In March of this year the Tenth National Conference on Higher Education sponsored by a department of the National Education Association declared that present housing facilities are entirely inadequate for present and anticipated enrollments. The conference further declared an equally critical need for buildings to house other self-liquidating services such as cafeterias and dining halls. At the close of my remarks I will introduce the complete text of resolutions adopted by the conference.

Further evidence on this point is revealed by a recent survey of the financial status of colleges and universities of the United States. This survey was made by the Council for Financial Aid to Education, Inc., and was released on April 3, 1955. The council is nonprofit organization established by leading businessmen to encourage greater financial support of higher education in this country. The council surveyed roughly two-thirds of the Nation's degree-granting institutions-including all of the best-known colleges and universities. The purpose of the survey was to assemble information which would help business concerns decide the amounts and types of contributions to make to colleges and universities in need of financial assistance--not loans, but outright gifts. Consequently the findings cover all phases of income and expenditures of these institutions. While I will not repeat the council's report in its entirety, I will call attention to some of their more alarming findings:

(a) At least one-half of the Nation's colleges and universities are operating in the red-average annual deficits range from $30,000 to $194,000.

(b) These deficits cannot be cured by raising charges to students-to do so would deny higher education to too many worthy students.

(c) Scholarships are financed primarily from general revenues, not from gifts and endowments.

(d) Average annual salaries of undergraduate teachers in the nine categories of institutions surveyed range from $3.737 to a high average of $5,462. Teachers in graduate schools average a little higher, ranging from $5,112 to $6,371. On the whole, teachers in tax-supported institutions receive higher pay than those in independent schools.

(e) The 753 institutions surveyed were asked to express their need for funds in terms of preferred usage, i. e., buildings, endowment, salary increases, scholarships, new equipment--all but one category of institution placed capital funds for buildings at the top of the list.

(f) Six hundred and thirty institutions reported their need over the next 10 years for buildings, improvements, equipment, and maintenance to be over $2% billion-or an average of over $4 million per institution.

The total impact of this survey reveals a need for funds for all purposes-but the greatest need is for buildings. These operating deficits, the ridiculously low salaries for teachers, and the shortage of buildings of all kinds exist right now. 3. Prospects for meeting this need.-Enrollment is rising, present buildings are inadequate, and new buildings must be provided. New buildings cost money and there are only two sources for this money-gifts or loans. Gifts and grants can be made and are being made, by individuals and by both private and public corporate bodies. But these gifts and grants have not been sufficient in the past, are not sufficient now, and will not be sufficient in the future. This means that a significant portion of the necessary money must be obtained by loans. Borrowed money cannot serve its full purpose in this program unless it can be repaid from the income of the buildings so provided. The record clearly shows that private loans are not available in sufficient quantity and at terms and interest rates necessary for self-liquidation of these buildings. Consequently, the only solution I can see is for the Congress to strengthen and liberalize the college housing program. The bill I will offer proposes necessary changes in this program.

BILL TO EXPAND AND LIBERALIZE THE COLLEGE HOUSING PROGRAM

In approaching this matter of college housing, I have mentioned some of the general problems facing our educational institutions. My bill is not designed to solve all of these problems, but deals with only one small phase-what we might call the buildings for necessary services to students and facilities without which the institutions could not function. The Housing Act of 1950, as amended, established a program under which colleges and universities can borrow money from the Federal Government to construct dormitories and residences for students and faculty members. The loans can be for as long as 40 years and are subject to an interest rate determined by the Administrator of the Housing and Home Finance Agency. The total of all loans cannot exceed $300 million and no more

than 10 percent of the money may be borrowed by institutions in any single State.

The bill which I introduce makes the following changes in the present law:

(1) It expands the purposes for which loans may be made to include cafeterias, dining halls, infirmaries, student unions or student centers, and other essential service buildings, all of which are capable of self-liquidation.

(2) It increases the maximum term of the loans to 50 years,

(3) It fixes the interest charge to the colleges at a reasonable rate, but at a rate lower than that available under the present law.

(4) It fixes the interest charge to the Housing and Home Finance Administrator at a fair return to the Treasury, but at a rate lower than he is now forced to pay,

(5) It fixes the conditions under which Federal loans may be denied on grounds that comparable private loans are available, and

(6) It increases the overall ceiling on loans to $500 million. Each of these changes is necessary and can be justified.

The first change recognizes that cafeterias, dining halls, and infirmaries are just as essential to the college campus as classrooms and dormitories. Such buildings must be financed by private or public gifts or grants, by general college revenue, or by income from the services which the building provide. There is no other way. Gifts and grants are apparently not forthcoming in sufficient quantity and general revenues cannot be spread to cover the cost of these buildings— which leaves self-liquidation as the only reasonable alternative. These buildings can be substantially self-liquidating if they are financed by long term loans at low interest rates.

