Secretary Bennett. All beneficiaries of the GSL program have a responsibility to prevent defaults. The Department is proposing legislation what would require lenders to assume 10 percent of the risk of default. This would create a tangible incentive for lenders to pursue diligent collection efforts before filing default claims.

Mr. Conte. How do you think going after the schools will solve the problem?

Secretary Bennett. As one of the beneficiaries of student loans, institutions should also be held responsible for controlling defaults. Institutions can prevent defaults through improvements in loan counseling, more reasonable refund policies, and careful assessment of a student's ability to benefit from higher education.

PROFILE OF STUDENT LOAN DEFAULTERS

Mr. Conte. I understand that a recent study of defaulters (the Belmont Report confirmed by GAO) showed that defaulters tend to be dropouts with small loan amounts, in their first year of postsecondary education, from low income or minority families, and are likely to be unemployed. Does that suggest that we have a structural default problem caused by overreliance on loans by this type of borrower?

Secretary Bennett. We do not believe there is a structural problem in the loan program. The profile of defaulters cited in the Belmont Report supports our position that students who do not have a high school diploma or equivalent should not receive Federal student aid. Students without a high school diploma are more likely to dropout during their first year of education. On the other hand, high school graduates are more likely to finish their academic programs and repay their loans.

LOAN ELIGIBILITY TO BE TIED TO DIPLOMA OR GED

Mr. Conte. How can we deal with this default problem without denying postsecondary educational opportunity to those who need help?

Secretary Bennett. We believe ample opportunity exists for those who need help to obtain a good postsecondary education. However, students with financial need must have sufficient training at the high school level to meet the challenges of a postsecondary education. Those students who are not adequately prepared will dropout, become disillusioned, and default on their loans.

Mr. Conte. Could we lower loan limits for high risk students or impose stricter repayment terms?

Secretary Bennett. As indicated in the Belmont Report, defaulters tend to be dropouts with small loan amounts. Instead of limiting the amount of funds available to students (which would limit their options with regard to selecting the type of institution they wish to attend) we have proposed that students should have a high school diploma or its equivalent before they receive Federal student loans.

ANNUAL SURVEY OF EDUCATIONAL ACHIEVEMENT

Mr. Conte. Mr. Secretary, last week you annnounced the results of your annual survey of educational achievement, and you said that the news was not good. You stated that test scores are not improving, except for poor and minority children, despite record expenditures on education. Aren't those children the focus of Federal education policy, and shouldn't we take heart that our program dollars are hitting the mark?

Secretary Bennett. I am greatly encouraged by improvements in test scores made by minority students and low-income students. These improvements suggest that Federal programs such as Chapter 1 and Headstart are working and those funds are well spent. This result is tempered somewhat by the knowledge that while the gains made by Chapter 1 participants are significant, they are not great enough to enable these students to "catch up" with non-disadvantaged, non-Chapter 1 students.

The initial

As a

Overall, student achievement is disappointing. academic improvements that resulted from the educational reforms implemented by States after release of A Nation at Risk have flattened out, and no further improvement has occurred. In no case have test scores returned to their levels of 25 years ago. Nation, we cannot afford merely to maintain the status quo. In order to compete effectively in the world economy, our children must have the best education possible. Recent results from the annual survey of educational achievement suggest that a significant number of American children are not getting the education they need.

CHAPTER 1 INCREASE FOR CONCENTRATION GRANTS

Mr. Conte. You propose an increase of about $238 million for Chapter 1, with almost two-thirds of the increase going for your Concentration Grants proposal. With the majority of Chapter 1 children scoring below the 25th percentile in achievement, shouldn't we continue to focus this program on improving the basic skills of disadvantaged students whether they live in a high concentration poverty area or not?

Secretary Bennett. Research generally has found a strong association between school poverty rates and average achievement in schools. Data from the National Assessment of Chapter 1 found that children, regardless of income, do more poorly academically when attending schools with a higher concentration of poverty. a result, a much larger proportion of children scoring below the 25th percentile are found in school districts with a higher concentration of poor children.

As

Chapter 1 funds are currently allocated to some 90 percent of all LEAS in the United States. Roughly 70 percent of all elementary schools and 36 percent of all secondary schools participate in the program. As a result of this diffusion of resources, the National Assessment of Chapter 1 found that wealthier school dis

tricts with fewer lower-achieving students are likely to serve higher-achieving students with their Chapter 1 funds, while school districts with higher concentrations of poor students receive enough funds to serve only a portion of their low-achieving students. This misdirection of funds results in a significant number of the neediest children remaining unserved. We believe these findings provide a strong argument for the need to concentrate available funds on areas that have the highest concentrations of poverty, since they have the greatest need.

JAMES MADISON HIGH SCHOOL

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A MODEL CURRICULUM

Mr. Conte. How would your James Madison High School model curriculum improve educational achievement? I know that you can't prescribe curriculum across the Nation, but is there a way to test the effect of the James Madison High School curriculum in a pilot program?

Secretary Bennett. Unless students are challenged to achieve, they are unlikely to put forth the effort to expand their knowledge and skills. I have visited a number of schools where this principle is put into practice; in effect, these schools constitute natural experiments of the James Madison High School curriculum. These schools are not just for the elite; they serve children from all backgrounds and have a record of success with them. The Department of Education has recognizd some of these schools in its Recognition Programs and in such publications as James Madison High School (December 1987) and Schools That Work.

