National Defense Education Act, and the National Vocational Student Loan Insurance~ Act all have made immeasurable contributions toward the goals of strengthening the quality of higher education and of increasing edu- cational opportunities in this country. The Higher Education Facilities Act has also been vital in increasing the capability of our colleges and universities to accommodate the multitudes of new students who come forward each year and on whom the future of our country depends. It is my privilege to testify in support of H.R. 15100, a bill I introduced which is identical to the Administration's omnibus bill. The broad purpose of this legislation is to extend the aforementioned programs for five years and make some significant amendments, including the creation of several new- programs. I do not believe that I need to draw the attention of this committee to the critical needs w'hich prompted the passage of the Higher Education Act and related programs. Certainly the Members of this committee, more than any other Mem- bers of Congress, are familiar with these continuing needs. Nor is it necessary for me to enumerate for you the accomplishments of this legislation. You have already heard the testimony of Commissioner Howe, and I will not reiterate the testimony. PAGENO="0367" 873 I would like to emphasize, however, the particular importance of those por- tions of the bill which strengthen the guaranteed students loan program, es- pecially through such provisions as the acquisition and conversion fees for lenders. The insured loan program authorized by Title IV of the Higher Education Act is, of course,. an important and potentially effective tool of student assist- ance. A major reason for its enactment was to help families meet the rising cost of post-secondary education at a time when such educational attainments were becoming almost a necessity in our increasingly complex society. Indeed, the tremendous growth in education past high school is one of the most startling changes in the educational picture of this country over the last decade. Fifteen years ago, only about one-fourth of all United States citizens aged 18-21 continued on to institutions of post-secondary education, while now this figure is about one-half, .or six million students. Once thought of as available only to the wealthier ancljor more academically talented students, post-secondary edu- cation is now theoretically available to all students who can benefit from it. Yet the rising costs of living, increased service costs, and higher capital con- struction costs of the new and expanded facilities needed to meet the student growth have been reflected in increased costs of attending institutions of higher education. Both public and private institutional operating costs have increased, with the result that many middle-income students and their families have had to undergo severe hardship in order that a student might receive higher education. In the past, with little aid other than commercial bank loans available, these families had only a four-year period in which to finance all of the student's college costs. Often, this proved to be an almost insurmountable obstacle, espe- cially for those with more than one child of post-secondary age. For example, under one widely-used needs analysis system, a family of four, with an income of $9,000, and two children of average abilities, is expected to devote 25 percent of its after-tax income to the higher education needs of the children, for each year both of them are in college. This percentage is the maximum normally allowed for a family to invest in its `housing. Another family under the same circumstances but with an income of $16,000 is expected to divert 35 percent of income after taxes to the higher education' costs of the children. Obviously, to pay this expense in such a short time period means undue hardship. It would be inappropriate to argue that middle- income families should be relieved of this major responsibility-but it is also clear that expenses of higher education concentrated in a brief four or five year period should not be allowed to absorb such a heavy portion of family income. Rather than being a current expendi~ure, the expenses of higher education have become so heavy that they have become a question of capital investment and therefore present a financing problem. It is not uncommon to find estimates of the cost of a bachelor's degree (If a student were to begin in September, 1909) running in excess of $12,000, and for the most expensive institutions, $15,000. Thus, to many families whose incomes may be classified in the upper-middle range, handling a $15,000 charge over a four year period against income may represent a financial burden' unlike any other the student and his family have encountered. Certainly, in other areas of heavy family investment such as home purchase, automobile purchase, and the like, it is customary if not mandatory that the charges be spread over a number of years. In view of the increasing importance of higher education to a student and his future, it seems apparent that this form of capital investment should be treated in much the same manner, with financing made available on a similar basis. The guaranteed loan program, passed in 1905, offers "loans of convenience" to meet this problem. Its fundamental purpose is to provide long-term, deferred payback credit at a six percent simple interest rate to any postsecondary student who elects to borrow part or perhaps all of his costs of education. One of the program's prime virtues is the fact that repayment does not begin until after the student has finished his college program. This, in turn, enables the family to run the cost out over a seven-, eight-, or possibly nine-year period, unlike virtually all of the commercial loan programs for this purpose, which require repayment concurrently with the student's progress through college. I have not dwelt on another aspect of the need for a successful program of this type, but it would seem that unless substantial quantities of student loan credit are continually made available, families will begin to make decisions about college not on the basis of the best match between student and college but on a cost `basis alone. In this regard, it should be noted that while the operating costs of both private and public institutions of higher education have been rising, PAGENO="0368" 874 increasingly State and public funds have been set aside to support and subsidize public education. Hence, the most dramatic cost increases occurred in tuition and fees of private institutions-an increase of nearly 120 percent during 1955- 67. The average costs of a private institution of higher eclucation-tuition, board and room-now exceed $2,000 per year, twice the cost of public institutions. A main result of this trend is the increased share of the public sector of higher education in the total degree-credit enrollment, from 55 percent in 1955-li to nearly 70 percent in 1966-7. If this shift toward the public sector continues unabated over the next decade or so, we could well witness the disappearance of our dual system of higher education. In the past, the American system of higher education has been a highly indi- vidualized mixture of public and private, large and small, two-year and four-year, community and residential institutions. As in many areas of our economy, respon- sibility for the task of educating has been shared by the public and private sectors. Because of the wide choice afforded by this healthy diversity, American students have had a better chance of finding "the right college." It seems to me that there is a great danger, if the present pattern continues, that our students, faced with higher costs in the private institutions, w-ill be forced to consider only those in the public area. This would destroy a tradition of more than three centuries duration and deprive our youngsters of one of the most cherished priv- ileges of citizenship in this country. Since the student loan program provides an alternative source of financing for students and their families, it has the potential of reversing the trend toward public-only higher education. Students are freer to choose among many more institutions, public and private, than would have been possible with less aid available. Through making more alternatives available, this program gives stu- dents a real opportunity to choose the schools most suited to their needs. There have been other proposals for assistance to the middle-income family in the matter of educational financing. Tax credits provide minimal assistance to the individual family and spread the benefits in very small amounts to several million families. At the other end of the spectrum is the so-called Educational Opportunity Bank described in the Zacharias task force report issued late in 1967 and envisaging Federal loans which would be repaid through higher income taxes during the student's working life. This proposal, while making large amounts of credit available to students, has a number of serious defects, the most important of which is the removal of family responsibility for assisting the student. It places too much emphasis on the financial and educational deci- sions of an eighteen-year-old and requires a student to indenture himself for a thirty- or forty-year period to pay for the cost of his education. The existing student loan program, while it does not have these defects, does need strengthening as proposed in the legislation before this committee. Although we are informed that some 675.000 students during the present school year will receive a Federally-guaranteed loan, the program has gotten off to a much slower start than we had hoped. In Dade County, my county in Florida-for all practical purposes, the insured loan program does not exist. The same situation exists in other parts of the country, too, and this is true for several reasons. Bankers and other leading agencies do not feel that in today's tight money market the maximum interest rate of six percent covers the cost of a student loan, especially since such loans are not repaid for a considerable length of time. The excessive uncompensated paper work and administrative costs involved in the application and repayment of student loans are other deterring features of the program. In the last session I introduced H.R. 11978, to revitalize the student loan pro- gram, and several provisions of that bill are contained in HR. 15100, the Higher Education Amendments of 1968. These include the authorization of an applica- tion and conversion fee of up to $35 per student loan per year to make the pro- gram more feasible and attractive for lenders. Additional "seed" money would also be authorized to support State guaranteed loan programs on a matching basis. I think that these are essential amendments if the guaranteed loan pro- gram is to be an effective means of student aid. By enacting these needed improvements in the guaranteed loan program we will help to assure the program's greater success as well as encourage the con- tinuation of our dual system of higher education. Even under the existing pro- gram, it appears that students are considering private institutjori3 on a nioro equal basis with public ones. For example, in academic year 1960-i, students enrolled in private institutions of higher education received 53 percent of all funds in the NDSL program. In 1966-67, they received 53 percent of all NDS loans, 47 percent of all Educational Opportunity Grants, and 40 percent of the PAGENO="0369" 875 total bank loans volume under the Guaranteed Loan and Vocational Student Loan Insurance programs. I commend these facts to the committee's attention in support of the amendments strengthening the loan guarantee programs. Obviously, if bank credit is to continue to be made available to the vast major- ity of those families who must finance a part of a student's cost of higher educa- tion, many more banks and savings and loan institutions than is presently the case must be brought into the program. Therefore, let us continue to support this financial aid program by enacting the proposals embodied in the pending legislation. There are, of course, many other features in the legislation which deserve favorable consideration. One amendment, for example, is aimed at facilitating the planning and administration procedures of the institutions. A common but legiti- mate complaint of the colleges has been about the extreme hardship which higher education legislation imposes in terms of their preparation and execution of an annual budget. The amendment would authorize advance appropriation of all titles of the Higher Education Act, the Higher Education Facilities Act, and the National Defense Education Act. In other words, appropriations could be made a year in advance of their actual obligation for use. This would bring to higher education the long needed convenience of advance funding which we introduced at the elementary and secondary level through the amendments of last year. The goal of equalizing educational opportunity has beeii foremost in the minds of the 89th and 90th Congresses. Title IV of the Higher Education Act is evidence of the seriousness of our intention to assist as many students as possible. And, generally, I am pleased with the effectiveness of the educational opportunity grant and the work-study programs. Under the 1968 nmen'dments these would be extended through fiscal year 1969. Beginning in 1970, however, both programs would be consolidated with the national defense loan program in a title to be cited as the Educational Opportunity Act of 1968. The purpose of the consolidation is to allow the colleges greater flexibility in the administration of their student aid programs. Funds w-ould also be more evenly distributed among institutions which could apply `to participate in one or more of the programs. Institutions would also be able to transfer up to 20% of an allocation `from one program to another and 3% of an institution's total allotment, up to $125,000 could be used for administrative expenses. The obvious advantage of these new provisions is that they give the individual institutions greater leeway in the operation of an overall student aid program. The Higher Education Amendments of 1938 do, of course, extend other titles of the Higher Education Adt through fiscal year 1973 and the Higher Education ~aeilities Act through fisdal year 1974. I have emphasized only several provisions of the amendments. The proposed amendments include several new programs which deserve serious consideration-the establishment of special projects to help disadvantaged students `to enter or continue higher education; grants to strengthen graduate education; a "Networks for Knowledge" title to stimulate the sharing of facilities and resources through cooperative arrangements; and a program of grants to develop or improve graduate programs in public service education. I cannot encourage the Committee strongty enough to weigh carefully the needs of our in~titutions and students and `the respective merits of these proposed amendments. In view of my continuing interest and concern for higher education I thank the `Committee for this opportunity to present testimony in support of the Higher Education Amendments `~f 1968. The approaching expiration date of the Higher Education Act makes it imperative that we proceed with all deliberate speed. CONGRESS OF THE UNITED STATES, HOUSE OF REPRESENTATIVES, Washington, D.C., March 4, 1968. Hon. EDITH GREEN, Chairman, $pecial ~ubcom.mittee on Education., Committee on Education and Labor, Rayburn Office Building, Washington, D.C. DEAR MADAM CHAIRMAN: I have been following the hearings by your sub- committee regarding `Selective Service policies affecting `graduate students with considerable interest. In an effort to solve the impending `heavy call for young men enrolled in graduate schools throughout the country, I have proposed `that `a `delayed induc- 92-371-OS-pt. 2-24 PAGENO="0370" 876 tion program be established. If such a plan were adopted, any graduate student who chooses to enlist in any of the services will be granted up to three years to complete his education~ I would be pleased if you would inetude the enclosed statement on this plan in your hearings. Sincerely, JACKSON E. BETT5. [From the Congressional Record, Feb. 26, 1968] A PLAN FOR GRADUATE STUDENTS FACING THE DRAFT (Mr. Betts asked and was given permission to extend his remarks at this point in the Record and to include extraneous matter.) Mr. BE-Irs. Mr. Speaker, a devastating cutoff of the supply of new college teachers as well as young men trained in natural science, law, mathematics, health, and all fields of social science and the humanities is predicted unless the draft law now in effect is changed by June 1968. The threat to graduate education has been vividly presented and the growing dismay across *the country about who serves under present draft laws is well known. The President and Selective Service Director must consider alternatives to alleviate the dire situation expected to befall graduate students. In the debate on this subject. I believe equity falls somewhere between meeting military man- power needs with.qualified men and the requirement that our society educate a large cadre of young people to improve every aspect of life in this country and its international obligations. The emphasis in the present draft system leans heavily toward the former objective. I wish to advance a plan to create a balanced draft policy in terms of both critical national needs. A delayed induction program for graduate students and specific hardship situations would allow students to enlist for military service at the completion of undergraduate s-tudy but defer induction until up to a 3-year course of grad- uate study has been completed. This would establish a program whereby any- one wishing to pursue full-time graduate study can enlist with one of the services but not have to begin training until completing an advanced degree program. Let me describe this approach by including a letter written to Selective Service Director Hershey: CONGRESS OF THE UNITED STATES. HousE OF REPRESENTATIVES, Washington, D.C., An gust 2, 1967. Lt. Gen. LEwIs B. HERSHEY. Director, Selective Service System, TVasliington, D.C. DEAR GENERAL HERSHEY: The recent congressional consideration of the Uni- versal Military Training and Service Act has resulted in the modification and, in most instances, the elimination of graduate educational deferments except for medical and dental students. The need for graduate education in other than medical allied professions concerns me; first, because it may result in the ter- mination of many students' graduate careers and second, because of the ramifica- tions it may have on the nation's pool and highly educated manpower. This nation is dependent on a high level of educational capacity in the continuing competition with its adversaries and in the campaign to develop a better society. Thus, w-hile I recognize the military obligation of every young man and the over- riding importance of national security, is it not possible to couple the interest of defense with educational attainment? The underlying reason given by the Marshall Commission and the Clark Panel for the abolishment of graduate deferments is that a disproportionate few grad- uate students ever serve in the Armed Forces. Many graduate students pyramid deferment on top of deferment and catapult themselves out of the draft pool as only 27% ever serve in contrast to 70% of the college and 74% of high school graduates. While these figures evidence a sharp disparity and injustice, as Rep- resentative Richard S. Schweiker noted in the House Armed Services Committee hearings, "These statistics do not make every graduate student a willful draft dodger." It is on this premise and in response to the need for persons with extensive educational experience that I propose a delayed induction program for graduate students. Such a program is in keeping with what is alleged to be your tenet PAGENO="0371" 877 that ". . . college students are deferred so that they can serve the Armed Forces more capably when they enter later on . . ." Is it possible under present law by administrative directive or Executive Order to expand the 1-D classification, which is now restricted `to enroilees~ in the ROTC program? I feel that students desirous of pursuing graduate education, regardless of area of concentration, should be given the option of signing a contractual enlistment agreement which would delay induction until after the completion of graduate training. The program could be devised so that persons graduating from college be allowed 60 days in which to sign the legally binding contract specifying a date for induction immediately succeeding the completion of a graduate program of one, two, or three years' duration. At any time that progress is unsatisfactory or the terms of the agreement violated, the student would be subject to immedia'te induction, as also would be the case if a national emergency were deëlared by Congress. Thus the conscien- tious graduate student would be benefited by an uninterrupted educational ex- perience and the Armed Services would be benefited by the additional education obtained by the enlistee. The graduate students participating in the delayed induction program do not escape the giving of their sophisticated talents and the Services would have a concrete indication of the number of specialists entering their ranks. Those students electing to take their chances with the draft, of course, would still be permitted to do so. The delayed induction program could also be utilized in extraordinary hardship cases of a temporary nature. For example, a family owning a farm or small business which depends largely on a draft-age son requires time to liquidate or make other `arrangements. Under the delayed induction program, the individual could settle matters of personal concern and yet insure the Armed Forces `of his desire to meet his military commitment after a deferment of specified length, possibly up to a year. Statements made before* the House Armed Services Committee, while not in response to this proposal, seem to support the plan. First, while considering how officers could be secured if student deferments were eliminated, George Reedy, Jr., of the National Advisory Council said that a major revision of the 1-D ~rogram could satisfy officer needs. 