The second change lengthens the maximum term to 50 years. This is not to say that all loans shall be for 50 years, but where such a term is required, it should be available. Permanent buildings, soundly constructed, and conscientiously maintained, can endure far beyond 50 years. I will present a table later in this statement to show the real advantage that accrues to students and faculty, from the standpoint of monthly charges, by increasing the term of a loan. The third change is perhaps the most important-the interest rate to be paid by the colleges. Under the original law, this interest rate was fixed as onefourth of 1 percent above the interest rate in the most recently issued bonds of the Federal Government having a maturity of 10 years or more. Under this policy, effective until the law was changed in 1953, the interest rate averaged at approximately 2.88 percent.

Then came the so-called hard money policy. The law was changed in the 83d Congress to give discretion to the Administrator of the Housing and Home Finance Agency in this matter of interest. I am sure you can imagine what happened the interest rate went up. This same law in 1953 also gave the Secretary of the Treasury discretion regarding the amount he could charge the HHFA-which also had an upward effect on the interest charge to colleges. As a result, since mid-1953 the interest rate has averaged at approximately 3.26 percent. This rise is made even more significant in view of the fact that, because of the Korean emergency, the program was deferred and most of the loans have been made at the higher rates.

The following table, prepared in the HHFA, illustrates the effect which higher interest rates has on charges to students. The table also shows the effects of short term as opposed to long term loans:

Annual rental (9 months) required per student for self-liquidating residence hall at various rates of interest and terms of years

[Assumptions: Cost per bed, $3,000; maintenance and operation, $100 per student; vacancy ratio, 10 percent: coverage, 1.35 times. Computed on basis of no principal payments for first 2 years of loan]

This table shows that money borrowed at 234 percent interest for 50 years will provide shelter at approximately $31 per month. Loans for 40 years at 32 percent interest (the present private loan rate which, if available, will cause the HHFA to refuse a loan) will provide shelter for approximately $36 per month. Five-dollars-per-month savings for shelter alone is significant in determining whether a young man or woman can afford to go to college.

I believe that the public interest justifies loans at the lowest possible interest rate. Based upon the average cost of borrowed money to the Government during recent years, the interest rate on these loans can be fixed at a maximum of approximately 234 percent and still cover the cost of money obtained from the Treasury and the cost of administering the program. Two and three-fourths percent should be a maximum rate and I can see no reason for establishing a statutory rate which varies from month to month or which is subject to periodic revision by administrators of the program.

I agree wholeheartedly with a statement on this matter of term and interest rate in a recent article by Mr. Albert M. Cole, Administrator of the Housing and Home Finance Agency. Mr. Cole said: "Even with the 40-year maximum amortization and the current 34 percent interest rate provided under the college housing program, it is almost impossible to work out projects which are completely self-liquidating from the moderate rentals which are economically feasible for college students today. Nearly every college housing loan requires additional revenues from other debt-free buildings, student fees, or other sources. Thus, each institution must work out its own individual solution to a financial problem whose principal components are the construction cost per bed and monthly rent per student." But I cannot agree with the solution which he advocates to relieve this impossible situation. He urges borrowing from private lenders at 32 percent interest and at terms up to 40 years. Such a solution places an even greater burden on additional revenues to supplement income from the buildings themselves. A more reasonable, and the only practical, solution is to reduce the interest rate and increase the maximum term. By these means it is possible to achieve self-liquidation, which is the goal our colleges and universities are seeking.

The fourth change is concerned with the interest rate which the Treasury charges the HHFA. Prior to the hard-money policy this rate was as low as 2 percent. I understand that the present charge to the HHFA is 3 percent. With money costing the HHFA as much as 3 percent, it is forced to set its discretionary interest rate to the colleges at some higher amount-and at the present time it is 34 percent. Thus the rate to the colleges is a full one-half of 1 percent higher than it was in 1950 when the program started. This rise is largely attributable to the manner by which the Treasury has exercised its discretion under the law.

For this reason I propose that this discretion be removed and that the statute fix a fair charge for money made available to HHFA. I think that 21⁄2 percent is a fair charge. This exceeds the average cost of money obtained by the Treasury. If by any chance this cost should rise above 22 percent, the bill provides that the charge to HHFA and the charge to the colleges will rise correspondingly. If the HHFA can obtain money from the Treasury at 22 percent and lend to colleges at 24 percent, the return of 4 percent should be sufficient to offset the costs of administration.

The fifth change is to correct what I think has been an unwise use of discretion granted under existing law. As now written, the law requires the HHFA Administrator to turn down any loan application if the applicant can obtain a private loan upon "comparable terms and conditions." This concept of "comparability" is not defined in the law and is left to the discretion of the Administrator.

Up until July 1954, this discretion was exercised by a decision to deny any application if a private loan was available at not more than one-tenth of 1 percent above the rate being charged by the Administrator. In July 1954, however, this policy was changed and the private interest rate is determined to be "comparable" if it is not more than one-fourth of 1 percent higher than the rate being charged by the Administrator.

