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POPULATION AT PRIVATE BLACK COLLEGES HAS BECOME INCREASINGLY
POOR OVER THE PAST TWO DECADES. NOT SURPRISINGLY, THE AVERAGE
ENDOWMENT AT UNCF INSTITUTIONS WAS LESS THAN HALF OF THE NATION-
AL AVERAGE FOR PRIVATE COLLEGES. WE MUST RECOGNIZE THAT THESE
POOR STUDENTS BY VIRTUE OF THEIR FINANCIAL STATUS QUALIFY FOR
A VAST ARRAY OF LOCAL, STATE AND FEDERAL PROGRAMS WHICH GENERATE
REAMS OF PAPERWORK. BLACK COLLEGE PRESIDENTS, HOWEVER, IN MANY

INSTANCES ARE LOATH TO INCREASE TUITION BEYOND THE STIPEND
AVAILABLE UNDER THE BEOG'S PROGRAM, SINCE THEY WOULD THEN RUN
THE RISK OF PRICING THEIR INSTITUTIONS OUT OF THE STUDENT MARKET
THEY SERVE. THIS DISMAL CATCH-22 FINANCIAL SITUATION LOCKS
THESE SPECIAL PURPOSE INSTITUTIONS INTO AN UNREALISTIC TUITION
SCALE WHICH IS HARDLY ADEQUATE TO PAY COMPETITIVE FACULTY
SALARIES OR FINANCE THE PURCHASE OF MUCH NEEDED MODERN ADMINISTRA-
TIVE SERVICES. THE LACK OF THESE MODERN ACCOUNTING TECHNIQUES
AND MACHINERY IS AT THE ROOT OF DISPUTES INVOLVING CHARGES

OF MISHANDLING OF FEDERAL FUNDS AT BLACK HIGHER EDUCATION IN

STUTITIONS.

LET ME NOW TURN TO A BRIEF SUMMARY OF MY RECOMMENDATIONS WHICH SEEK TO REMEDY MANY OF THESE DIFFICULTIES.

CONSISTENT

WITH THE HISTORIC FEDERAL COMMITMENT TO PROVIDING EQUAL AND EX-
PANDED ACCESS TO QUALITY EDUCATIONAL OPPORTUNITIES, MY LEGISLA-
TION WOULD ESTABLISH FIRM AND OBJECTIVE ELIGIBILITY CRITERIA
BY DIRECTING TITLE III AID TO THOSE INSTITUTIONS WHICH ENROLL

SUBSTANTIAL NUMBERS OF LOW INCOME, DISADVANTAGED STUDENTS, BUT

WHICH ARE ABLE TO SPEND ONLY LIMITED AMOUNTS TO EDUCATE THESE
STUDENTS. THE GOAL OF THIS APPROACH IS TO ENCOURAGE RATHER THAN
PENALIZE ANY INSTITUTION WHICH SERVES LOW INCOME STUDENTS. IT
IS ALSO IMPERATIVE THAT THIS TITLE ADDRESS THE NEEDS OF COM-
MUNITY COLLEGES. I AM AWARE THAT THESE INSTITUTIONS ENROLL
UPWARDS OF 40% OF ALL MINORITY STUDENTS IN POSTSECONDARY EDUCA-
TION, AND I BELIEVE THAT A SOLID CASE HAS BEEN MADE BY WITNESSES
IN THE HOUSE FOR ADEQUATE FUNDING FOR THESE SCHOOLS. IN MY
HOME BOROUGH OF BROOKLYN, FOR EXAMPLE, THE COMMUNITY COLLEGES
ARE FACED WITH POSSIBLE EXTINCTION DUE TO THE FINANCIAL SQUEEZE
IN NEW YORK CITY. MOREOVER, I ALSO RECOGNIZE THAT MANY BLACK
AND BROWN STUDENTS ARE DEPENDENT UPON THE TWO YEAR INSTITUTION
AS THEIR ONLY ENTRY POINT DUE TO HIGH COSTS AND POOR ACADEMIC
PREPARATION. ACCORDINGLY, MY BILL INCLUDES THE 24 PERCENT SET

ASIDE AS A FUNDING FLOOR RATHER THAN A CEILING.

