We first applaud the renewed commitment to strengthening and improving the operational efficiency of the overall student financial aid programs

Senator PELL. Excuse me. Representative Chisholm, could you join us here, please? Carry on, please.

Dr. ROBINSON. We are pleased by the renewed commitment to provide student financial aid to the needy. We consider the BEOG program to be a strong foundation on which other forms of student financial aid are superimposed. It is our hope that this program will be strengthened and expanded.

Mr. Chairman, we also join with other educational associations in seeking increased funding for SEOG. We strongly endorse and support strengthening the TRIO programs. We join with other educational associations in expressing our concern over the expanding eligibility requirements for participation in the TRIO program. We feel that the requirement that they be first generation college students not be imposed. We consider the requirement of being low income to be sufficient.

We are excited about the prospect of expanding college workstudy programs and of allowing a 10-percent carryover of funds to provide the program with greater flexibility. We enthusiastically endorse the development of the job location and development pro

gram

We look with favor upon proposals for the following reasons: No. 1, to expand availability of loans. We know that from experience large numbers of low-income students simply do not have access to bank loans for educational purposes under the guaranteed student loan program. Banks do tend to give priority to their regular

customers.

Many low-income students come from families that have had little experience in dealing with banks and accordingly cannot be counted among the bank's regular customers.

No. 2, on campus administration-we particularly favor the provision of the administration and the Kennedy-Bellmon proposals that the Federal Student Financial Aid Officer on campus would administer the loans. We consider the financial aid officers to be the pivotal persons in packaging financial aid.

They know of the high priority to be given to grants. They know of the importance of college work-study to the development of the students, to the institution, and to off campus employers.

Third, off campus collections-we are pleased by the proposal that an agency other than the college or university itself would be charged with the responsibility of collecting loans in default. We have long contended that the colleges should not be collection agencies. Accordingly, we are delighted by the prospect that the loan collection responsibility should be removed from our campus

es.

Although we generally endorse the administration and the Kennedy-Bellmon proposals, there are certain specific changes we would recommend: one, establishing the interest rate at 3 percent. Both H. R. 5210 and S. 1600 propose an interest rate of 7 percent on the student loans.

We consider this excessive. Economists recognize that the gross interest rate is a composite payment that includes many elements:

payment for risks, payment for administration, and some gain to the lender. After subtracting these elements, the economists arrive at a pure interest rate which probably would not exceed 3 percent. Since loans are part of a financial aid package based on students who have need, we find no compelling argument for exceeding the 3 percent.

Point No. 2, waiver of interest for graduate students-we wish to encourage more low-income students to pursue graduate and professional studies upon completion of their undergraduate work. Requiring that students begin paying interest while in graduate school would be a deterrent to their pursuing advanced studies. Point No. 3, cancellation for those serving the needy-we are pleased by the proposal that a cancellation provision would be included to forgive the indebtedness at a specified rate for those becoming full-time teachers in public or nonprofit elementary or secondary schools serving significantly large numbers of lowincome students, low-income preschool children, or the handicapped. Our feeling is that this provision could be broadened to cancel indebtedness for persons going into a variety of occupations in which public service would be rendered to a significant number of low-income and disadvantaged persons.

This could include even students going into business administration who would then enter a type firm catering to low-income communities. We could also envision loan forgiveness for those who have committed themselves to render their teaching services on a full-time basis to low-income students in postsecondary education.

In brief, we could seek to get multiple benefits out of our investment in the development of needy students by directing them toward serving the needy in a variety of ways.

Mr. Chairman, I would like to briefly conclude by stating that both the administration and the Kennedy-Bellmon proposals should be amended to address two concerns that have been widely expressed in the higher education community that we find convincing.

One is that the availability of large quantities of loans could saddle students with very heavy indebtedness that would burden them for life. The second is that the existence of an apparently unlimited pool of loan resources would tempt State, private, and proprietary institutions to increase their tuition and costs and thereby erect further barriers to many low-income students.

To offset these two self-defeating outcomes, we would propose that a cap be placed on available loans. The ceiling could be high enough to fulfill the spirit of the proposals that there be a readily available loan resource to top off other need-based grants and parental contributions, but low enough to prevent the accumulation of unmanageable debts and low enough to discourage unwarranted tuition increases.

Mr. Chairman, we feel that with proper modification, the proposals to reform student loan programs could expand opportunity for needy students and thereby increase their contributions to the strength of our Nation. Mr. Chairman, thank you very much. [The prepared statement of Mr. Robinson follows:]

STATEMENT TO AMEND STUDENT LOAN PROGRAMS OF THE HIGHER EDUCATION ACT OF 1965

ΤΟ

THE SUBCOMMITTEE ON ELEMENTARY, SECONDARY, AND VOCATIONAL EDUCATION

My name is Prezell Robinson. I am President of Saint Augustine's College of Raleigh, North Carolina and Secretary of the Board of Directors of the National Association For Equal Opportunity in Higher Education, whose accronym is NAFEO. Today, I appear before you on behalf of NAFEO. NAFEO is the membership organization of 107 historically and predominantly black colleges. These colleges enroll more than 200,000 students, and continue to account for approximately one-half of the black recipients of baccalaureate degrees.

I thank you, Mr. Chairman, for this opportunity to comment on various proposals concerning student financial aid, particularly student loans. Consistently, in testimony before Congressional committees, we have stressed the importance of increasing the flow of students from low-income families into the mainstream of society. Not too long ago, one of my colleagues stressed, before this committee, the importance of funding higher education for needy students. Our position was and is:

We know that no civilization has long flourished that has catered only to the privileged few. We know that by bringing into the mainstream of our society through higher education the sons and daughters of the poor, we strengthen the economic base of our nation; we utilize otherwise underutilized talent to serve and resolve problems of our nation. We avoid the discord and threats to the tranquility of our society that inevitably result when hordes of people are dispossessed. By expanding opportunities, we give hope and encouragement to our general populace to work toward the realization of the American dream and, in so doing, elevate our nation as a beacon light that guides and inspires the poor and the needy of the entire world.

In most NAFEO institutions, 80 to 90 percent of the students are needy. Indeed, recent census data indicate that three-quarters of the students at historically black colleges split almost evenly between homes with family incomes of under $5,000 and those with incomes from $5,000 to $10,000 annually. We feel, accordingly, well qualified to comment on student financial aid programs from the vantage point of the low-income student.

We first applaud the renewed commitment to strenthening and improving the operational efficiency of the overall student financial aid programs. We are pleased by the renewed commitment to provide student financial aid to the needy. We consider the BEOG Program to be the strong foundation on which other forms of student financial aid are superimposed. It is our hope that this Program will be strengthened and expanded. We join in the "Great Compromise" within the higher education community to increase maximum BEOG awards to $2,700 by academic year 1985-86 and, concomitantly, to raise BEOG awards from 50 to 75 percent of educational costs.

We also join with other educational associations in seeking increased funding for SEOG. We strongly endorse and support strengthening the TRIO Programs. We join with other educational associations in expressing our concern over expanding the eligibility requirements for participants in the TRIO Program. We feel that the requirement that they be first-generation college students not be imposed. We consider the requirement of being low-income to be sufficient.

We are excited by the prospect of expanding college work-study programs and of allowing a ten percent carry-over of funds to provide the Program with greater flexibility. We enthusiastically endorse the development of the Job Location and Development Program.