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Attachment C



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Senator PELL. Dr. Shaw.



Dr. SHAW. Thank you, Mr. Chairman. I am Kenneth A. Shaw, chancellor of the Southern Illinois University System. Let me just take a moment to describe the SIU System so that you know the perspective from which I speak.

The Southern Illinois University System is one of four public senior university systems in the State of Illinois. There are two universities in the System, one at Carbondale, Ill., which is in rural Jackson County, and one in Edwardsville, which is in suburban St. Louis.

SIU enrolls approximately 33,000 students. One of our campuses, the Edwardsville campus, is primarily commuter. The other is residential. We have a broad range undergraduate and graduate programs, three professional programs in medicine, law, and dental medicine, enrolling over 600 students, and enroll a total of more than 5,500 graduate students.

I tell you this as background to suggest that ours is a very diverse system. The areas we serve are not the most prosperous in the State. Many of our students come from lower- and middleincome families. Many are first generation students. With regard to the problem of access and leading into my comments about this specific bill, Senate 1600, access is-in large measure-dependent upon the flexibility of the overall financial aid program which we are able to offer students.

Loans are an important part of this program, as has been mentioned. But also important are grants, work, and parental contribution. In the SIU system, 55 percent of our students receive some form of financial assistance. Twenty-six percent receive aid in the form of loans, 45 percent aid in the form of some sort of grant, and 29 percent in the form of employment.

Despite some legitimate criticisms of certain aspects of the overall financial aid program in this country, I believe that the combined Federal, State, and institutional programs of financial aid do in fact provide access to qualified undergraduate, graduate, and professional students.

And because access has, in my opinion, been generally achieved, I think what we should be looking at are relatively minor improvements in this mix, this mix of loans, this mix of aid, this mix of parental contribution. I would commend for your review, as you are analyzing this whole picture, H.R. 5192 which proposes changes in other aspects of the mix.

Now with this as background, let me turn to the proposed National Student Loan Reform Act, the matter of loan assistance. One of the most attractive features of this proposal is that qualified students would be assured of a loan in an equal amount to the cost of attendance, less scholarship, other financial aid, and the parental contribution.

I believe that these assurances are necessary to all students to overcome the psychological barriers to access and to eliminate some of the complexity of procedures one must negotiate in order to obtain financial assistance.

63-979 0-1980--5

This proposal, because it would be administered on the campus or through a State agency, could also reduce the number of relationships the student must establish in order to participate, thus providing some simplification of what is now a complex procedure. With regard to the loan amounts, tying the loan amount to the cost of attendance minus expected contributions from other sources on the one hand is a very positive step. No longer would attendance be limited because of the inability of students to borrow money to finance their education. The money would be available. However, there is a negative implication that Senator Bellmon commented on briefly. And that is, if tuition were to rise in response to students' increased ability to pay through the loan program, this would be unfortunate. Keeping the overall cost of attendance low is, I believe, the best way to assure access.

The extent to which this bill could drive up tuition could be a negative feature.

Loan terms and payback-the proposed program would charge 7 percent interest on the borrowed money by dependent students. And this seems equitable. A troubling aspect which has been commented on earlier also, however, is that graduate or professional students would have interest accrue on the loans while they are pursuing their advanced course of study. In our system, 15 to 20 percent of our students are graduate and professional students, and the interest accruing could present a barrier to many of them who want to improve themselves. Most graduate students pay a larger cost of their education through employment. I suspect employment prospects are better for the older students than for the new, the beginning graduate or professional students.

This would place a heavier loan burden during the initial stages of graduate or professional study, and given the complexity of problems which America now faces and will face in the future, graduate and professional studies should be encouraged in the national interest. The proposal as written is not supportive of such advanced study and could in fact establish real barriers to those who are not fortunate enough to finance a graduate education without borrowing.

The optional payback provisions of the proposed legislation would be a welcome addition, in my opinion, to the overall financial aid program. This flexibility could ease the burden of loan repayment by extending it over a greater period of time and could lead to fewer defaults.

The parental independent student loan portion of the bill, a mechanism to provide loan funds to parents of dependent students and to independent students up to the expected parental contribution, is a good feature. Parents would be aided in meeting their calculated contribution, regardless of whether or not their assets were liquid.

I also favor the section on default, not that institutions have not tried very hard to collect money. We have tried hard. But our record, as you well know, is not that good. The collection process placed in the hands of specialists could, and hopefully would, substantially reduce the overall default rate.

In conclusion, Mr. Chairman, I have not attempted to address all aspects of this legislation, but instead have tried to highlight some of what I see as its advantages and disadvantages.

I believe that the legislation offers some unique advantages over the current loan programs, particularly in the area of loan assurance, flexible payback provisions, better opportunities for parents and independent students to borrow money, and the collection system.

On the other hand, the legislation does not encourage graduate and professional education, something which I believe should receive a high priority.

But perhaps my greatest concern is that this legislation might be viewed independent and outside the overall context of other financial aid programs. As I indicated at the outset, loans should be viewed as only a part of the overall student financial aid package. They should not become the principal means of financing one's education.

The best guarantee of access remains, I believe, low cost. Again, I would like to thank you for allowing me this opportunity to comment on the legislation.

[The prepared statement of Dr. Shaw follows:]









OCTOBER 10, 1979

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