area of financial aid. I would simply like to raise the issue of fairness with regard to young people whose independent financial situation precludes their attending college.

I note that Commissioner Boyer shares this same concern. In testimony before this Subcommittee earlier this year, he cited the changing demographic characteristics of college students today as compared to those of ten years ago. I believe the family contributions schedule should demonstrate common sense and flexibility, and in so doing, reflect the needs of

our growing independent population.

STATEMENT OF HON. RICHARDSON PREYER, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF NORTH CAROLINA

Mr. PREYER. Thank you Mr. Chairman. I appreciate the opportunity and want to thank you for allowing me to testify today. I feel a little bit like the story about the centipede who had the gout. His 100 feet were killing him and he went to the owl, the wisest creature in the jungle to ask how he could reduce the pain and the owl said, "Reduce the number of your feet by half." The centipede said, "I can see why you are the wisest creature in the jungle. Now tell me how do I do that" and the owl said, "I can't tell you that. I just set policy."

So I am afraid what I am here for is not to tell you how to do the hard part of it-I am leaving that up to you--but to make a suggestion on the policy side.

I have been particularly concerned with the BEOG program as it affects the independent student. My interest in this matter stems from the experiences of constituents who, though barely self-sufficient, have been denied the BEOG. I presume this has occurred on the premise that the majority of the income of independent students should be going toward their education. However, it seems to me that before one can consider education, he or she must account for the basics of survival, such as food, clothing, and shelter. Understandably, there is little money left over to support college costs, and as day-to-day costs continue to rise, self-sufficiency becomes more and more improbable.

I have seen where this approach inadvertently discriminates against many independents. There is a young woman from my district who applied for a BEOG, claiming no dependency relationship, as she is an orphan. Her claimed income was $2,592, based on income received from social security and veterans' benefits. She lives with an aunt and uncle during the week, and with a sister on weekends. Lamentably, her eligibility index enabled her to receive only $226.

Another young woman from my district is in a similar bind. Raised by adoptive parents, her adoptive mother died while she was in high school. She has had to quit college on at least three occasions since graduation from high school for lack of funds. She even qualified for a BEOG 1 year, but the grant was rescinded the next year because her eligibility index was too high.

A third woman, who represents a more common situation, has been denied eligibility despite an adjusted gross income of only $3,528.

Obviously my sympathy is directed to the orphan and others who are circumstantial victims of bad luck. But the problem runs deeper than that, because many independent students are merely living on their own trying to make ends meet, with no particular disadvantage other than financial insecurity.

I can understand the reluctance of this subcommittee and of HEW to offer a carte blanche to independent students who have gained their independent status for potentially abusive reasons. Certainly, I do not think our tax dollars should be providing grants to children of wealthy parents who claim independence to save their parents from paying for their college education.

However, there are legitimate cases which warrant our attention. A hypothetical 23-year-old man who has been helping his father at the local market for 4 years and is now living alone, should be entitled to

Federal help in the form of a grant to pursue his education. To deny him this opportunity is, in essence, to deny him an education.

I want to make it clear at this point that my argument is philosophical in nature, and it is not founded on any expertise in the area of financial aid. I would simply like to raise the issue of fairness with regard to young people whose independent financial situation precludes their attending college.

I note that Commissioner Boyer shares this same concern. In testimony before this subcommittee earlier this year, he cited the changing demographic characteristics of college students today as compared to those of 10 years ago. I believe the family contributions schedule should demonstrate commonsense and flexibility, and in so doing, reflect the needs of our growing independent population. Thank you very much.

Mr. FORD. Thank you. You have brought to our attention individuals who, clearly by any examination of their situation from the perspective you presented to us, would seem to illustrate that a system that does not treat them as an eligible independent student has something very basically wrong with it. It has been a matter of concern for the committee and for the Office of Education to try to figure some sort of a solution, not quite as drastic perhaps as was suggested to the centipede.

The temptation for people to take advantage of the possibilities for the independent student is so great that it leads people to expect that it will be done, that there will be some exploitation of it if the regulations are not rigid and rigidly enforced. As long as a substantial part of the academic population thinks that the program is subject to that kind of abuse, it erodes confidence in the program.

We do expect that before the end of the day today we will have some idea of an improvement of sorts, not as much as some would like, more than others would like, in the regulation with respect to the status of an independent student. We also hope that we can get a breathing period for a little while on this question while we get into it more deeply and see if we can find some suggestions that will make it possible for us, if they can't do it by the regulation, to legislate a more sensible kind of a test than we have been applying in the past.

I appreciate the fact that you have used specific cases to continually put before this committee the questions being raised about the present regulations.

Mr. BIAGGI. We appreciate your philosophy, and you have left us with the nitty-gritty, and hopefully we can respond to your philosophy and your doctrine of fairness in a substantial fashion. I have stated my views before. I have always been concerned about this segment of the population and felt that there was an inequitable situation existing. We appreciate your testimony today.

Mr. FORD. Thank you very much, gentlemen.

Now Mr. Leo Kornfeld, Deputy Commissioner of Education for Student Financial Assistance, Office of Education, accompanied by Mr. William Blakey, Deputy Assistant Secretary for LegislationEducation, and Mr. Peter K. U. Voigt, Director, Division of Basic and Student Incentive Grants.

