On the other hand, whether in the long range institutions would be helped presents some questions the answers to which we do not have in the material concerning the proposal presently available to us. These would involve questions such as terms of repayment of student loans, whether interest would be free to the institutions, what interest rates would be, and what discounts would be necessary to make paper salable in the private sector of the economy-and others. Answers to many of these questions would be necessary before a firm opinion can be expressed.

It would seem that a "sales participation" program such as this might be very helpful as a supplement to NDEA loans in their present form. It would seem that the details referred to above and others could be satisfactorily worked out to this end.

I should like to record my strong opposition (shared, I think, by my colleagues here at the University) to any proposals such as the HEW proposal, if it were viewed as an eventual replacement for the present form of NDEA loans. One of the primary functions of public institutions of higher education-indeed, of the total higher education enterprise in general-and of federal legislation in aid of higher education is to make it possible for the needy but able student to secure education to the highest level which his interest and ability make possible. Financing of loan programs entirely through the private sector is likely to make more difficult, if not impossible, providing loans to the truly needy student for whom primarily they are designed.

Thank you for the opportunity to file this supplemental statement.

Senator MORSE. This closes our hearing on Higher Education Amendments of 1966. The record should show that the Chair has already ruled that we may call upon any of the representatives of the organizations that appeared before us for supplemental memorandums, if they care to file them, that we will undoubtedly ask HEW for a whole series of memorandums and letters that can be used by the committee in the markup of the bill and can be used by the committee representing the position of the Department when we write our report on the bill.

I want to say to counsel that I would like to have the hearings printed at the earliest possible date, for I am desirious of having markup sessions on this bill immediately following the markup sessions on the secondary and elementary school bill which I hope to complete early next week.

I am going to close the record. The supplemental statements, if they do not get in in time, can be used by the subcommittee as exhibits that the committee can use. I shall close the official record 1 week from today at 5 p.m. Thank you very much.

At this point I will insert in the record statements and letters from various individuals who were unable to appear.

(The material referred to above follows:)

PREPARED STATEMENT OF THE AMERICAN FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS

The AFL-CIO is pleased once again, to assure the Education Subcommittee of the Senate Labor and Public Welfare Committee of its continuing concern for the needs of higher education. This subcommittee has demonstrated repeatedly its imaginative understanding and its deep concern for the problems and the opportunities connected with the massive increase in students participating in higher education. The Higher Education Facilities Act of 1963, the Higher Education Act of 1965, and the constant improvements in the national Defense Education Act-all initiated by this subcommittee-have been landmarks in constructive legislation.

In considering S. 3047, the Education Subcommittee is engaged in the useful process of reviewing the progress of these laws and considering possible ways of improving them.

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CONTINUE NDEA

We urge you, in considering these matters, to support the continuation of the National Defense Education Act student loan program. In this and other regards we endorse the House version of the bill. The AFL-CIO actively supported the new program of federally insured student loans with subsidized interest which was adopted last year as a part of the Higher Education Act of 1965. We believed then, and we believe now, that this is a good program which meets many needs not otherwise covered by the various existing student aid programs.

The AFL-CIO did not consider, however, the guaranteed loan program to be a substitute for the long established NDEA loan program. The NDEA loans are particularly useful as a form of assistance for young people from low income and working class families. These young people usually experience great difficulty in obtaining loans from commercial sources. Moreover, the guaranteed loan program is new. So far, lending institutions have been hesitant about putting it into operation, and there has been far too little experience to warrant making it the single federal student loan program. We therefore urge your committee to continue the NDEA loan program, thus bringing S. 3047 into harmony with the House bili.

INCREASED AUTHORIZATION FOR HEA

The AFL-CIO also welcomes the increased authorization for the Higher Education Facilities Act of 1963, included in the House bill. The loans and grants made possible under this Act have been of invaluable aid in the expansion of college and university facilities, the development of new community colleges, and the construction of new graduate school facilities. Success of the program more than justifies continuing it; it justifies expanding it considerably. Every year that the program has been in operation, application for grants have exceeded the available funds. The reason is not difficult to find. Everywhere applications from prospective students outrun the available space, and countless institutions are meeting the situation by raising their entrance requirements to a "B" or even an "A" average in high school.

