separate programs. For this reason, we can go on with what we have--the campus based National Direct Student Loan Program (NDSL), the state agencyprivate bank Guaranteed Student Loan Program (GSLP), the hybrid Federal Insured Student Loan Program (FISL), and the rest of the student loan alphabet soup (HEAL, HPSL, NSL, and others) patching and adjusting and correcting the most glaring deficiencies. Such an approach has the virtue of being far less threatening to the many involved parties as well as being unquestionably easier both to legislate and to execute. The fix-what-we-have approach has many wise and experienced advocates, highly respected both on The Hill

and in the schools.

However, I hope that the Senate will take the more demanding, but I believe ultimately far more responsible, path and consider a more substantial overhaul of our national non-system of student loans. Patches on the existing programs can help. But patches cannot solve the problems of:

*uneven access to loans, due in part to student aid

officers' inability to assure students a full package
of financial assistance, including loans.

*burdensome repayments, encouraged by multiple
repayment programs, limited terms, and insufficient
regard for ability to repay.

*high defaults, at least in part due to multiple repay

ments, absence of adequate records, and too much
campus-run loan servicing.

*very high cost to taxpayer, due in large part to the

maintenance of some loans returning an effective rate

of less than two percent during a period when the

cheapest money available today has a true value well
in excess of 10 percent.

*confusion between parental and student responsibilities
for sharing, with the taxpayer, the costs of higher
education. This confusion is perpetrated by a system
that provides no loan plan for parents to meet their
heavy burdens, but allows parents to borrow indirectly
through their sons' and daughters' debts, thus blurring
the precious and vital differences between their respec-
tive responsibilities.

Solving these problems and creating a system of federally-sponsored student loans that best undergirds the Basic Educational Opportunity Grants and the other federal and state grant programs will take a comprehensive overhaul of the federal student loan system. S. 1600, introduced by Senators Kennedy, Bellmon, and others, provides an excellent base for such an overhaul. It does not pretend yet to have answered all the questions that can be raised in a true reform of our present non-system, nor in my opinion are all of the answers it does provide the right ones. But I firmly believe S. 1600 to be founded on correct as well as courageous principles that can move us, for the first time in recent years, an important step toward real solutions to the well known limitations of the present programs.

Mr. Chairman, I would like to identify six extremely important principles of student loan reform that are met by S. 1600 and that in fact require legislation of the thrust and scope of S. 1600 to achieve. As I identify these principles, I will also mention several improvements that might be made in

the bill.

Before mentioning these principles, however, I would like to disavow any intent on my part to advocate directly or indirectly a change in the present general proportion of college costs borne by taxpayer, student, parent, or philanthropist, or to advocate directly or indirectly a change in the relative health or accessibility of the private versus the public sector or of high tuition versus low tuition schools or of advanced professional and graduate versus undergraduate education. I hope we are beyond the point of debating whether students should bear some of the costs of higher education or whether there ought to be federally-sponsored student loans to make this possible and so to broaden access to higher education. I do not believe that the mere existence of student loan programs will drive up tuitions or drive down state appropriations. I am deeply worried about the high costs of higher education in both the public and the private sectors. I am worried about debt levels that for some students in some programs are already far too righ. I worry about declining state appropriations to the public sector and about the possible easing of our public commitment to universal opportunity for a post-secondary education limited only by motivation and ability and not by

family financial circumstances.

But a good loan program--as opposed to the current uneven and chaotic program--will not cause tuitions to rise or state appropriations to fall.

A coherent, consistent, and principled loan program can itself only bring better service to students for the available taxpayer's dollar. This subcommittee or the parent full committee or the Congress may, for entirely understandable reasons, reject the comprehensive approach typified by S. 1600 and continue to patch and perfect. I only hope, Mr. Chairman, that such a course, if it must be taken, be taken because of a judgment that the costs of comprehensive reform seemed too high for the benefits, and not out of a fear that a more rational student loan program would itself create higher tuitions, less state support, less parental support, or any higher debts by our future students.

Six key principles of student loan reform, each of which with some

adjustments can be met by S. 1600, are the following:

1.

There should be a single federally-sponsored student loan
program with a single running account for each borrower, a single
repayment schedule, and a coherent and consistent set of prin-
ciples to meet the needs of students of varying circumstances.

Comments: A single loan program can have many variations

to meet the different needs of, e.g., community college
freshmen and advanced medical students. But the present
multiple system allows loans under one program to build up
debt and to generate repayment obligations without regard
to the other. There is no rationale having anything to do
with students or education or access or choice that supports
the present multiple system--only history and inertia. A
single program can accommodate any special needs the
Congress wishes to maintain, but with the right hand knowing
what the left hand is up to. A unified plan should, in time,
reduce the incidence of irresponsibly high borrowing,

reduce administrative costs, and reduce defaults.

I would suggest that the subcommittee consider reinstituting in the bill some annual and aggregate loan limits appropriate to the year and the circumstances of the student. This, plus some clearer language of legislative intent, could make it clear that the bill is designed to make borrowing

more evenly accessible, cheaper to administer, and better