60 percent. This is due to greater participation by guarantee agencies and larger numbers of accounts temporarily assigned by guarantee agencies to the Department. Question: You include the $4.3 billion repayment of the Student Loan Marketing Association (Sallie Mae) to the Federal Financing Bank (FFB) due in fiscal year 1996 in the GSL liquidating account rather than the program account. Why? Answer: The loan to Sallie Mae was made prior to fiscal year 1992. Therefore, as required by the Credit Reform Act, all activities related to the repayment of this loan are reflected in the liquidating account rather than the program account. Question: Will these funds be available for obligation by the GSL program when they are repaid? Answer: No. Repayments made by Sallie Mae to the Federal Financing Bank are displayed in the GSL liquidating account, but these repayments are not available for obligation in the GSL program. GSL PROGRAM ACCOUNT Question: In determining the estimate for the GSL program account, what average U.S. Treasury bill rate did you assume for the life of the fiscal year 1992 loans? Answer: For the fiscal year 1992 loans, the following T-bill rate assumptions were used to estimate the subsidy: Answer: It was assumed that there would be loans outstanding through the year 2004, a total of 13 years. Question: How much of your subsidy calculation for Stafford Loans is attributable to special allowance costs? Answer: Approximately 20 percent of the subsidy costs are attributable to special allowance costs. Question: Is there any "slack" in your estimate for the GSL program account in case your economic assumptions or assumptions about defaults and collections are too low? Answer: There is no "slack" in the estimate for the GSL program account. The subsidy estimate is based on the best available data and assumptions at the time of budget preparation. The Credit Reform Act requires the annual re-estimation of subsidy costs for each cohort of loans. Based on the re-estimate, a separate request will be made for loans made prior to the budget year, if necessary, within the program account for each budget year. GSL FINANCING ACCOUNT Question: What happens if the financing account runs out of money? Answer: The GSL programs are mandatory programs. The Credit Reform Act specifically exempts the GSL programs from the requirement that appropriations be made in advance of new loan commitments and obligations. The subsidy for each cohort of loans will be re-estimated every year. If necessary, additional appropriations will be requested to cover obligations. INCOME CONTINGENT LOANS Question: Repayments are beginning to kick in under the Income Contingent Loan program, such that the Department expects roughly $1 million in payments in fiscal year 1991 from prior year borrowers. Because this is the first experience we've had with incomecontingent loan payments, I'm curious what your initial findings are regarding the rate of default in this program in relation to others for which payments are not tied to income? Answer: The Department has been conducting an ongoing evaluation of the Income Contingent Loan (ICL) program. The first phase of the evaluation focused mainly on whether the ICL funds have been distributed fairly and efficiently to students. The evaluation indicated that the distribution of funds has worked well. It A study of ICL repayments will begin in late Spring 1991. will include, for the first time, analysis of a significant number of out-of-school borrowers with loans in repayment. A comprehensive study of repayments has not been feasible until now because ICL borrowers are not required to make income-contingent repayments until they begin the third year of the repayment period. The results of that study may be available later this year. HIGHER EDUCATION AID FOR INSTITUTIONAL DEVELOPMENT--STRENGTHENING INSTITUTIONS Question: What is the award rate for applications under Part A of Title III of the Higher Education Act? Answer: The fiscal year 1990 award rate for 2-year institutions under Part A was 42 percent. The award rate for 4-year institutions in the same year was 29 percent. ENDOWMENT CHALLENGE GRANTS -- a Question: Why does the proposed $10 million reduction in funding for the Endowment Challenge Grants for fiscal year 1992 57 percent drop in funding result in a decline of only 29 percent (from 21 to 15) in the number of institutions receiving these grants? Answer: In any year in which the appropriation for endowment grants under Title III, Part C, does not exceed $10 million, the maximum allowable award is $500,000. The estimated number of awards shown for 1992 represents the maximum number of awards that could be made at the maximum award level of $500,000. The number of actual awards may be greater than that, depending on the number and quality of applications received, and on the award amounts requested. Question: Are you proposing other changes to the Endowment Challenge Grant program? Answer: For 1992, the Secretary will propose to add a new authority for an endowment challenge grant set-aside for historically black colleges and universities under Title III, Part C, as outlined in AMERICA 2000--An Education Strategy. HIGHER EDUCATION FACILITIES LOANS Question: Facilities needs are estimated at beyond $50 billion. What, if anything, is the Department doing to address the decaying infrastructure at the Nation's colleges and universities? Answer: The Administration does not support the provision of direct Federal financial assistance for academic facilities construction. The responsibility for financing the capital outlay needed to maintain the infrastructure of postsecondary educational institutions lies with colleges and universities themselves, State and local governments, taxpayers at those levels, private sector users and beneficiaries of higher education services, and the newly authorized College Construction Loan Insurance Association. The Department established the College Construction Loan Insurance Association (Connie Lee) to provide reinsurance and direct insurance of higher education construction debt. Connie Lee has provided 400 higher education institutions with $3 billion in reinsurance of construction debt. Connie