This shortage of facilities will become increasingly serious in the next few years. The high birth rate of the 1940's is just beginning to affect the colleges. Until now, enrollment increases have resulted primarily from the increasing proportion of young people continuing their education beyond high school. Today, however, there is a much larger college-age population than at any time in the past and this college-age population will continue to grow for many years to

come.

COLD WAR GI BILL

There is still another pressure which necessitates a continuing and expanded program for the construction of higher education facilities. The 89th Congress has at last passed the Cold War GI Bill. The AFL-CIO actively supported this legislation for many years and we are gratified that it is now law. It is simple realism to recognize that this legislation will create still new demand for space in institutions of higher education. Thousands of veterans who might not have seriously considered attending college will be encouraged to do so by the promise of the GI Bill. Our colleges and universities must have the facilities to fullfill this need.

These growing pressures for admission to colleges and universities should not be regarded as an onerous burden; they should rather be regarded as an unparalleled opportunity worthy of the nation's most creative and imaginative efforts.

We therefore urge this subcommittee to support the increased federal expendi tures for construction of facilities for higher education, as already incorporated in the House bill.

OPPOSED TO $30 MILLION "SALES PARTICIPATION PLAN" FOR NDEA

We have read with interest the proposal for a $30 million loan authorization to expand NDEA funds made by U.S. Commissioner of Education Harold Howe II in his testimony to the subcommittee on July 12. This suggestion is a frank acknowledgement that the present NDEA authorizations are too low to meet the need of low income students. The inadequacy of the NDEA funds is aggravated by the difficulties students are facing in obtaining the guaranteed bank

loans authorized under Title IV of the Higher Education Act; a difficulty which is caused in part at least by the administration's tight money policies.

Much as the AFL-CIO recognizes the need for increasing the amount of money available for NDEA loans, we believe that the "sales participation" method proposed by Commissioner Howe is the wrong way to go about it. We would recommend to the subcommittee that the authorizations for NDEA loans be increased by $30 million to meet the demonstrated need, and urge that the Congress appropriate these additional funds. To attempt to transfer a part of the NDEA program to the private commercial credit market in this fashion is a major mistake from the point of view of government fiscal policy.

The AFL-CIO agrees with the point of view expressed in an editorial in Business Week for June 25, 1966 dealing with this general policy. Here is what Business Week says:

"One of the rabbits that President Johnson pulled out of his budgetary hat last January was a plan to reduce the apparent size of the federal deficit by stepping up the sale of portfolio assets held by government agencies.

"As far as the budget goes, the scheme has worked. But these sales are also having the unintended effect of creating a problem for the managers of monetary policy at a time when they are being forced to bear the full burden of preventing inflation.

"On the surface, the budgetary gimmick seems innocent enough. As the result of the normal operations of federal mortgage and other lending agencies, private businesses and individuals now owe the government over $30 billion. The fiscal 1966 budget called for public sale of $3.3 billion of loans and participations in loans out of this portfolio; the fiscal 1967 budget calls for stepping sales up to $4.7 billion. By a quirk of budget arithmetic, proceeds are subtracted from departmental expenses, making government spending look smaller.

"Unfortunately, the sale of these agency loans, particularly the new certificates of participation, is creating distortions in the capital markets. The new instruments give an upward push to interest rates. Since they are unfamiliar, the market for them is narrow, and they yield far more than ordinary Treasury issues of the same maturity. A recent 2-year issue, for instance, was priced to yield 54%, when comparable Treasury notes were selling at a 4.9% yield. "Yields of this kind are having an unsettling effect on the banking system. They have drawn money out of the hard-pressed savings institutions as well as out of the certificates of deposit issued by the commercial banks.

"This loss of funds to the banking system is only the most obvious problem. By tradition and necessity, the Federal Reserve is obliged to keep the market liquid enough to absorb any new government issue, including the agency issues. Because the market for these issues is narrow, it takes more nursing than the regular government market. Indeed, the need to facilitate the intermittent sales of batches of agency issues is one reason why the money supply has grown so fast and so erratically despite the Fed's attempt to enforce monetary restraint. "More trouble can be avoided if the Administration stops the sale of the agency obligations-at least for the present-and increases its regular Treasury borrowing by an equivalent amount. The special agency issues appear to have been a bad idea, badly executed. There is nothing to be gained by pushing ahead with more of them."

