additional government funds be allocated to this end. This new program wi result in increased opportunities for the students and educators of Latin Ame can countries and the United States to study and work together. These Center will request the assistance of universities in Latin America in studying the civilizations and the languages of Latin America. MEMORANDUM FROM NORMAN J. SMALL, ATTORNEY, LEGISLATIVE REFERENCE ST ICE, LIBRARY OF CONGRESS, RE VALIDITY OF PROPOSED AMENDMENT OF THE HIGHT EDUCATION ACT OF 1965 (79 STAT. 1240, 1242, SECTIONS 427 (b), 428(b) (1) - E INCREASING TO 7 PERCENT THE INTERSTATE RATE on FederalLY INSURED LOAN > T COLLEGE STUDENTS, APRIL 19, 1968 Inasmuch as there are no recorded precedents sustaining, by invocation of the principle of National Supremacy (art. VI, cl. 2), federal regulations of interes rates charged by lenders that were in conflict with state usury laws, validate of the aforementioned proposed amendment must be rested on the contentie that this provision is a necessary and proper means (art. I § 8, cl. 10) of ener tuating the Higher Education Act of 1965 which, in turn, encompasses a pe missible exercise of the federal power to expend the proceeds of federal taxto "provide for the . . . general welfare of the United States” (art I § 8, el. 11. Although the general welfare clause (art I § 8, cl. 1) has never been eitstrued as conferring upon the Congress an unlimited discretion to pursue atr course of regulatory activity which in its estimation will enhance national we being, it is no longer open to dispute that the aforesaid power to tax and sen! to promote the general welfare constitutes an independent source of legislative authority and no longer is to be accorded the limited interpretation, initi's advanced by James Madison, that it merely affords the Congress an auxil means of effectuating the exercise of other legislative powers expressly CRferred and enumerated in art. I § 8 of the Constitution. As much was conesdeg by the Supreme Court in United States v. Butler, 297 U.S. 1, 65, 66 (1957) wherein it set forth the following assessment of that power. "Hamilton ... maintained the clause [art I § 8, cl. 1] confers a power separate and distinct from those later enumerated. is not restricted in meaning by the grant of them, and Congress consequently has a substantive power to tax and ta appropriate, limited only by the requirement that it shall be exercised to ree vide for the general welfare of the United States. . . Justice Story in tw Commentaries, espouses the Hamiltonian position . . . Study of all these leads us to conclude that the reading advocated by Justice Story is the correct ore While, therefore, the power to tax is not unlimited, its confines are set in the clause which confers it, and not in those of $8 which bestow and define the legislative powers of Congress. It results that the power of Congress to auther ize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution". At no point in our constitutional history has the Supreme Court ever attempted to delineate the outermost limits of the power to expend the proceeds of federal tax collections for the promotion of the general welfare. In sustain::g an expenditure under this power to acquire lands in Pennsylvania for the erve tion of a national memorial park, specifically a park encompassing the land which the Battle of Gettsyburg was fought, the Supreme Court acknowledod than "an act of Congress which plainly and directly tends to enhance the re spect and love of the citizen for the institution of his country and to quicken ard strengthen his motives to defend them, and which is germane to and intiruter connected with and appropriate to the exercise of some one or all of the powers granted by Congress must be valid... Such a use seems necessarily for a lic use, but one so closely connected with the welfare of the republic itself as to be within the powers granted Congress by the Constitution for the purpose of protecting and preserving the whole country." (United States v. Gettysburg Electric R'y. 160 U.S. 668, 681, 682 (1896)). Subsequently, invalidating the unemployment compensation and old age and survivors insurance provisions of the Social Security Act, the Court commerted as follows concerning the scope of the general welfare clause. "It is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose narrower than the promotion of the general welfare stem of old age pensions has special dangers of its own, if put in force in one ate and rejected in another . . . Only a power that is national can save the erests of all . . . Whether wisdom or unwisdom resides in the scheme of nefits. . . it is not for us to say. The answer to such inquiries must come -m Congress, not the courts When money is spent to promote the general lfare, the concept of welfare or the opposite is shaped by Congress, not the tes" (Steward Machine Co. v. Davis, 301 U.S. 548, 586-587 (1937); Helvering Davis, 301 U.S. 619, 644, 645 (1939)). That the expenditure of federal funds the promotion of agriculture through construction of irrigation and reclaman projects is "for a valid public and national purpose" and accordingly sancned