1-le mentioned the possibility of confronting students with the alternative, "You can be a doctor, will you take a 1-D defer- ment and agree to serve as a doctor or dentist after you graduate from college, after you graduate from~ graduate school, after you have all the professional training that is' essential to make you a qualified doctor or dentist." While Reedy dismissed such an alternative as impractical when addressing 14 years olds, it seems that such an arrangement could be offered potential graduate students who have just received their baccalaureate degree without jeopardizing the fairness of the Selective Service System. A second remark by Mr. Reedy revealed the reason for granting medical and dental deferments to be, "The point still remains that a very large percentage of all medical students will serve in the Armed Forces. In fact, this is the real reason for granting them the deferment, not because they are more essential to the society than a physicist or a chemist or perhaps a Latin scholar." These remarks justify graduate deferments purely on the basis of eventual likeliness to serve. A delayed induction program which requires a firma commitment from the `student should be acceptable because "a very large percentage," and as a matter of fact, 100%, will serve their country. Third, the Honorable Burke Marshall, Chairman of the President's National Advisory Commission on Selective Service, explained that the most serious man- power problem raised by abolishing the college deferment is officer procurement. "The Commission majority recommended, as an exception to its policy on college student deferment, that the Defense Department be encouraged to continue these (1-D) programs and even to devise new ones, so long as the commitment to serve be made a firm commitment by the student." In response to the one possible objection that could be advanced, "Wouldn't such a plan enable a student to defer himself out of a hot war," I offer the reply of George Reedy, Jr. "It is true that at the present period of time a man faced with such a choice might defer himself out of trouble. I believe there are quite a few people who accepted deferments in 1962 or 1963 and who found they deferred themselves into trouble." I concur with Mr. Schweiker that not every graduate student is a willful draft dodger. Because I believe that conscientious students who recognize their military obligation should not have their education interrupted, and because I believe PAGENO="0372" 878 both the nation and the Armed Services will benefit from the services of highly educated and competent personnel, I urge the adoption of a delayed induction plan which would couple the interest of defense with educational attainment. I would appreciate your comments on the feasibility and implementation of such a delayed induction program. Sincerely, JACKSON E. BuTTS. The response I received from General Hershey was to the effect that induction and military service prior to graduate study would not be harmful to the students themselves or the Nation. This thesis was also present in a response to the letter from Assistant Secretary of Defense for Manpower, Thomas D. Morris. I dis- agree with this position and believe that either through an expanded interpreta- tion of the I-D deferment classification or new regulations for delayed enlistment by the services themselves, this plan could be effectively implemented. If these two approaches fall short of adequate authority, the President can incorporate the plan into selective service regulations by Executive order. This delayed induction program was advanced by the National Advisory Com- mission on Selective Service. The Commission's report on page 44 states: "To satisfy the recommendations against student deferments, however, such officer programs-which might even include scholarship programs, if necessary- Would have to be based on a binding contrad in effect during the man's time in college, committing him to entry into the Armed Forces as an enlisted man if he did not complete his program, and to training and service as an officer for a specified time after graduation." The crux of this plan is already embodied in the military services join-now serve-later concept. Graduate students certainly possess the "special qualifica- tions" which are required for later induction by the services. Let these qualifi- cations be recognized and incorporated into military manpower requirements and `both educational goals and the defense needs of our country will be met. I wrote to each of the services to learn if they currently operate a delayed in- duction program. They do. It allows an enlistee up to 120 days to complete work, study or personal obligations before beginning training. All I am recommend- ing is tha~t this limited delay in induction be extended to up to 3 years. Here are the letters I received regarding present delayed induction from the services: DEPARTMENT OF THE ARMY, OrrICE OF THE SECRETARY OF THE ARMY, Washington, D.C., August 7, 11167. Hon. JACKSON B. BuTTS, House of Representatives. DEAR MR. BETTS: This is in reply to your inquiry, concerning delayed entry into military service. Since the Selective Service System determines eligibility for all deferments from induction, this reply applies only to men entering the `United `States Army on a voluntary basis. The Army does have a delayed entry program which gives a man who otherwise might be subject to induction up to four months to continue personal endeavors. Personnel who h'ave received orders to report for i'nduction are not eligible since they fall under the jurisdictiOn of Seledtive Service. Under this program, men enlisting in the United States Army Reserve for six years' are required to serve three years on active duty with a delay of up to 120 days in reporting for entry on active `duty. These men are eligible to apply for training of their choice and, if qualified, are guaranteed this training prior to enlistment. It may be of interest to you that college graduates who have completed ROTC training and been commissioned in the United States Army Reserve may request a delay in reporting for adtive duty if they have been accepted by a recognized institution of higher education for graduate `or professional study, would suffer undue hardship, or for other cogent reasons. Delays are granted in one year increments. Additional delay for graduate study is dependent upon academic progress. 1 trust this information will be of assistance to you. Sincerely, J. L. BLACKWELL, Colonel, CS, Office, Chief of Legislative Liaisons. PAGENO="0373" 879 DEPARTMENT OF THE AIR FoRCE, Washington, september 7. 1967. Hon. JACKSON B. BETTS, House of Representatives DEAR MR. BETTS: Recently, you asked for additional information regarding our Delayed Enlistment Program (DEP). An applicant for the DEP enlists in the Air Force Reserve for four years through the USAF Recruiting Service. Prior to enlistment, each `applicant sub- mits a written Air Force Form 941 (Statement of Understanding) to the recruit- ing office, volunteering for extended `adtive duty (BAD) for four years, with a statement that he may enlist in the Regular Air Force for the same period of time in lieu of performing BAD. One of the entries on the AF Form 941 reads as follows: "The date of my en- listment in the Regular Air Force is `s~heduled for (Day), (Date), (Month), (Year), and if I do not subsequently disqualify myself, a vacancy will exist." The blank spaces are completed prior t'o enlistmen1t in the DEP. The enlistment date for entry in `the `Regular Air Force, from PEP, is estab- lished by recruiting personnel based on the desires of the enli'stee and the quotas which have been assigned to recruiting officials. This `date is established prior to enlistment in the DEP. Current regulations provide that an applicant may not be enlisted in the Regular Air Force earlier than 30 `and later than 90 days after enlistment in the DEP. In exceptional cases, a waiver to permit enlistment in the Regular Air Force between 91 and 120 days may be obtained. We hope the foregoing will serve to clarify this policy. Sincerely, JOHN E. LINGO, Colonel, T]SAP Congressional Inquiry Division, Of/lee of Legislative Liaison. DEPARTMENT OF THE NAVY, BUREAU OF NAVAL PERSONNEL, Washington, D.C., August 1, 1967. Hon. JACKSON E. BuTTS, house of Representatives, Washington, D.C. DEAR Mu. BETTS: This is in reply to your recent inquiry requesting informa- tion concerning delayed induction periods in the United `States Navy. Since the Navy `does not normally induct individuals, we `do not have a stand- ard delayed induction period. However, the Navy does have a delayed enlistment program known as `the `Cache Program. This program, which has proved `to be highly successful, permits young men to be enlisted while in school or employed with the contingency that `they ~ill report within 120 days for active duty in the Regular Navy. This period is extended only in cases wherein a hardship or other emergency arises. The Cache Program allows an enlistee planning time to terminate his civilian endeavors knowing he will be enlisted in the Regular Navy. The Chief of Naval Personnel trusts that the foregoing information satisfac- torily answers your inquiry. By direction of the Chief of Naval Personnel: Sincerely yours, JAMES E. PATTON, Commander, TJ~S~. Navy, Head, Enlisted Programs Branch, Recruiting Division. DEPARTMENT OF THE NAVY, HEADQUARTERS, U.,S. MARINE CORPS, Washington, D.C., August 11, 1967. Hon. JACKSON B. BETTS, House of Representatives, Washington, D.C. DEAR Mu. BuTTS: This is in reply to your inquiry ~f 2 August 1967, concerning `specific `information as to the delay restrictions under the Marine Corps 120-day delay program. PAGENO="0374" 880 This program was established under the provisions of Section 261 of the Armed Forces Reserve Act of 1952. as amended, subsequently codified by section 1 of Public Law 85-8~1 in section 511(b) of Title 10 of the U.S. Code. It is the policy of the Department of Defense that enlistees under this program shall enter into active duty with a minimum practicable delay. Such delay shall not exceed 120 days except as follows: a. Individuals enlisting for positions requiring security clearance for access to or work with classified military information or equipment may be delayed to the extent necessary to accomplish the required clearances. b. Individuals with special qualifications enlisted to fill positions requiring highly specialized skills, for which appropriate formal training courses are offered only infrequently, may be delayed to the extent necessary to ensure that the enhistee pursues the proper course commensurate with his qaulifications and the requirements of the position for which enlisted. Enhistees under this program are classified 1-D by Selective Service, under the provision of paragraph 1622.13 of the Selective Service Regulations. Selective Service is notified by the Marine Corps on the date an enhistee commences active duty or at any date the he fails to comply with the agreement. The local draft board, having been notified by the Marine Corps that a registrant has enlisted under this program. will notify the State Director, Selective Service, in any case in which active duty was not reported to have commenced within the prescribed 120 days. I would defer to Selective Service any specific questions relative to deferment or classification under this program. I trust that the foregoing information satisfactorily replies to your inquiry. Sincerely, F. J. FRAZER, Colonel, T].,S1. Marine Corps, Assistant Director of Personnel. Mr. Speaker, I include the letters to which I have referred from General Hershey and Secretary Morris at this point: NATIONAL HEADQTJARTERS. SELECTIVE SERVICE SYSTEM. Washington, D.C., August .30, 1967. Hon. JACKSON E. BETTS, House of Representatives. DEAR Mn. BETTS: I share your concern expressed in your letter of August 2, 1967, with the problem of providing a continuous flow of trained individuals into our society, and, at the same time. insuring so far as possible that the privilege and duty of military service be distributed generally. This is the essence of the problem involved in formulating a student defer- ment program, for the ages at which military service is performed are the same as the ages during which most young men pursue their studies. Legislation recently enacted by the Congress and the policies put into effect by the President in recent selective service regulations, for the present at least. appear to me to be a good solution to this problem which is one that is con- stantly under study. Fields of graduate study where deferment is in the national interest will be identified upon recommendations by the National Security Council. I anticipate that the recommendation of the National Security Council and the fields of study specified for possible deferment will take into account not only military needs but the needs of the civilian economy. I anticipate also that critical areas of study will be changed from time to time as changing needs dictate. The I-D deferment is, in effect, a delayed service program. But it is designed solely to meet the needs of the military services in terms of numbers of officers, reservists, and national guardsmen. It is not designed to meet requirements of the military forces for certain skills such as are acquired through graduate study. Such a program for graduate students generally would result in all of them entering service when some of them might be far better Utilized in the national interest in a civilian capacity. Limitation of graduate school deferments may delay graduate study for some students. Studies of military manpower procurement by a commission appointed by the President, by a civilian panel named by the Chairman of the Committee on Armed Services of the House of Representatives, and by the Congress w-hich PAGENO="0375" 881 preceded recent legislative and executive actions, concluded that such a delay would not deter the serious student nor jeopardize the national interest. I appreciate your serious concern with this matter and hope my comments will be of some value. Sincerely yours, LEwIs B. HERSHEY, Director. ASSISTANT SEcRETARY OF DEFENSE, Washington, D.C., $eptember 1, 1967. Hon. JACKSON B. BETTS, Hoitse of Representatives, Washington, D.C. DEAR Mn. BETTS: I have given considerable thought to your letter of 4 August, inviting my comments on your letter to General Hershey concerning graduate student deferments. I appreciate very much the point you have made about the importance of maintaining our national resources of highly educated manpower, both from the standpoint of national defense and the general welfare. In fact, the question as to whether the tightened Class TI-S graduate deferment policy would ad- versely affect our resources of highly trained manpower was specifically ad- dressed by the Executive Branch and earlier by the Marshall Commission. The conclusion was that it would not do so in the long run. In effect, the new rules mean that in the future young men qualified for military service will have to do their graduate and professional work after, rather than before, military service. There has been no conclusive evidence brought to the attention of the Executive Branch as to whether this will result in a lesser or greater productioll of persons with post-baccalaureate training, considering that veterans are once again eligible for financial assistance to further their education under the so- called G.I. Bill. As you probably know, under the law and implementing Executive Order, the National Security Council may designate other fields of study, in addition to medicine and allied health fields, as eligible for TI-S deferment. This provides needed flexibility to review problem areas in terms of changing conditions. In your letter, you propose expansion of Class I-D deferments so that students desiring to pursue graduate education, regardless of concentration, would have their induction delayed until after completion of graduate training. At `the present time, I-D deferments of the kind you propose are restricted to the needs of the Armed Forces for officer programs. I believe a general expansion of I-i) deferments would accordingly not be feasible and it would amount to an indirect way of substituting for Class 11-S student deferments. You further suggest that a delayed induction program could be used in extraordinary hardship cases of a temporary nature. It is my understanding that Class Ill-A hardship deferments, IT-A occupation deferments and I-A postpone- ments are available for this purpose, depending on the nature and merits of the case. I hope these comments will be helpful. Sincerely, THOMAS D. MoRRIS. STATEMENT OF HON. CALVIN L. HAMPTON. GOVERNER OF THE STATE OF UTAH; CHAIRMAN, EDUCATION COMMITTEE, NATIONAL GoVERNoRS' CONFERENCE; CHAIR- MAN, EDUCATION COMMISSION OF THE STATES I am appearing here today in my capacity as Chairman of the Education Com- mittee of the National Governors' Conference. I would like to read into the record a portion of the report of that committee, adopted by the governors on March 1 of this year, particularly those sections dealing with the higher education bill now before this committee, HR. 15067. "The National Governors' Conference commends the Congress and the Admin- istration for providing for advance funding of educational aid programs under the Elementary and Secondary Education Amendments of 1067 and for request- ing advance funding for fiscal year 1970 for most of the higher education legisla- tion of 1968 embodied in Bill HR. `15067. ` "However, in the firm belief, `that late funding has been one of the most severe problems for the states and local education authorities under all federal aid pro- PAGENO="0376" 882 grams for education, the Governors' Conference recommends and calls upon the Adnunistration and the Congress to extend the principle of advance funding to programs beginning with fiscal year 1970. "Further, we recognize the budget strictures operating during the coming year, but we question the advisability of budget cuts which have the effect of denying educational opportunity, and we, therefore, recommend substantially increased funding . . . for equipment and remodeling under Title III of the National Defense Education Act to at least levels of fiscal 1968. "We urge the Congress to appropriate adequate funds under the Higher Edu- cation Facilities Act so as to prevent a serious shortage in classroom space and provide a continuing high level program of meeting the space needs in our burgeoning institutions. "We further urge the Congress to support the provisions of H.R. 15067 which provide for improvement of graduate programs, special services for disadvantaged students, networks for knowledge, education for the public service, and a con- solidation and expansion of student loan programs." The governors w-ere especially concerned about the reduced funding for the higher education facilities program, primarily the undergraduate facilities w-here the 1969 estimate of $133 million represents a 61% reduction from the 1967 level of obligations. In my own state of Utah, for example, obligations in 1967 totaled $3 million, while the estimate for 1969 is only $1.1 million. The reduction for public community colleges and technical institutes, although not as severe, also w-ill present substantial problems to the states because of intense pressures for education in these institutions, relative to 4-year schools. We are pleased, however, that the appropriations recommended for state planning for higher educational activities have not been reduced from the 1967 level of obligations or the 1968 estimate. I know that the authorization level of programs is the concern of the Appropriations Committee, and I intend to testify before them on these funding levels. The governors do oppose Section 1102 which raises interest rates on facilities loans. We believe that the present ceiling of 3% on interest rates for loans made under Title III of the Higher Education Facilities Act has permitted the colleges to provide the expansion demanded by increasing enrollments with a minimum of transfer costs to students. We believe the flexible interest rate proposed in 1102 would result in higher costs to the states and very possibly to the students. We respectfully urge that this section be dropped. We believe there are alternate methods of providing additional funds for academic facilities loans, including utiltaing the private lending market. A pro- vision for an interest subsidy on facilities loans obtained through