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2. It prepares them at once for useful work in the helping professions (teaching, guidance, social work, medicine), and places them in part-time jobs.

3. It carries instruction into the field, utilizing the actual field setting and actual day-to-day tasks on the job as the medium for "methods" teaching. 4. It offers a core curriculum, built on the needs of the professions and the populations being served. Case studies drawn from the field experiences of the group give dramatic relevancy to child psychology, urban sociology, and anthropology, as well as to conversational Spanish and English grammar.

5. It avoids the conventional computation of credit hours and the foursemester, two-year pattern of the junior college, although the program leads to a junior college degree. Instead, it offers learning programs of varying lengths of time, individually developed for each student according to her needs, and includes for those who wish it-preparation for transfer to a four-year college.

The Women's Talent Corps, Inc., is developing the experimental program outlined above as The College of Community Service.


I am grateful for this opportunity to present the views of United Student Aid Funds concerning H.R. 6232.

Since my comments must necessarily be based on the experience of my own organization, I should like to start by summarizing the purpose and history of United Student Aid Funds.

Ours is a privately supported, nonprofit agency which guarantees low-cost bank loans to college students. On the strength of our guarantee, banks and other lending institutions have agreed to lend students up to $12.50 for every $1 in our reserve. This reserve consists primarily of deposits by colleges and donations by businesses, philanthropic organizations and individuals. Since last August we have also received advances for deposit from the Office of Education under terms of the Higher Education Act of 1965, and something under onefourth of our loan guarantees are currently backed by Federal deposits.


We guaranted our first loan in 1961, in Indiana. By the middle of 1962 we had guaranteed about 3,000 loans with a total value of a million and a half dollars, and were beginning operations in a few more states. From then on our expansion was dramatic. Four years later-that is, by June of 1966-we were active in all fifty states. 814 institutions of higher education were depositors in our reserve account, and more than half of the banks in the country were honoring our endorsements. More than $65 million worth of loans had been made on the strength of USA Funds guarantees.

If our growth was dramatic prior to last June, it has been explosive since then. Total loans guaranteed passed $100 million before the end of the year. More than 10,000 commercial banks, savings and loan associations and credit unions now participate in our program, as do more than 900 colleges and universities. We expect that our guarantees for the 1966-67 academic year alone will exceed $50 million.


While much of this recent growth would have taken place in any event, there is no doubt that it was greatly accelerated as a result of the Higher Education Act of 1965, and specifically by the infusion of the Federal advances, or so-called "seed money", to which I referred a moment ago. Under the terms of the Act, the "seed money" is allotted to "establish or strengthen" non-Federal guarantee service in the states. Where a state has a guarantee program of its own, the Federal money is deposited in the reserve of that program. If a state has named United Student Aid Funds to operate its program, the Federal money goes to the state, which then deposits it in our reserve. And if the state has no guarantee program of its own, the Office of Education deposits the advance earmarked for that state directly in our account. At the moment, we are operating 12 state

programs and serving in lieu of a state program in 17 states, the District of Columbia and Puerto Rico. Thus more than half of the states use us in one way or the other to handle their loan guarantees. This is in addition to our regular reserve program, which, as I said earlier, operates in all 50 states.

A college thus may have loan capacity on our books as a result of a deposit made by the college itself, as the result of a deposit made by the state, or as the result of a Federal deposit. We find it gratifying that despite the influx of Federal "seed money" in 1966, deposits by schools creating their own reserves increased substantially during the year. In our view, it is psychologically sound for a college to have some of its own money at stake in a program of this kind. We believe it is good for the college, the borrowing students, and the whole concept of guaranteed loans, when colleges make deposits to help create lending capacity on behalf of their own students. This is consistent with the philosophy of the National Defense Education Act, where a 10% participation by the college is required by law. Under the United Student Aid Funds program, while we obviously cannot "require" any such deposits, we do encourage deposits by the colleges. By way of comparison with NDEA, it might be said the college participation with United Student Aid Funds is at an 8% level, since for every $1.00 in our reserve funds lending institutions will make available $12.50 in direct loans to students.