IN MY VIEW GENERAL AND LONG RANGE PLANNING IS PIVOTAL TO THE DEVELOPMENT OF A STRONG AND VIABLE INSTITUTION. THE PLANNING FEATURES FOUND IN THE CURRENT LAW MUST BE RETAINED, COUPLED WITH NEW GRANT CATEGORIES WHICH WILL CLARIFY FUNDING EXPECTATIONS. UNDER PROVISIONS IN MY LEGISLATION, AN INSTITUTION COULD OPT TO PURSUE FUNDING UNDER THE ONE TO THREE YEAR GRANT CATEGORY, AND RE-APPLICATION FOR THESE FUNDS WOULD BE PERMITTED. MORE SUBSTANTIAL LONG TERM GRANTS WOULD BE AVAILABLE ON A ONE TIME BASIS IN THE 4 TO 7 YEAR CATEGORY. THE DISTINCTION IN FUNDING LEVELS AND DURATION OF GRANTS SHOULD PROVIDE AN INCENTIVE FOR INSTITUTIONS TO MOVE THROUGH THE PROGRAM. AS A FINAL

COMPONENT IN THIS PACKAGE, MY BILL INCLUDES A CHALLENGE GRANT

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PROPOSAL.

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THE CHALLENGE GRANT PROPOSAL PROVIDES A NEW MECHANISM AND FURTHER INCENTIVE TO ELIGIBLE INSTITUTIONS IN THEIR QUEST FOR SELF-SUFFICIENCY AND FISCAL STABILITY. THE CHALLENGE GRANT PROGRAM IS DESIGNED TO PROMOTE STATE AND PRIVATE SECTOR INVESTMENT IN DEVELOPING INSTITUTIONS. THROUGH THE DOLLAR FOR DOLLAR MATCH REQUIREMENT IN MY BILL, INSTITUTIONS WHICH DEMONSTRATE A CAPACITY TO MOVE AWAY FROM DEPENDENCY ON FEDERAL FUNDING WOULD BE ENCOURAGED TO ACCELERATE THEIR DRIVE TO OBTAIN RESOURCES FROM A VARIETY OF SOURCES. I AM MOST EXCITED ABOUT THE POTENTIAL THAT THIS PROGRAM REPRESENTS FOR STIMULATION OF THE STATES AND THE PRIVATE SECTOR TO TAKE A MORE ACTIVE ROLE IN ACHIEVING THE GOAL OF FISCAL STABILITY AMONG TITLE III INSTITUTIONS. IN ORDER TO ACHIEVE THE PURPOSE OF THIS TITLE, MY BILL LIFTS THE AUTHORIZATION LEVEL TO $250,000,000 OVER THE LIFE OF THE ACT, WHICH INCLUDES A $50 MILLION AUTHORIZATION FOR CHALLENGE GRANTS. AS YOU KNOW, MR. CHAIRMAN, THE HOUSE EDUCATION AND LABOR COMMITTEE HAS ALREADY ADOPTED PROVISIONS VIRTUALLY IDENTICAL TO THOSE I JUST DESCRIBED IN H.R. 5192. I HOPE THIS COMMITTEE WILL BE PERSUADED TO DO LIKEWISE.

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TITLE IV STUDENT LOAN PROGRAMS

ALTHOUGH GREAT STRIDES HAVE BEEN MADE IN ASSURING THAT

OUR NATION'S CHILDREN HAVE THE OPPORTUNITY TO RECEIVE THE

EDUCATION OF THEIR CHOICE, THERE REMAIN FORMIDABLE BARRIERS
TO ACCESS OF HIGHER EDUCATIONAL OPPORTUNITIES FOR THOSE STUDENTS
FROM ECONOMICALLY DISADVANTAGED BACKGROUNDS. IN RECENT YEARS

THE RISING COSTS OF POST-SECONDARY INSTITUTIONS HAVE ALSO
IMPACTED ON THE ABILITY OF MIDDLE-INCOME PARENTS TO SEE
THEIR CHILDREN THROUGH THE EDUCATIONAL PROCESS. WE ARE

