HIGHER EDUCATION ACT AMENDMENTS OF 1976

TUESDAY, FEBRUARY 24, 1976

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON POSTSECONDARY EDUCATION

OF THE COMMITTEE ON EDUCATION AND LABOR,

Washington, D.C.

The subcommittee met at 10:10 a.m., pursuant to notice, in room 2175, Rayburn House Office Building, Hon. James G. O'Hara (chairman of the subcommittee) presiding.

Members present: Representatives O'Hara, Ford, Chisholm, Mottl, and Buchanan.

Mr. O'HARA. The Subcommittee on Postsecondary Education will come to order.

Today's hearing will very likely mark the close of this very long and thorough series of hearings on the shape of the Higher Education Act. Not counting the extensive series of oversight hearings during the 93d Congress, we have held, beginning last March, 12 days of legislative hearings on student financial aid, 2 days taking testimony on problems arising out of the administration of the basic grant program, a day to discuss the administration's reaction to the consensus method of needs analysis which had been worked out by the higher education community and, counting today, 12 days on the Higher Education Act in general.

I don't list that catalog of our hearings with any sense of excessive pride, because I must also admit that we are very seriously behind schedule in the marking up of the new Higher Education Act. I had high hopes at the beginning of this Congress that for once we might get a major piece of legislation ready for the statute books substantially before its expiration date. Obviously we will not succeed in that goal this year.

We will have a bill to report to the House, and I am confident there will be Higher Education Amendments of 1976 on the statute books prior to the expiration date of the present law but not by very long.

It is becoming more and more urgent for us all to resolve our differences and arrive at something that can achieve, if not unanimity, at least a large enough majority to be adopted in both Houses and to discourage the President's habit of vetoing legislation dealing with education.

This morning we will be taking testimony from the Assistant Secretary for Education, the Honorable Virginia Trotter; the Commissioner of Education, the Honorable Terrel Bell; and members of their staff who have accompanied them. The testimony, I assume, will

take the shape of an explanation of and arguments in support of H.R. 11939, which is the administration's legislative proposal to amend the Higher Education Act.

Mr. Buchanan, did you wish to say something?

Mr. BUCHANAN. No, Mr. Chairman. I share your regret that we could not succeed in markups earlier and would hope that we can yet make progress in that direction.

Mr. O'HARA. Madam Secretary, we would be very pleased to hear from you at this time.

STATEMENT OF HON. VIRGINIA Y. TROTTER, ASSISTANT SECRETARY FOR EDUCATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED BY TERREL H. BELL, COMMISSIONER OF EDUCATION; VIRGINIA SMITH, DIRECTOR, FUND FOR IMPROVEMENT OF POSTSECONDARY EDUCATION; EDWARD T. YORK, JR., DEPUTY COMMISSIONER, OFFICE OF MANAGEMENT, OFFICE OF EDUCATION; JOHN D. PHILLIPS, DEPUTY COMMISSIONER, BUREAU OF POSTSECONDARY EDUCATION, OFFICE OF EDUCATION; AND RICHARD A. HASTINGS, DEPUTY ASSISTANT SECRETARY FOR LEGISLATION (EDUCATION), DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE

MS. TROTTER. Thank you, Mr. Chairman and members of the committee. It is my pleasure to introduce those who are accompanying me. Other than Dr. Bell, whom you know, Virginia Smith, who is Director of the Fund for the Improvement of Postsecondary Education is on my right; Edward T. York, who is the Deputy Commissioner, Office of Management, Office of Education is on my far right; John D. Phillips, Deputy Commissioner, Bureau of Postsecondary Education is on my far left; and Richard Hastings, Deputy Assistant Secretary for Legislation, Department of HEW is on my immediate left.

I would, with your permission, like to submit for the record a more detailed statement from the one that I am going to present at this time.

Mr. O'HARA. Without objection your statement will be printed in full in the record at this point.

Ms. TROTTER. Thank you.

[The statement referred to follows:]

PREPARED STATEMENT OF HON. VIRGINIA Y. TROTTER, ASSISTANT SECRETARY OF EDUCATION, Department oF HEALTH, EDUCATION, AND WELFARE

Mr. Chairman and members of the committee, thank you for the opportunity to discuss the Administration's proposals for postsecondary education.

As you are aware, postsecondary education is changing in an effort to meet the shifting demands of society. As new forms of education beyond the elementary and secondary school level are taking shape, and new groups expecting to be served by postsecondary education are emerging, it is the responsibility of the Federal Government to provide assistance that is responsive to current needs and conditions. In short, Federal priorities must reflect changing societal and institutional needs.

At the same time, fiscal restraint has become essential in the development of the Federal budget. Federal dollars must be allocated to meet only the most pressing needs of society and allocated only where a distinct Federal role has

been identified. Therefore, we are recommending the termination of some existing Federal programs so that the limited dollars available can be utilized in a more effective manner in support of other programs of postsecondary education.