This brings me to the question of whether the Federal advances provided under the Higher Education Act of 1965 should be continued. In our judgment, such advances are needed in the near future to support the anticipated loan demandbut they should not be in such form as to discourage private and state support. The response of the private sector to the loan need has been outstanding. In view of the fact that the peak demand for loans came at a moment when money was tigher and credit rates higher than they had been for perhaps forty years, "outstanding" is really too weak a word. In nine months beginning last July 1, financial institutions made guaranteed loans totaling $210 million (which is more than the total appropriated for NDEA loans for the entire fiscal year). Next year will be even better. The country owes the banks and other lending institutions participating in the guaranteed loan program-without profit, and often at an actual out-of-pocket loss-a rousing vote of thanks.

But the few months which have passed since the first "seed money" was advanced are simply not time enough for full development of so large and complex an undertaking.

Some of the hurdles faced by the fledgling guarantee operation were described in a recent speech by Under Secretary of the Treasury Joseph W. Barr before the New York chapter of the American Institute of Banking.

"I can only admit", he said "that this program has had a rough beginning. After it was enacted into law in the fall of 1965, it took the Office of Education about six months to really get started. I might say at this juncture that we have had the complete and enthusiastic cooperation of the American Bankers Association, the two savings and loan association leagues, the Association of Mutual Savings Banks, and the credit unions association (CUNA International).

"Our troubles largely can be traced back to the phenomenon known as tight money, which began to be evident in April of last year. Tight money life extremely difficult for the savings and loans and the mutual savings banks, and, to a lesser degree, for the credit unions and the commerical banks. It made most financial institutions think twice about committing themselves to new and untried programs."

Mr. Barr went on to point out that banks found the costs of getting these loans on the books to be more than they anticipated, so that they were facing a losing rather than a break-even proposition. And they were deluged with paperwork. Nonetheless, he went on :

"We still succeeded in the fall semester of 1966 in getting out loans totaling $160 million to 190,000 students. For the full 1966-1967 year, our original target was loans to 963,000 students, totaling $700 million. At the moment, we are guessing that we will actually hit a level of 480,000 loans totaling $400 million." He added: "I would hope that you would agree with me that the guaranteed loan program provides the most promising solution currently available to the problem of financial assistance to the student."

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It is clear that the program is on the right track. Half the states have already made appropriations to guarantee programs for their own citizens. Inasmuch as legislative sessions are not simultaneous in all the states, it seems reasonable to give the remaining states more time to take action on behalf of their citizens, with the stand-by Federal guarantee remaining inoperative, as it is now. We believe activation of a Federal guarantee program would soon dry up existing state and private guarantee effort. We also believe it would depress bank participation, and in this view the American Bankers Association concurs. Under the circumstances, continuation of Federal "seed money" for a limited period appears to be advisable.


A second matter that I hope this Committee will reconsider is the existing prohibition on consideration of need in recommending or granting loans. I do not think this prohibition has worked out quite the way Congress intended. Simply stated, the law provides that no student will be denied the benefits of the guaranteed loan program, based on consideration of his family income or his lack of need. The practical effect of this is that student financial aid officers uniformly feel closed from counseling effectively with students as to amounts they should borrow. Further, they feel frustrated in their inability to coordinate the total assortment of student aid items they generally administer. For example, they feel they cannot effectively relate scholarship aid, work-study activity, and the like, along with guaranteed lending, into a total package for a particular student.

