tional defense loans. It is suggested that the 6 percent interest rate is a subsidy in itself and it is recommended that the additional interest subsidy be canceled. The funds thus saved might well be used to provide additional loan insurance and thereby provide a substantial increase in the amount of guarantee funds.

Madam Chairman and members of the committee, that concludes, I think, the most significant portions of our testimony in this matter. (The prepared statement of Dr. Parish follows:)

STATEMENT OF DR. H. CARROLL PARISH, CHAIRMAN, COMMISSION ON FINANCIAL AID OF THE AMERICAN COLLEGE PERSONNEL ASSOCIATION

Madame Chairman and members of the subcommittee, my name is H. Carroll Parish. I am Dean of Financial Aids at the University of California, Los Angeles. I am appearing today as Chairman of the Commission on Financial Aid of the American College Personnel Association, a division of the American Personnel and Guidance Association, to present testimony on behalf of the Association. The American College Personnel Association includes in its membership more than 6,000 professional student personnel workers at the university and college level. ACPA's Commission on Financial Aid, which until recently has operated under the able leadership of Dr. Robert P. Huff of Stanford University, includes both experienced student aid administrators from institutions of higher education in every part of the nation and leading representatives from private and public agencies with major programs involving the student aid field.

The opportunity to present the Association's views on H.R. 6232 and H.R. 6265, cited as the "Higher Education Amendments of 1967," is deeply appreciated. My comments will be limited to the financial aid provisions of the Amendments contained in Title IV although I am prepared to answer your questions on related matters not contained in this title.

The Association has strongly supported student aid provisions of Federal legislation, the passage of which has enabled an increasing number of college capable youths to obtain a higher education which otherwise might well have been denied them. Originally restricted to making loans available to students with a "superior" academic background," programs inaugurated under recent legislation have provided several kinds of aid to make college education available to academically qualified youths from the environmentally disadvantaged segment of the population.

In fact, the Higher Education Act of 1965 in Section 408 requires that “qualified youths of exceptional financial need" be encouraged to continue their education beyond secondary school. Institutions participating in these programs are expected to make conditional commitments of financial assistance to high school students in the eleventh grade and below. If such promises are to be honored, legislative action is required. H.R. 6232 and H.R. 6265 contain some important changes which we support. There are other provisions of these bills about which we are somewhat concerned. There are, also, some important changes which we would like to see incorporated in these Amendments.

We favor the authorization to extend all programs on a five year basis as provided in Section 401 (a). Institutional commitments to students can thus be made with more assurance.

The National Defense Student Loan Program is aimed at assisting students from low income families and those with exceptional financial need. It should be funded in amounts necessary to take care of the increasing numbers of students entering higher education. The amount set forth in Section 451 (a) is favored. Section 452 provides for further extension of the cancellation provisions for loans made under this program. In principle the Association opposes extensions of the cancellation provisions especially as it is extended to more and more fields. As the American Council on Education has pointed out in its policy statement, the cancellation provisions "may well be undermining the whole concept of a loan as something that should be repaid. It unduly complicates the problems of those responsible for collection." Along with the American Council on Education, we urge that "Congress give serious consideration to eliminating existing forgiveness programs and move instead toward larger grant programs open to needy students regardless of the fields they wish to enter."

The program of greatest value to youths from disadvantaged backgrounds is that which provides them the opportunity of obtaining meaningful work ex

perience which, in their cases, may be equally as important as their educational attainments. Proper employment of the Federal College Work-Study Program also cultivates a sense of pride in achievement among these youths and is vital to students whose cultural mores prohibit borrowing. These Amendments provide that the Federal support formula for this program be changed from the present 90%-10% to 80%-20% rather than 75%-25% as originally scheduled. Again, we join with the American Council on Education in recommending that the present 90%-10% ratio be retained. In any case, this latter ratio should be continued for those community projects which otherwise might of necessity be terminated. Whatever the decision, it is urgent that the Congress act before August 20 when the original ratio change is scheduled to take effect.

An amendment to Section 124(d) of the Economic Opportunity Act of 1964 should be included in these Amendments to permit graduate students to work twenty hours a week rather than the stated fifteen and to allow the fifteen hours a week for undergraduates to be averaged out over the month. This would allow employment on the Work-Study Program to conform to college employment for other graduate students and permit undergraduates, particularly those under the quarter system, to schedule free time before examinations.

Since the 5% allowance for the cost of administering off-campus projects is wholly inadequate, allowance should be made for at least a part of the administrative costs of the total program. A cost study should be undertaken similar to the one employed for the National Defense Student Loan Program. The Federal Government should be expected to assume its fair share of the administrative costs of the total program as determined by an advisory committee which would have the benefit of information gathered through the study.