Title I

Title I of the Higher Education Act authorizes a Community Service and Continuing Education program. Under this title, grants are provided for education programs or services designed to assist in the solution of community problems. Since its enactment in 1965, $110,125,000 has been made available to the States, allowing for the funding of 6,091 projects. It is now time for these Federal funds to be reallocated to higher priority programs, particularly student financial aid, in order that the most effective use can be made of scarce Federal funds.

State agencies have integrated the services provided under this authority into their own programs. Throughout this process, Federal support has been marginal at best.

It is our anticipation that in recognition of the value of these efforts, institutions and State and local governments will continue to provide support for these activities. Consequently, we are proposing that Title I be repealed.

Title II

Title II-A of the Higher Education Act of 1965 created the College Library Resources program.

This program authorizes grants to institutions of higher education and to branches of such institutions in communities other than that of the parent institution to assist and encourage them in the acquisition of library resourcesbooks, periodicals, documents, magnetic tapes, phonograph records, audiovisual materials, and other related library materials. In addition, the Education Amendments of 1972 broadened eligibility to include other public and private nonprofit library institutions whose primary function is to provide library and information services to institutions of higher education on a formal cooperative basis. Three types of grants are awarded to eligible institutions of higher education: (1) Basic grants of up to $5,000, provided that the applicant expends at least the same amount from instructional funds for library resources; (2) Supplemental grants of up to $20 per full-time student (or full-time equivalent of part-time students); and (3) Special Purpose Grants unrestricted as to the amount requested but which must be matched with one dollar of institutional funds for library resources for every three dollars of Federal funds.

Title II-B authorizes two programs. Training in Librarianship and Library Demonstrations.

The Training in Librarianship program provides grants to institutions of higher education and other non-profit library organizations or agencies, to support training and retraining of librarians and information scientists, including paraprofessionals, for service in all types of libraries and information centers.

The other program authorized under Title II-B, Library Demonstrations, provides funds through grants and contracts to improve libraries and information science by demonstration and dissemination. While H.R. 11939 calls for repeal, we are proposing to extend Title II for one additional year and will be submitting legislation to that effect.

Title III

Title III of the Higher Education Act authorizes an institutional support program to strengthen developing colleges through funding programs in faculty growth, curriculum improvement, administrative development and student services. In FY 1973, the program was divided into Basic and Advanced programs of Institutional Development. The Basic program funds projects in large numbers of institutions, whereas the Advanced program funds a limited number of relatively highly developed applicants to accelerate their development to the point where they are no longer in need of support.

Our legislative proposal calls for extending the authorization for Title III with the following amendments:

1. Establishment of a maximum funding level of $110,000,000 for the fiscal year ending June 30, 1976 and each of the succeeding fiscal years ending prior to October 1, 1979.

2. Removal of the provision that no more than 1.4 percent of the amount appropriated can be used for institutions located on or near Indian reservations which have been granted a waiver of the five-year requirement for eligibility on the

basis of their service to the Indian population. This recommendation would enable the program to better serve the education needs of this minority group.

3. Broaden the authority of the Commissioner to waive the five-year accreditation requirement for institutions serving substantial numbers of Spanish-speaking people. Such an amendment is consistent with the treatment presently afforded Indians under this authority.

4. Increase the number of members of the Advisory Council on Developing Institutions from nine to twelve. In view of the urgent need to assist developing institutions with large proportions of low income and minority students, it would be most advantageous if the Advisory Council's membership were expanded in order to provide more representation from those sectors of the population. Title IV

Title IV of the Higher Education Act provides for programs of student financial assistance to assist needy students in obtaining a postsecondary education. Our proposal continues the Basic Educational Opportunity Grant program as the primary vehicle for assistance to disadvantaged students. We are proposing a number of significant amendments to improve the operation and equity of the program. While maintaining the $1,400 maximum awrd for BEOG, we are proposing that the present limitation of one-half cost be replaced and that awards now be computed on the basis of one-half need. Such a change is desirable for reasons of equity and consistency of definition in the program. Where the program is fully funded. the present one-half cost provision results in a number of students receiving a Basic Grant award that meets more than half of their need. At the same time, other students coming from similar family circumstances but attending institutions that have different costs may receive only one-half of their need. We are proposing to correct this inequality of treatment. Since the Basic Grant program is "need based," the use of the half need limitation is the most equitable and consistent method for computing Basic Grant awards.

Another proposed amendment authorizes the Commissioner to prescribe average costs of attendance at individual institutions, if he determines that to do so would simplify the administration of the program. The Basic Grant legislation presently requires that the amount paid by a student for tuition, fees, and room and board be considered in determining his cost for Basic Grant purposes. As a result, a determination must be made for each student as to the amount that he pays for these items of cost. Such individual determinations makes it much more difficult for students to find out in advance the amount of the Basic Grant they will receive.