by the general welfare clause also has been acknowledged by the Court Ivanhoe Irreq. Dist. v. McCracken, 357 U.S. 275, 294, 296 (1958)). Appraised in terms of the aforementioned precedents the validity of the fed1 program of assistance to higher education fostered by the Act to be amended uld appear unquestionably immune from challenge. That provision for attainnt of a secondary or college education on the part of younger citizens of the ited States is in the national interest, that the individual skills thereby acred will enhance the strength of the United States as an industrial and itary power, and will contribute to progressive enlargement of its Gross tional Product no less than to attainment of higher living standards on the t of the population are propositions or conclusions that do not appear to be ceptible of refutation. The overall objective of the measure to be amended ng within the reach or constitutional competence of Congress, there remains be determined whether the regulatory provision therein, in its modified form, reasonable and necessary proper means (art. I § 8, cl. 18) of effectuating atment of that constitutionally permissible goal. n adopting the Higher Education Act of 1965 Congress incorporated therein determinations that a number of younger citizens, although possessed of plastic attainments, which would render them eligible for enrollment in inutions of higher learning, would be unable to obtain a college education unless rded financial assistance; and with a view to making such assistance avail, consistently with its power to expend tax proceeds to promote the general fare, it undertook to induce private lenders to make interest bearing loans tudents by allocating funds for insuring such loans in the event of default the part of student borrowers. Having reason to fear that the interest rate ing of 6% imposed upon such lenders by the terms of the Higher Education of 1965 no longer will prove an adequate inducement to their continued otiation of insured loans, the Congress now proposes to increase this ceiling one percentage point to 7%. It is submitted that if the regulations and condis presently contained in the Higher Education Act relative to the consumion of insured loans to college students are conceded to be a valid means of lementing this otherwise legitimate exercise of the federal spending power he form of aid to higher education, the constitutionality of such regulations not be impaired by increasing the interest rate ceiling from 6 to 7%. s the Supreme Court has conceded, the Congress is competent to adopt reguons, and, under appropriate circumstances, to impose coercive sanctions with ew to facilitating the more effective enforcement of legislation which it ets pursuant to its power to appropriate tax revenues for the promotion of general welfare. Manifestly, if the Congress is privileged to "regulate that h it subsidizes", then it is equally within its province to establish inducets, in this instance the maximum rate of interest collectible on loans to stuborrowers, as a means of expediting the administration of a subsidized pron in aid of education. Neither the lender nor the student borrower is subjected ny form of coercion under the aforesaid terms. The lender is free to withhold funds altogether or to make funds available, subject to insurance proteceither at the maximum rate of interest stipulated in the proposed amendt or at a rate below that maximum. Having volunteered to accept federal stance on the terms under which such aid is proferred, the student borrower, rn, would appear to be estopped therefater from advancing an objection to nterest exacted as a quid pro quo therefor. But for such aid the beneficiary id have been prevented from acquiring a privilege, a college education, which rwise would have been beyond his capacity or his right to obtain. he constitutionality of the proposed amendment having been established, ers who exercise the option afforded by its terms and exact 7% interest will nmune from prosecution for violating a state usury law prohibiting loans in ss of a lower maximum. Consistent with the principle of National Supremacy set forth in art. VI cl. 2, all conflict between a valid federal lis and a state enactment equally within the constitutional competence of a state to adopt is to be resolved in favor of the former. This appra's of the aforementioned "kingbolt" clause (art. VI el. 2) was enuncia” very early in the following excerpt from the opinion of Chief Justice Marsta. in McCulloch v. Maryland, 9 Wheat, 1, 210-211 (1824). "The appropriate ap cation of that part of the clause which confer the same supremacy on [feder. laws and treaties, is to such acts of the State legislatures as do not transec their powers, but though enacted in the execution of acknowledged State pos ers, interfere with, or are contrary to the laws of Congress, made in pursmar of the Constitution, or some treaty made under the authority of the United States. In every such case, the act of Congress, or the treaty, is supreme: ati the law of the State, though enacted in the exercise of powers not controvertel must yield to it." The only contentions which may be advanced