We have also proposed an amendment to the requirements for determining eligibility for Federal interest benefits which would eliminate the needs test for loans of any amount up to the $2,500 annual ceiling for students with an adjusted family income of less than $15,000. Under the present law, the interest subsidy may be paid, without any demonstration of need, only on a loan of $2,000 or less for such students. Of course, we continue to support the needs test requirement for any student whose adjusted family income is $15,000 or greater, regardless of loan amount. Several amendments have also been introduced as a means of increasing and broadening lender participation in the GSLP. Two important elements of the GSLP which pertain to lender yield are (1) the maximum rate of interest which may be charged the borrower and (2) the maximum rate of the special allowance paid to lenders in order to provide them with an equitable yield in light of current economic conditions. Under the Administration's current proposal, the rate of interest to be charged borrowers would be raised from 7 percent to 8 percent on all new guaranteed student loans while the maximum special allowance would be retained at 3 percent. Loans which already have been made would continue under the 7 percent level but lenders holding such loans could receive a maximum special allowance rate of 4 percent. In both cases, the maximum yield to the lender would be 11 percent. At the present time, we are particularly aware of the fact that participating lenders under the GSLP do not feel that the current ceiling of 10 percent (7 percent interest rate plus up to 3 percent special allowance) is high enough to attract the necessary capital for ensuring their increased and continued participation under the GSLP. We believe the ceiling must be increased to 11 percent. Coupled with this proposal, the Administration has also recommended that lenders be able to receive special allowance payments based not just upon the unpaid principal amount of loans, but also based upon interest that accrues on nonsubsidized loans during the in-school and 9 to 12 month grace period which is added to the principal amount of the loan when the repayment period begins. Present law excludes such accrued interest for special allowance purposes and, as a result, lenders have billed students for the interest on nonsubsidized loans as it accrues. Many such students have had difficulty in meeting their payments while in school and defaults have occurred which this amendment should greatly reduce. To further encourage lenders to make loans which are not eligible for Federal interest benefits, we have proposed allowing lenders to compound any such interest which they allow to accrue during the in-school period. We have also recommended a legislative change relating to the foreign schools which are eligible for the GSLP. Currently, we have special problems with those schools as a result of the inclusion of the concept of financial needs analysis in the GSLP. Language and cultural differences, as well as lack of understanding of the U.S. standard of living and the various determinants that enter into needs analysis, make it impractical for the foreign schools to comply with this requirement. We have proposed a technical amendment to the law which would provide that needs analysis for students attending foreign institutions be conducted by the guarantee agencies where the loan is insured by such agencies. In the case of the Federally insured phase of the program, needs analysis would be conducted by the Commissioner of Education. Finally, as part of our continuing effort to improve the administration of the GSLP, we have proposed the decentralization to the regional OE offices of certain functions of the Commissioner under the GSLP. The decentralized functions would include reviewing applications for loan insurance and issuing certificates of insurance, processing claims for insurance payments under the program, and carrying out certain collection activities. Our proposal would continue the College Work-Study program at an annual authorization of $250 million. There are, however, two set-aside provisions in this statute which we propose to repeal. The first is a reservation of 2 percent of the funds for the jurisdictions of Guam, Puerto Rico, the Virgin Islands, American Samoa, and the Trust Territory of the Pacific Islands. Under the general provisions of the Higher Education Act, these areas are to be treated as States for purposes of that statute. However, Work-Study, as the law presently is written, is an exception to that general rule. By eliminating the 2 percent set-aside and treating these areas as States, the College Work-Study program will then conform with procedures presently employed in the remaining student assistance and other higher education programs. Similarly a 10 percent set-aside enacted for the purpose of holding States harmless at Fiscal Year 1972 funding levels is repealed. We are recommending that all funds be allocated to the States and that no funds be reserved for the Commissioner's discretion. Another provision of H.R. 11939 permits a graduated reduction in the Federal matching share in the College Work-Study program. The Federal contribution is presently 80 percent reduced from 90 percent several years ago. It is proposed that this contribution be reduced 10 percent each fiscal year until it reaches 50 percent in Fiscal Year 1979. As those familiar with the Work-Study program know, participating students are engaged in work which is frequently useful and productive to their employers. It