We think this is a mistake which ought to be corrected. I want to emphasize, however, that we do not advocate a needs test in the sense of fixing any dollar amount for family income, or in the sense of prescribing any dollar level of family net worth as means of determining whether need exists or does not exist. We don't think this dollar approach is either advisable or necessary. In fact, it is often the case that a greater need exists with a higher income family than with a lower income family, depending on the situation. A boy or girl from a $30,000 income family may have greater need in a particular case than a boy or girl from, say, a $12,000 family. This will depend on many things. The higher income family might have three or four children in college at the same time, the lower income family perhaps only one. All we suggest in this whole situation is that the law and its intent be stated in such a way that the student financial aid officer may be a meaningful participant with the student, the student's family and the lender in helping the student decide on the amounts he will borrow. As the law is now written, this kind of participation is foreclosed.

Information which comes to us almost daily from lenders and colleges all across the country convinces me that this is a real problem. For example, I am informed again by both bankers and college administrators that there is a sharp and continuing rise in loan applications from students who appear to have adequate resources. And a growing number of students are borrowing up to the full $1,000 annual limit, whether or not they need that much.

This unnecessary borrowing certainly does the borrower no good. Sooner or later he is going to have to pay that money back, and the more he has to pay the more difficult it will be. Prudence in borrowing, like promptness in repayment, is as good a rule for a college student as it is for his father.

Over-borrowing has the additional effect of reducing the amount of money remaining for loans to the young men and women who without such help might really be forced to discontinue their education. The funds available for nonprofit loans are limited, and banks would like to allot them to students who need the money most.

I suggest that this portion of the Act be changed to say that income level alone should not be a factor in granting or refusing a loan.


I understand that a Treasury task force is now making a study which may lead to recommendations for lightening the cost load to lenders one of the most serious obstacles to getting the added banks we need into the program. We shall therefore make no recommendation on this point now.

We do, however, have one last suggestion. We should like to see colleges have more loan options. Some colleges have substantial funds which can only be used

to make loans to their students. If government policy is to pay part of the interest on guaranteed loans, and if a college is making a direct loan to a student, there seems to be no reason why the government should not pay interest on that loan as well. We find that a very considerable body of sentiment for this change exists in the colleges.

We believe also that those colleges which wish to do so should have the option of depositing some percentage of NDEA repayments in the reserve fund of a guarantee agency. Here again we find widespread sentiment in favor of this proposal among colleges. They don't want to tamper with NDEA, or diminish its effectiveness in any way. Neither do we. However, I do think Congress should examine this suggestion very closely, bearing in mind that it places the option to act or not act in the college itself. In many cases colleges might not assert the option. In many others, however, colleges might well view the option as a means of multiplying the loan funds available to their own students. We think it should be in the interest of the overall student financial aid effort to give such an option to the college.

In closing, let me restate my strong belief that guaranteed loans to students are now, and will continue to be, a vital and growing portion of student financial aid. Working along with other aid programs, it offers a very desirable blend and balance. We are pleased that Congress has seen fit to encourage private nonprofit and state guarantee services, and we urge that this encouragement be continued. The Higher Education Act of 1965 has greatly stimulated the work of private nonprofit and state guarantee agencies, principally because of the Federal “seed money" advances on behalf of the several states and through the Federal payment of an interest subsidy for most borrowers. The absence of a Federal insurance program as such has greatly stimulated the growth of state and private nonprofit guarantee effort. In this regard, we would cite the fact that the last year has seen a sharp increase in the number of states appropriating their own funds to guarantee purposes. Likewise, there has been a very sharp increase in the financial participation of colleges themselves, in the form of deposits made to guarantee reserve funds. The performance of lenders, under severely adverse conditions, has been tremendously gratifying. This is not to say that the process to date has been without problems. It has had many, most of them in recent months coming from the adjustments necessary because of the Federal Government's involvement under the terms of the Higher Education Act of 1965. And even though that Federal Act became law in November, 1965, we have had only one semester's experience with the provisions relating to guaranteed loans. It was not until the fall semester of 1966 was about to begin that Federal "seed money" advances were available to the states. Federal regulations under the program were available only a short time before that.