in support of a contrary clusion that the proposed amendment is invalid are those embraced in a doctri once applied but now definitely rejected by the Supreme Court; namely, that 12powers reserved to the states by Amendment 10 operate as limitations upon thexercise of authority clearly allotted to the Federal Government by other jrvisions of the Constitution, notably, the powers enumerated in art. 1 § Un this discredited approach whereunder Congress was deemed to be precluded fro, implementing its exercise of a constitutionally granted power by a regulate which encroached upon authority reserved to the states, it would be coûtend--: that inasmuch as the states, rather than the National Government, are ved with the police power, the former alone, in the exercise of the latter authori are competent to protect public morals by enacting usury laws and that federa legislation, such as the proposed amendment, purporting to override or superede such reserved state competence is invalid. As early as 1919, in Hamilton v. K❤ tucky Distillerics Co., 251 U.S. 146, 156, the Supreme Court rejected this 2of reasoning by asserting: "That the United States lacks the police power, and that this was reserved to the States by the Tenth Amendment, is true. But : is nontheless true that when the United States exerts any of the powers og ferred upon it by the Constitution, no valid objection can be based upon the fas that such exercise may be attended by the same incidents which attend the exercise by a State of its police power." Subsequently, in 1941, in United States v. Darby, 312 U.S. 100, 114, 123, 124 the Court reiterated what is now viewed as a final definitive abandonment of this incorrect standard of constitutional interpretation. "It is no objection t the assertion of the power to regulate interstate commerce that its exer A N attended by the same incidents which attended the exercise of the police power of the states. . . Our conclusion is unaffected by the Tenth Amendme which . . . states but a truism that all is retained which has not been sur rendered". The latter conclusion is deemed to represent a return to orga intent of those who framed the Tenth Amendment, as disclosed in the follow £2 statement of James Madison. "Interference with the power of the States was to criterion of the power of Congress. If the power was not given, Congress could not exercise it; if given, they might exercise it, although it should interfere with the laws, or even the Constitution of the States" (Annals of Congress, p 1897 (1791)). Senator GAYLORD NELSON, Washington, D.C. RICE LAKE SCHOOL OF VOCATIONAL, DEAR SENATOR NELSON: Recently I received a letter regarding the President's recommendations to congress on a fiscal budget for Vocational Education M xà to my chagrin, I notice that President Johnson is once more recommending that the work-study funds be omitted from the Vocational Education budget. I am sure that you are aware that during this past year, these funds were taken out of the Vocational Education budget and somehow ended up in the Economic Opportunity Act budget. The end result being that our schools have been on the hook all year trying to establish a permanent. firm, work-study program. All of these uncertainties have certainly led to a confused situation. The students who receive financial assistance, under the work-study program. eally are in financial need. I know that you don't need to be reminded that the itizens of Northwestern Wisconsin, which our school serves, in general, have low annual average income. For your information, during this 1967-68 school ear, 47 students, approximately 16% of our student body, are receiving assistnce under this program with a working budget of $21.400.00. Without this elp, I know a large number of these people would not be advancing their ucation. This past year has been rough. In October, we were informed that there might ot be work-study funds this year. Our school decided to operate this program a a half time basis during the months of November and December waiting o see what would happen. Finally, in January, when it was felt that our local udget was stretched well beyond its means, it was decided to discontinue the rogram. Three weeks after this decision was made and the students were inormed that we would have to discontinue this program, we were informed that onies would be available and we had to once more re-establish our program. The net effect of this budget juggling is one of confused planning. Our school unable to prepare a financial aid program for our needy students because the pes of money available are limited to loans and work-study only and if you ke away the work-study funds, we really have a very meager financial aid ogram. In recent years, our school has been involved in all sorts of occupational traing programs under various governmental laws. It is my honest opinion that of 1 of these programs, the work-study funds are the best spent funds which the deral government can provide. Under this program, the students earn enough oney to gain them an education and, in addition, they have to work for these nds. This letter is to request your assistance in supporting