Section 402 (a) provides that Educational Opportunity Grants can be matched by earnings from the Work-Study Program. This is desirable. However, in addition, such grants should be able to be matched by any other financial resources such as private employment arranged by the institution. The college should be required to insure that these grants are matched at the required percentage and that the student will be assured of the resources to complete his undergraduate education.

In view of the need for remedial education among youths from disadvantaged backgrounds, it is recommended that Section 403 of the Higher Education Act of 1965 be amended to permit the renewal of their grants for a fifth year in cases where remedial studies or special tutorial assistance may be required. In addition, grants to students enrolled in regular five-year undergraduate programs, such as the education curriculum leading to the elementary or secondary teaching credential, should also be renewable.

The Student Loan Insurance Program was intended to make loans available from the private sector to students from all income levels. States and non-profit corporations were encouraged to provide funds to guarantee such loans. An appropriation for reserve funds to make such guarantees was approved but the amount was insufficient to meet anticipated demands.

In the same Act, Congress provided for an interest subsidy for students from moderate income families which made these loans almost comparable to National Defense loans. It is suggested that the 6% interest rate is a subsidy in itself and it is recommended that the additional interest subsidy be cancelled. The funds thus saved might well be used to provide additional loan insurance and thereby provide a substantial increase in the amount of guarantee funds. It is also recommended that commercial lenders be permitted to compute interest on these loans in any manner they desire, including the discount (addon) method.

The invitation to set forth our views is very much appreciated. The Association wishes to compliment you, Madame Chairman, and the Committee for the indepth attention that you have given these problems and for the substantial progress that has been made in educational legislation under your guidance. Thank you.

Mrs. GREEN. Thank you very much, Dr. Parish.
Congress Brademas?

Mr. BRADEMAS. Thank you, Madam Chairman.

I have just one or two quick questions. One question concerns the last suggestion you made on page 5 of your statement where you are suggesting that the additional interests subsidy be canceled. Have

you any analysis that would support the proposal that the program would be successful if such an interest subsidy were canceled?

Mr. PARISH. Since the purpose, according to many people, of this program is to take care of moderate and upper income groups mainly, we feel

Mr. BRADEMAS. I don't think that is accurate. I think the moderate or middle income is accurate, but I don't think it has been defended in here as an upper income.

Go ahead.

Mr. PARISH. Let us say that it has been used in some places for upper income people.

Since it is intended for the moderate income group, we consider, those of us who work in the field, that a 6 percent guaranteed interest rate is a subsidy and that it can be well afforded considering the payback provisions of this act.

We feel that the job has not been done under the program mainly because there isn't enough Federal insurance money provided so that it can be extended to all the moderate income groups and it has been used also in the low income group but although bankers are not too eager to help that group, certainly the moderate income group, the low interest loans, 6 percent, is we feel a very, very nice subsidy. Mr. SCHEUER. Will my colleague yield?

In the field of housing, we give moderate income groups Government loans at 3% percent to 33% percent interest. Six-percent interest is the going bank rate. A person may not be able to get a 6-percent loan but if he can get a loan from a bank at all, he is not going to pay more than 6 percent.

I don't see any subsidy involved there at all except that you are making a loan at any interest rate available to him. If we can make it available for housing a moderate income person-and I am not talking about public housing, but a moderate income person above the public housing income level-and we give him a direct loan for 40 years at 3% percent interest, why do we have to charge him 6 percent for an educational purpose which is just as important if not more important than his shelter?

Mr. PARISH. Let me say this: That the going rate for borrowing money for educational loans is of course even as stated at 6 percent has been twice that and much more. In fact, the loan companies that do involve themselves in this program may charge as much as 22 percent interest. It doesn't appear that way, but this is what actually happens if you really get the true rate of interest.

Mr. BRADEMAS. Are you endorsing the truth in lending?

Mr. PARISH. I think it would be very helpful speaking personally. But we feel that if you actually get a simple interest rate with the payback terms with this particular loan, it is a tremendous thing. All of us in the moderate income group, and again I speak personally, as well as for the committee, would be very happy with this if we can use the money that is not now being made available in our State particularly.

Certainly we had about $611⁄2 million last year and we restricted because we knew we wouldn't have enough money, and, therefore, did not make it available to all the people it was intended to be made available to.

80-155-67-pt. 1-16

If we had that money by taking away the interest subsidy, we would be very happy. If you can provide both, if the Congress can provide both, perhaps we would not argue that way.

Mr. BRADEMAS. You make no distinction, I take it, between the language of the act which does make a distinction between the student borrower whose family adjusted income is $15,000 and the student whose family adjusted income is more than that.