Thus, more time is needed to see how well the existing system will work out. We urge that Congress authorize a continuation for two or three more years under existing ground rules. We have every confidence that the program will succeed fully under state and private nonprofit guarantee auspices. Yet, as I pointed out earlier, with only one semester's effective experience since the enactment of the Federal Higher Education Act, there has simply not been time enough for the full development of so large and complex an undertaking.



AUEC was organized in 1939 and now consists of 154 member institutions of higher learning distributed over 36 states and Canada. In addition, AUEC includes 153 associate and contributing members who are deans, directors and administrative officers of evening colleges and universities.

The main concern of AUEC is the advancement of collegiate evening education of adults in degree-granting curricula. AUEC deems this objective as a basic function and responsibility of institutions of higher learning.

AUEC promotes high standards for professional excellence; stimulates faculty leadership in constructive support of evening college objectives; sponsors research on evening college problems; and cooperates with other groups and organizations in the achievement of these goals.


Approximately one-third of college enrollments in curricula leading to the baccalaureate degree consists of part-time students in evening colleges. This type of evening education at the college level is a phenomenon unique to the United States.

According to reports of the United States Office of Education, there was 5.56 million students enrolled in degree-credit curricula in the fall of 1965. Of these, 3.93 million were on full-time and 1.63 million on part-time attendance. (OE54003-65, Circular No. 796)

Evening colleges are an essential part of the system of higher education in the United States. Designed primarily for adults employed during the day, who seek to continue their education at night, the university evening colleges have gradually expanded their facilities to meet the needs of a heterogeneous student body. In addition to offering complete programs of evening instruction in a variety of curricula leading to associate, baccalaureate, and graduate degrees, many of these schools conduct forums, institutes, short courses, and non-credit programs at all hours in response to the demands of a serious and mature citizenry. By serving the requirements of adult students who wish to resume or continue their studies, the evening colleges are making an invaluable contribution to contemporary American culture while, at the same time, widening the scope and enhancing the intellectual mission of the universities of which they are a part.

The twentieth century is best characterized as an age of change. Not only is there constant obsolescence of machines and methods, but there is constant obsolescence in the learning of men. Man's knowledge is increasing at an unprecedented rate. Technological advancements and change in almost every field of endeavor necessitate widening of horizons for people already employed. The lengthening life span reflects a steadily rising percentage of the population in the age group of twenty one and over. Labor saving devices and automation continue to shorten the work day and week. Increasing emphasis is being placed on the cultural aspects of society. All of these factors favor a limitless pursuit of learning-a privilege not possible for previous generations.

In recognizing the importance of the need for opportunities for part-time study, the Association of University Evening Colleges dedicates itself to the encouragement and support of high quality degree programs for adults among its member institutions of higher learning.


Title IV of the Higher Education Act of 1965 provides for student financial assistance in three forms. First, it establishes "educational opportunity grants" to institutions to enable them to provide undergraduate scholarships to "qualified high school graduates of exceptional financial need, who for lack of financial means of their own of their families" would be unable to obtain the benefits of higher education without scholarship aid. Second, it establishes a low-interest insured loan program designed to absorb interest costs during the period of study and to pay a portion of the interest thereafter on insured loans made to qualified students. Third, it provides for work-study programs. Grants, loans, and jobs are the triad of Title IV.


Scholarship grants, which are limited to full-time students, may not be less than $200 a year or more than $800 a year or one-half the amount received by the student from all other scholarships (public or private), whichever is lower. Thus the institution must in effect equally match the federal "educational opportunity grant."


While scholarship grants are available only to full-time students in good standing, insured loans, on the other hand, are available to students who are "carrying at least one-half of the normal full-time workload as determined by the institution." Part-time students enrolled in evening colleges thus do not qualify for scholarship aid even though they may be low-income wage earners or come from low-income families. But, significantly, part-time students are eligible to mortgage their futures under the insured loan program by borrowing. Why the discriminatory treatment of part-time students?

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