Mr. CORNELL. Thank you. Mr. FORD. Thank you very much. Once again I would like to thank you for appearing this afternoon. We have now Mr. Dallas Martin, executive secretary of the National Association of Student Financial Aid Administrators. [The prepared statement of Mr. Martin follows:] STATEMENT before the SUBCOMMITTEE ON POSTSECONDARY EDUCATION U. S. HOUSE OF REPRESENTATIVES September 12, 1977 by Dallas Martin, Executive Secretary National Association of Student Financial Aid Administrators on behalf of: The American Association of Community and Junior Colleges The Association of American Universities The Association of Jesuit Colleges and Universities The National Association of Independent Colleges and Universities The National Association of Student Financial Aid Administrators Mr. Chairman and Members of the Subcommittee: Good morning. I am Dallas Martin, Executive Secretary of the National Association of Student Financial Aid Administrators, and I am accompanied by Patricia Smith, Policy Associate with the American Council on Education. We are pleased to appear before you today on behalf of the major higher education associations regarding the Office of Education's Notice of Proposed Rulemaking governing the Basic Grant Family Contribution Schedules and the proposed change in the definition of the independent student. The higher education community supports the changes proposed by the Office of Education in its Notice of Proposed Rulemaking governing the Family Contribution Schedule for 1978-79. The Commissioner's intent to revise the criteria used in determining which parent's income is to be used in calculating Basic Grant eligibility for a student whose parents are divorced or separated, the inclusion of the loss of unemployment benefits as a permissible condition for filing a Supplemental Form, and the revision which enables applicants to correct their previously reported assets when such have been lost or damaged as a result of natural disaster, will surely improve the equity of the program. There are, however, some changes which need to be included in the Notice of Proposed Rulemaking, but were not known at the time these rules were developed. These needed changes are the result of action taken by the Conferees on the 1978 Labor, Health, Education and Welfare appropriations bills. Amendment #57 earmarked $2.16 billion for the Basic Grant program to fund a maximum grant level of $1600 and, in addition, provides at least $90 million for the expansion of eligibility under the program. Further, the conference report indicated that the intention of the conferees was that up to $50 million be used to increase the offset for farm and small business assets, and that up to $40 million be used for increasing the offset for personal use. The higher education community commends the appropriations conferees for taking the initiative to expand eligibility criteria and to support needed changes in asset offsets which would make the distribution of Basic Grant funds more equitable for all students. Heretofore, students whose parents are busi ness or farm owners have participated in the program at a lower rate than other students whose families are in similar economic situations. The reason for this difference has been the limitations which have been inherent in the asset reserve offsets used in calculating Basic Grants eligibility. However, by changing the asset protection allowance to a level more in keeping with average asset holdings of these various groups greater equity can be achieved. Based on our analysis, we would recommend that for 1978-79 the personal asset reserve be changed from the current $12,500 to $17,500, and that the farm and business asset reserve be increased from the current $25,000 to $50,000. These two changes, coupled with the $1600 maximum award, will generate program costs of approximately $2.16 billion for 1978-79. In addition, approximately 2,356,000 recipients will be eligible to participate in the program, as opposed to 1,978,000 for 1977-78. We would also encourage further expansion of the personal asset reserve in the future. These changes, in our opinion, are in keeping with the intent of Congress. But more important, they will help to relieve some of the increased burden of middle income Americans who have experienced most severely the influence of rapid inflation on their personal and other assets. We would, therefore, hope that this Subcommittee would adopt the Family Contribution Schedules as proposed by the Office of Education and instruct the Office of Education to include these changes to the asset reserve levels when the final rules are published. Under the current In addition, we would like to take this opportunity to point out another major inequity within the Basic Grant program as it relates to the treatment of single, self-supporting students with dependent children. formula there is no personal asset reserve for self-supporting students. Instead, their assets are taxed at the rate of 33% per year. ment is generally accepted for the typical self-supporting student who has no dependents, the current procedure certainly imposes an unrealistic expectation upon the single, self-supporting student who has dependents. While this treat For example, a divorced mother with two children, whose net assets of $10,000 are in the form of home equity, would be expected to contribute $3,333 from these assets for educational purposes. The assumption behind this treatment is that, since the student is the direct beneficiary of the post-secondary education, he or she should be expected to invest a portion of his or her resources in meeting educational costs. Since the assets are re-calculated each year, a modest reserve is provided for the individual student. However, in the case of the single, self-supporting student with children, the parent's obligations are different in that they also must provide for the financial needs of their offspring. As a result of this unrealistic expectation, many widowed, divorced or separated self-supporting students with children are denied assistance through the Basic Grant program. Consequently, these students are forced to seek help from other aid sources and typically must borrow larger amounts of money and/or work more hours in an effort to meet their postsecondary educational expenses. We would, therefore, strongly recommend that this Subcommittee instruct the Office of Education to conduct a complete analysis of this problem and 97-379 O-78-6 |