The second item that we include in our written testimony deals. with the five changes we are proposing for the 1978-79 family contribution schedule. The first change we are suggesting for your consideration is an increase in the family size offset to take into account inflation. This is something that we have done each year and the increase is based on the CPI which we are estimating this year will be approximately 6 percent.

Two of the proposed changes that we are talking about are part of the effort to develop common data elements for the basic grant application and the applications of the major need analysis services. The first is a revision of the criteria for determining which parent's income should be considered in computing basic grant eligibility when the applicant's parents are separated or divorced.

The proposed revision, which would provide consistency with the procedures of the major need analysis services, would require income information from the parent who has custody of the student, or, in cases in which the term "custody" is no longer applicable, from the parent with whom the applicant resided for the greater portion of the 12-month period preceding the date of the application. If the applicant did not reside with either parent during that period, the income of the parent who is providing the greater portion of the student's support shall be considered. The latter is the way we have been doing it in the past and we are suggesting this particular change which would make us consistent with the way this particular element is defined by the various services.

The second revision related to the effort to develop common data elements is a revision of the criteria for determining the circumstances in which a stepparent's income and resources shall be considered in basic grant eligibility computations. Under the procedures set forth in the 1977-78 family contribution schedule, the stepparent's financial information is reported only when the applicant has resided with the stepparent and parent for 6 weeks or more during the base year of the calendar year following the base year, or if the stepparent has contributed more than $600 to the applicant's support during either of those years.

As you know, basic grant eligibility computations are generally based on actual financial information for the calendar year prior to the academic year for which the student is requesting aid. The conditions under which a student may apply for a grant based on estimated data for the current year have deliberately been kept to a minimum.

The fourth modification we are proposing is to add the loss of unemployment benefits to the list of reasons for using estimated income when applying for a basic grant.

Finally, we are proposing for your consideration a technical amendment to permit an applicant to revise previously reported asset amounts if the applicant or the applicant's family has suffered a loss of assets resulting from a national disaster in an area which has been declared a national disaster area by the President.

The third major subject that we have included in our testimony is that of the reserves to be applied to the assets of farmers and businessmen and the reserves against family assets. In keeping with Congressman Obey's statement and in view of the fact that the Appropriation Committee has increased the basic grant appropriation for fiscal year

1978 by $90 million, we are suggesting that if the Congress does not disapprove it, we would include as a change in the family contribution schedule increasing the farm and business asset reserve from $25,000 to $50,000 and increasing the family asset reserve from $12,000 to $17,000. It is our estimate that these two changes would cost about $90 million.

It is interesting to note what impact these changes in fact would have. If these two changes were made 36 percent of our applicants reporting farm assets or about 36,000 persons will become eligible for basic grants and another 34 percent would have a reduced family contribution. In addition, 30 percent of the applicants reporting small business assets or 41,000 persons would become eligible for basic grants and an additional 14 percent of these applicants would have a reduced family contribution.

By going to a $17,000 reserve against family assets, an additional 9 percent, or 157,500 of our applicants would be eligible for basic grants and 33 percent of our applicants would have a reduction of their expected family contribution.

The last item we wish to discuss with you concerns the independent student. As you know so well, the problem with the independent student is a complex one. On one hand, what we are trying to do is to reduce and hopefully eliminate the real possibility of shifting the responsibility for postsecondary expenses from the families which can afford to contribute to their children's educational costs to the Federal Government. On the other hand, there is a legitimate concern about the truly independent student since they are becoming a major factor in the educational process. We have struggled with this dilemma and had many discussions with representatives of the educational community on it. We have published some proposed changes, which are basically to extend the time frame to 2 years instead of 1 year with respect to being declared on the parents' income tax, and changing the 2 weeks residence requirement to 6 weeks.