the private market which would make up the difference between 3% and the rate colleges must pay on the commercial loans would be one method of maintaining lower costs to the states and students. Of major significance to the governors is the fact that both the National De- fense Education Act and the Higher Education Act expire at the end of this year, and the governors strongly recommend that the Congress extend these im- portant programs at an early date and extend them for the 5-year period as recommended in H.R. 15067. We also urge the extension of the facilities act, which expires in fiscal 1969, through fiscal 1974. The governors were extremely pleased to note that in several areas of legisla- tion, including HR. 15067, the concept of packaging, of simplification and con- solidation, is beginning to manifest itself. The Governors' Committee on Educa- tion a year ago strongly recommended the consolidation of vocational programs, and we are very pleased to note that the embodiment of our recommendations are represented in H.R. 15066, now before the House General Education Sub- committee. In this bill (H.R. 15067), w-e strongly urge the adoption of the provisions relating to the consolidation of student aid programs, where educa- tional opportunity grants, national defense student loans, and college work-study programs are combined so that institutions may submit a single application in- stead of 3 under 3 separate authorizations, and which gives the institution discretion to shift up to 20% of funds in any one program to other programs. We are also pleased w-ith the provision of the consolidation which provides funds for the development of effective student aid programs in all institutions. The governors support the provisions of Title IV raising the maximum educa- tional opportunity grant from $800 to $1,000 per year and the maximum under- graduate student loan from $1,000 to $1,500 annually. We also support the reinsurance proposal, the provision for additional "seed money" for state reserve funds ,and the proposed fees to bankers for handling PAGENO="0377" 883 loans. These proposals should assist more students through more involvement of more fund sources. One provision of Title IV allows some unfairness to creep into the national defense student loan program funds. The state quota method of allocating funds has resulted in a discrimination against institutions in certain states. The in- stitutions in some states receive 100% of their approved request for loan funds, while others get only 75% or less on their approved dollar request. Only in 11 states and Puerto Rico do institutions now receive 100% of their loan request: California, Delaware, Georgia, Hawaii, Idaho, Louisiana, Maryland, Nebraska, Texas, my own state of Utah and Virginia. The governors were enthused about the provisions of Title XII which is de- signed to support graduate education for the public service. All of us recognize the growth of state and local governments and the need for talented employees, espe- cially at the state level, and we urge this committee to endorse the provisions of Title XII. We hope this program will be funded at the $10 million level recoIn- mended by the Administration. The governors also support the provisions of Title IX-the so-called networks for knowledge title-~and see in these provisions the potential for more efficient utilization of facilities and faculty both within the states and between and among the states, and w-e urge the approval of this program. The governors also support the provisions of title IV, particularly Part C, special services for disadvantaged students, and we hope the authorization of that program at the $15 million level recommended by the Administration will be approved by the Appropriations Committee. With particular reference to this section, however, we caution the establishment by the Office of Education of too elaborate and too complicated procedures to implement this and other new programs and urge that initially simplified procedures and packaging concepts be employed, rather than waiting until the program has been in effect for some time. The governors do not believe that it is necessary to circumscribe many of these new programs with the kind of elaborate, detailed and time-consuming strictures which have typified other programs in the past. The governors also endorse the proposal to improve the so-called middle range of graduate schools by the infusion of funds which are estimated to total be- tween $5 and $10 million in the fiscal year under consideration, and we heartily endorse the proposbi to increase the cost of education allowances to the schools accompanying Office of Education fellowships from $2,500 to $3,500. This ends my remarks relative to H.R. 15067, and I would like to conclude by referring to two other sections of the resolution adopted by the Governors' Coii- ference relating to education which may be of interest to this committee. The first relates to the subject of teacher unrest and states that "the Governors' Confer- ence and the Education Commission of the States take cognizance of the prob- lein of teacher strikes, and will devote the annual meeting of the Education Com- mission on June 26-28 to this problem, and will follow up with proposals to the July meeting of the National Governors' Conference." Because the main reason for teacher strikes seems to be salaries, and because of the tremendous difficulty of increasing local property taxes on the one hand and/or state-wide taxes on the other to ameliorate the problem and provide addi- tional state-wide salaries, the Governors' Conference asked the Education Com- mission of the States to review the possibilities of federal aid programs for teacher salaries in an effort to alleviate this problem. One final comment relates to the desire by many of the governors to have the Upward Bound program transferred from the Office of Economic Opportunity to the Office of Education. I would like to express my gratitude to the committee for the opportunity to present this information and position of the National Governors' Conference on this most important piece of education legislation. IMPROVING Accxss TO INFORMATION-A RECOMMENDATION FOR A NATIONAL LIBRABY- INFORMATION PROGRAM-REPORT OF THE AD Hoc JOINT COMMITTEE ON NATIONAL LIBRARY-INFORMATION SYSTEMS (CONLIS) SIJMMARY 1. The national interest requires that all users throughout the nation have ready access to informhtion; such access should not be limited to a few geo- graphic areas or to a few elements of the economy. PAGENO="0378" 884 2. The problem of access to information is equally urgent for all fields of knowledge and not only natural science and technology; it includes no less im- portantly and no less urgently the information in the social sciences and the humanities. 3. The volume of information is so large that a great proportion of an indi- vidual's needs can be met only through library-information centers (which are here defined as any store, in any form, of information intended for the com- mon use of some community of users). 4. The volume of information is so large, and is growing so rapidly, that even every community of users cannot afford to support for their own use a library- information system that can acquire, analyze, organize, and house, all of the information to which that community from time to time needs access. 5. The only practical solution to this dilemma, regardless of the techniques used (whether automated data processing, microforms, conventional publication forms, or a combination of these) is a system operating nation-wide that makes it possible for every library to do two things: identify readily the publications containing the information the patron wants and then to provide him, within a reasonably short period of time, with a copy in some form of all publications thus identified. Such a system can be achieved only by organization and coordi- nation at the national level at least. 0. Since it is in the national interest, meaning by this the interest of all citi- zens, to assure ready assess to information by all elements of the economy, and since this can be assured only by organization and support at the national level, therefore support by the federal government as necessary to assure such access is not only justified but is its obligation. 7. The essential framework for effective federal action is now lacking because there is no agency within the federal structure with either the responsibility or the authority to see that an adequate solution is developed and implemented to serve all fields of knowledge and all users. RECOMMENDATION S. Therefore our recommendation as the essential first step toward an effective solution is that there be established within the federal government a single agency with the responsibility to assure that there is ready access to information by all elements of the economy, to develop the most effective techniques and methods for accomplishing this goal, and that it be given the continuing budget support and operating authority that will enable it to fulfill this responsibility. INTRODUCTION In March of 1966, at the invitation of Robert Vosper, President of the Ameri- can Library Association, representatives of the American Library Association, the Association of College and Research Libraries, the Association of Research Libraries, the Council of National Library Associations, the Federal Library Committee, the Library of Congress, the Medical Library Association, the Special Libraries Association, and the American Documentation Institute, met in Chi- cago to consider the Recommendati&ns for iYationai Document Handling ~Systems in $cicnce and Technology as proposed by the Committee on Scientific and Tech- nical Information (COSATI) of the Federal Council for Science and Technology. The discussion at this meeting indicated a consensus that the recommendations made by COSATI, purely aside from the merits or demerits the individual pro- posals made, were basically inadequate to the real needs of the situation by virtue of their limitation to science and technology. Not only did they fail to consider the urgent needs for improved access to information in the social sci- ences and the humanities (which is not attributed to any lack of awareness or understanding on the part of COSATI but only to the limited charge given it) but in the opinion of those present this failure vitiated even some of the proposals made by COSXTI. The close and essential relationships between the physical and biological sciences, the social sciences, technology, and the humanities, prohibit clear-cut divisions between them, and most libraries are therefore compelled to serve all of these fields to at least some extent. Any real improvement in their service to any field must therefore involve their total system. This does not mean that all fields will be served in precisely the same way, or that different tech- niques and methods may not be employed to best satisfy different needs, but only that these must be systematically compatible and coherent if any field, in- cluding those in science and technology, is to be adequately served. PAGENO="0379" 885 The library associations represented at this meeting have long recognized that stronger and more unified systems organized on a national basis are essential to significantly improved library and information services. They have already been instrumental in establishing a number of programs directed toward im- proving the nation-wide access to information through such systems as inter- library loan, union catalogs, the Farmington Plan, and most recently the central- ized cataloguing scheme at the Library of Congress. It has also been recognized that further significant advances must be dependent upon substantial participa- tion by the Federal Government. Accordingly, the representatives at this meeting recommended the establish- ment of a joint committee to be called the Ad Hoc Joint Committee on National Library/Information Systems (CONLIS), to have several functions: With (Tue regard for all types and levels of library service to: 1. Be responsible for drafting a program directed toward improvement of of the access to and availability of information through national systems of libraries and information centers; 2. Be responsible for continuing advice to and liaison with appropriate fed- eral and other bodies on behalf of the library associations represented; 3. Through its members, keep the associations fully and regularly in- formed of committee activity and the recommendations formulated by the committee. Representatives on the committee have been designated by the following six major nationa.l library associations: American Association of Law Libr~ries, American Documentation Institute, American Library Association, Association of Research Libraries, Council of Nationhi Library Associations, Medical Li- brary Association, and Special Libraries Association. In accordance with its charter the committee presents the following as its report and recommendation for the first essential step toward the establishment of an effective national library-information system. WILLIAM K. BRATTY, Medical Library Association. WILLIAM S. BUDDINGT0N, Special Libraries Association. LAURENCE B. HEILPRIN, American Documentation Institute. WILLIAM D. MURPHY, American Association of Law Libraries. JAMES E. SKIPPEII, Association of Research Libraries. BILL M. WOODS, Council of National Library Association. GORDEN R. WILLIAMS, American Library Association. ASSURED ACCESS TO INFORMATION The basic hypothesis proposed by the Committee is that the national interest requires assured aud ready access by all citizens to all unrestricted information. In simplest terms, information as a commodity is essential to our development as individuhls, to optimization of our activities, to the strength of our nation and to the progress and survival of mankind. To have access, difficult, slow, or re- stricted only to a few, is to limit utilization, which thus diminishes our total national accomplishment and welfare; it is in everyone's interest that all that is known to be readily available to all so that it can be used. No one-doctor, scien- tist, lawyer, engineer, teacher, public official, or plain citizen-should have less access to information merely because he is not located in a major center of I The reader must guard against misunderstanding the term "information" as it is used here, and throughout this report. Commonly, most people tend to use the word "in- formation" to mean specific facts and data; to mean what scientists are concerned with as opposed to what the humanist, the philosopher, the novelist, and the poet are concerned with. But as used here the term is to be understood in its more general sense as the meaningful content of any communication as opposed to the random, meaningless, inter- fering, "noise" or "static" that may also be present. In this sense the text of a noem. a novel, a history, and an engineering handbook. are all equally "information." We know of no other simple term that covers the content of any communication regardless of its subject matter, and so have used this one. but caution again that it must not be under- stood as meaning only "scientific information." PAGENO="0380" 886 population or research. The national interest is best served by equality of access by all elements of the economy, wherever located, to insure equality of oppor- tunity and competence. Minor differences in speed and convenience of access wiU undoubtedly remain inevitable because of differences in location, but even the slowest and least convenient access must not be so slow and inconvenient that, practically, as in many cases now, it amounts to no access. It is recognized of course that distinctions must be made between users and their purposes in order to prevent abuse and overload of the system. The high school student writing a theme, and the doctor, do not need, or want, the same amount and detail of information about the cause and treatment of cancer, for example. But this is a minor problem and solvable, as it is solved now, by com- mon sense. What is important is the safeguards and limits not be sought in payment schemes. Access to information should not be a function of the ability to pay for it. ACCESS IS EQUALLY URGENT FOR ALL FIELDS OF KNOWLEDGE The need for maximum information exists in all realms of human thought; any consideration of the problem must encompass the social sciences, basic sciences, humanities, technologies, etc. The complexities, interrelationships and fluidities of today's disciplines, and the unpredictability of tomorrow's, require initial acceptance of this total approach to the information problem. An advaneed society is unquestionably dependent upon advanced technology, but it is no less dependent upon advanced social sciences and a sound humanistic understanding. Our purpose is to build a society in which humans can live happily as w-ell as machines. Inherent differences in information characteristics, modes of analysis and storage, and types of need in various subject fields, may require somewhat dif- ferent systems of solution in different fields, and different timetables for devel- opment will result not only from this but from recognized priorities of need. But independent uncoordinated developments by type or discipline cannot hope to solve even their individual problems. The inherent interrelations and overlaps between subject fields makes them interdependent and requires a common sys- tem even though that system in turn functions through a multiple sw-itching capability. THE PROBLEM ARISES FROM THE LARGE QUANTITY OF INFORMATION The amount of significant information existing and being added daily is beyond the grasp of any individual; he cannot hope to be familier with all of that now existing, or to keep current with the new additions to it. The impossibility of this, together with other limitations such as his memory capacity and time available for work, has resulted in the now familiar phenomenon of specialization by in- dividuals in only one area of knowledge. But the number of publications is so great that the individual cannot hope to acquire for his personal library even that portion of the total pertinent to his ow-n specialty, and he must therefore depend upon library/information centers as sources for needed publications. Yet none of these, in turn, can cope with the requirements in acquisition and processing of the potential input, at anything approaching coniprehensive and uniform levels. At the same time, the individual, even with specialization, is Still left with the problem of having to locate within the large and rapidly growing body of com- munications that information that is pertinent to his needs and interests, without missing any of importance, when he has not time enough to scan all of it to find those parts that are pertinent to him. Present techniques for recording the existence of information, for analysis and evaluation, for creation of surrogates (abstracts, indexes, catalogues, etc.) for retrieval by users are inadequate, and adequate new methods are not yet fully developed. This is true both in con- ventional libraries and in other information systems, whether automated or not, despite the range of present operational, pilot, and experimental efforts. Everyone now lacks access to information he can profitably use by reason of the mass to be screened, the inadequate bibliographic controls, his own lack of time, and his library's inability to possess all the information be needs. It is obvious that the only solution to this difficulty is one that will enable any user to identify with only a short expenditure of his own time-and it must be short if he is to have sufficient time left to read u-hat he identifies and then put the resulting information to use-all of that smaller segment of information within the larger body that is important to his needs. PAGENO="0381" 887 LOCAL RESOURCES ARE LIMITED As just indicated, no library supported by some relatively small community (university, corporation, city, county, or state) can afford to obtain all published information and to analyze and classify it so that any part is readily identifiable and quickly available for use. 1~ven if they could, this would obviously be a wasteful duplication of effort. The only solution is to enlarge the community that shares access to the information so that the cost, being more widely spread, can be afforded. For overall economy and accessibility to all, an integrated sys- tern based on the nation as a single community is required; a system that deals with all forms in which information is piThlished, all types of information, and all fields of knowledge. It is taken for granted that each local community will con- tinue to provide for itself most of what that community requires, and that the national system, which each community supports in part through its taxes, will not replace the local effort but only augment it by providing for all what can be afforded only if all share in supporting it for their common use. It is readily apparent that bibliographic analyses-catalogs, indexes, abstracts, and the like-can easily be supported and shared nationally (and even inter- nationally). It is this ability that has already made possible such significant tools as Chemical Abstracts Mathematical Reviews, The National Union Catalog, Psychological Abstracts, and all the others. Experience such as that provided in the United States by the National Library of Medicine and