INVESTIGATE GUARANTEED LOAN PROVISIONS, TITLE IV

At the same time we urge the subcommittee to start a study of the operations of the guaranteed bank loan provisions of Title IV of the Higher Education Act. If, as we suspect, the tightness of the money market has made these loans unattractive to the banks so that students in need of loans are unable to get them, we would urge the subcommittee to consider an alternative direct government loan program for presentation to the next Congress.

PREPARED STATEMENT OF GEORGE E. PROBST, EXECUTIVE DIRECTOR, NATIONAL COMMISSION FOR COOPERATIVE EDUCATION, NEW YORK, N.Y.

May I bring to your attention an important consequence of the inadequate financial appropriation in fiscal 1966 for Title III of The Higher Education Act of 1965.

INADEQUATE APPROPRIATION FOR TITLE III OF HEA OF 1966

The Higher Education Act of 1965 opened the way for financing by the U.S. Office of Education of the establishment at colleges and universities of workstudy cooperative education programs. Under a provision in Title III, the Commissioner of Education was to make grants to colleges and univeristies "to pay part of the cost of planning, developing and carrying out cooperative arrangements which show promise as effective measures for strengthening the academic programs of developing institutions." As a result of testimony and evidence presented to the Senate Subcommittee on Education, one of the cooperative arrangements which was to be supported was work-study cooperative education. A provision in Title III states that funds are authorized for "development and operation of cooperative education programs involving alternate periods of academic study and business or public employment."

COOPERATIVE EDUCATION

Among the considerations that led Congress to include work-study cooperative education in The Higher Education Act of 1965 were: research shows that educationally valuable jobs that have been arranged by colleges and universities for students increase the motivation of these students to study; in the one-half of each year that the student spends in his job period the average earnings are $1,800 a year or more toward the cost of his or her higher education; colleges with a program of cooperative education are able to make maximum use of their physical plant and accommodate almost twice as many students; and, the cooperative program is an excellent vehicle through which the real changes in opportunities for the employment of disadvantaged youth may be communicated to students, faculty, and the community at large.

Dr. Ralph W. Tyler, Chairman of the National Commission for Cooperative Education and Director of the Center for Advanced Study in the Behavioral Sciences, who also was chairman of the Two-year Research Study on Cooperative Education, has stated its finding as being that; "Cooperative education gives a student an education qualitatively superior in some respects to a conventional college education. Cooperative students become more mature; and their records in graduate school and in employment show that cooperative education is a firstrate education." I attach a list of the officers and trustees of the National Commission.

U.S. Commissioner of Education Harold Howe II stated to your Committee on July 12, 1966 that, "This year, almost half of our college students are studying in institutions having an enrollment of less than 2.500. More than 1,700 of the 2,200 institutions of higher education fall into this category." It is important to make every effort to improve the educational services rendered by these institutions.

The establishment of cooperative education programs gives students the opportunity to have educationally valuable experiences in full-time jobs in business. industry, and government and can greatly contribute to improving the educational excellence of programs offered by colleges and universities. Some recent instances of this fact can be seen in the experiences of Wilberforce University and Alabama Agricultural and Mechanical College which have both recently undertaken cooperative education programs as a result of assistance given by the Ford Foundation. As a result of the experience that students have had thus far, Dr. Rembert Stokes, President of Wilberforce University, has stated that in his judgment "Cooperative education is of critical importance for a predominantly Negro college."

In view of the critical plight of those to whom opportunity for higher education is limited, it is indeed very unfortunate that the small appropriation of $5,000,000 in fiscal 1966 for Title III did not make it possible for the U.S. Office of Education to make any grants to institutions asking for the support to establish work-study cooperative education programs.