By adopting this legislative amendment, the administrative work of the financial aid officer at each institution would be greatly reduced. The same average cost would be used for all students enrolled in an institution, thereby eliminating a separate computation for each student. The use of standard student budgets would be quite similar to current practices utilized in determining total need under other need analysis procedures.

It is further proposed that the Commissioner promulgate the expected family contribution schedule by July 1 of the year preceding the calendar year in which the academic year begins. In addition, the provision authorizing a single House of Congress to disapprove the schedule is repealed.

Two provisions are designed to clarify the treatment of social security benefits under the program. The first provision makes it clear that benefits under the Social Security Act should be considered in determining the expected family contribution. The second eliminates the provision requiring payments received under the Social Security Act, which result from an individual's status as a student, to be treated as effective income of the student.

In the current academic year, the effective income of the student has been considered as part of the total family income and treated accordingly. However, we feel that although this does produce the desired results for social security recipients, it gives an unfair advantage to G.I. Bill recipients, since these funds are clearly for educational purposes and only one-half of the V.A. benefits are even considered.

The proposal would establish a new and greatly simplified procedure for making reductions in grant amounts in the event that appropriatons are insufficient to make full payments. Instead of a three-tiered system with different rates of reduc tion for different grant amounts, the proposal permits the Commissioner to take into account the total amount available, the expected number of participants and the award levels in establishing a new awards ceiling.

Our proposal would, in addition, repeal the provision of the statute as it now stands which prohibits the expenditure of any money under the Basic Educa tional Opportunity Grant program for any year for which appropriations for the Supplemental Educational Opportunity Grant program, the College WorkStudy program, and capital contributions for direct student loans do not equal or exceed certain levels.

We are requesting the repeal of the Supplemental Educational Opportunity Grant program. The Basic Grant has become the primary vehicle for obtaining access to postsecondary education for our students. In the 1976-77 academic year, for the first time, all four undergraduate classes will be eligible for participation. It is our belief that the Basic Grant program, operating under a nation-' wide formula for determination of need, is an efficient and equitabie means of assuring access to postsecondary education. Therefore, we believe the SEOG authority should be repealed.

We are proposing that the State Student Incentive Grant program be continued at an annual authorization level of $44,000,000. In addition, we propose that a separate authority for additional appropriations for continuation grants be eliminated and that a single authorization cover both initial and continuation awards.

Further, we are recommending two new requirements for the State Grant program. First, that unless prohibited by the State Constitution, grants be made available to students attending both public and nonprofit private institutions in the State. Such a provision would go far toward assuring that students participating in the program have not only access to postsecondary education but choice among institutions and that our private colleges and universities become full partners in this effort.

The second requirement provides that a grant would not be made to any student who has not first applied for a Basic Educational Opportunity Grant. Such a requirement is an effort to improve the coordination of our student assistance programs. If every qualified student has applied for a Basic Grant before applying for an SSIG, those State scholarship funds will go further and, with much of the need for access having been met by the BEOG award, the SSIG funds can be used to further expand choice.

The segment in the Administration's legislative proposals relating to the Guaranteed Student Loan Program (GSLP) emphasizes the need to permit increases in the amount of money a student can borrow to meet escalating educational costs; to modify existing statutory repayment provision is; to liberalize the eligibility requirements for qualifying for Federal interest benefits; to increase the incentives for lending institutions to enter or remain with the GSLP; and a number of technical and other amendments designed to improve the administration of the program.

Among the proposed amendments to the GSLP, there are several which I would like to focus upon at this time. It is well known that the cost of attending medical schools and other such professional training institutions is increasing in dramatic fashion. Therefore, to assist students who need to borrow funds to attend these schools, we have proposed that the Commissioner of Education can by regulation increase the maximum aggregate loan amount under the GSLP to $25,000 for students attending high cost specialized educational institutions. For example, medical school graduates can well afford to repay more than the current aggregate loan amount of $10,000. In fact, many such graduates do in fact borrow more than this amount but do so through a variety of loan programs. By amending the law in this fashion, it would eliminate the necessity of multiple loan applications, simplify repayment and reduce the incidence of default which sometimes occurs when students have to repay more than one lender.

To further assist in reducing the incidence of defaults in the GSLP, the Administration has further proposed that the maximum period during which a loan may be outstanding will be extended from 15 to 20 years. Furthermore, the new amendments authorize the Commissioner, by regulation, to permit a repayment period in excess of 10 years in the case of students whose aggregate loan amounts exceed $10,000. This provision is extremely important in providing more flexibility in determining repayment schedules for those students who have borrowed large amounts. For example, a student with loans totalling $18,000 would have to pay $209.00 each month over the maximum ten-year period permitted under current law. By increasing the repayment period from 10 years to 15 years, the monthly repayment amount would be reduced to $161.79.