the Center for Re- search Libraries, and in England by the National Library for Science and Tech- nology, has also demonstrated that libraries and scholars across the nation can effectively share in using many kinds of ptthlications that they cannot afford locally provided that they are readily, and assuredly, available from such a central location geared to serving the nation-wide community whenever those publications are needed locally. FEDERAL GOVERNMENT ACTION IS REQUIRED The foregoing sections assert that maximnm access to information is in the national interest, that present systems are inadequate, that concerted and compre- hensive planning must occur, and that local resources as presently constituted are limited. It is evident that a national base of operations is in order, and it follows that the federal government is the most logical body to carry responsibility for a problem requiring nation-wide support and coordination; indeed it is precisely to provide an instrument for national affairs that a federal government was esta~blished. The distinction bears making between the total "national" information problem and the "federal" information problem. The latter has been the subject of several studies in recent years: While directed in some respects to national needs, these have inevitably been influenced by agency requirements, notably R and D effort in science and technology, and the viewpoints therefore tend to be restricted. But no central agency now exists within the federal government with responsibility and authority for cognizance of the total information problem. as it affects all the nation. Certain provisions have been made according to discipline (medicine, agriculture), mission (nuclear science, space, defense), branch (legislative), etc. Other provisions have sprung up in the private sector because of demon- strated need (engineering, metals, translations). Information, however, is not divisible into mutually exclusive areas or forms. Final responsibility cannot be so based or excessive duplication and yawning gaps will continue to appear in the structure of our information resources. Furthermore, such assignment (or default) of responsibility encourages pro- prietary philosophies, both within the government and without. While this may generate and is generated by enthusiasm, it does not necessarily work toward the overall welfare. The expenditure of money, time, effort and emotion by a single group or body, without some overall direction, feeds this proprietary character of development, and the passage of time hardens the situation. The very essential elements of compatibility and coordination are growing increas- ingly remote even now. A final factor requiring the federal approach is the necessity for providing geographical equivalences in accessibility. BOTH PRESENT AND LONG RANGE NEEDS MUST BE MET The magnitude of all requirements in total information needs makes it certain that the most advanced technologies must be utilized, including those now known arid those yet to come. Many of the newer means of recording, analyzing, storing, PAGENO="0382" 888 retrieving and transmitting information, are proving technically feasible, though still not wholly useable because of economic factors. Long-range planning must be initiated and capabilities strengthened to take complete advantage of such methods at all stages of the information cycle and to serve the needs of all individuals. Achievement of success by new systems can be assured only if sufficient ré- sources are made available in development and application. Yet complete achievement is recognized to be still some years away-whether five, fifteen or thirty. The present need is too urgent to be endured without a considerable meas- ure, of relief. Therefore, it is also essential that study, planning and implementa- tion occur with respect to short-term requirements. In brief, work must proceed simultaneously on carefully established short-, intermediate- and long-term goals, and not be limited to long range goals only. The Committee is quite aware of the magnitude of the task. The problems are complicated and many, reaching well `beyond the world of libraries per se. In the following sections, some of the basic elements of total problem and total system are outlined, with major points w-hich must receive consideration. The process of placing desired information in the hands of an inquirer con- sists of two steps: first, determination of the existence of the information and its location within the system, `and second, obtaining and delivering to the in- quirer the information thus identified and located. Automatic systems of the future will probably accomplish these steps in a way that makes them so nearly simultaneous, as far as the user is concerned, that he thinks of the process as only one step. Indeed, the response in some present-day operating systems gives this impression. Nonetheless, in any system these tw-o distinct operations are involved, however simultaneous they may seem, an'd they, are here, considered separately for this' reason as w-ell as because immediate improvement in access to information `will most probably require improving each of these steps by different methods. , INTELLECTUAL ACCESS The complexity of the identification `process is not always well recognized and better solutions to the problems, in many cases, have yet to be achieved. `The identification process includes subject analysis and classification `is well as the physical description of the publication, and in some eases, note of its location(s). There has been decreasing success in control, and increasing dissatisfaction. One cause is the high degree of knowledge and, training required for the task: person- nel with greater specialization and in large numbers have been `needed, yet they have not generally been available for this endeavour. Other causes are the mass of publication, which has increased to the point of near-suffocation, and the new forms of publication (separately published research reports, `for example) not easily fitted into established bibliographic patterns. Finally, analyses that have been prepared are not always widely available, or compatible with those done elsewhere, resulting either in unnecessary duplication w-ith waste of manpOwer and resources, or in deprivation of wider access. Particularly because, as seems most likely for some considerable time yet, every local library collection cannot contain every ,publication its particular community of users requires, every library must at least be able to provide full intellectual (bibliographic) access to all significant information and not merely to that in its own collection. Improved intellectual access requires, initially, enlargement of coverage. In simplest terms with infinite implications, all documents and records must be subjected to some or all parts of a screening and analysis process. This must occur not in some subject fields only, but eventually in all fields. The importance now attached to science and technology, and the services presently operating therein, may bring about activity in this sector more immediately. Yet the need in other disciplines is no less urgent, and in some possibly more so, in the light of social, political and artistic implications of our times. No discipline can flourish in the absence of information exchange; it is quite recognized that adequate provision is simply non-existent in many-if not most-of the social sciences and in the humanities. While certain non-science disciplines are undertaking programs of improvement, their requests for assistance have not been satisfied to nearly the same extent as have those in the sciences. It is certain that there are degrees of need by economists, for example, no less urgent and important, if with less glamor, than the needs of physical scientists. An obvious problem will be the screening of publications and other input to any store of information, to admit material of deserving significance. This significance cannot be determined by simple and arbitrary rules applied to a PAGENO="0383" 889 communication, `nor can' future' needs and purposes be precisely predicted. This does not imply that all communications must therefore be treated as equally important, or that prior judgments cannot be made with a, high degree of reliability; It does mean that' judgments to exclude a particular document `or,' having once included it, later to eliminate it, must be made only with the greatest care. ` ` The essential content communications must be identified and tagged, for potential `retrieval, and accommodation made for changing terminology, interpre- tation and language. Each unit of the record should be digested and prepared that it may respond at any appropriate level and in a wide variety of forms, as may be needed. Demands, for example, may require statements of data, bibliographic citations, abstracts, distillations or digests, locations of documents, or the com- plete documents themselves. Information from related units should also be incorporated in continuously updated larger ` summaries and reviews. Thus, pro- vision must be made for storage not only of the original records but of various surrogates representing or substituting for such `units. In addition to access to the content of all recorded information, it should also be possible to obtain current, `short-term, periodic reports of information newly received. `The parameters of such continuing reports should also be readily modifiable, to reflect changing interests an,d developments. Any system must also have the capability of referring an initial query to the most relevant sources, of switching a request to an appropriate store of information, and to succeeding stores as required. Implementation of intellectual access requires parallel processing of inquiries, so that needs may be matched with available units `of information. Definition, refinement and qualification of requests will have to be as complete as possible, prior to any attempt at access. `However, it should be possible to modify requests during the' searching process, in the context of information found to be available. Such "dialogue" may take into account a disclosed volume' of existing informa- tion; it may~ also involve `examination of various surrogates, or restatement `of level of character of need, to aid in further refinement of the request. In contemplating any national system responsive, to requests from all geo- graphic `areas, in all subjects, and `with varying levels and forms of output, the need for compatibility and standardization is obvious. Yet it is recognized that different subject fields present different requirements in all' phases of informa- tion handling.' These requirements will `be satisfied best by specific system com- ponents and techniques. Furthermore, research and development now under way, already completed, or still `to be initiated `will employ theories, solutions and equipment of quite specific nature. There is a problem of immense complexity, therefore, in achieving any degree of universal access to information through common channels, by conversion, switching capability or other means, and only substantial capital investment in `research and development can hope to find satisfactory solutions. Such an investment is not only of national benefit, but ~beyond the capacity of any single field or library. It is undebatable that any future system must start from and be built upon the existing information structure. A number of surveys have studied some aspects of this present structure, `but a much more thorough study of present indexing, abstracting, and cataloguing services is required to' discover more precisely the existing gaps, inadequacies, and duplications, in order to determine where improvement is most required and how it can be provided. Delegation to, `and support of, existing but inadequate private agencies-commercial as well as non-profit-as well as public agencies providing bibliographic services must be anticipated and provided for. Production and consumption of information knows no national limits, and the importance of information-oriented activity in other countries is well recognized. The intellectual access to which we refer incorporates publications and resources of all countries and of all time. It follows that consideration must be given to a world-wide approach to the problem, with fullest possible coordination of talent and work in all parts of the world. PHYSICAL ACCESS Physical access is the second of the two essential steps to information. Once the existence and location of a text or data is determined, it must then be made available. Bibliographic access alone is only a means to an end. It tells the inquirer what it is be needs, but then he must be provided with that material. As with intellectual or bibliographic access, this physic'al access must be avail- able to all and in all fields of information. It cannot be limited to certain areas, PAGENO="0384" 890 such as the metropolitan centers of the country. It must serve the scholar, the industrialist, the scientist, the lawyer-all sectors of society-denying no rea- sonable request from anyone in the country. Users differ in their requirements for physical access to information. For example, most often the individual concerned with the arts, be it graphic or verbal, needs the original or a reproduction of the original visual representation. The scientist, on the other hand, is often likely to want a distillation of the original and be willing never to see the latter. This does not mean that the scientist never wants to see the original document. Some sciences are less con- cerned with quantitative data, or the original is needed for the study of method- ology or insight into the overall purpose of the study. At the same time the artist may need but a fact or an abstract. Thus the information system which is to provide full physical access must be able to supply the original, an index or abstract of the original (surrogate) and a distillation of the original. How to do this best is the crux of the physical access part of the problem of providing full information service to the nation. At the present time it is the user's library or information center, whether it is public, academic, special or government, that provides him with physical access to published information. It must be recognized however, that the amount of significant information already available and the accelerated rate at which new information appears makes it impossible now for this local library to acquire all the publications its patrons need. Some new approach is needed that will enable every local library to have assured and, most important, ready access from another source to what it cannot provide from its own collection. Essentially this amounts to the assurance that there is such a source-a national lending library system-from which any library can borrow (or acquire a photocopy), quickly and easily, any needed item not available in its own collection. The user will still apply to his local source, but backing up that local library or informa- tion center will be all the stored information elsewhere in the nation and the knowledge that under a national effort all new data is being collected someplace as it becomes available. Only when this is a reality will that basic need be taken care of-a copy of all publications somewhere in the country that is readily available to all. Confronting us at this point is the problem of copyright, the means by which enterprise in the intellectual field is given a property right.. The whole copyright law is now under study for possible revision. What the exact nature of these revisions may be is not of concern to the problem of access to information so long as the means is retained to make information readily avail- able. Solutions range from free copies of anything to a fee system for all copies. Somewhere in this range is the answer that will protect the author and publisher of information and still make it readily and quickly available to all. It must be emphasized, however, that any system assumes, and its planning recognizes, continuance and even the strengthening of local resources. The corporation or government agency or school or public library is expected to provide--and may be assisted by various means to do so-a substantial propor- tion of needed services. The national system is a back-up resource. It is not intended to replace the local resource but to produce what this cannot practically provide for itself. It must also be recognized that there should be relative equiv- alence of access in all regions and at all necessary levels of complexity. The context of local resources and the means of supporting them will require study and the formulation of measures of need. Considerable evidence can be mustered that costs of information and services drastically handicap educators and researchers in many segments of the country and the world. This new national system to provide ready access to all information is a huge task. Such a system is predicated, of course, on the assumution that library service will be available to all within the next few years. Behind this service there will then have to be the over-all coordination of acquisition programs and of distribution programs for the acquired materials. Modern technology already can ease the task greatly, and it is even possible now to visualize the time when such an information system will be able to provide directly the information wanted, rather than the document itself in some form. Instantaneous recall of some information is essential in our age. However, it is recognized that such speed is not always necessary, another factor easing the burden of this great national effort. The combination of requesting by telephone and receiving by airmail, backed up by TWX or some other similar machine, will take care of the large majority of requests. The technology for this last method of PAGENO="0385" 891 providing physical access is fully developed today, but it is still `not truly avail- able to most people. It is essential that this form of service be strengthened and enlarged now. Indications are that maclime retrieval may someday be a com- plete reality in all areas of information, but until this is true, it will be necessary to take care of most physical access by present methods. The accelerated growth of significant information makes it imperative that we adopt machine methods as quickly as possible, but at the same time proceed to strengthen present meth- ods of physical access for use during the interim period, be it ten, twenty or more years. RECOMMENDATION The essential framework for effective federal action is now lacking because there is no agency within the federal structure with either the responsibility of the authority to see that an adequate solution is developed and implemented. Therefore our fundamental recommendation as the essential first step is: That there be established within the federal `government a single agency with the responsibility to assure that there is ready access to all significant published information by all elements of the economy, and with the continuing budget support that will enable it to fulfill this responsibility. It is emphasized strongly that this is not a recommendation for a monstrous, monolithic, federal agency to replace all existing channels for disseminating and providing access to information. There must be many channels for these pur- poses and basic library service is best provided, as it is now, by libraries directed and supported by the local community of users (whether this community is a city, town, or other political division; a university, college, or other school; a corporation or other commercial organization; or a governmental department or agency), and dependent on commercial publishers and distributors, and on scholarly functions in the whole process of access to information and its transfer, dissemination, and preservation. Each such community is expected to continue to provide the basic library services for itself capable of satisfying most of the community's needs, while the national agency's function is to augment these by providing for the common use of all libraries those collections and services that the local community cannot afford but can be supported only by the nation-wide community, and to provide a means for coordinating and standardizing the work of libraries, publishers, and associations, to avoid unnecessary duplication of their effort and expenditure. In the provision of these new, augmenting services, the national agency should have the authority to itself establish and support, directly or through contract with other organizations, the national service libraries and `bibliographic facilities required. W'hich of these alternatives the agency elects in each case should not now be specified in detail, in part because there is insufficient information to do so. accurately, and in part because the system requirements, and `the techniques for satisfying them, will undoubtedly change with time, and the national library/ information agency must be free to change its actions accordingly. Indeed, the first function of `the proposed agency must be to investigate the present system more thoroughly than any group or organization now has the resources to do, initiate research on both technical (equipment) and functional problems, and itself determine its own best actions to fulfill the responsibility named above and to accomplish its mission. But