$55 MILLION FOR TITLE III

I should like respectfully to urge you and your Committee to do all that you can to have Congress authorize appropriation of $55,000,000 for fiscal year 1967 for Title III of The Higher Education Act of 1965. Such action would mean that Congress would appropriate the amount originally envisioned as needed

to carry out the various programs that are included in title III, with an indicated allocation to work-study cooperation education. If such an allocation were to be made, expansion of work-study cooperative education would not only be accelerated in four-year institutions but would also be hastened in community colleges, where the need is equally severe.

At the present time, there are slightly more than 50,000 students in college and university work-study programs. These students are earning more than $90,000,000 toward the cost of their higher education this year. Grants made by the U.S. Office of Education to establish additional cooperative education programs would have a very great dollar return in increasing the earned income students would have while going to school. Once a college is in a position of operating a full program of cooperative education, it would have a second student body on jobs away from campus while serving an equal number of students who are learning on campus. An arrangement that can almost double the annual tuition income for small colleges deserves encouragement and support. I hope that it will be possible for Congress to make $55,000,000 available for developing institutions and that it will then be possible for the U.S. Office of Education to make grants for work-study cooperative education programs than can assist greatly in meeting the immense educational and financial problems of higher education.

We shall be most pleased to furnish whatever additional information you may request about this most important matter.

OFFICERS AND BOARD OF TRUSTEES OF THE NATIONAL COMMISSION FOR COOPERATIVE EDUCATION, NEW YORK, N.Y.

Honorary Chairman: Mr. Eugene W. Kettering, President, Charles F. Kettering Foundation, 40 North Main Street, Dayton 2, Ohio.

Chairman: Dr. Ralph W. Tyler, Director, Center for Advanced Study in the Behavioral Sciences, 202 Junipero Serra Boulevard, Stanford, California. Vice Chairmen:

Mr. Robert G. Chollar. Vice President, Research, The National Cash Register Company, Main and K Streets, Dayton 9, Ohio.

Dr. Elmer W. Engstrom, President, Radio Corporation of America, 30 Rockefeller Plaza, New York, New York, 10020.

Dr. Asa S. Knowles, President, Northeastern University, Boston, Massachusetts, 02115.

Dr. Walter C. Langsam, President, University of Cincinnati, Cincinnati 21, Ohio.

Secretary-Treasurer: Mr. Edward E. Booher, President, McGraw-Hill Book Company, Inc., 330 West 42nd Street, New York, New York, 10036.

Members:

Mr. Emery F. Bacon, Assistant to the President, West Virginia University, Morgantown, West Virginia.

Dr. Allen T. Bonnell, President, Community College of Philadelphia, 21 South 12th Street, Philadelphia, Pennsylvania, 19107.

Mr. Stewart B. Collins, Professor of Cooperative Education, Drexel Institute of Technology, Philadelphia, Pennsylvania, 19104.

Mr. Henry F. Dever, Vice President. Minneapolis-Honeywell, Inc., 5504 Schaefer Road, Minneapolis, Minnesota, 55424.

James P. Dixon, M.D., President, Antioch College, Yellow Springs, Ohio. Mr. Byron K. Elliott, Chairman, John Hancock Mutual Life Insurance Co., 200 Berkeley Street, Boston, Massachusetts, 02117.

Mr. Robert Erickson, Executive Vice President. Retired, Beckman Instruments, Inc., 2535 Terraza Place, Fullerton, California, 92632.

Dr. Samuel B. Gould, President, State University of New York, 8 Thurlow Terrace, Albany 1, New York.

Mr. Cecil H. Green, Honorary Chairman of the Board, Geophysical Service, Inc., Exchange Bank Building, 100 Exchange Park North, Dallas 35, Texas. Dr. Jerome H. Holland, President, Hampton Institute. Hampton, Virginia. Mr. Clarence H. Linder, Vice President, Retired, General Electric, 1322 Ruffner Road, Schenectady 9, New York.

Mr. Cyrus R. Osborn, Executive Vice President, Retired, General Motors, 24 Barbour Lane, Bloomfield Hills, Michigan.

Dr. Harold P. Rodes, President. General Motors Institute, Flint 2, Michigan. Dr. William E. Stirton, Vice President, University of Michigan, Director, Dearborn Campus, 4901 Evergreen Road, Dearborn, Michigan.