After receiving comments on the notice of proposed rulemaking, and after thinking more about it, we are now suggesting that we postpone putting the new rule into effect for 1978-79, and that we consider this new rule for 1979-80. During that time we will study the entire problem of the independent student in terms of definition as well as treatment. What we would like to do in this case is come back some time in March or April rather than wait until the entire family contribution schedule is being reviewed next summer, with a suggestion as to how we might treat the entire independent student question. We want to look at the entire problem since we think it is time to give that subject a very thorough review.

As you know the basic grant program was started with the idea it was primarily for the younger person going from high school to college. Our situation has now changed and we feel that this kind of study is warranted and we would like the opportunity of coming back to you early next year to talk about this in a more thorough way than we can now. If you would agree we would do nothing about changing the rule as far as independent student definition and let it run until we can have that kind of conversation.

It is sort of interesting to talk about the independent student. Of the 2.2 million qualified applicants in the year 1976-77, about 38

percent or 868,000 of those applicants were independent. The other interesting aspect of that number of 868,000 is that about 70 percent of those students who do apply as independent students are over 23 years of age which clearly indicates that we are dealing with a new population of students. That is another reason why we feel the subject needs further review and we do plan to do this.

If there are any questions we would be very happy to answer them. Mr. FORD. You are suggesting that at this point there be no change in the definition of the independent student and the 2-year rule would not go into effect for the 1978-79 academic year?

Mr. KORNFELD. Yes, sir.

Mr. FORD. I think that is probably a good idea because that change can start a lot of arguing and I don't know whether it is worthwhile to have a lot of reaction in the community over that part of it when the whole phenomenon of the independent student really has not been considered here or perhaps any place in light of the real world of 1977.

Mr. KORNFELD. That is my feeling, Mr. Chairman. It is just playing around with the definition, just causing a lot of fuss and fury and when you look at what we are accomplishing it looks rather insignificant in comparison to the fuss.

Mr. FORD. I think we were talking last week about the family or student moving away from the college campus. The pattern seems to have changed; the relationship of a college-age person to the parent is quite different than it was just a very few years ago.

I imagine a good deal of the package of assumption that you work under might not pass muster.

I appreciate your undertaking this study until such time as we can deal more easily with the question. When we see laws that don't square with the purpose of the law or that seem to disqualify the person who is thought to be the recipient, the beneficiary, we are doing something

wrong.

We have had ample warning now that there is substantial injustice, as well as an invitation for mischief, when young people take advantage of programs that encourage them from making the kind of expenditure with their own resources that they are capable of making. Mr. Brademas has a question. He cannot be with us this afternoon. It is:

In examining the statistical relation provided in the appendices to your prepared statement, the most relevant data would be on the recipient, that is, people who actually got the basic grants rather than applicants for a basic grant. Do you think you could replicate the data which you have here, extracted from actual experience?

I think it would be very interesting to have that.

Mr. VOIGT. May I respond to that, Mr. Chairman? We are working now on pulling the data together through this year on the recipients. We could not, however, for the current application cycle provide you with recipient information because those applications are still coming in. The application file is, first, not yet completed and second, we really haven't received the reports back from the institutions about these students.

So that kind of data will not be available until a good bit later, actually next year. For previous years we are working now to pull that data together. We will make it available as soon as it is ready.

Mr. FORD. Mr. Thompson also wanted to ask a question about the Education Amendments of 1976. Mr. Thompson would like for you to give him and the committee an update on the implementation of the Thompson-Eshleman amendment. What has happened, are you having problems, how widespread is the participation?

Mr. VOIGT. Mr. Chairman, strictly speaking, the implementation of the Thompson-Eshleman amendment was slightly changed by our approach to going with this multiple data entry procedure on basic grants.

In the 1978 and 1979 processing year, we will be dealing not only with State agencies but the two major need analysis services on that approach. At the moment we are working to put that system together. I think progress so far has been very good. We expect two States to participate in that procedure for the 1978-79 academic year.