what can be specified now are the major organiza- tional requirements if this agency is to perform effectively. First, the agency's responsibilities should be limited to national library serv- ices, that is to services to be made equally available to all the nation's libraries, including the federal libraries, rather than for it to attempt to combine basic library service to the federal government itself with service to the nation as a whole. The principle this recognizes is that the divisions, departments, and agencies, of the federal government need access to informationfor their own use, and as in universities, research establishments, industry, and other elements of the economy, the primary satisfaction of these needs requires a library directed by and primarily responsive to the needs of the agency being served. It is no more possible for a federal library, merely because it is federally supported, to give first priority atten'tion to the needs of libraries in the nation as a whole from a collection and staff organized and supported primarily to serve the needs of a local community of users than it is for a non-federal library, such as that of a university, to do so. Such a federal library, getting its budget support from the federal agency served in order that the agency's information needs might `be met, 92-371-68-pt. 2-25 PAGENO="0386" 892 must organize itself so that it can best satisfy those needs, and give first prior. ity in service to the individuals in that agency rather than to the more remote users in the rest of the country. Prom the other side, a library organized and responsible to serve the nation as a whole by augmenting what the local libraries can provide for their own communities of users cannot without conflict serve as the basic, primary, information source for one particular agency. This is even less possible than to expect a single federal library such as the Library of Con- gress adequately to serve all the information needs of the Department of Defense, the Department of Agriculture, the Department of State, and all the others, and for these to give up completely their own libraries. This conflict between service to the nation as a whole and service to a partic- ular local group is greatest with respect to the provision of physical access, and is substantially less, though far from insignificant, with respect to bibliographic access. In the latter case, bibliographic descriptions and analyses prepared by a library for its own use can be duplicated or in other ways made available to other libraries without interfering with local access or needs. This has in fact been the basis for the Library of Congress catalog card distribution service. Since the "national group" versus "local group" problem is well illustrated by Library of Congress activity, some description will be useful. Under its program, the Library of Congress has prepared and printed catalog cards for its own use in accordance with its own needs as the Library of Congress, and then merely printed additional copies for purchase by libraries so that they could take advan- tage of this cataloguing. This was, and is, very valuable in making it unnecessary for other libraries to duplicate the intellectual work of the cataloguing done by the Library of Congress. But this was not a complete solution to the problem of cataloguing even monographs and serial titles in all libraries because in many cases the cataloguing priorities established at the Library of Congress which were intended to be those best satisfying the needs of the users it has primary responsibilities to serve-the Congress itself-were different from the needs of other users throughout the nation, and in a great many other cases the Library of Congress neither acquired nor catalogued the publication at all since it was of iiisufficiei~t interest to the needs of the Congress. To have changed priorities to satisfy the needs of the nation as a whole would have been a disservice to the needs of Congress itself; while to have acquired and catalogued titles out of scope to the Congressional interest could have been done only by diverting funds from other Library of Congress services, thus handicapping its primary mission of service to Congress. The only practicable way of avoiding this conflict of interest is the one finally arrived at in this particular case-that is by giving another agency the funds to pay for the additional cataloguing to be done in the national interest, with authority to transfer these funds to the Library of Congress, as the best avail- able agency to do this additional work with assurance that it would be consistent with LC's own cataloguing. This responsibility of the Library of Congress for service to the nation as a whole, being thus separately funded and staffed, does not compete with its services to Congress for support or priority in performance and continuation. The pattern represented in miniature by this program of cataloguing one particular group of publications in the national interest is thus similar to the one here recommended for implementation of a complete national library sys- tem. It separates federal funding and responsibility for library services to the nation as a whole from funding and responsibility for library services to the federal community itself so that they do not come into conflict and neither one is forced into a secondary l)osition. At the same time it (Toes not preclude making available for the national benefit those services that the federal libraries per- form for their own purposes that can without conflict be utilized nationally, and indeed establishes an agency to coordinate these more effectively. In addition to the requirements above, one other appears to us to be of primary importance if the Xational Library Agency is satisfactorily to meet the national needs. This is that responsibility for determination of the Agency's programs and policies be vested in a board, commission, or committee, of persons representing the communities of users to 1)e served. The actual administrative officers will of course l)e qualified civil servants, ultimately responsible to the President and Congress. and undoubtedly will come to these positions with ex- perience gained in the user communities. But the needs and problems of these communities vary in detail and with time, and only those persons continually PAGENO="0387" 893 facing these in their daily work can remain fully familiar with them. Unless policies are guided and programs determined by those whom the agency serves there is grave danger of its becoming, despite the best will in the world, out of touch with current needs and too slowly responsive to new problems and new solutions. For this reason the agency and its director must be continually guided by a group representing the users. Whether this body is a board or commission, legally responsible for program and policy guidance, or a committee charged merely with advising the actual ad- ministrators, perhaps practically makes little difference, though legal responsi- bility is more certain of effectiveness and is therefore recommended. But in any case such a group of experts in a position where its voice must be heard and heeded, without its having to hunt for a channel of communication and fight for an audience, is essential to keep the system continually and most effectively responsive to the national need and interest. This group must represent the ultimate individual users, major types of libraries, and the various agencies con- cerned with support of research. There are several possible places within the federal structure where the Na- tional Library Agency might be placed, and several possible forms it might take. It might, for example, be established: 1. As a bureau of division within the Department of Health, Education and Welfare. 2. As an independent commission, similar in form to the Atomic Energy Commission, or as a foundation similar to the National Science Foundation and the National Foundation for the Arts and Humanities. 3. As an independent division of the Library of Congress. 1. If the responsibility for this function (of assuring ready access to informa- ti()n by all elements of the economy is to be assigned to an existing executive department, the Department of Health, Education and Welfare is a more logical choice than any other, and indeed it has already been charged for some time with administering various programs of library aid. It is important to note, though, that no such National Library Agency is here recommended, and as is required adequately to solve the problem, now exists within the Department, and in fact the administration of even existing library legislation is now diffused through the Department so that there is no unified direction of all efforts toward the same goal. But only a: single agency competently staffed with men and women of expert knowledge in the fields of librarianship and information han- dling, with the assigned responsibility to `assure that all elements of the economy have ready access to all information, and with authority not limited to just one way of accomplishing this, or to only some aspects of the problem, can hope to insure a `solution that avoids both unnecessary duplication and gaps in coverage. 2. The operational functions required of the Agency in fulfillment of its responsibility, and particularly its need to have the freedom to initiate research and to act dynamically and promptly in an environment of rapidly changing technology, might be better satisfied through the establishment of an independ- ent commission, similar in form to the Atomic Energy Commission, or a. Library Foundation similar in form to the National Science Foundation, reporting directly to the Pre(si'dent and Congress. Either one would undoubtedly make the complete centra1i~ation of responsibility and administration, and thus the uni- fied approach that is essential to an economically practical solution to the information problem, easier than inclusion of the agency within the already complex bureaucratic environment of a large executive department such as Health, Education, and Welfare. But despite these advantages, there are also disadvantages from the point of view of public administration in adding still another agency budgeted outside of a cabinet department. 3. Locating the National Library Agency under the Library of Congress would have the advantage of placing it more closely iii connection with the largest single library within the federal establishment, and one that, although intended primarily to serve a federal agency (the Congress), is now also serving in some ways the library/information needs of the nation as a whole, But it has already been pointed out that the same agency cannot without disservice to one or the other serve `the nationwide need when it also must satisfy the pri- mary information need of a federal agency. This conflict could he avoided only by establishing the National Library Agency as a wholly separate agency from the Library of Congress itself, and with a wholly separate budget, the only connection being that both would be administered by the Librarian of Congress. PAGENO="0388" 894 The major disadvantage of this location of the agency is that, even with separate budgets for the Library of Congress per se and the National Library Agency, under this arrangement the National Library Agency budget still remains on the Legislative Branch side rather than on the Executive Branch side, and thus gives an unfair impression of the actual purpose of the expenditure. A second disadvantage lies in the bifurcation of the resposibilities of the Li- brarian of Congress himself. Balancing the advantages and disadvantages of these several possible locations and forms for the National Library Agency, we believe that although any one of them can be made workable, the administrative and budgetary relationships will be more logical and less conflicting if the Agency is made a separate office with the Department of Health, Education, and Welfare. But we emphasize again that wherever located, and whatever form the National Library Agency takes, responsibility for assuming all national library/information needs are satisfied must be concentrated in a single agency; its function must not be weakened by combining responsibility for service to the nation as a whole with responsibility for primary service to the federal establishment itself; the agency must have broad authority to act directly or through grants or contracts with other federal, public, and non-profit, agencies; and policy and program guidance must be pro- vided by a board or committee representing the immediate and ultimate users of the system, to insure responsive and responsible guidance in the nationkl interest. THE LIBRARY OF CONGRESS, Washington, D.C., February 15, 1.968. Hon. EDITH GREEN, Cii airman, Special Sn beom mittee on Ed a cation, house of Representatives, Washington, D.C. DEAR Mus. GREEN: As you know, the Library of Congress is responsible for the administration of Title 11-C (the National Program for Acquisitions and Cataloging) of the Higher Education Act of 1065. As I testified before your Subcommittee in April of 1067, I support the amend- ments to this Act in regard to Title IT-C that were included in HR. 6232 and HR. 6265 and more recently in the omnibus education bill, H.R. 15067. I would, however, like to reiterate what I said in April about the length of ex- tension of Title TI-C. I urge that Part C l)e extended for a 5-year period as are parts A and B of Title II, rather than for 2 years as provided for in H.R. 15067. Great progress has been made in the centralized cataloging program at the Library of Congress but, because of limited funding, the far-reaching effects of the pro- gram are just now being felt by the research community in the Nation. A 5-year extension would give the Library, I believe, sufficient time to put this very im- portant cataloging program on a sound operating basis and would greatly iii- crease the benefits it can bring to higher education and scholarly research. If you desire any additional information, I would be very happy to provide it. Sincerely yours, L. Quixc~ MTJMF0rw, Librarian of Congress. THE AMERICAN PARENTS COMMITTEE, Ixc., Washington, D.C., March 21, 1968. Re HR. 15007, Higher Education Amendments of 1968. Hon. EDITH GREEN, Chairman, Special. Sn beoin mit tee on Education, House Committee on Edvcation and Labor, R.aybnrn Ho use 0/flee B uilding, Washington, D.C. DEAR REPRESENTATIVE GREEN: For the purpose of inclusion in the record of hearings on the above legislation, the American Parents Committee wishes to ex- press our support for the following programs: Title I, Community Service and Continuing Education programs. We support the continuation of 75% Federal share through FY 1969, and 50% for the follow- ing four years. Title IV, Part E, NDEA. Teaching Fellowships. We strongly support the pro- vision increasing from three to four years fellowships to encourage recipients to enter or continue teaching, especially in the primary and secondary systems. PAGENO="0389" 895 TItle V, Education Professions Development. Under Section 502, authorizing State educational agencies to administer directly programs of teacher and teacher- aide recruitment and training, we respectfully urge that the 1965 Act be fur- tlier amended to include School Food Service administrative personnel. As passed by the House on March 5, a bill to extend the School Lunch Act (H.R. 15398) emphasized that the School Lunch program should be categorized as an educa- tional program, orienting the recipient toward good nutritional standards. Title VI, Part B, Instructional Equipment and Material for Elementary and Secondary Education. We support amendments to extend the NDEA program; to eliminate subject limitations in accordance with State plans: and to limit Fed- eral payments under this Title in conformance with Constitutional law. Respectfully submitted. MRS. BARBARA D. MCGARRY, Eccecutive Director. STATEMENT BY WALTER A. SCHEIBER, PRESIDENT, FELS INSTITUTE ALUMNI ASSOCIATION Madam Chairman and members of the subcommittee, I am submitting this statement to YOU in support of Title XII of HR. 15067 on behalf of the alumni of time Fels Institute of Local and State Government of the University of Pennsylvania. The Fels Institute was founded in 1937 for the purpose of providing graduate and undergraduate training to young men and women interested in careers in local and state government. In the more than thirty years since that time, it has awarded advanced degrees to more than five hundred graduates. Seventy-five percent of these men and women occupy places in local, state and Federal Government today. According to a recent survey by the American Society for Public Administra- tion, the Fels Institute has conferred a greater number of advanced degrees to urban specialists than has any other educational institution in the United States-y~t this `is just a drop in `the bucket. Never before have the needs of our cities for qualified professional and technical personnel been so great as they `are today. Positions are going begging in every large city government in the United States because of a lack of qualified people. The gap between supply and demand is immense. In the face of this challenge, the graduate schools of our universities have been struggling-unsuccessfully-to educate and train generalists and specialists capable of coping with the huge burdens of our urban areas. More than any other single factor, the lack of adequate financial support for their programs has been a stumbling block to success. The Education for the Public Service Act, Title XII of I-I.R. 15607, would provide grants and contracts with institutions such as the Fels Institute of Local and State Government to strengthen existing programs, develop new programs for the preparation of graduate and professional students for the public service, and for research into improved methods of education for the public service. It would provide significant assistance to existing institutions which have been struggling to meet the ever greater demands of our cities for men and women to staff their programs. It could provide a major resource in the campaign to produce adequately trained urban specialists, and to close the exist- ing gap between supply and demand in this field. The Fels Institute Alumni Association, representing the largest single body of urban specialists representative of any of our American universities strongly supports the enactment of Title XII, and urges that the Committee favorably report the bill now under consideration by it. UNIVERSITY or SOUTHERN CALIFORNIA, SCHOOL OF PUBLIC ADMINISTRATION, Los Angeles, Calif., February 15, 1968. Flon. EDITI-r GREEN, U.S. House of Representatives, House Office Building, Washington, D.C. Mx DEAR CONGRESSWOMAN: On February 1, 1968 the membership of the California Association for Public Administration Education, representing profes- sors of public administration in both private and public institutions of higher learning in California, voted unanimously to urge you to give your favorable PAGENO="0390" 896 consideration to the "Education for Public Service Act" and the "Intergovern- mental Manpower Act" which we understood will be heard soon by your Com- mittee. It is our Association's belief that without the development of a positive policy and coordinated program for public service education and training, a continuous manpower shortage will threaten the ability of federal, state, and local governments to fulfill their purposes effectively, efficiently, and econom- ically. The changes in urban living produced by new technology, population mobility, rising income, shifting employment conditions, evolving concepts of social and economic democracy and citizen participation in determining govern- mental goals, have created situations that demand high administrative com- petence. We are actually seeing 1968 administrative problems being administered by persons with 1938 to 1948 educations. Educations which, however good, did not equip administrators with the diverse kinds of knowledge indicated by today's problems. It seems that only a reshaping of many existing education and training pro- grams will provide the manpower required for governmental service. Inade- quate programs of public service education and training result in unjustified social and economic costs. These costs are reflected in underdeveloped manpower, diminished personnel performance and inadequately administered public pro- grams. The education needs affect more than the public service. All segments of private and public enterprise suffer undesirable consequences when public serv- ants are not appropriately qualified for their tasks. It is our belief that state and local government has even greater need than does the Federal Government for the kind of education and training which would be made possible by enactment of the bills before you. Nevertheless, all segments of government could profit by improved training and education. The California Association for Public Administration Education respectfully requests your support for this important legislation. Very truly yours, NEELY GARDNER, Chairman, California Association for Public Administration Education. COLLEGE ENTRANCE EXAMTNATION BOARD, Washington, D.C., March 5, 1968. Hon. EDITH GREEN, U.$. House of Representatives, Washington, D.C. DEAR MRs. GREEN: May I impose upon your patience and possibly that of other members of your Sub-committee to make several comments about the Higher Education Act of 1968. 