Lee has estimated a $100 billion need for construction, renovation, acquisition of buildings, infrastructure and science equipment at colleges and hospitals. Association plans to provide $50 billion in primary insurance and reinsurance of construction debt over the next decade. The OFFICE FOR CIVIL RIGHTS MINORITY SCHOLARSHIPS Question: Last year the Department's Office for Civil Rights told colleges and universities receiving Federal funds that they could not administer scholarship programs based on race, and then said institutions could administer, but not fund such programs. Under what conditions will institutions who receive aid under this subcommittee's jurisdiction be permitted by the Department to encourage minority attendance through the provision of minoritydirected scholarships? Answer: Secretary Lamar Alexander, during his Senate confirmation hearing on February 6, 1991, stated that he would review the subject of scholarships in which race or national origin is a factor and that he would consult with members of Congress, the higher education and civil rights communities, and other administration officials. On March 20, 1991, Secretary Alexander announced the process that the Department of Education will follow in conducting this review. This process will consist of gathering facts about existing financial aid programs in which race or national origin is a factor; requesting information and comments from interested parties; analyzing, in cooperation with the Department of Justice, the requirements of Title VI of the Civil Rights Act of 1964; publishing guidelines on how Title VI may affect financial aid programs in which race or national origin is a factor; and working with colleges and universities to help them make any adjustments that may be needed under the new guidelines without jeopardizing outstanding grants and loans. The Department will postpone any final decision on pending investigations concerning this issue while these guidelines are being formulated. Question: What policy guidance is the Office for Civil Rights currently providing to higher education institutions on raceexclusive scholarships? Answer: During the time guidelines on race-exclusive scholarships are being formulated, the Department is encouraging educational institutions and scholarship providers to continue what they are doing to provide financial assistance to minority and other students. When the Department announces the policy on how Title VI applies to financial aid programs, educational institutions and scholarship providers may wish to contact the Office for Civil Rights (OCR) for technical assistance. OCR will work with these institutions and scholarship providers to determine if any adjustments are required under the policy. EDUCATIONAL ATTAINMENT BY MINORITIES Question: The minority population in the United States is growing, as is the importance of its success to the economic and social future of the Nation. But there continues to be a gap in the educational attainment of minorities. What is the Department doing to address this problem? Answer: While there has been significant progress in narrowing the gap between minority students and others in achievement test scores and, for some groups, in graduation rates, a gap between their educational attainment and that of the majority persists. Department of Education's programs, while not for the most part targeted on minority students, are heavily targeted on the educationally and economically disadvantaged. Black, Hispanic, and The Native American students are disproportionately represented among the disadvantaged. Several Department programs aim to improve the educational attainment of the disadvantaged. Chapter 1 proposed funding for FY 1992 includes an increase of $119 million for services to children in counties and school districts with high poverty concentrations; it also includes an increase for the Even Start family literacy program, to reach greater numbers of low-income families with limited educational attainment. Minority students are disproportionately represented among our school dropouts, and the Dropout Prevention Demonstration program is examining the most promising strategies to keep young people in school; the Department has submitted legislation to extend this program through 1994. The AMERICA 2000 education strategy includes several new proposals which can boost the attainment of minority students. These include the Merit Schools Program, differential teacher pay for those who teach in challenging settings, choice, and of course, the New American Schools. In selecting from among applicants for the new schools, AMERICA 2000 directs the Governors and the Secretary to ensure that many such schools serve communities with high concentrations of "at-risk" children. Interestingly, many of the ideas which have shaped AMERICA 2000 have been generated or tested in heavily disadvantaged neighborhoods with large minority populations. These experiments, which "break the mold" of traditional education, were begun because educators, parents, and community leaders, sensing a crisis in the quality of education for disadvantaged children and youth, were motivated to look for new solutions. RACE- AND ETHNIC-EXCLUSIVE SCHOLARSHIPS Question: Is the Office for Civil Rights currently investigating any complaints involving college scholarship programs for minority college students? Answer: The Office for Civil Rights has seven complaints involving college scholarship programs for minority college students. These complaints are at various stages in the investigative process. The Department will postpone any final decision on these pending complaint investigations while formulating the guidelines on scholarships in which race or national origin is a factor. RACE- AND ETHNIC-EXCLUSIVE SCHOLARSHIPS-- Question: Please provide the Committee with a list of the administrative decisions and letters of finding issued by the agency on race- or ethnic-exclusive scholarships during the past decade and what those decisions concluded. Answer: The U.S. Department of Education's Office for Civil Rights (OCR) has issued several documents, going back more than a decade to 1970, relating to the subject of race-exclusive |