THEREFORE FACED WITH A SITUATION IN WHICH WE MUST FIND

SOME VIABLE MEANS OF EASING THE BURDEN ON MIDDLE

INCOME FAMILIES, WHILE PROTECTING THE ACCESS TO HIGHER

EDUCATIONAL OPPORTUNITIES OF THOSE INCOME GROUPS WHO HAVE BEEN

HISTORICALLY EXCLUDED FROM PARTICIPATION IN POST-SECONDARY

EDUCATION. AFTER CAREFUL CONSIDERATION OF THE COMPLEX

ISSUES SURROUNDING REFORM OF THE CURRENT FEDERAL LOAN PROGRAMS,
I HAVE CONCLUDED THAT S.1600, THE KENNEDY-BELLMON STUDENT
LOAN REFORM ACT, BEST REPRESENTS OUR NATIONAL COMMITMENT TO

PROVIDING ACCESS TO HIGHER EDUCATIONAL OPPORTUNITIES FOR ALL

THIS NATION'S CHILDREN.

THE CURRENT FEDERAL LOAN PROGRAMS DO NOT ADEQUATELY ASSURE ACCESS TO LOAN CAPITAL FOR MANY STUDENTS IN NEED.

THE GUARENTEED STUDENT LOAN PROGRAM HAS INHERENT LIMITATIONS

BECAUSE OF ITS DEPENDENCE UPON THE WILLINGNESS OF BANKS TO
LEND MONEY DURING VARIOUS ECONOMIC CIRCUMSTANCES; THE UNEVEN

GEOGRAPHIC DISTRIBUTION OF PARTICIPATING BANKS AND INSTITU-
TIONS THROUGHOUT THE COUNTRY; AND THE TENDENCY OF BANKS TO

LEND TO CHILDREN WHOSE FAMILIES HAVE A PRIOR RELATIONSHIP WITH THE BANK. THE LATTER POINT REPRESENTS AN OFTEN INSUR

MOUNTABLE PROBLEM OF ACCESS TO CAPITAL FOR THE MOST NEEDY

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STUDENT, WHO IS OFTEN REJECTED AS A BAD CREDIT RISK. THE
EXPANSION OF ELIGIBILITY FOR SUBSIDIZED LOANS TO HIGHER

INCOME BORROWERS, MANDATED BY THE MIDDLE-INCOME STUDENT
ASSISTANCE ACT, WILL FURTHER EXACERBATE THE PROBLEM OF
AVAILABILITY OF LOAN CAPITAL FOR LOW-INCOME STUDENTS, AS
LARGE NUMBERS OF MIDDLE-INCOME STUDENTS CHOOSE TO TAKE

ADVANTAGE OF THE PROGRAM AND PRIVATE LENDERS DIRECT THEIR

RESOURCES TOWARD THESE BETTER CREDIT RISKS. IN ADDITION

TO THIS PROBLEM CONFRONTING ALL LOWER-INCOME STUDENTS, WE

MUST BE COGNIZANT OF THE PARTICULAR PROBLEMS OF MINORITIES

IN SECURING LOANS FROM FINANCIAL INSTITUTIONS WHICH CONTINUE

TO PEPETUATE DISCRIMINATORY PRACTICES.

THE CAMPUS BASED NATIONAL DIRECT STUDENT LOAN PROGRAM

PROVIDES ONLY A LIMITED AMOUNT OF FUNDS, AND MANY INSTITUTIONS EITHER CHOOSE NOT TO PARTICIPATE OR ARE UNABLE TO DO so

BECAUSE OF THE BURDEN OF LOAN COLLECTION AND THE REQUIREMENT OF INSTITUTIONAL CAPITAL INVESTMENT. IN ADDITION, THERE ARE

SERIOUS PROBLEMS WITH THE STATE ALLOCATION FORMULAS WHICH

HAVE NO RELATIONSHIP TO THE ACTUAL FINANCIAL NEEDS OF STUDENTS

IN INSTITUTIONS ACCROSS THE NATION.

THUS, NEITHER PROGRAM, NOR THE TWO PROGRAMS COMBINED

ADEQUATELY ADDRESS THE PROBLEM OF AVAILABLE LOAN CAPITAL FOR

NEEDY STUDENTS.

63-979 O-1980--3

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