1. It is my understanding that participating colleges estimate that the amount of money required to renew EOG grants will apparently use so much of their allotments that a smaller number of incoming students will receive grants than was true last year. If there have been no revisions of these estimates and the evidence still suggests that it will be necessary to reduce the number of new grant recipients, then this will be a very grave setback and would seem to be a most shortsighted economy. It would in fact be incomprehensible to provide for a reduced number of new students when the same act provides for an increase in funds for Section 408, the Talent Search Title, and for a new sum of $15 million to provide training to reduce the number of drop-outs. The increased talent search funds should produce an increase in the number of students needing grants and the program to increase retention should increase the amount of money required to maintain continuing students. 2. The preceding comment should not be interpreted as lack of support for the increase for Section 408 and for the new program to provide special services. Actually there may be additional benefits from the provision of special services which I have not heard mentioned in the testimony. The inattention and the ineffective teaching given to the instruction of all undergraduates but particularly those in the first two years, has become a source of major criticism from under- graduates and has been a central and an aggravating factor in a large number of the student protests of which I have any firsthand knowledge. The program proposed in the Higher Education Act is pointed rather specifically towards underprivileged students but I am convinced that any programs which result in PAGENO="0391" 897 a more effedtive teaching of lower division underprivileged students will have a direct carry-over to the teaching of all lower division and undergraduate stu- dents. It will provide essential support for the new curriculum approaches which are being developed. Obviously, there can be no assurance that the program will produce these improvements but it is the only one I know which is pointed so specifically at this area. We have let ourselves be bemused and satisfied with the statistics which show the number of persons who have registered. The proposed new program hopefully will deal directly with the questions of the quality of the learning which follows .those registrations, and even though it be in the beginning limited to underprivileged students. I have no question that if something good comes from this it will then influence the teaching for the entire student group. 3. There has been some testimony concerning the Guaranteed Loan Program that college financial aid officers should make some comments to lending agencies about the student's financial need but that the program should not require a needs test. As a financial aid officer, I would not know how to deal with this situ- ation. The only information I would have of the family's financial situation and the student's need would come from an application which described the family's financial situation in sufficient detail to enable me to understand it. This is what is meant by a needs test. If a student had not filed an application of this kind, no one in the college would have any basis for judgment of his financial need. If colleges are to recommend the amount of a loan this requires an analysis of need, and I believe other financial aid officers would feel as I do about this. It is clear from the testimony that there is considerable confusion about the term "need" as used by financial aid officers and by the general public. During the past decade, member colleges working through the machinery of the College Scholarship Service have developed a procedure which requires a reasonably common amount of effort and self-sacrifice on the part of parents. We have become wiser in dealing with unusual circumstances. For example, we accept the fact that in a family in which the mother is employed outside the home, this requires additional expenditures which would not be the case if she were not so employed. We make allowances for this. We use a more realistic figure for child maintenance than is in use by the IRS. There is, however, neither any principle of economics nor any conventional folk wisdom as to just bow much self denial parents of college going students should be expected to make. For example, if a family income is raised from $10,000 to $12,000 there is no principle of economics which determines what portion of this increment ought to be available to meet the costs of higher education. The current yardstick used by the College Scholarship Service accepts the fact that higher education is not the only demand on family income. We believe that financial aid officers can use this yardstick in a way which calls for a comparable effort between families in a great variety of financial circumstances. It cannot assert, however, that all people in the society agree that the yardstick require a correct amount of self denial and frugality. This judgment, we suspect, comes primarily from each individual's own accustomed standard of living. Please forgive me if I have been too professorial and pedantic in this last topic. Sincerely, EDWARD SANDERS, Vice President, College Board, Director, Washington Office. P.S.-I mention the College Scholarship Service only because it is .the needs analysis system with which I am most familiar. The same general principles are used in other needs analysis systems. STANFORD UNIvERSITY, stanford, Calif., April 2, 1968. Hon. EDITH GREEN, Chairman, House Education and Labor Committee, Washington, D.C. DEAR MADAM CHAIRMAN: I understand that your Committee is currently considering H.R. 15067, the Higher Education Amendments of 1968 `and is in- terested in receiving the views of institutions that may be affected by the pro- posed legislation. My purpose in writing is to add my warm endorsement to the others you have received for Section 302 of the bill, which would add a new Part B--Improvement of Graduate Programs, to Title III of the Higher Education Act of 1965. Stanford University has for many years been carrying the heavy financial burdens associated with maintaining graduate programs of high quality. We PAGENO="0392" 898 are acutely conscious of the fact that no institutions of higher education, Public or private, can continue to maintain and strengthen this uniquely expensive form of education without substantial Federal assistance. `We are eager to work with your Commitee and other responsible agencies of the Federal Government to develop programs of Federal support that will maximize the advantages to the nation that graduate education produces while maintaing the atmosphere of in- dependence required for the health of quality education. We therefore welcome this legislation as a necessary step in recognition of the Federal interest in this area. I am of course in no position to assess the relative priorities that you will accord to this and other desirable features of the proposed legislation. I do wish to say, though, that I think it would be a great mistake to fail to enact Section 302 simply because current financial stringency makes the provision of adequate sums for its implementation during the next fiscal year unlikely. Graduate educa- tion has suffered a severe setback from this year's revisions of Selective Service policy. A gesture of Congressional concern about graduate education at this time would be ino~t welcome, even if its effective implementation must wait. I trust that you recall as pleasantly as we the visit that you and your Com- mittee colleagues paid us at Stanford last year. It was the kind of opportunity for exchange of facts and ideas that I wish we could have more often. Sincerely yours, RICHARD W. LYHAN, Vice President and Provost. COLORADO Co~fMIssIoN ON HIGHER EDUCATION, Denver, Cob., February 27, 1968. Hon. EDITH GREEN, Chairman, Special Subcommittee on Education, U.S. House of Representatives, Rayburn House Office Building, Washington, D.C. DEAR REPRESENTATIVE GREEN: In view of recent and impending testimony before your Committee concerning provisions of the Higher Education Amendments of 1968 relating to Title IV B, student loan insurance programs, we thought in- formatiOn concerning the status of these programs in Colorado might be useful to you in your deliberations. At the request of Governor Love, the Colorado legislature in its current "short" session is giving consideration to a measure (HB 1073) `To establish a student loan guarantee program for higher and vocational education, and making an appropriation therefor." Pending determination by either the state attorney general or the state supreme court whether this bill has successfully avoided the quite specific prohibitions contained in the Colorado constitution against pledging the faith and credit of the state, we have as yet no final assurance that Colorado will be able even this year to establish by legislation alone a state loan insurance program. If the attorney general or court should rule unfavorably, then it would be necessary to obtain public approval of a constitutional amendment in November. 1968, before the program could be established. If, however, no ruling is obtained before the legislature adjourns, it might be November 1970 before the necessary amendment could be submitted to the voters. Under these circumstances, it is obviously of considerable interest to Colorado that the present federal loan insurance program, which in the six months of its operation has enabled Colorado students to borrow over ~5 million for higher and vocational education, be continued beyond the end of the present fiscal year, as contemplated in Sec. 431 of HR. 15067, introduced by you and Mr. Perkins on February 5. It may be of further interest to you and your colleagues to know of the concern recently expressed by the Colorado Commission on Higher Education, w-hich is the state coordinating agency for public higher education in Colorado, to the effect that "if the states are to be expected to take over a program that has been federally defined, initiated, and regulated, then some latitude should be granted to the states in deftning the nature of the program that will best suit their situa- tions and the needs of their students." In view of this concern the Commission directed the staff to prepare ap- propriate statements to convey to the Congress the position that if the program PAGENO="0393" 899 is to be transferred to state responsibility, the states should be given authority to define its terms within general guidelines. Such statements have already been addressed to the members of Colorado's congressional delegation, together with an expression of concern that the present Federal insured loan program be extended through June 30, 1970. We believe it would be entirely appropriate in this connection to report our very favorable impression of the effective operation by the regional staff of the U.S. Office of Education of the f~deral program in Oolorado. Not only has this program made it possible for an unprecedented number of Colorado students to negotiate some 5,800 loans to date, but even more impressive has been the favor- able response of lenders to the program. More than fifty lenders who for varying reasons did not elect to participate under the previous program operated for Colorado by United Student Aid Funds, Incorporated, under contract with the U.S. Office of Education using the limited reserves established through Colo- rado's allocation of federal seed money, have now become active participants under the federal insurance program-an increase of over 70 percent in the number of participating lenders. We hope the foregoing information may be useful to you in your current de- liberations. If further details on any of these matters would be of interest, we stand ready to provide them. Sincerely yours, FRANK C. ABBOTT, Ewecutive Director. PENNSYLVANIA STATE UNIVERSITY, LTniversity Park, Pa., March 20. 1968. Hon. ELMER J. HOLLAND, house of Representatives, ~$pecial Committee on Education, House Committee on Education, house Committee on Education and Labor, house Office Building, Washington, D.C. DEAR MR. HOLLAND For several years The Pennsylvania State University has been experimenting with the use of microwave and telephone line inter- connections between the main campus at University Park and several of our Commonwealth Campuses in other parts of the state. These interconnections have `been used for the sharing of instructional re- sources by means of television, for rapid access to library materials, for con- tinuing education, and for administrative communication. On the `basis of this experience, it seems to us that the development of in- terconnecting networks among colleges and universities across `the country could have `a profound effect on the dissemination `of knowledge and the sharing of resources among universities and colleges, both large `and small. Such networks could provide for the exchange of instruction, access to com- puters *for `computation purposes or for informhtion retrieval, the sharing of specialized library resources and the like. The availability of `such netw-orks would be of considerable value to `large universities, and for strengthening small, developing colleges with limited resources. I would, therefore, like to urge support `of Title IX of Bill HR. 15067 for the support of `the development of such networks. Sincerely yours, ERIC A. WALKER, President. Pittsburgh, Pa., March 22, 1968. Hon. ELMER J. HOLLAND, Honse of Representatives, Washington, D.C. DEAR MR. HOLLAND: I was grateful to learn of the inclusion of title IX in H.R. 15067. If we are to have equ'al educational opportunity in U.S. networks for knowledge are essential. Their potential, not `only in providing education of the highest quality everywhere in the nation, but `also in making available the `skills of medical and `other professional specialists for the solution of health and environmental `problems in all regions are immeasurable. May I therefore urge your support of title IX and `ask you `to work for its passage. EDISON MONTGOMERY Director of Communications Program, University of Pittsburgh. 92-371-68----26 PAGENO="0394" 900 CARNEGIE-MELLON UNIVERSITY, Pittsbargh Pa., March 21, 1968. Hon. ELMER J. HOLLAND, Honse of Representatives, Washington, D.C. DEAR CONGRESSMAN HOLLAND: I understand that the Congress is now consider- ing HR. 15007, Title IX of which contains the Networks for Knowledge Act of 1968. Carnegie-Mellon University is a member institution of the Interuniversity Communications Council, called EDUCOM, which is working to develop plans to develop an information network to interconnect colleges and universities in the U.S. The passage of Title IX would be a great help to higher education, for it would make possible both the sharing of informational resources among institu- tions of higher education and the strengthening of developing institutions. I hope that this legislation will be given your full support. Respectfully yours, H. GUYFORD STEVER, President. THE UNIVERSITY OF CHICAGO, Chicago, Iii., February 15, 1968. lion. EDITH GREEN, TJ.& House of Representatives, Washington, D.C. My DEAR MRS. GREEN: I was delighted to see Section 1004 (pg. 100) contained in HR 15067. This section answers an extraordinarily troubling and unnecessary problem with which I am famifiar. I As you know, the Center for Research Libraries is located on the campus of the University of Chicago. Originally this entity was organized as a not-for-profit corporation in 1949 by a group of major universities as a "library's library" through which they could cooperate to make readily available more research mate- rials than each participant would be able to provide individually in its own library. The Center's collections, housed in its facilities, amount to more than two million volumes. In June of 1966 the Association of Research Libraries, constituting the seventy- odd major research libraries in the United States and Canada, approved a report urging that all members of the Association become members of the Center for Research Libraries. II Section 201 of Title II of the Higher Education Act of 1965 provides: "SEc. 201. There are authorized to be appropriated $50,000,000 for the fiscal year ending June 30, 1966, and for each of the two succeeding fiscal years, to enable the Commissioner to make grants under this part to institutions of higher education to assist and encourage such institutions in the acquisition for library purposes of books, periodicals, documents, magnetic tapes, phonograph records, audiovisual materials, and other related library materials (including necessary binding). For the fiscal year ending June 30, 1969, and the succeeding fiscal year, there may be appropriated, to enable the Commissioner to make such grants, only such sums as the Congress may hereafter authorize by law." Section 204 provides: "SEC. 204(a) (1) Twenty-five per centum of the sums appropriated pursuant to section 201 for each fiscal year shall be used by the Commissioner in accordance with this subsection. "(2) Of the sums available for use under paragraph (1) sixty per centum may be used to make special grants (A) to institutions of higher education which demonstrate a special need for additional library resources and which demon- state that such additional library resources will make a substantial contribution to the quality of their educational resources, (B) to institutions of higher educa- tion to meet special national or regional needs in the library and information sciences, and (C) to combinations of institutions of higher education which need special assistance in establishing and strengthening joint-use facilities. Grants PAGENO="0395" 901 under this section may be used only for books, periodicals, documents, magnetic tapes, phonograph records, audiovisual materials, and other related library mate- rials (including necessary binding). "(3) Any sums available for use under paragraph (1) which are not used for the purposes of paragraph (2) shall be used in the manner prescribed by the first sentence of section 203 (a). "(b) Grants pursuant to paragraph (2) shall be made upon application pro- viding satisfactory assurance that (1) the applicant (or applicants jointly in the case of a combination of institutions) will expend during the fiscal year for which the grant is requested (from funds other than funds received under this part) for the same purpose as such grant an amount from such other sources equal to not less than 33-~/~ per centum of such grant, and (2) in addition each equal to not less than 33~/3 per centum of such grant, and (2) in addition each such applicant will expend during such fiscal year (from such other sources) for all library purposes (exclusive of construction) an amount not less than the average annual amount it expended for such purposes during the two-year period ending Eune 30,1965." Reports of the Congressional Committees, in explaining the purpose of the special purpose grants, specifically referred to the Center for Research Libraries in Chicago as "a notable example of potential college joint activities." III However, the Adult and Vocational Education Section of the United States Office of Education determined that the Center for Research Libraries was not eligible for assistance pursuant to Section 204 of Title II of the Higher Education Act of 1965. It did so on the theory that Section 201 entitles the Commissioner to make grants to "institutions of higher education; Section 204(a) (2) authorizes special grants to "institutions of higher education" and to "combinations of insti- tutions of higher education"; and that the Center for Research Libraries, although specifically described in the legislative history as performing "notable examples of the potential of college joint activities," is not itself an institution of higher education. In addition, the Office of Education Section raised the point that the member- ship of the Center included institutions which were not eligible "institutions of higher education," specifically the two Canadian universities (the University of British Columbia and the University of Toronto) and the John Crerar Library (wthose collection of scholarly scientific materials is recognized throughout the world) which, while located on the campus of Illinois Institute of Technology, is not itself a degree granting entity. Iv Joint activities of institutions of higher education often are carried out through the multi-university, not-for-profit corporation. The most notable recent example is the organization of Universities Research Association, Inc., a multi-university corporation under the auspices of the National Academy of Science, as well as the Atomic Energy Commission, to design, build and operate the high energy accelerator at Weston, Illinois. Similar corporate arrangements exist in the operation of the Brookhaven National Laboratory at Long Island, New York, the Argonne Universities Association for policy determination in operation of the Argonne National Laboratory at Lemont, Illinois, and ARPA for operation of astronomy research facilities in Arizona and Chile. I would assume that the value and purpose of such arrangements are clear to both lawyers and prudent administrators. The case of the Center itself is in point. The magnitude of that operation could not be prudently administered through combination or joint venture arrangements involving universities sit- iutted at long distances over the country. Nevertheless, the position of the Office of Education Section, in effect, determines that such arrangements cannot be recognized as university combination activities for the purposes of the statute. V The Section of the Office of Education thus concluded that applications for support of the Center for Research Libraries had to be made individually by each member, then processed individually, grant disbursements made to each individual institution and then transfered. The result was that the Section was obliged to process multiple applications and, at the same time, each member in- PAGENO="0396" 902 stitution was similarly burdened. Moreover, the determination as to whether the requirements of Section (3) (b) of the statute are met must be made primarily in examination of the activities of the Center for Research Libraries which itself was not a party to the proceedings. Further, as a matter of policy the formation of the multi-university corpora- tion is effective insurance of permanent, long-term collaboration. The position adopted by the Section was to penalize this precise activity in contrast to a much looser and often informal collaborative arrangement. VI It would appear that Section 1004 @f HR 1~067 would meet this problem and should now authorize the Office of Education to deal with the Center for Research Libraries as "a private, nonprofit agency, organization or institution designated or created by a group of institutions of higher education for the purpose of carrying out a common objective on their behalf." Previous experience, how-ever, leads me to inquire as to whether the making of some legislative history would not be appropriate in this matter. Membership of the two Canadian universities and the Crerar Library is very much in the interest of not only the Center, but of each of its members. Moreover, in years to come it is altogether likely that major public libraries may desire to participate. I am concerned that, lacking legislative history, the question of eligibility of the Center might again be raised. I hope that you will forgive the length of this note. We are, as always, most grateful to you for your leadership and interest. Sincerely yours, JULTAN H. LEVI. UNIvERsITY OF ML&MI, Coral Gables, Fla., February 26, 1968. Hon. EDITH GREEN, U.S. House of Representatives, Rayburn Building, Washington, D.C. DEAR CoNGREssWOMAN GREEN: Thank you for your letter of February 17. 