Without objection, your prepared statement presented by Mr. Kornfeld will be incorporated in the record in full. I would like to deviate

from our normal procedure for just a moment because Mr. Biaggi has a bill under suspension on the floor that he has to leave to attend to, but he wanted to have an opportunity to ask you some questions in the brief time he has available. If you don't mind, we will proceed with the questions of Mr. Biaggi.

Mr. BIAGGI. Thank you, Mr. Chairman. Mr. Kornfeld, the question of proprietary schools has developed into a critical problem because of the contemplation of the Office of Education in an effort to promulgate regulations that would limit the non-high-school degree-bearing students to 5 percent. I don't know anywhere along the line where the legislative intent of the Congress indicated that to be the objective.

The fact is these proprietary schools have been functioning for some time without this contemplated limitation and I have to assume satisfactorily. They are subject to the same supervision other schools are, and to the extent that your office supervises them where they violate any of the regulations or requirements, they are subject to criticism and suspension and termination. I have a number of questions, but what bothers me is, how did this proposed regulation develop, what triggered it, and why and whom? Those people out there had every right to believe they were operating properly as a result of experience and approval. They had to assume approval because there was no disapproval, and they were permitted to function and expand and permit people into their schools without any percentage limitation. Then suddenly after operating for a period of time, their continued existence is threatened. I don't understand it.

Mr. KORNFELD. First, Congressman Biaggi, as you may know, I am new in this position, very new. I was sworn in a little over a month ago, August 7.

Mr. BIAGGI. Let me congratulate you and wish you well.

Mr. KORNFELD. Thank you. However, since I am new, I can't answer your specific questions as to how this came about and what the history of the situation is. It is not in a proposed rule. It is something that has been discussed in another Bureau. The resolution of this whole problem is not within the control of the Bureau of Student Financial Assistance, but we are very concerned because once this rule comes out, we are obligated to live with it and regulate it.

Mr. BIAGGI. While we are on that score, I am aware of the delineation but are there subordinate divisions?

Mr. KORNFELD. It is another bureau entirely. The whole problem of institutional eligibility and accreditation is under the Bureau of Continuing and Higher Education. However, since it does affect our program so much, we are concerned, too. Our present plan is that we are going to look into it. No rule is going to come out at this point regarding this 5 percent or de minimis interpretation.

It is something that has been seriously discussed within the Bureau. However, at this point we are going to look into it and try to figure out a way to handle that entire problem of the non-high-school graduate in proprietary schools.

Mr. BIAGGI. In the light of your response let me pose a number of questions for the record. I understand we have a representative of the bureau in question here and the questions will be posed to him as well. I would appreciate it if you can't respond now that you submit responses to these questions. You don't have to write them, I will give you copies of them.

You stated initially that you intended to publish regulations limiting eligibility of proprietary schools for the basic grants program to schools which enroll less than 5 percent non-high-school graduates. If so what is the statutory authority for such a regulation? That last sentence is the crucial one. I have not found any statutory authority. You have not as yet applied the rule?

Mr. KORNFELD. We have not.

Mr. BIAGGI. I am informed by counsel that some schools have already been subject to this rule and are threatened with discontinuance. Mr. KORNFELD. Let me try to respond to that, Mr. Biaggi.

Mr. BIAGGI. I understand that you are brand new.

Mr. KORNFELD. Right. I don't want to use that as an apology however. Mr. BIAGGI. We have all been brand new and you will be here 4 years and will still learn.

Mr. KORNFELD. The usual way this comes about is through an HEW audit of that institution, the report of which is then reported back to us and our bureau is responsible for resolving an exception noted in the audit. The only cases I know of that have come to us is where the violation of the non-high-school percentage was in the 30-, 40-, 50percent category. It was not a minor infraction of the rules as we are now interpreting them.

Mr. FORD. Will you yield? Actually it came to my attention, unfortunately after I had my conversation with you last week, that in at least one regional office there has been widespread publicity given to anticipation of a regulation yet to be published which was disseminated to people. They tell me the way you get this information is if you are in the process of reapplying for certification because the ownership or the location of the school has changed.

At the time of the application for recertification, people are being told this regulation is so nearly complete and frozen in concrete that they are being warned that unless they meet the requirements of this not-yet-promulgated regulation, they won't be qualified.

Now if the regulation were to go into effect as it has been indicated to people, apparently it could have the effect right now of closing some schools. The thing that I guess has us really puzzled is where any of us on this committee or on counterpart committees in the Senate have said anything that could give anybody at the Office of Education the suggestion that there is a legislative history developed which indicates that we wanted to disqualify proprietary schools or that we wanted to treat the non-high-school graduate as harshly as this would treat them.

Quite the contrary, I might say. There have been numerous things done by the committee legislatively in the last few years that indicate that, to the degree we could do so, we would treat the high school diploma as an irrelevancy in determining what the educational needs of a person were and encourage institutions to do that.

We have taken a number of initiatives to encourage institutions to develop education programs which are very likely to appeal to large numbers of people well beyond high school graduation age who may have been out in the work force for a long time without the benefit of a high school education or equivalent. I don't ever remember anybody urging that there should be some stopoff point where you go back