seems only equitable that these employers, be they educational institutions or others, provide a greater portion of the cost. At the end of the period of graduated reduction, there will still be a 50 percent subsidy which we believe to be a generous Federal contribution. Our proposal revises the poverty level in the third part of the allocation formula for the College Work-Study program, by substituting the Orshansky poverty criteria for the present level of $3,000, which was established in 1964. Thus, the present realities of the economy would be more adequately recognized in the apportioning of these funds. Further, it is recommended that the authority for additional financial support for students, particularly veterans of Indochina and Korea, for Work-Study in community service and educational development programs be repealed. This program has never been funded and we find it difficult to justify, in view of the other benefits available to veterans. We would extend the Cooperative Education program at an annual authorization of $8 million. We would propose only one change in this authority-that we eliminate the existing requirement that cooperative education must consist of alternative periods of "full-time" academic study and employment. This modification recognizes certain existing practices and provides greater flexibility to the program in furnishing assistance to varying cooperative education arrangements. A number of significant changes are proposed in the National Direct Student Loan program. We are requesting that the authority for Federal capital contributions be repealed. Funds which have been granted in previous years to institutions will remain vested in the institutions so that they can continue to make loans to their students. The NDSL funds now amounts to $3.2 billion. collections from borrowers repaying their loans now reach nearly $250 million annually which can be used for relending. One of the options that would be available to the institutions is to use their NDSL capital to make Guaranteed Student Loans. With this in mind, we are proposing a number of amendments which would more closely align the terms for the direct loans with those in practice or proposed for Guaranteed Student Loans. The interest rate would be raised to eight percent, provision is made for using revolving funds to make GSL loans which can be sold in a secondary market, and the cancellation provisions are terminated. Our proposal broadens the authority for assisting disadvantaged students to prepare for, or to enroll in, institutions of higher education. In addition to existing activities, it includes authority to train individuals to provide these services. The program would be authorized at an annual level of $60.331,000. The proposal would lastly add a new provision to Title IV authorizing the Commissioner to prescribe procedures for the coordination of student assistance programs, including promulgation of a common application form and the exchange of information with participating agencies, institutions, and organizations as may be necessary to carry out those programs. Such coordination is vital if these programs are to operate successfully and at a maximum efficiency. This provision is designed to resolve the question of whether, under the Privacy Act, the Commissioner can carry out such coordinated activities. However, any information collection processes and systems of records established pursuant to this section would be required to be maintained in conformance with that Act. We would also draw your attention to the fact that Title IV encompasses the authority for cost-of-education payments to institutions of higher education and veterans cost-of-instruction payments. Reflecting the Administration's continuing belief that our higher education effort should be directed at student assistance rather than institutional assistance, our proposal calls for the repeal of these authorities. ELIGIBILITY OF INSTITUTIONS There has been much recent discussion of abuses within Federal student assistance programs. It is clear that provisions relating to the eligibility of institutions to participate in these programs must be strengthened, if their legislative intent is to be fulfilled. Recognizing this need, our proposal contains a number of new provisions relating to institutional eligibility. Our proposal would require institutions participating in any student aid program under the Higher Education Act to: Permit the Secretary or Commissioner to have access to records of the institution as necessary to audit the program and ensure compliance with requirements. Comply with reasonable standards of financial responsibility and administrative capability as prescribed by regulation. Comply with regulations designed to provide protection to students as consumers. The proposal authorizes the issuance of regulations providing for the limitation, suspension, or termination of the eligibility of institutions failing to comply with program requirements. This parallels procedures presently employed in the Guaranteed Student Loan Program. The definition of higher education is modified to include those institutions which admit individuals who are beyond compulsory school age and who can benefit from the instruction offered. Present law requires that the institution admit only high school graduates or the equivalent. NATIONAL ADVISORY COMMITTEE ON INSTITUTIONAL ELIGIBILITY Our proposal establishes in the Office of Education a National Advisory Com mittee on Institutional Eligibility. This would replace the Accreditation and Institutional Eligibility Advisory