HANDICAPPED EDUCATION AND REHABILITATION SERVICES

Mr. Conte. I note that you propose a $72 million increase for education of the handicapped and rehabilitation services, which reflects a turnaround in Administration policy. Does the increase for handicapped education take us any closer to the statutory goal of providing a free and appropriate education for all handicapped children?

Secretary Bennett. We believe the increases requested for each of the State Grant programs would take us closer to the goal of serving all handicapped children by assisting States in expanding services to these children. For the Grants to States program, our request would provide a Federal share of $348 for each child served, an increase of $7 over fiscal year 1988 to help States meet increased costs. The request would also provide funds for an additional 40,000 children over the number served in fiscal year 1988. For the Preschool Grants program, our request would provide a Federal share of $500 for each child served, the maximum authorized by law. The request would provide funds for an additional 30,000 children over the number served in fiscal year 1988 and $3,800 each for another 12,000 children whom we estimate States will be serving in the 1989-1990 school year. Our request for the Grants for Infants and Families program would help States meet increased costs as they continue to plan and develop statewide comprehensive, coordinated, interagency programs of early intervention services for all handicapped infants and toddlers and their families.

FEDERAL TEACHER IMPROVEMENT PROGRAMS

Mr. Conte. What does your budget propose to improve teaching and the status of teachers so that we can continue to attract the best qualified individuals to the teaching profession?

Secretary Bennett.

We consider the improvement of teaching

and teachers, and entry into the teaching profession of talented people who are well versed in their subject areas, to be essential. For 1989, we are proposing to devote $4 million from the Chapter 2 Secretary's Discretionary Fund to support of alternative certification projects that would demonstrate how such talented people, lacking only formal teacher education, can effectively and efficiently become teachers. We also plan to establish a priority for upgrading the content area knowledge of teachers under the Fund for the Improvement and Reform of Schools and Teaching, a new program in the Senate-passed version of H.R. 5, which we hope will be enacted for 1989.

We will request $108.9 million for Science and Mathematics Education State Grants, contingent upon enactment of pending reauthorizing legislation. These grants provide support for activities to improve the skills of teachers and instruction in mathematics, science, computer learning, and foreign languages.

We also have requested $1.9 million for the Christa McAuliffe Fellowship program. This program provides fellowships to outstanding teachers for projects to improve education through sabbaticals for study, research, or academic improvement; consultation with or assistance to other school districts or private schools; development of model teacher programs; and staff development.

The Department also supports a number of research efforts that we hope will provide valuable information related to improving teaching. In 1987, we established a number of research and development centers to examine teaching and learning in specific content areas math, science, history, literature, arts, and elementary subjects. We plan to establish another center to examine teaching and learning of civics and citizenship in 1989. Since 1986, we have been supporting a research and development center on teacher education, and in 1987 we established a center to conduct research on how the school environment affects teachers and teaching. In 1988 and 1989, we will be awarding a number of small research grants directly to teachers so that they can make their own contributions to improving instruction. We plan to compile and disseminate the lessons learned from our three-year teacher education development and demonstration program.

Finally, we are making improvements in the ERIC system, both to expand the type of resources available from this vast education information service and to make the resources available to a wider audience, including teachers.

PROPOSAL FOR VOCATIONAL EDUCATION EFFECTIVENESS STANDARDS

Mr. Conte. How does your accountability proposal affect your funding decision to provide $881 million for Vocational Education last year's level and how would it work?

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Secretary Bennett. Our request of $881 million for Vocational Education is not contingent on our proposal to: increase accountability, but is based on a belief that Federal support for vocational education should be a vehicle for making State and local programs more accountable. While we are still negotiating the details of our proposal with OMB, we intend to require States to develop standards of effectiveness related to: basic academic skills development; placement of graduates in jobs, their continued enrollment in education, or enlistment in the military services; and skills required for specific jobs, to be determined by the State.

The performance measures would take into account the fact that expectations differ for programs at the secondary and postsecondary levels as well as for programs involving different population groups. States would establish a separate set of measures for handicapped programs, as they do now under current law. States would also be required to apply their performance measures in making decisions about initial and continued funding for local programs.

States would be required to provide assistance to localities whose programs do not measure up to the State standards. However, continued non-performance would result in termination and reallocation of funds by the State. States would be required to report to the Secretary, every two years, on their progress in developing, implementing, and enforcing their performance measures.

Mr. Conte. What is the rationale for your proposed termination of the Consumer and Homemaking Education program?

Secretary Bennett. Direct categorical funding for consumer and homemaking education is inappropriate. All States have active, wellestablished consumer and homemaking programs that will continue without direct Federal support. Expenditure reports for 1985-86 indicate that each Federal dollar for consumer and homemaking education is matched by over $20 from State and local governments. States that wish to use Federal funds to supplement State and local resources can use the Basic State grant for that purpose. The budget request for the Vocational Education Basic grant has been increased to offset the termination of funding for the Consumer and Homemaking Education program.

STATUS OF COLLEGE HOUSING AND HIGHER EDUCATION FACILITIES PORTFOLIOS

Mr. Conte. Please provide a status report on the existing loan portfolios, including a report on last year's sales, and what you plan to do with the program this year.