And so, Mr. Chairman, we hope that you will be advising the OE and its successor agency the new Department of Education that congressional intent is to be taken seriously by providing this specifically in the report language you give to the Senate or in the bill itself. Thank you.

[The prepared statement of Mr. Paley follows:]

I am Henry Paley, President of the Commission on Independent Colleges and Universities. Our Commission is the master planning and coordinating agency of

the more than 100 non-government, non-profit institutions of higher learning within the University of the State of New York. Ours is the most numerous and largest independent sector of higher education in the country. It is accountable for its public higher education mission to the Regents of the University along with the government sector institutions of our state system. We deeply appreciate this opportunity to share with you our concerns with respect to the reauthorization of the student grant provisions of the Higher Education Act.

I want to begin by stating our strong support for the compromise proposals offered to you and your colleagues in the House by the executives of the higher education associations in Washington. That decision, I must emphasize, was not arrived at without careful and critical analysis by the appropriate committees of our Commission and our Board of Trustees.

Mr. Chairman, at the outset of these hearings you placed proper emphasis upon higher education quality. You want the reauthorized law to take into account the need for enhancing the academic output of campuses in the coming decade. We share your concern. We believe that the elements of the compromise proposal also reflect that vital consideration.

I know of no reputable analysis of American higher education which fails to acknowledge the fact that our system's diversity is a key element of its quality. It goes without saying that the maintenance of a diverse system is impossible without reasonably adequate choice upon the part of its student inhabitants.

The compromise proposal recognizes the need to enhance student choice by seeking to assure it not be constrained by family economic circumstance. It wisely links funding provisions to encourage choice with funding provisions to strengthen collegiate accessibility. We cannot overstate the need for this

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linkage as reflected in the compromise proposal's BEOG and SEOG provisions. To move into the 1980's without this built-in balance would in our judgement effectively frustrate our goals of enhancing quality. For state systems which emphasize

quality, such as New York's, the absence of such a linkage between SEOG and BEOG would be a disaster.

New York has been in the vanguard of those states responding to past federal initiatives to encourage a balanced approach to the problem of student access and student choice, while maintaining priority focus upon academic excellence. We lead the nation in student assistance. In academic year 1978-1979, our State Tuition Assistance Program provided in excess of 260 million dollars to undergraduates in all sectors of New York's system.

We achieved this leadership position largely in response to the challenge placed before all states by the Congress. Your distinguished Subcommittee helped fashion that challenge. We are proud of the role of the senior Senator from New York in that development. The fact that there has been such an affirmative response from our State's legislative and executive branches is not unrelated to efforts made by you, Mr. Chairman, and Senator Javits to build in incentives for state effort.

But, Mr. Chairman, there is too often a dichotomy between Congressional intent and Federal implementation. A flagrant example of such a dichotomy is represented by the regulations imposed by the Office of Education with respect to the distribution of campus-based student assistance. What was intended by the Congress to be an incentive to the states is being applied to states like New York as a disincentive.

The formula from which OE determines institutional need for SEOG and other campus-based assistance subtracts 100 percent of state grant assistance and 50 percent of institutionally-provided assistance from the total amount which would

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otherwise be made available. Thus, the formula substantially penalizes those states and institutions which have best responded to the intent of Congress to provide incentives.

A word about institutional assistance. Higher education jargon refers to it as "unfunded student aid." It is more aptly described as a "Robin Hood tax." The bulk of this institutional money is the movement of tuition revenue from higher income students to lower income students. As a tax, it is highly progressive. It is hardly an institutional policy that could be followed without significant social commitment. It requires a high level of intestinal fortitude on the part of campus trustees and chief administrators. This Robin Hood money is essential to maintaining institutions in the independent sector that are as intergrated and similar in income profile of students as those in the government sector. It enables us to bridge the invidious barrier of economic circumstance in extending choice to needy students. But, the Office of Education does not reward such pursuit of sound and humane public policy. It penalizes it. Fifty cents of every Robin Hood dollar we strain to raise for needy students is counted against us in the apportionment of federal campus-based student assistance. Every penny of state effort is counted against us.

Mr. Chairman, we find these distortions of Congressional intent to be intolerable. For that reason, in cooperation with other states and associations, we strongly urge that the bill reported to the Senate contain specific language which would prohibit the Office of Education from continuation of disincentives and penalties because of state and institutional student aid efforts. All direct state aid for students and all need based-institutional aid for students should be specifically exempt from penalty in the distribution of federal campus-based

student assistance.

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Lest you consider us unduly paranoid in this plea, you should know the response of OE to our success in obtaining inclusion of what we and the Congressional sponsors thought was such a provision in H. R. 5192 just a few weeks ago. The reaction of the Office of Education was simply to declare that the formulae now in use do not penalize states and institutions which provide student assistance. OE officials have said they intend to proceed next year with an even more regressive formula. Mr. Chairman, we ask you to tell OE in no uncertain terms that the Congress does not find acceptable the issuance of regulations such as those used last year to discount state and institutional student assistance. Not only would such a firm expression help relieve the present intolerable condition, it should be most helpful in guiding the leadership of the new Department of Education on the subject of Congressional intent.

Like many others across this country, higher education in New York is deeply concerned about the new federal Department of Education. Nothing would go further in allaying the fear of those who do not welcome a federal education ministry than Congressional action to assure that state and local effort is encouraged.

Senator PELL. Thank you very much, Mr. Paley and Mr. Irwin. Mr. Irwin, I know you had some concern, and you did, too, Mr. Paley, with the so called fair share formula. I think, Mr. Irwin, you felt some States were benefiting unduly, others were not.

Could you submit for the record your view of which States are benefiting unfairly and which are not?

Mr. IRWIN. Well, we have a listing on the fair share formula, and I could run through the list, Mr. Chairman.

Senator PELL. It is not in the testimony you submitted.

Mr. IRWIN. I gave you some information.

Senator PELL. You gave me some names here.

Mr. IRWIN. Yes, and I would just want to refer to those.

Senator PELL. You have those that are disadvantaged.

Mr. IRWIN. I was pointing out that the States that were particularly being agrieved under the fair share formula, Mr. Chairman, were, in the West, Alaska, California, Colorado-

Senator PELL. I have that list. That is right here.

Mr. IRWIN. Right.

Senator PELL. Maybe what you could do is submit to us, for the record, a table showing your view as to how they benefit or not. Mr. IRWIN. I certainly will, Mr. Chairman.

Senator PELL. I know I have a very simple rule of thumb that if my State gets half of 1 percent of any national allotment, that is about fair, because we have half of 1 percent of the people.

Mr. IRWIN. That is correct.

Senator PELL. And I think you might relate that rather simple formula to the fair share formula and see how you come out. Senator STAFFORD. That same percentile pleases the people of Vermont, too. [Laughter.]