Committee which was established by the Secretary in 1974. Under the General Education Provisions Act, that Committee can exist for only two years without statutory authority. Our proposal would provide the necessary statutory authority. The Committee would consist of 15 members appointed by the Secretary. The functions of the Committee would include: (1) providing advice to the Commissioner on standards and criteria for establishing interim eligibility of schools for which there is no State or nationally recognized accrediting agency or association; (2) advising the Commissioner with regard to the recognition of accrediting agencies and associations; (3) advising the Commissioner on the development of criteria for such recognition; (4) advising the Commissioner with regard to formulation of policy on institutional eligibility; (5) advising the Commissioner with regard to State agencies designated as reliable authorities on the quality of certain types of post-secondary education in their States; (6) making appropriate legislative recommendations; (7) advising the Commissioner with regard to developments in the accreditation process; and, (8) advising the Commissioner with regard to his responsibilities in relation to the award of degreegranting status to Federal agencies and institutions. It is our belief that the enactment of these eligibility requirements and the establishment of the National Advisory Committee would go far toward dealing with those program abuses which are of general concern. Title V The basic rationale which led to the passage of the Education Professions Development Act in 1967 was to relieve critical teacher shortages. That need has substantially been satisfied. Today, the education profession faces a different type of challenge. Inservice training is needed to enable our present school personnel-most of them trained years ago and now tenured-to cope effectively with today's students, who have changed drastically with shifting neighborhoods, desegregation, youthful alienation, and youth's ready access to other media of education. There is also a need to assist the personnel in key administrative positions— school principals and superintendents-to deal with roles which require a skill and knowledge to cope with a variety of problems (e.g., desegregation, unionization of teachers, and increased public criticism of education). Section 15 of our proposed legislation contains a number of amendments to the provisions in Title V of HEA-Education Professions Development (EPDA). Subsection (a) would add two additional items to the statement of purpose for Title V: providing inservice training to enable currently qualified teachers to meet new and emerging problems and providing additional skills to assist administrative personnel in meeting their responsibilities. Subsection (b) would extend the authorization for part B of Title V-Teacher Corps. Subsection (c) repeals Section 504 and parts C. D. E, and F of Title V. Section 16 of our proposal contains a number of amendments to part B of Title V which authorizes the Teacher Corps. Subsection (a) clarifies the authority to include interns and other professional personnel in Teacher Corps demonstration projects, as well as the currently authorized teachers and teacher-aides. The interns should be trained together with the rest of the school staff for maximum training effectiveness. Subsection (b) would add "other educational personnel" to the category of those persons who can participate in Teacher Corps demonstration projects. Subsection (c) would: 1. Add "other educational personnel" to those persons who may participate in the Teacher Corps Program; 2. Permit other educational personnel to be members of teaching teams; and 3. Permit technical assistance to be made available to State as well as to local education agencies. Title VI The purpose of Title VI of the Higher Education Act is to improve the quality of undergraduate instruction in institutions of higher education by providing financial assistance on a matching basis for the acquisition of instructional equipment, materials and related minor remodeling. Funds are allocated to the States by a formula based on higher education enrollment and per capita income. We propose that this authority be repealed. Our proposal that Title VI be repealed is consistent with the Administration's philosophy that financial assistance should be concentrated on students rather than narrow categorical programs. Title VII The purpose of Title VII is to provide grants and loans to higher education institutions to finance construction, rehabilitation, and improvement of undergraduate and graduate academic facilities. The Federal government has provided financial assistance for the construction of academic facilities throughout the 55 States and territories. During the period from Fiscal Year 1965 through Fiscal Year 1975, approximately $4.0 billion in grants and low interest loans were awarded in support of nearly $11.0 billion of academic facilities. The grant program for undergraduate academic facilities received declining appropriations since 1965, and none in Fiscal Years 1974 and 1975, even though Fiscal Year 1973 funds were released to the program in May of 1974 for obligations during those years. No funds have been appropriated for direct loans since Fiscal Year 1970, when direct loans were replaced by the Annual Interest Grant program. No funding under that program is anticipated in FY 1976. There has been no funding request or appropriation for the program of grants for construction of graduate academic facilities since Fiscal