I think at a later date for the record we can provide you with a more detailed progress report. But at the moment we are working on contracts to implement this approach. The application forms themselves have been agreed to and put together. I think we are at the stage where some of the services have actually gone to press with their application forms, which means that we are not in a position to recommend or make changes that would affect the application forms. Thus far progress has been very good.

Mr. FORD. At what point will you be able to ask your computer for a profile of the recipients by program and then break it out by institution so that we can get some idea? I know we have tried to get bits and pieces of this and it has been difficult for the committee up until now. I have not been impressed with the Office of Education's limited ability to be able to look at the whole package of student assistance programs.

There are differences in perspective between big city campuses and a private school that always color what we are told about who should benefit and how these programs work.

There is a difference in attitude and perspective between the people who administer the programs that reflects the kind of administration and population of students they serve.

We get an uneasy feeling when we don't even know in my own State of Michigan what kind of student population is being impacted most directly and which kind of student loan is being used where.

Mr. KORNFELD. We do feel it is important that we somehow get ourselves in the position where we can look at all the programs in a coordinated way to determine what institutions are getting involved in which programs and also be able to do this by States so we get a better feel.

The problem is that the systems we have currently do not permit us to do this, No. 1. We are looking at that. Although we can't give you a date, we too feel it is something that is very important, that we be able to identify student financial assistance by State and by institutions to determine what changes we should make in these programs.

Mr. FORD. It is something the Office of Education should have been doing in anticipation of being advocates of programs, not only as Congress sets them up but how a program ought to be enacted by Congress. The advocacy role has been lost. But to be advocates you have

to be the best informed people in this town and this country about what is actually happening.

Mr. KORNFELD. We hope to assume that role when we get data that show where this money is in fact being expended, and we are working on this now.

Mr. FORD. Mr. Quie will have some questions which we will send down with Mr. Biaggi's questions so we don't have to detain you further. Some of them have been touched on already.

Mr. CORNELL. I want to be sure I have one figure correct. You mentioned the increase in the farm reserve assets from $25,000 to $50,000 and that this would have the effect of increasing those eligible by 36 percent?

Mr. KORNFELD. Thirty-six percent of those persons who submit applications report farm assets. Of those applicants 36 percent more will become eligible or 36,000 additional students.

The other thing I think is significant that 34 percent will have a reduced family contribution. More than 50,000 people will benefit. Mr. CORNELL. Of those who submit applications?

Mr. KORNFELD. Right.

Mr. CORNELL. I was wondering what the rationale was in the proposed amendment providing for extension of residence limitation, that is, from 2 weeks consecutive to 6 weeks. What is the reason for that?

Mr. VOIGT. The 2-week rule was a rule that was with the basic grant program right from its inception. Many of us felt it was essentially an unenforceable rule and probably considerably more strict than logically it should be, in terms of determining a student's independence.

So we took this opportunity while changing the tax exemption to also change the residence requirement.

Mr. CORNELL. What is the rationale for the 6 weeks?

Mr. VOIGT. Essentially the 6 weeks was arrived at through discussions with the financial aid community to see what kind of a reaction we got. We were open to changing it to 8 weeks.

Mr. FORD. Six consecutive weeks?

Mr. VOIGT. Six consecutive weeks.

Mr. KORNFELD. You just go away for a long weekend.

Mr. CORNELL. I had an experience where some students came from rather wealthy families and declared themselves after their freshman or sophomore years to be independent and they were eligible for programs on campus that they would not have gotten otherwise.

I think it would take the wisdom of Solomon to work out a definition that would be equitable and fair.

Did I get that correct? Did you say of the 2.2 million qualified, 38 percent were independent students?

Mr. KORNFELD. Yes.

Mr. CORNELL. And that percentage for age 23, that does surprise me. Mr. KORNFELD. Which is why we think the whole subject needs restudying. We do want to prevent those students who are not truly independent from qualifying as independent students. In the past what was done was simply have your family not include you on their income tax return. That is about the only thing that can be validated. There are so many of those independent students over 23 years of age. The problem is with the 30 percent, not the 70 percent.