Mr. PARISH. The $15,000 of course is modified as you know. It can go up to $20,000 with the particular amendments that were included. But the question is there that we are not making any money in California available to those above the $15,000 in just the education field because we haven't got that much money. We have restricted it.

But if you take the number of students involved, if you take the total number of students involved, you will find most of them fit into, or say 85 percent would fit in the amounts below the adjusted $15,000, so actually we are talking about the largest number in that group but we cannot provide enough funds to take care of that particular group at the present time.

Mr. BRADEMAS. Thank you.

Mrs. GREEN. Congressman Hathaway?

Mr. HATHAWAY. I wonder if you could give me your thoughts on the tax credit proposal?

Mr. PARISH. I have to give them to you as the Commission itself felt because we cannot speak for the association on this particular

matter.

The Commission on financial aid opposes tax credits. We feel it will help only those with highest incomes and, therefore, we have taken action for that purpose to oppose it.

Mr. HATHAWAY. Don't you think the tax credit proposal in conjunction with a good loan program for those of low incomes would be an ideal situation?

Mr. PARISH. I think my own personal feeling is that the loss to the Treasury of this amount of money would make it almost impossible to properly fund the proper kind of loan program and the proper kind of other programs.

I think the loan program used to be the most important but today I think college work-study and others have supplanted the loan program as being the most effective.

Mr. HATHAWAY. Thank you.

Mrs. GREEN. Are you speaking from the effect on the Treasury? Is this why you oppose the tax credit?

Mr. PARISH. Yes, this is the main reason.

Mrs. GREEN. Do you oppose the tax incentive for businessmen that would cost $2.2 billion this year?

Mr. PARISH. That is not within our competence.

Mrs. GREEN. It is kind of a tax reduction to the Treasury. Is it less important to make arrangements for students to go to college than to get the tax incentive for businessmen?

Mr. PARISH. I wish I could speak to that point, but I feel that tax credit could be a very worthwhile thing if we have enough money to fund all of these programs properly.

Mrs. GREEN. On your guaranteed loan, you make your plea here in regard to the 6 percent subsidy in the cancellation. I judge on that basis you want the money to go further?

Mr. PARISH. That is correct.

Mrs. GREEN. At the top of page 5 on the opportunity grants, you make the plea that they be extended for the fifth year.

Mr. PARISH. That is correct.

Mrs. GREEN. Wouldn't the argument also hold there that if we had given a student 4 years opportunity and had given you the right grants and since we only have partial funding anyhow that that ought to be enough and then make the additional funds available to others for the first year? We don't have enough opportunity money in this for everyone.

Mr. PARISH. This is true, but we feel here that the people that we have aimed this at, the people we are trying to recruit under your section 408 of the Higher Education Act are of a certain level that need this remedial assistance and, therefore, most of them have not been getting through or will not be able to get through although this hasn't run that 4-year period yet. We feel that from the present studies that we have made what has happened to this first group that they will not be able to get through in 4 years.

Therefore, they are in the category of the background of the economics that at least four and a half or five years may be required in almost every case.

Mrs. GREEN. If I understand it, your justification is that we have given him an economic opportunity grant for 4 years, and he is closer to being a productive member of society. Therefore, do you say, we should choose to give him the fifth year rather than help another student who may not be able to go to college for the first year if we do not help?

Mr. PARISH. This is very hard to say, looking at it right here at this table, but I would say that the question, and we do in many cases give more money to less people in scholarship programs because we feel that it is better to do a good job with a certain person rather than just spread it very thin and not do a very good job with a lot of people.

In our scholarship award at my university certainly we often make the scholarship award a little larger for the person we really want to take care of. It is a matter of philosophy and is widely debated. Mrs. GREEN. Thank you, very much.

Our next group of representatives are from the Investment Bankers Association of America, Frank Carr, president of John Nuveen & Co., Chicago, Ill., Noble L. Biddinger, president, City Securities Corp., Indianapolis, Ind., accompanied by Alvin V. Shoemaker, municipal director, IBAA.

STATEMENTS OF FRANK CARR, PRESIDENT OF JOHN NUVEEN & CO., CHICAGO, ILL., ACCOMPANIED BY NOBLE L. BIDDINGER, PRESIDENT, CITY SECURITIES CORP., INDIANAPOLIS, IND.; AND ALVIN V. SHOEMAKER, MUNICIPAL DIRECTOR, IBAA

Mrs. GREEN. Welcome, gentlemen, and would you proceed. We have your statements which will be made a part of the record at this point. If you could summarize your statement and hit the highspots, I understand that you are particularly concerned about the interest rate of the loans.

(Statements follow:)