Year 1969. Similarly, the program of assistance in major disaster areas has not been funded since FY 1967. A recently completed evaluation study of college facilities indicates that in 1971 the supply of classroom spaces had exceeded demand. Further, based upon projections of enrollment growth during the next ten years, there will be no need for extensive new construction, although some imbalance will exist in the type of space available by type of institution and region. Overall, however, it is clear that any current imbalance does not constitute a national problem. We are therefore requesting the repeal of Title VII, with the exception of authority required for the higher education academic facilities loan and loan insurance fund, so that obligations with respect to prior year loan commitments may be met. The authority to make annual interest grants to those institutions which have received such grants prior to July 1, 1975 would also be continued. Title IX Our proposed legislation authorizes the Commissioner to continue under Title IX-B college teacher fellowships during Fiscal Year 1976 in the case of veterans: 65-609-765C who had their period of study under a previously awarded fellowship interrupted by service in the Armed Forces. As this will be the last year of eligibility for all such veterans to begin their final year of studies, Fiscal Year 1976 will be the last year for which appropriations will be necessary under this authority. Title IX-B would therefore be repealed effective July 1, 1976. The program for assistance to disadvantaged individuals for training in the legal profession will continue under existing authority through FY 1977. The remainder of graduate programs under Title IX, including the programs of public service fellowships and mining fellowships, would be repealed. There has been no evidence developed that supports the need for such categorical assistance. On the contrary, we believe that long term career prospects in these fields are sufficient to attract graduate students without these fellowships, Those students wishing to pursue studies in these areas who need aid have at their disposal many of the general student assistance programs authorized under IV. Titles VIII, X, and XI We are requesting that Titles VIII, X, and XI of the Higher Education Act, the authorizations for Networks for Knowledge, Community Colleges and Occupational Education, and Law School Clinical Experience Programs respectively, be repealed. The Administration has never requested funding for these programs and we do not anticipate such future requests. Similarly, the Congress has never appropriated funds for their implementation. We see no purpose in maintaining these non-functioning authorities. Title XII The proposal would repeal Sections 1202 and 1203 of Title XII of the Higher Education Act, the State Postsecondary Education Commission and comprehensive planning provisions. These provisions were enacted in 1972 in an effort to encourage statewide planning and coordination of postsecondary education efforts. The statute provided that the State Commissions could be newly created or that existing agencies or Commissions could be duly designated. In either instance, however, the Commissions were to be broadly representative of the general public and of all types of institutions of postsecondary education in the State. By the end of this fiscal year, in excess of six million dollars will have been awarded to such State Commissions for planning activities. Fifty-one such Commissions have been established in forty-six States, the District of Columbia. Puerto Rico, Guam, the Virgin Islands, and American Samoa. It seems apparent that the original purpose-that of encouraging the establishment of these broadly representative planning bodies to initiate statewide planning-has been met and what is essentially a State responsibility can be returned to the States. It is anticipated that the Commissions, now that they are in place, will continue to function and that the States will seek other sources of support for whatever funding may be necessary to continue their activities. Title VI of the National Defense Education Act NDEA has proven to be an effective program for providing foreign language training and area studies. These aspects of the NDEA program provide a means for correcting existing disciplinary and geographic imbalances, broadening the scope of area studies training, and improving and maintaining language skills. The specialized nature of the Title VI, NDEA research program would be greatly facilitated if there were to be added to the present authority to award contracts the authority to make grant awards to provide financial assistance to language and area researchers and materials developers. The addition to grant authority to Section 602 is recommended as an effective means for the U.S. Office of Education to respond to unsolicited proposals in the areas authorized by the NDEA legislation. The grants mechanism also would effectively augment administration of the priority areas of the program as determined and announced by the U.S. Office of Education. Authorization to make grants would in no way preclude the use of contracts in those instances in which the interests of the program would be best served by the contract process. We are also proposing that funding for this Title be continued through the fiscal year ending September 30, 1979. International Education Act of 1966 Since we feel that all activities which we expect to carry out in the field of international education can be conducted under authority provided by Title VI |