The Administrator's rate is now 34 percent, and this "comparability" policy means that the Administrator will not make a loan if a private lender offers money at 32 percent. To my mind, this does not represent "comparable terms and conditions." Consequently, I propose a change in law to require that private

loans be judged comparable only if their terms and conditions are equal to or better than the terms and conditions provided herein for Federal loans. If colleges need long-term loans at 24 percent interest, and I believe they do, then I think private lenders should meet this need or stand aside for the Federal loan. The sixth change proposes to increase the statutory ceiling on funds available for these loans from $300 million to $500 million. This increase is essential and is but a small percentage of the total funds required for construction of residential and other service buildings on our college campuses over the next few years. These funds are not for gifts or grants-but are for loans at reasonable interest rates.

I am aware of the recent report of the Hoover Commission which recommends that this program be discontinued. But I believe that the Commission must have misunderstood the intent of the Congress when it started this program in 1950. On March 14, the Hoover Commission transmitted to the Senate and the House of Representatives a 126-page report on lending, guaranteeing, and insurance activities of the Federal Government. On page 42 of this report there appears the following statement:

"In its consideration of the Housing Act of 1950, Congress was aware of the influx of GI students, though no reference to them is made in the act. Since then, any GI emergency has passed and this lending activity is only one of general aid to colleges and universities. The demonstrated ability of colleges to secure such loans elsewhere compels us to conclude that this program is no longer necessary. Recommendation No. 15-That the program of loans for college housing be terminated."

The Commission states that although the Housing Act of 1950 did not mention the need to house college students who are GI's, the Congress was aware of the housing needs of such students. The argument goes on to say that since the GI student emergency has passed, the college housing program is nothing more than general aid to colleges and universities. The obvious implication is that this program was for the GI emergency need only and that, therefore, the program is no longer necessary. Such an implication does not convey my understanding of the situation.

I have carefully reviewed the initial bills, the hearings, the reports, and the debates leading to the enactment of that portion of the Housing Act of 1950, known as the college housing program. This research makes it perfectly clear that the legislation was in no way predicated upon the enrollment of students receiving assistance under the GI bill. The only significant references to GI enrollment made the following points:

(1) that enrollments would continue to rise in spite of the predicted and inevitable decline of GI enrollment,

(2) that the emergency shacks utilized to meet the large influx of GI students in 1946, 1947, and 1948, were rapidly approaching dilapidation,

(3) that although the housing need was not predicated upon GI enrollment, their needs did contribute to the urgency of the program, and

(4) that far from being a GI housing program, the legislation was in fact the first peacetime Federal aid to higher education.

Furthermore, according to statistics of the Office of Education, Federal Security Agency, the ratio of GI enrollment to total college enrollment was at its peak in 1946-4 years before the Housing Act of 1950. This ratio has steadily declined since 1946. In 1946 the ratio was a little over 52 percent. By 1950 it had declined to 25 percent. By 1954, the peak year of total college enrollment, the GI ratio was down to 15 percent-and this includes Korean veterans. If limited to World War II veterans, which is what the word "GI" meant in 1950, the ratio was only 3 percent in 1954. (At this point in my remarks I would like to insert a table based upon information supplied by the Federal Security Agency.)

Mr. President, the expansion of the facilities of our colleges and universities is central to the continued freedom and prosperity of our Nation. The programs of these institutions must be available to ever-increasing numbers of students and at prices they can afford to pay. The public interest demands that this expansion occur. The Federal Government can assist by outright gift, by subsidizing students, or by lending at low interest rates. This lending is the very least we can do, and I think that it must be done. I hope I can count on every Member of the Senate to support this necessary legislation.

10TH NATIONAL CONFERENCE OF HIGHER EDUCATION, SPONSORED BY ASSOCIATION FOR HIGHER EDUCATION, CHICAGO, ILL., MARCH 2, 1955-CONFERENCE RESOLUTIONS ADOPTED

College and university housing

Whereas the present housing facilities on college and university campuses are entirely inadequate for present and anticipated enrollments despite the welcome assistance already given by the college housing program, title IV of the Housing Act of 1950 (Public Law 475, 81st Cong.), and

Whereas the regulations under which title IV of the Housing Act, 1950, now operates prevent the program from being fully practical for self-liquidating projects: Be it

Resolved, That the 10th National Conference on Higher Education recommends a modification of the regulations governing the use of the funds by providing for the lowest interest rates consistent with the original act; reducing the reserve fund requirement to the lowest reasonable level; and by making available as soon as possible the full amount of the funds provided under the act, and Whereas the 1953 amendment to title IV of the Housing Act of 1950 gives discretionary power to the Administrator of the Housing and Home Finance Agency to change the interest rate, thus introducing further elements of uncertainty for the colleges in the effective operation of the law: Be it

Resolved, That the 10th National Conference on Higher Education recommends that title IV of the Housing Act of 1950, as amended, be further amended to withdraw the discretionary power of the Administrator of the Housing and Home Finance Agency to change the interest rate.

College and university facilities for auxiliary services other than housing

Whereas the existing facilities for auxiliary services other than housing on college and university campuses fall far short of meeting the needs of present and anticipated enrollments, and

Whereas facilities for auxiliary enterprises of colleges and universities may be of a self-liquidating nature: Be it

Resolved, That the 10th National Conference on Higher Education urges amendment of title IV of the Housing Act, 1950, to include financing the construction and equipment of facilities for auxiliary services other than housing on college and university campuses.