1968. As I stated to you in my letter of February 6, 1968, I would advise you of the actions taken on the resolutions which were presented to the Florida Association of Student Financial Aid Adnilnistrators (FASFAA) and to the Southern Asso- ciation of Student Financial Aid Administrators (SASFAA). Enclosed are copies of the resolutions presented and the resulting action taken by the two respective organizations is noted in red at the top of each resolution. As I was responsible for the preparation and presentation of the resolutions to both organizations I would like to comment briefly on each. (1) NDEA_Teacher Cancellation Provisions-Section' 205(b3) This resolution was passed by a large majority vote by both organizations, and there were no vocal comments or objections presented. (2) NDEA-Terrns of Loans-SectiOn 205 (a) This resolution was passed by a large majority by both organizations, and there were no vocal comments or objections presented. (3) NDEA_LOYaitY Oath-SectiOfl 1001 (fi) and 1001 (fS) This resolution was rejected by F.A.S.F.A.A. and was not presented to S.A.S.F.A.A. It should be understood however that in the Southeast there is at present a lot of ~isunderstafldi11g and irrational acceptance of the validity and purpose of the loyalty oath. I personally feel that the loyalty oath is a meaningless gesture on the part of the federal government. (4) C WSP_Federa stitutioHal Matching Ratios-Section 124(1) This resolution passed unanimously by both the F.A.S.F.A.A. and S.A.S.F.A.A. organizations. (5) CWSP_An~1iVe7~8a1Y dates re Matching Ratios This resolution passed unanimously by both the F.A.S.F.A.A. and S.A.S.F.A.A. organizations. (6) Proliferation and Duplication of Student Financial Aid Programs This resolution passed by a substantial majorIty in the F.A.S.F.A.A. meeting but was referred to Committee for further study by S.A.S.F.A.A. The primary PAGENO="0397" 903 basis for referral was that only a few of the institutions represented had Nursing and Medi~al School programs and the others were not aware of the fact that problems existed. (7) Guaranteed Loan Program~s This resolution passed by a substantial majority in the F.A.S.F.A.A. meeting, hut was' referred to Committee for further study by S.A.S.F.A.A. The primary reason being that there are just not enough informed people on the provisions of the program. Over all, I believe the degree of success `of the resolutions, was due to a growing awareness on the part of Financial Aid Officers, of the provisions and problems of the programs. If I may be of further service, please do not hesitate to 50 advise. I appreciate your invitation to appear before your committe, but travel funds are not avail- able. I sincerely believe, however, that experienced financial aid administrators' opinions and judgments would be more beneficial to your committee, than organizational representatives who are not dealing with the problems nor the programs on a daily basis. Sincerely yours, Tuos W. SUTTON, Director of Financial Aid. (Passed by FASFAA & SASFAA) PROPOSED REsOLUTIoNs AFFECTING FEDERAL PROGRAMS OF STUDENT FINANCIAL AID NATIONAL DEFENSE EDUCATION ACT OF 1058 I. Section 205(b3)-Teacher cancellation provisions Whereas the Florida Association of Student Financial Aid Administrators (FASFAA) recognizes that one of the purposes of Title II of the NDEA was to attract superior students to the teaching profession by providing loan cancellation provisions; and Whereas it has been determined from analysis that the teacher cancellation provisions have not resulted in an appreciable increase over and above the normal number of students entering the teaching field; and Whereas section 205 (b3), as amended, has resulted in an ever broadening scope of teacher cancellation provisions and an increasing number of student borrowers who are receiving either partial or total cancellation of their obliga- tion; and Whereas it is the opinion of the FASFAA Committee on Student Financial Aid Programs that this section of the National Defense Education Act is discrimina- tory and tends to destroy the effectiveness of an otherwise basic loan program which is the greatest source of student financial aid available to students; and Whereas there are at present other proposals being considered to provide cancellation privileges to Veterans and others, so that eventually the true intent of a long-term, low intereSt loan program will be destroyed at the expense of the American Taxpayer: Therefore be it Resolved, That Section 205(b3) of the National Defense Education Act be de- leted, thereby; (a) eliminating the discriminatory provisions of the act; (b) eliminating the paper work and ever increasing problems of collections associated with cancellation privileges; and (c) otherwise restoring the program to a true loan program for students. (Passed by FASFAA ~ SASFAA) III. Section 205(a)-Terms a/loan Whereas section 205 (a) provides that "the total of the loans for any academic year or its equivalent, as determined under regulations of the Commissioner, made by institutions of higher education from loan funds established pursuant to agreements under this title may not exceed $2,500 in the case of any graduate or professional student (as defined in regulations of the Commissioner), and may not exceed $1,000 in the case of any other student. The aggregate of the loans for all years from such funds may not exceed $10,000 in the case of any graduate or professional student (as so defined, and including any loans from PAGENO="0398" 904 such funds made to such person before he became a graduate or professional student), or $5,000 in the case of any other student ;" and Whereas due to the ever increasing costs of higher education at both public and private institutions; and Whereas institutional directors of financial aid are finding it increasingly diffi- cult to provide sufficient sources and amounts of funds to "package" and meet the ever increasing assistance required by students to meet their educational costs: Therefore be it Resolved, (a) that Section 205 (a) of the National Defense Education Act of 1958 be amended to provide a maximum loan of $1,500 per academic year or its equivalent at the undergraduate level to an aggregate maximum of $7,500 for the undergraduate program; and (b) that the maximum loan of $2,500 per year or its equivalent for graduate or professional students be retained, but that the aggregate total for both the undergraduate and graduate programs be increased to $12,500. (Rejected by FASFAA and was not submitted to SASFAA) II. Section 1001(f) (1) and Section 1001 (f) (3)-Loyalty Oath Whereas section 1001(f) (1) provides that no part of any funds appropriated or otherwise made available for expenditure under the authority of this Act shall be used to make payments or loans to any individual unless such individual has taken and subscribed to an oath or affirmation in the following form: "I do solemnly swear (or affirm) that I bear true faith and allegiance to the United States of America and will support and defend the Constitution and laws of the United States against all its enemies, foreign and domestic ;" and Whereas section 1001(f) (3) provides that the provisions of Section 1001 of Title 18, United States Code, shall be applicable with respect to the oath or affirmation required under the paragraph above. (This is a part of the Federal Criminal Code relating to any person making a fraudulent representation to the Government.); and Whereas it has been determined that these sections of the National Defense Education Act of 1958 are meaningless and serve no realistic purpose; and Whereas it has been determined that if a person actively or otherwise advo- cated non-support of the United States, that he or she could care less what they signed realizing full well the question of constitutionality of such a requirement; and Whereas this program of long-term, low interest rate, student loans is basically a legal and binding obligation on the part of a student to repay monies borrowed for educational purposes and should therefore be recognized in that context; and Whereas this requirement is not consistent with other federal governmental lending practices and is therefore discriminating against students: Therefore be it Resolved: That Section 1001(f) (1) and (f) (3) of the National Defense Edu- cation Act of 1958 be deleted, thereby (a) eliminating a discriminatory provision of the Act; and (b) eliminating a meaningless provision which is also unrealistic. (Passed by FASFAA i SASFAA) The Committee on Federal Financial Aid Programs of the Florida Association of Student Financial Aid Administrators (F.A.S.F.A.A.) recommends that the following resolutions, affecting the College Work-Study program provided for under Title I, Part 0 of the Economic Opportunity Act of 1964, as amended by the Economic Opportunity Amendments of 1965, and the Higher Education Act of 1965, be adopted and forwarded to the Southern Association of Student Financial Aid Administrators (S.A.S.F.A.A.) for their review and adoption. I. Section 124(f) as amended-Federal-Institutional Matching Ratios Whereas section 124(f) as amended now provides that the federal-institu- tional matching ratios drop from 85-iS to 80-20 on August 20, 1968, and to 75-25 on August 20, 1969; and Whereas due to the magnitude of the work-study programs, most institutions of higher education (both public and private) are experiencing difficulty in providing the ever increasing burden of the insitutional matching portion: Be it therefore PAGENO="0399" 905 Resolved, That Section 124(f) Part 0, Title I of the Economic Opportunity Act of 1964 as amended, be further amended to restore the federal-institutional matching ratios to the original level of 90-10. (Passed by FASFAA c~ SASFAA) II. Anniversary Dates of Changes in Federal-Institutional Matching Ratios- Section 124 (f) Whereas section 124(f) as amended provides that the changes in the federal- institutional matching ratios occur on August 20, 1968, and August 20, 1969: and Whereas these dates occur approximately a month and a half subsequent to the beginning of the federal fiscal year; and Whereas the dates occur approximately at the mid point in a student's monthly earnings during peak periods of employment in the summer months; and Whereas the subsequent computations of students' monthly earnings during this period of changing ratios result in undue hardship on participating institutions; and Whereas the changing ratios further complicate institutional application re- quests for federal funds to support the student financial aid programs and also complicates the preparation of the required federal fiscal reports of operations: Be it therefore Resolved, That Section 124(f) as amended be further amended to provide that the date of change in the federal-institutional matching ratio be altered to coincide with the date (July 1) that the federal fiscal year begins. (Referred to committee for further study by SASFAA resolution passed by FASFAA) Time Committee on Federal Financial Aid Programs of the Florida Association of Student Financial Aid Administrators (F.A.S.F.A.A.) recommends that the following resolution be adopted and forwarded to the Southern Association of Student Financial Aid Administrators (S.A.S.F.A.A.) for its consideration and subsequent adoption. Whereas it has become increasingly apparent that the proliferation by other governmental agencies and bureaus into the area of student financial aid pro- grams in detrimental to the overall effectiveness of the programs; and Whereas for example, the Nursing Student Loan Program provided for by the Nurse Training Act of 1964 duplicates to a large degree the National Defense Student Loan program in terms and conditions, even to the extent of cancella- tion provisions; and Whereas the Nurse Training Act of 1964, as amended, now provides Educa- tional Opportunity Grants for Nursing students under almost identical provi- siöns as those provided for in the Higher Education* Act of 1965; and Whereas the Health Professions Educational Assistance Act of 1963 (as amended) authorized the establishment of a student loan program which dupli- cates to a large extent that of the National Defense Student Loan Program; and Whereas these programs are essentially duplications of programs previously in existence and substantially affect and detract from the amount of dollars al- located for student assistance programs: be it therefore Resolved, That the U.S. Office of Education, Congressmen and Senators repre- senting the Southern Region, and other interested parties and organizations be notified `and instructed to introduce and support legislative amendments to elim- inate the proliferation and duplication of student financial aid programs, i.e., Nurse Training Act of 1964 and Health Professions Educational Assistance Act of 1963, and be it further Resolved, That the various offices, individuals and organizations be further notified and instructed to introduce and support legislative amendments to the NDEA. and EOG programs which will provide adequate funds and provisions to incorporate Nursing and Health Professions `students. (Passed by FASFAA, referred to committee for further study by SASFAA) II. Guaranteed loan program Whereas the Florida Association of Student Financial Aid Administrators (F.A.S.F.A.A.) believes and advocates that this Guarantee Loan Program, pro- PAGENO="0400" 906 vided by the Higher Education Act of 1965, be reserved for students who evi- dence financial need in order to meet the costs of their college education; and Whereas the available funds for such guaranteed loans are being drained off by students whose families are perfectly capable of financing their education; and Whereas under the present provisions of the Higher Education Act of 1965, need shall not be taken into consideration in making guaranteed loans; and Whereas under the present provisions of the program, institutional directors of financial aid are prohibited from assessing financial need on the part of the applicants: Be it therefore Resolved, That the Higher Education Act of 1965 be amended to provide that financial need be the primary consideration given to applicants seeking a Guar- anteed Loan and that the financial aid officers of the eduactional institutions be required. as a result of their evaluations and analysis tf the student's application, to recommend the amount of the loan for each applicant. COMPTROLLER GENERAL OF THE UNITED STATES, Washington, D.C., February 27, 1968. Hon. EDITH GREEN, Chairman, Special Subcommittee on Education, Committee on Education avd Labor, House of Representatives. DEAR MADAM CHAIRMAN: This report is in response to your request that we review and comment on the Treasury Department's comparison of the total cost to the Federal Government, for the insured student loan program under the Bigher Education Act ~f 1965 as amended (20 U.S.C. 1071-1085), and the direct student loan program under the National Defense Education Act of 1958, as amended (20 U.S.C. 421-429). Both of these programs are administered by the Department of Health. Education, and Welfare. The preparation of the cost comparison was undertaken initially by the Office of Education, Department of Health, Education, and Welfare, pursuant to your request during hearings before the Special Subcommittee on Education, Com- mittee on Education and Labor, House of Representatives, relative to proposed amendments to the Higher Education Act of 1965. Subsequently, however, it was decided that the Treasury Department would prepare the cost comparison for the Subcommittee. The Under Secretary of the Treasury submitted the cost comparison to the Subcommittee by letter of October 30, 1967. Pursuant to instructions contained in your request, the cost comparison was to be made on the basis of the costs under the insured and direct loan programs for 500 student borrowers, assuming that each student borrows $1,000 a year for 4 years and has a 10-year repayment period. Additionally, the comparison was to give redognition to certain fees proposed in an amendment to section 428 of the Higher Education Act of 1965 which would authorize the Commissioner of Education to pay lending institutions a loan placement fee of not to exceed $35 for the processing of each student loan and a conversation fee of not to exceed $35 for the consolidation, to a repayment status, of all loans to each student. The comparison was to show also the cost of the insured and direct loan programs with and without teacher-cancellation provisions. Such cancellation provisions exist under the direct loan program but are not applicable to the in- sured loan program. The cancellation provisions for the di.re~t loan program state that a maximum of 50 percent ~if loan indebtedness and interest may be canceled at the rate ~f 10 percent of the total loan, plus interest ther~on, for each year that the bor- rower serves as a full4ime teacher. A borrower who elects to teach in a school with a high concentration of students from low-income families or teach handicapped children may qualify for cancellation of his entire obligation at the rate of 15 percent per year. The following cost comparison and accompanying footnotes were included in the Treasury Department's submission to the Subcommittee. In the cost com- parison "NDEA" refers to the direct loan program and "GSLP" refers to the insured loan program. PAGENO="0401" 907 COMPARISON OF RELATIVE FEDERAL GOVERNMENT COSTS FOR NDEA AND GUARANTEED STUDENT LOAN PRO- GRAMS, PRESENT VALUES IN DOLLARS' NDEA GSLP Federal canital contribution $534,808 Interest receipts, deduct -185,478 Payments for institutions' administrative cost 115, 064 Cancellations, 10 percent and 15 oercent 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 3 713,694 3 579, 407 1 Based on costs incurred by Federal Government for 500 students borrowing $4,000 each with 10-year rep.~yrnent cycle, 5~-percent discount rate. Present value is the standard method used for comnaring 2 or more streams of receiots and payments which h.ve different time uatterns. It is based on the concept that a dollar st 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 reinsur- -ance, the FederJ 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- 1cellation feature to GSLP would increase the GSLP tot...I cost to $828,972. METHOD USED IN COMPUTING COMPARATIVE COSTS The Treasury Department's calculation was made using the discounting tech- `nique of calculating the present value of costs. The theory underlying the dis- counting technique is that benefits from programs to be realized in the near future are ~aiued more highly than beiiefits to be realized in the more distant fu- ture and that costs which must be incurred in the near future loom larger than costs that will be incurred in the more distant future. The discounting of future benefits and costs makes them comparable to present benefits and costs, i.e., to the present value of benefits and costs. The numerical standard used in making these intertemporal comparisons is called the discount rate. ASSUMPTIONS USED IN TREASURY'S COST COMPARISON Our review of material supporting the cost comparison shows that the Treas- ~ury Department made certain assumptions with respect to various aspects of the two loan programs. These assumptions and related background information are shown below: 1. Each of 500 students will borrow $1,000 a year for 4 years and lohn dis- bursements will be made to each student semiannually. 