Prepared statements, letters, supplemental materials, et cetera-Continued Dresch, Stephen P., chairman, Institute for Demographic and Economic "Financial and Behavioral Implications of Federal Student Loan Pro- Testimony by Driscoll, Rev. John M., O.S.A., president, Villanova University, president, Pennsylvania Association of Colleges and Universities, prepared statement of Page 449 410 569 640 845 Dunlap, E. T., chancellor, chairman of the board, Student Loan Marketing 674 H.R. 4507 Fenwick, Hon. Millicent, a Representative in Congress from the State of 1022 Prepared statement of. 1020 Fitt, Alfred B., General Counsel, Congressional Budget Office, prepared Fritz, Arthur J., director, Commission on Governmental Affairs, National 3 147 1120 Attachment to statement 860 Letter from Ellis C. Gedney, director, Office of Student Financial Aid, 890 Letter to Chairman Ford, dated June 19, 1979.. 886 948 Harrington, Joan E., assistant to the director, Boston University, letter to the subcommittee, dated May 31, 1979 884 Holst, Helge, president, National Council of Higher Education Loan Programs: Testimony of 1049 Letter to Chairman Ford, dated June 1, 1979. 518 Letter to Chairman Ford, dated June 29, 1979, enclosing requested Ihlanfeldt, William, vice president of institutional relations, Northwestern 524 933 Kennedy, Hon. Edward M., a Senator from the State of Massachusetts, testimony of 1106 Kocian, Patrick W., national director, Coalition of Independent College and Prepared statement of. 801 Statement of.. 70 Maguire, Hon. Andrew, a Representative in Congress from the State of Written testimony of.......... 538 "Repayment Choices Under the Maguire GSL Bill (H.R. 3769)," chart 622 Mallan, John P., assistant executive director, governmental relations, American Association of State Colleges and Universities, letter to Chairman Ford, dated June 13, 1979 893 Marmaduke, Arthur S., director, California Student Aid Commission, 516 1060 Matsler, Dr. Franklin G., executive director, Board of Regents of State 850 Meares, Charles W. V., chairman of the board, United Student Aid Funds,New York, N.Y., letter to staff director, dated May 23, 1979, enclosing a statement 506 Prepared statements, letters, supplemental materials, et cetera-Continued National Association of Student Financial Aid Administrators, pamphlet entitled "Student Loans: Alternatives for Reauthorization," Packer, Joel, legislative director, United States Student Association, Washington, D.C.: Prepared statement of. Target report by NSA-NSL coalition Paratore, Matthew R., executive secretary, International Liaison, Inc., U.S. "Invest Yourself 1979" a pamphlet published by the Commission on Page 295 1040 49, 758 783 182 Letter from Stephen Kurzman to Chairman Ford enclosing three 177 Letter from Steve Quigley, assistant director, Jesuit Volunteer Corps: 291 289 164 238 Letter to Steve Quigley from Sam Brown dated April 10, 1979 "The Response," Volunteer Opportunities 1979, pamphlet entitled Piana, Edward, executive vice president of Baybanks Norfolk County Trust Co., Dedham, Mass., statement on behalf of American Bankers Association Rinaldo, Hon. Matthew J., a Representative in Congress from the State of New Jersey, letter to Chairman Ford, dated June 20, 1979, enclosing a draft proposal 1069 905 Tate, S. Shepherd, president, American Bar Association, letter to Chairman Ford, dated June 13, 1979 Ruud, Millard H., executive director, Association of American Law Schools, Saunders, Charles B., Jr., vice president for governmental relations, Ameri- Smith, Marshall (Mike) S., Assistant Commissioner for Policy Studies, 125 913 715 732 894 Undergraduate Student Government, Pennsylvania State University, On behalf of American Banker's Association 376 982 384 470 499 APPENDIX Fitt, Alfred B., General Counsel, Congressional Budget Office, Washington, D.C., letter to Congressman Buchanan, enclosing requested information, dated June 15, 1979. 1157 Text of H.R. 750, introduced by Congressman Smith from the State of Iowa..... 1160 Text of H.R. 3769, introduced by Congressman Maguire from the State of New Jersey Fox, Edward A., president, Student Loan Marketing Association, Washington, D.C., letter to Congressman Buchanan enclosing requested information, dated July 9, 1979 Zuver, Charles O., Federal Legislative Counsel, American Bankers Association, letter to Congressman Buchanan, enclosing requested information, dated June 11, 1979 Wolff, Willis Ann, executive director, Iowa College Aid Commission, Des Moines, Iowa, letter to Chairman Ford, dated August 23, 1979, enclosing a memorandum regarding "Proposals for Reauthorization of the Higher Education Act of 1965" 1172 1213 1218 1223 Unger, Ron, president, Diversified Collection Services, Inc., Oakland, Calif., letter to Chairman Ford enclosing a statement with attachments 1232 REAUTHORIZATION OF THE HIGHER EDUCATION ACT AND RELATED MEASURES Part 6-Student Financial Assistance: Loans WEDNESDAY, MAY 30, 1979 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON POSTSECONDARY EDUCATION, Washington, D.C. The committee met, pursuant to notice, at 9:35 a.m., in room 2257, Rayburn House Office Building, Hon. William D. Ford (chairman of the subcommittee) presiding. Members present: Representatives Ford, Gaydos, Ratchford, Buchanan, and Jeffords. Staff present: Thomas R. Wolanin, staff director; Patricia F. Rissler, deputy staff director; William Clohan, minority assistant education counsel; Jennifer W. Vance, minority legislative associate. Mr. FORD. The Subcommittee on Postsecondary Education will come to order for the purpose of continuing hearings on