any efforts which may made to put the work-study funds back into the Vocational Education budget. Sincerely, JAMES W. COVEY, Director. OREGON ASSOCIATION OF PRIVATE VOCATIONAL SCHOOLS, r. CLINTON A. JOHNSON, DEAR MR. JOHNSON: Yesterday's Oregonian announced a program currently derway at the Portland Community College under the Manpower Development d Training Act. The project, at a cost of $905,180.00, of which the federal govnment's share is $877,775.00, will present multioccupational training to some 3 unemployed and underemployed. A similar project in Eugene will train 67 persons in the Lane Community llege at a cost of $169,587.00. The federal government's share of this is rerted to be $163.129.00. The average cost per student at the Portland Community College is $1,287.40; d at Lane Community College, $2,531.00. The placement for training of these students was accomplished without conleration of the facilities offered by any of the private vocational schools in e state of Oregon. And interestingly enough the highest annual tuition for a gle student at any of the private vocational schools in Oregon is $1,200.00 some 7.40 less than is being charged the federal government by Portland Community llege, a tax-supported institution, and is less than half of the Lane Community llege charge. This association earnestly requests to know from you the reasons for your ice bypassing private vocational schools who historically have a higher rate student job placement at a consistently lower cost per student than publicly anced community colleges. Perhaps we can change our operations so as to of more help in the training that so desperately needs doing amongst the employed and underemployed. Sincerely yours, DONALD N. BASSIST, President. 93-989-68-pt. 6--34 [From the Oregonian, Feb. 24, 1968] PRIVATE VOCATIONAL SCHOOLS ASSAIL SELECTION FOR JOB TRAINING CONTRACTS (By John Guernsey) "I think it's a downright scandal that Oregon's privately operated vocationi and business schools were not allowed to bid on about $1.1 million in federi.. funded education contracts," the president of the Oregon Association of Private Vocational Schools said Friday. Donald Bassist, president of the association, referred to job training progra for 703 persons at Portland Community College, and for 67 at Lane CommL."y College in Eugene. The training is for unemployed and under-employed persons in occupationa where worker shortages exist. Bassist said "the private school operators are pretty darned 'shook up' abert the thing because we could do it for a lot less than the $1,300 average per ei dent it will cost Portland Community College, and the $2,500 per student it wil cost at Lane Community College. "Some of these special students will attend classes less than a year, and the maximum yearly tuition at any of the private vocational schools is $1,200.” REQUIREMENTS STUDIED Financing for the instruction is from the U.S. Department of Labor, but prescribing the education training courses and which schools shall teach them the function of the State Department of Education and the U.S. Department of Health, Education and Welfare. "We have studied the education requirements for these programs, and the private school operators believe we could offer the same or better programs for half of what the federal government will spend," Bassist said. The courses for instruction for the unemployed include business and clers! machine operation, welding, landscape gardening, secretarial, cooks and helper% health aide jobs, some dairy work preparation, and others. Leon Minear, state superintendent of public instruction, said the privately operated schools were permitted to bid on the instruction contracts, but the private schools' bid appeared to be the high bid due to a misunderstanding about what had to be included in instructional costs. He said Portland Community College appeared to be the low bidder when the bid requirements were interpreted by State Department of Education of s but a later interpretation by U.S. Health, Education and Welfare Department officials indicated that the private schools were the low bidders. INSTRUCTION STARTED The Portland Community College share of the contract was $905.180, to tran and retrain 703 persons under provisions of the Manpower Development and Training Act. Minear said, "I think the private schools should be eligible next go-round, bat I don't know how to handle this one." The problem is that some of the instructi= already has started at Portland Community College. Minear has asked the Oregon attorney general to review the case, and the complaint of the private school operators, and to recommend how the conflict in volving the present contracts should be resolved. There are more than 100 privately operated vocational and business schools. most of them in the Portland, Eugene and Salem areas. They enroll more that 20,000 students. HOWARD UNIVERSITY, Washington, D.C., April 16, 1965, Senator WAYNE MORSE, DEAR SENATOR MORSE: I am submitting this statement on behalf of the develop ment of New Careers training programs, and their integration into the vocationa education programs in the local community institutions. |