2. Repayments of the loan, which will begin after a 9-month grace period, will be made in equal quarterly payments during each year for 10 years. 3. For the calculation of administrative costs in the comparison, 1 percent of the aggregate loan balance outstanding at the end of each fiscal year will be used for the direct loan program and placement and conversion fees of $25 will be used for the insured loan program. Administrative expenses under the direct loan program and fees under the insured loan program will be paid annually. For administrative expenses under the direct loan program, educational insti- tutions are allowed 1 percent of the aggregate loan balance outstanding at the end of each fiscal year or 50 percent of the amount of administrative costs in- curred whichever is lower. Proposed legislation relative to the insured loan program would allow a placement fee of not to exceed $35 for the processing of each student's loan and a conversion fee of not to exceed $35 for the consolida- tion, to `a repayment status, of all loans to each student. 4. Under both programs 25 percent of the 500 borrowers, or 125 borrowers, -will have all or part of their loan indebtedness plus accrued interest canceled. Ninety-five of these 125 borrowers (19 percent of the total) will have 50 per- -cent of their loan indebtedness canceled at the rate of 10 percent a year, and 30 borrowers (6 percent -of -the total) will have their entire obligation canceled at the rate of 15 percent a year. 5. For borrowers under the insured loan program, interest payments by the -Government will be made on their behalf at the rate of 6 percent annually while In school and during the grace period and at 3 percent during the rephyment PAGENO="0402" 908 period. For borrowers under the direct loan program, interest payments by the borrowers will be made at a rate of 3 percent during the repayment period only.. 6. Present values will be computed on the basis of an estimated Treasury bor- rowing rate of 5~ percent. 7. Federal advances will be made to an insurance reserve fund at a rate of 1 percent of the amount of loan disbursements. These advances will be repaid to the Federal Government at a rate of 1 percent of the loan repayments by the borrower. Federal advances, referred to as seed money, are made to insuring agencies to help establish or strengthen the reserve funds of the insured loan program. Proposed legislation now being considered by the Congress would provide in effect that Federal advances made to an insurance reserve fund after June 30, 1908, would equal 1 percent of the outstanding loans based on a 10-percent reserve that most insuring agencies maintain. COMMENTS ON COST COMPARISON AND OTHER MATTERS FOR THE CONSIDERATION OF THE SUBCOMMITTEE On the basis of our review, we believe that the cost comparison submitted by the Treasury Department presents fairly the relative costs of the two programs, subject to the limitations imposed by the various assumptions upon which the cost comparison was based. Certain matters concerning the presentation of the cost comparison, the assumptions used in making the cost comparison, and other~ material accompanying the cost comparison, are presented below for the Sub- committee's consideration. Matters related to presentation The cost comparison shows a lump-sum figure of $249,300 for cancellation costs: under the direct loan program. Although this amount represents the increased.' costs of the direct loan program when cancellation provisions are applicable, on the basis of assumptions made, the comparison does not show how the costs as-~ sociated with cancellation provisions affect other cost categories presented in the comparison, such as Federal capital contribution, interest receipts, and adminis-- trative costs. The effect of distributing costs associated with cancellation pro- visions to other cost categories under the direct loan program is shown in the following table. Direct loan program with cancellations Cancellation costs Cancellation costs not distributed distributed to other Difference to other cost cost categories categories Estimated Treasury borrowing rate (percent) 53"g 534 Federal capital contribution 1534, 808 1720,968 $186, 160- Interest receipts, deduct -185,478 -142,567 42,911 Payments for institutions' administrative cost 115,064 114,410 -654 Cancellation costs 249,300 Principal canceled (10 percent paid to schools) 20,883 20,883 Cancellation costs 713,694 713,694 249,300' As shown by the above table, the distribution of cancellation costs to other~ cost categories has significantly affected the costs applicable to the Federal capital. contribution and the interest receipts. The costs applicable to the Federal capital. contribution before distribution of cancellation costs were arrived at on the basis: that loans would be repaid in full. To the extent that loans are canceled, in partT or in full, the anticipated repayments are thereby reduced, which results in an increase in the costs of the Federal capital contribution. Similarly, such loan. cancellations have a significant effect on anticipated interest receipts. Matters related to assnna.ptions naade and other material accompanying tite cost comparison Following are our comments on certain of the asumptions upon which the Trea~ry Department's cost comparison was based. which we believe would b& of assistance in interpreting the results of the comparison. PAGENO="0403" 909 DETERMINATION OF DISCOUNT RATE TO BE USED The Single, most important assumption made, in our view, was that the esti- mated costs should be discounted at a rate of 51/8 percent, representing the esti- mated costs of Government borrowings. This Office has issued a report,1 a copy of which is enclosed, on an earlier survey~ of the use by 23 selected Federal agencies of the technique of discounting in~ making evaluations of future programs. In that report we indicated that, with respect to the determination of the discount rate to be used under the discounting technique, one school of thought holds that such rate should be determined by, and be equal to, the rate paid by the Treasury Department in borrowing money. Another school of thought holds that the rate should be determined by what is foregone in the economy, namely, the return that could have been earned in the private sector of the economy, when the decision is made to commit resources to* the public sector. Still another view, as indicated in that report, is that the rate should be the total of the interest cost to the Government and the cost of taxes forgone by the Government when resources are withdrawn from the private' sector to use for Government programs. Under the second and third views stated above, it appears that the discount rate to be used for determining the total cost to the Government would be higher' than 51/s percent and that a discount rate from 7 to 8 percent could be' demonstrated. With regard to the view that the rate should be determined by the return that could have been earned in the public sector of the economy, we noted that, in its report2 relative to the question of the discount rate which should be used in' evaluating public programs, the Joint Economic Committee, Congress of the' United States, stated: "According to the testimony received by the subcommittee, economists gen- erally agree that the appropriate discount rate to use in evaluating public pro- grams is the opportunity cost of capital in the private sector. * * * The witnesses~ generally agreed, however, that the opportunity cost of capital in the private' sector is at least 10 percent at the present time." Proponents of all views agree that the use ~f different discount rates has an effect on financial judgments. Because of the divergence of opinion at this time with respect to the discount rate `that should be used and the effect that the use of different discount rates would have on the estimated costs of a program, we have calculated the cost of the direct and insured loan programs using discount rates of 7 percent and 10 percent. Our calculations were made both with and without provisions for can- cellation costs, because of the initial request by the Subcommittee Chairman that the cost comparison made by the Treasury be made in such a manner. Our calcu- lations at the discount rates of 7 percent and 10 percent and a calculation at the' 51/8-percent discount rate used in the Treasury Department's cost comparison follow. COMPARISON OF RELATIVE FEDERAL GOVERNMENT COSTS FOR THE DIRECT AND INSURED LOAN PROGRAMS AT' VARYING DISCOUNT RATES WITH AND WITHOUT CANCELLATION COSTS wit Direct loan program hout cancellation costs Direct loan program with cancellation costs Discount rate (percent) 53~ 7 10 5~/~ 7 10 Federal capital contribution $534,808 $657,591 $799,713 $720,968 $818,005 1928,628' lnterestrecaipts,deduct -185,478 -160,967 -128,945 --142,567 -123,275 -98,211 Payments for institutions' administrative cost 115,064 103,876 88,816 114,410 103,356 88,446 Principal canceled (10 percent paid to schools) 20, 883 18, 128 14,503 Total cost 464, 394 600, 500 759, 584 713,694 817, 114 933, 366 1 See report to Joint Economic Committee, Congress of the United States. entitled' Survey of Use by Federal Agencies of the Discounting Technique in Evaluating Future' Programs, B-102719, diated January 29, 1968. Ileport of the Subcommittee on Economy in Government, Joint Economic Committee, Congress of the United States, December 4, 1967. PAGENO="0404" 910 Insu red loan program without cancellation costs Ins ured loan program with cancellation costs Discount rate (percent) 5~ 7 10 51% 7 10 Placement and conversion fees $56, 338 $54. 340 $51, 392 $56, 338 $54, 340 $51, 392 Interest paid on behalf of borrowers 517, 127 474, 073 415, 265 557, 879 510, 197 445, 091 Insurance reserve matching seed money 5, 942 7, 306 8, 886 5, 923 7, 286 8, 849 Principal canceled (paid to lending insti- tutions) 208,832 181,279 146,954 Total cost 579,407 535,719 475,543 828,972 753,102 652,286 Cost of insured loan program in excess of direct loan program 115,013 115,278 Cost of direct loan program in excess of insured loan program 64,781 284,041 64,012 281,080 As shown in the above table at the 51/5-percent discount rate used in the cost comparison by the Treasury Department, the direct loan program was less costly than the insured loan program both with and without cancellation costs. How- ever, at the 7- and 10-percent discount rates, the cost comparison shows a reverse trend and the insured loan program was less costly than the direct loan program. At the 7-percent rate, costs for the insured loan program amount to $753,102 with cancellation costs and $535,719 without cancellation costs compared with costs for the direct loan program of $817,114 with cancellation costs and $600,500 without cancellation costs. At the 10-percent rate, costs for the insured loan program amount to $652,286 with cancellation costs and $475,543 without cancellation costs compared with costs for the direct loan program of $933,366 with cancellation costs and $759,584 without cancellation costs. Also, the above table indicates that, as the discount rate was increased, the cost of the insured loan program showed a downward trend while the cost of the direct loan program showed an upward trend and thereby widened the gap in costs between the two programs. We believe that our cost comparisons of the two programs at the 7-percent and 10-percent discount rates indicate that the determination of total costs under those programs is particularly sensitive to the discount rate used. ADMINISTRATIVE EXPENSES APPLICABLE TO THE DIRECT LOAN PROGRAM ~. second assumption used in the cost comparison relates to the administrative expenses applicable to the direct loan program. In the cost comparison submitted -to the Subcommittee by the Treasury Department, administrative expenses determined on the basis of 1 percent of the outstanding loan balances were con- sidered appropriate. Our review of the basis upon which the 1-percent rate was * determined revealed the following matters. The 1-percent rate was computed by the Office of Education by dividing the total administrative expenses reported to it by various educational institutions for fiscal year 1966 by the institutions' total amount of outstanding loans. The result thus obtained, which was approximately nine tenths of 1 percent, was rounded to 1 percent. In addition to increasing the rate by one tenth of 1 percent for rounding purposes, the computation did not take into account the outstanding loan balances for educational institutions which did not claim administrative costs. Accordingly, the 1-percent rate used in computing administrative costs for the direct loan pro- gram appears to be on the high side when compared with the actual costs claimed -for administrative expenses by the educational institutions administering the program. However, statistics for all educational institutions we-re not readily available :to allow us to compute a more accurate rate for use in estimating the aclnsissistrative expenses to be included ~n the cost comparison. Also, with -respect to administrative expenses, we noted that, in part I, attach- ment B, of the cost comparison submitted by the -Treasury Department, reference was made to administrative expenses on a per loan basis. According to the attach- ment, the amount of administrative expenses per loan made during the year averaged $26 where claims for such costs were based on 1 percent of the aggregate loan balances and $13 where claims for such costs were based on 50 percent of the amount of administrative costs incurred. These amounts were not used in the Treasury Department's cost comparison but were provided for the information of the Subcommittee. These amounts were -derived by the Office of Education from a ~amp1e of approximately 10 percent of PAGENO="0405" 911 the educational institutions that submitted claims for administrative expenses in fiscal year 1966. Our evaluation of the basis upon which the Office of Education determined the administrative expenses of $26 and $13 applicable to each loan disclosed two matters which we believe should be brought to the attention of the Subcommittee. First, an arithmetical error wa's made in computing the $26 unit cost with respect to the educational institutions claiming administrative costs under the 1-percent criteria. This unit cost should have been computed at $20 per loan, and officials of the Office of Education acknowledged the arithmetical error. Secondly, in its computation of the $26 and $13 `amounts, the Office of Education divided the dollar amount of the administrative expenses reported by the educa- tional institutions for fiscal year 1966 by the number of student loans made during that fiscal year. The figures thus derived represented an allocation of all acimin- istrative expenses claimed for the fiscal year only to those borrowers who obtained loan's during the fiscal year and did not give recognition to any administrative expenses applicaible to borrowers now in `a repayment status. It seems that a large percentage of an educational institution's administrative expenses may be due to costs incurred in connection with billing and collection efforts for students in a repayment status. Furthermore, since fiscal year 1966 was `the 8th year `for the direct loan program, a substantial number of borrowers were in a repayment status, and consideration of the outstanding balances of loans applicable to these borrowers would tend to decrease the average adminis- trative expense per `loan. FEDERAL ADVANCES TO INSURANCE RESERVE An additional `assumption made in the cost comparison with respect to the insured loan program was that Federal advances to an insurance reserve of 1 percent of `the amount of loan disbursements (referred to as "seed money") would be repaid to the Federal Government as the loan was repaid by the borrower. This assumption had `the effect of reducing the cost of the insured loan program. Approximately $15 million in seed money (of the $17.5 million authorized) has been advanced for insurance reserves maintained by States and nonprofit organizations. We were informed by a responsible official of the Office of Educa- tion that repayments of seed money had not been made by States and nonprofit organizations and that none were expected to be made in the near future. Additionally, one of the Higher Education Act amendments currently being con- sidered by the Congress proposes a $12.5 million increase in authorizations for Federal advances of seed money. To the extent that Federal advances of seed money are increased and to the extent that Federal advances remain outstanding, the cost of the insured loan program will be increased. Because of your request for the early submission of our report, we did not obtain the views of either the Department of Health, Education, and Welfare or the Treasury Department on the comments in this report. We plan to make no further distribution of this report unless copies are specifically 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 report. We trust that the information presented above will serve the purposes of your request. Sincerely yours, FRANK H. WEITZEL, Assistant Comptroller General of the United States. AMERICAN FEDERATION OF STATE, COUNTY, & MUNICIPAL EMPLOYEES, AFL-CIO, Washington, D.C., February 26, 1968. Hon. EDITH GREEN, Chairman, Select Subcommittee of the House Education and Labor Committee, Rayburn House Office Building, Washington, D.C. MY DEAR CONGRESSWOMAN: Would you be so kind as to insert this statement into the record of the hearing on HR. 15067? The American Federation of State, County and Municipal Employees. AFL- CIO, applauds the Education for the Public Service Act, (H.R. 15067) which you PAGENO="0406" 912 co-introduced. The purpose of the legislation to improve the educational qualifi- cations of public servants is good. The method by which the legislation seeks to achieve this is good. There are two portions of the bill to which we direct your attention because of language difficulties which might impair the fulfillment of the objectives of the bill. Neither of these two points have a direct effect upon our 370,000 members, but we are effected by the quality of public service and the image of public employment. Consequently, we pass these suggestions on to you merely to improve -the bill and to meet the civic responsibility with which we are charged. Section 1213(4) (A) requires that a graduate or professional program of an institution of higher education will recommend "only persons of superior promise" (lines 14-15, p. 113). A statement suggesting positive recruitment methods to insure equal opportunity in the selection process would be desirable in over- coming the obvious problems flowing out of the contemporary utilization of certain symbols of academic or vocational "superiority." In other words, langu- age should be employed to offset the already inherent tendency to give less than full consideration to culturally deprived individuals. Section 1221(b) (3) provides a definition of "institution of higher education" (lines 8-11, p. 115) which would include two-year program community colleges. This is particularly noteworthy since such institutions are playing an increas- ingly important role in dealing with urban problems. The qualification of credits toward a degree presents problems whereby a fully accredited institution might not fall within the definition because of the treatment accorded course credits by four-year institutions. This possibility could be avoided by substituting the word "may" for "is" on line 10. Allow me to again commend you for your leadership in recognizing the pro- found implications of today's public personnel mechanisms and in developing an effective means to deal with the situation. Respectfully, JERRY WURF, International President. COLLEGE OF THE VIRGIN ISLANDS, February 13, 1968. Hon. EDITH GREEN, Chairman, ~S'pecial Committee on Education, House of Representatives, Washington, D.C. DEAR MRS. GREEN: I am writing to you to urge consideration of a change in the Higher Education Facilities Act under Title I. The change which is being re- quested is to provide for a minimum amount of $50,000 of grant money for each of the states under each of the two categories of Junior Colleges and Four Year Colleges. The reason for proposing this change is to provide a minimum level of support on which a building program can be based. If the amounts which present for- mulas provide are less than is here being proposed the result may be to hold out the promise but not the actuality of strengthening a state's higher education facilities. We are extremely pleased in the Virgin Islands to participate in this important program and request this change so that our participation can be more -meaningful. We continue to believe that the work of the Special Education Committee is of -the greatest importance to higher education and to give our fullest support to the leadership which this committee is providing. Sincerely yours, LAWRENCE C. WANLASS, President. 0