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The Commissioner of Education would make an agreement with an institution of higher learning requiring the institution to make vigorous efforts to identify qualified youths from low-income groups and encourage them to continue their education beyond secondary school. Colleges would establish close working relationships with secondary schools and could make tentative commitments of scholarships to qualified students enrolled in grade 11 or lower and to secondary school dropouts. Up to 5 percent of the funds received could be spent by the institutions for the administrative costs involved in this identification and encouragement program. An institution would also be required to maintain its efforts in its own scholarship and loan program.

Scholarship funds would be apportioned among the States in the following


(1) one-third on the basis of the number of full-time students enrolled in institutions of higher education in each State in relation to the total number of such students;

(2) one-third on the basis of the portion of secondary school graduates in each State; and

(3) one-third on the basis of the portion of children under age 18 from families with annual incomes of less than $3,000.

Up to 2 percent of the total appropriations could be allotted to Puerto Rico, Guam, American Samoa, and the Virgin Islands.

It is also provided that the Commissioner could enter into contracts, not to exceed $100,000 per year, with State and local educational agencies and other public or nonprofit organizations for the purpose of (1) identifying qualified youths from low-income families and encouraging them to continue their education, (2) publicizing existing forms of financial aid, and (3) encouraging secondary school dropouts to reenter educational programs.

The first-year authorization would be $70 million.

B-Insured reduced-interest loans

Insured, reduced-interest student loans would be provided by the establishment of the student loan insurance fund which would enable the Commissioner to insure eligible lenders against losses on loans made by them to students in eligible institutions who do not have reasonable access to similar loan programs. It is also provided that the Commissioner would pay a portion of the interest (up to 2 percentage points) on such loans and on certain other loans which are insured under a State program or by a nonprofit private organization or institution.

Students would be able to borrow up to $1,500 annually in order to pursue a course of study at an eligible institution. The aggregate insured unpaid principal amount could not exceed $9,000 in the case of a graduate or professional student or $6,000 in the case of any other student. The maximum amount of interest paid by the borrower would be set by the Secretary on a national, regional, or other appropriate basis.

Repayment of the loans would begin 1 year after the student ceases to carry at least one-half of a normal full-time workload or course of study. The period of repayment could not exceed 10 years and the complete term of the loan could not exceed 15 years.

A student would be eligible to obtain an insured loan if he (1) has been accepted for enrollment at an eligible institution; (2) if he carries at least one-half of a normal full-time workload; or (3) if he is already enrolled at an eligible institution and maintains good standing.

Eligible institutions in this program would be (1) institutions of higher education which are fully accredited and which offer courses creditable toward a bachelor's degree; or (2) business, vocational, and technical schools which are accredited and which admit only students who have completed or left secondary school. A student could borrow from an eligible institution of higher education or from any participating commercial lender which is subject to examination and supervision by an agency of the United States or any State.

The total principal amount of new loans to students covered by insurance would not exceed $700 million in fiscal year 1966, $1 billion in fiscal year 1967 and $1.4 billion in fiscal year 1968 and each of the 2 succeeding fiscal years. First-year cost would be $15 million.

C-College work-study program extension and amendments

The work-study program under part C of title I of the Economic Opportunity Act of 1964 would be transferred from the Office of Economic Opportunity to the Office of Education.

This program provides for contracts between the Commissioner of Education and institutions of higher education in which part-time employment opportunities are encouraged. The proposed amendments would expand the opportunities for part-time employment particularly for students from low-income families.

The period during which the Federal share of the compensation of students employed may not exceed 90 percent would be extended for 1 year, through June 30, 1967.

Authorization for fiscal year 1966 would be $129 million. Of this amount $84 million is carried in the budget requests for the Office of Economic Opportunity, $45 million for the Office of Education.

D-Extension of national defense student loan program

Title IV-D would extend the authorization of the national defense student loan program (title II of the National Defense Education Act of 1958, as amended) for an additional 3 years with the following authorizations: $225 million for fiscal year 1969; $250 million for fiscal year 1970; and $275 million for fiscal year 1971. Senator NELSON. The hearing on S. 600 is now adjourned.

(Whereupon, at 1:30 p.m., the subcommittee adjourned, to reconvene subject to the call of the chair.)

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