the reauthorization of the Higher Education Act and related measures. I believe this will be our 15th or 16th day of hearings on reauthorization. Today's hearing will continue our consideration of the student financial assistance programs authorized by title IV of the Higher Education Act. Thus far, in our consideration of title IV, the subcommittee has held 3 days of hearings on general issues that cut across all of the title IV programs, 3 days of hearings on the grant programs-basic grants, supplemental educational opportunity grants, and the State student incentive grants-and a field hearing at Oberlin College which focused on the impact of the student aid programs at independent liberal arts colleges. This morning, and in our next two hearings, we will consider the student loan programs-the Guaranteed Student Loan Program and the National Direct Student Loan Program. The NDSL program was created by the National Defense Education Act of 1958, and it is the oldest of our Federal student financial aid programs. Loans are made to students on the basis of need by schools using 90 percent Federal capital. Students can borrow up to a total of $10,000 for undergraduate and graduate studies. Students repay the loans with 3 percent interest, and there are opportunities for deferring or canceling repayment if the student undertakes certain types of public service. (1) Since 1958, the NDSL program has provided nearly $6 billion in loans to more than 5 million students. The Guaranteed Student Loan Program was created by the Higher Education Act of 1965. Loans are made to students primarily by commercial lenders using private capital. In 39 States, the loans are guaranteed through State-guarantee agencies and the Federal Government reinsures the loans against default, death, or disability of the borrower. In the remaining States, the Federal Government insures the loans directly. The Federal Government also pays the student's 7 percent interest while the student is in school as well as paying a special allowance to the lender to make these loans as attractive as other lending opportunities. With the passage of the Middle Income Student Assistance Act, all students, regardless of their family income, became eligible for the in-school interest subsidy. Students can borrow up to a total of $15,000 for graduate and undergraduate studies. Students repay the loans with 7 percent interest and the Federal Government continues to pay the special allowance, currently 6 percent, to the lenders. Since 1965, the Guaranteed Student Loan Program has provided approximately 12 million loans to students. These loans have had a total value of nearly $14 billion, and the total cost to the Federal Government has been close to $4 billion. The Student Loan Marketing Association, Sallie Mae, provides a secondary market for student loans. The authorization for the NDSL program expires in this Congress. The authorization for the GSL program extends through fiscal year 1981. While action with respect to GSL is not required in this Congress, both of these student loan programs have been the subject of considerable comment and criticism. In this reauthorization, I believe that the committee must seriously consider proposals for improving both of the programs. I consider that to be one of the understatements of these hearings because we continue unfairly to see a steady pattern of criticism of student borrowers and loan programs based on some preconceived notion that there are people conniving in some fashion to rip off their Government and cheat the system. There seems to be an inexhaustible supply of critics. Barely a day goes by that I do not have someone telling me of something appearing in the newspaper someplace which casts doubt on the wisdom of expenditure of Federal funds for the program. Our witnesses today will include representatives of student organizations, law schools, and student financial aid administrators. We will start off first with the representative from CBO, Mr. Alfred Fitt, an old friend from the State of Michigan. Without objection your prepared statement will be inserted in full at this point in the record and you can proceed to underline and amplify or add to it as you see fit. STATEMENT OF ALFRED FITT, CONGRESSIONAL BUDGET OFFICE [Prepared statement of Mr. Fitt follows:] Statement of Alfred B. Fitt General Counsel, Congressional Budget Office Mr. Chairman and members of the committee, my name is Alfred Fitt. I am General Counsel of the Congressional Budget Office. I am delighted to be here in response to the chairman's invitation, and on behalf of CBO. The general topic today is student loans. While there may be some lingering ideological or philosophical objections to the whole concept of helping students by making debtors out of them, the public policy of the United States for the last twenty-one years has been to make it ever easier for college students to secure education loans. The student loan business in this country is now a gigantic business. This fiscal year alone there will be nearly $3 billion worth of student borrowing, with practically all of the loan capital supplied or guaranteed by the federal government, and directly or indirectly paid for by federal taxpayers. By this fall, there should be close to $8 billion in guaranteed student loans outstanding, plus almost another $5 billion in the National Direct Student On-budget federal costs to support student Loan program. loans are approaching $1.5 billion annually. Given such figures, the question for years to come is unlikely to be whether there will be student loan programs. |