teachers. A total of 34 percent of all respondents, including 58 percent of the public universities responding to the questionnaire, stated that in their opinion the teacher cancellation provision had not increased the number of students in their institution who have gone into teaching. Of the respondents from teacher's colleges, 38 percent concurred in this judgment.

It would be valuable to show the relative significance or insignificance of teacher borrowing, but some items of information are not available and other items are difficult to reconcile. During fiscal year 1966, there were 118,400 teacher cancellation certificates, all but 6,000 of which were from elementary and secondary school teachers. Of these 118,400, there were 46,650 first-year certificates: presumably the large percentage of them were newly graduated from college. Relating the 46,650 "new-teachers-in-1965-66" borrowers with the 72,500 "college-seniors-in-1964-65" borrowers, produces the rather startling statistic that 60 percent of the senior class borrowing under the NDSLP went into teaching (assuming, of course, that all "new teacher" borrowers had borrowed under the NDSLP in their senior year.)

In addition, relating the 46,650 new-teachers-in-1965-66 borrowers with the 150,000 total new teachers in elementary and secondary schools, produces the information that 30 percent of all teachers borrowed under the NDSLP. As mentioned earlier in this report, students borrowing under the NDSLP represented 9 percent of all full-time students in higher education.

These very rough statistics might lead to a question as to whether an undue proportion of teachers are borrowing at least partly to receive a later cancellation-so that, in other words, their loan has been transformed into a grant. This worry is on the minds of some people in the educational world. It is impossible, however, to believe that prospective teachers are borrowing who do not need to borrow, and it is equally impossible to believe that financial aid officers would award the loans to prospective teachers who are not in need. Hence, it would seem reasonable that many prospective teachers in need are borrowing, as they would have to under any circumstances, and simply taking advantage of a right of cancellation to which they are entitled. None of this reasoning, however, supports or fails to support any thesis that the cancellation provision has contributed to an increase. in the number of teachers. It can probably be assumed though that many prospective teachers are availing themselves of a "grant" (that is, a cancellation of loan) who did not need the stimulus of this benefit in order to go into teaching.

The data contained in table 10 reveal that the average amount of loan principal canceled during fiscal years 1965 and 1966 was only $83 and $84, respectively. Since the large majority of teacher-borrowers are eligible for cancellation of 50 percent of indebtedness over 5 years, these averages would seem to indicate total NDSLP borrowing of $800 to $850 and, hence, cancellation of only $400 to $425 over a 5-year period. The average annual "saving" seems insignificant in relation to the approximate average annual salary of classroom teachers in public elementary and secondary schools, which was $6,500 in fiscal year 1966.

Classroom Teachers and High School Graduates in illions; Total Earned Degrees in 100 Thousands

Sources: "Projections of Educational Statistics to 1975-76," National Center for Educational Statistics, Office of Education, 1966, pgs. 25, 27, 40. "Digest of Lducational Statistics," U.S.0.b., 1966, p. 50.

As was stated previously, it is impossible validly to determine the effectiveness of the teacher cancellation provision in terms of meeting manpower needs in the teaching profession. However, if the teacher cancellation provision is effective in this regard, serious consideration would have to be given to an extension of the cancellation provision to borrowers who enter other "critical" professional fields. Among the professions that have already expressed a desire for a loan cancellation provision are those of law enforcement, social work, the military services, and the health professions,

Any cancellation provisions in the national defense student loan program should also be extended to students from similar income groups

L

Earned Bachelor's degrees in Education in Thousands

who borrow funds through the guaranteed loan program. State loan agency personnel and individual bankers have stated categorically, however, that the introduction of cancellation provisions into the guaranteed loan program could hurt the efforts of the past years to attract private credit sources for student loans.

Extension of cancellation provisions to other categories and to other professions might possibly have a detrimental effect upon collection of all loans in the national defense student loan program. In the questionnaire to institutions of higher education and in several meetings the study staff attempted to find out whether there was any depth to an alleged feeling on the part of students that "our loans will be forgiven if we wait long enough." In answer to the question about whether the teacher cancellation feature makes it more difficult for their institution to collect funds owed by borrowers who are not eligible for cancellation, 12 percent of the respondents said "yes" definitely or probably; 70 percent said "no"; and 18 percent said "hard to say. There is no widely held opinion, therefore, that cancellation is hurting collection, but it would seem fair to say that the situation would worsen if more and more cancellation provisions were created.

The teacher cancellation feature of the NDLSP has caused the expenditure of time and effort and controversy far beyond its significance. On the one hand, 67 percent of the respondents to the questionnaire requested no change in the cancellation provision, but this percentage ranged from 81 percent of the theological schools down to 44 percent of the public universities. The vote in favor of eliminating all cancellation came from 22 percent of all respondents, but this percentage again ranged from 49 percent of public universities to 2 percent of the theological schools.

On the other hand, the several meetings with university business officers clearly showed a very heavy preference for eliminating loan cancellations. This same feeling was voiced overwhelmingly in seven in-depth discussions that related mainly to the guaranteed loan program. The advisory committee for this study showed a strong consensus in favor of eliminating all loan cancellation provisions. They added the opinion that efforts to relieve critical manpower needs should not be made in the form of cancelling loan principal, that it was fundamentally unsound to motivate a student to choose a career on the basis of loan forgiveness.

The administration of the teacher cancellation provision has caused an extravagant amount of time and effort on the part of Office of Education staff in Washington and in the regional offices as well as college staff. The definition of a "full-time teacher" was relatively simple at the outset, since it applied only to teachers in public elementary and secondary schools. Then as the "full-time teacher" spent part of his time on guidance and counseling; and as eligibility was extended to private schools and then to institutions of higher education; and as the "full-time teacher" took on some administrative duties and then more administrative duties while his cancellation period still lasted, confusion started to reign. It was up to college officers to define "fulltime teacher," and three out of five disagreed with the other two. Regional offices differed in their interpretation of a "full-time teacher." During the period of this study, the Office of Education staff in the loans section declared that 80 percent of their correspondence and

89-971-68- 5

ingalries dealt with the single subject of definition of “eligibility" sider the teacher cancellation provision. This, of course, is an intolerabe squation.

In each of 1964, 1965, and 1966 the teacher cancellation provisions were broadened. The very changes themselves show what happens han there is a “vulnerable" spot.

It should be pointed out that the teacher cancellation provision of De nazional defense student loan program discriminates against poutal teachers who do not borrow funds for their education, and it COST DANS against potential teachers who borrow from non-Federal pengesels or from Federal programs other than the national defense

Utpallaring all these factors, the study Kat wecommends that precision of the national defense student loan in de gason 29a by eliminating the amal soway of this feature

V. HEALTH PROFESSIONS STUDENT LOAN PROGRAM

A. BACKGROUND

The problem of financial aid for students in the health professions has long had a high priority in discussions among the various professional school groups. In the early 1960's, the Association of American Medical Colleges (AAMC) formed a financial aid committee to grapple with the problem of the lack of Federal financial aid for students in the health professions, more specifically the medical schools. Students in other graduate schools had been heavily supported by Federal funds in the form of stipends and graduate assistantships. The schools continued to move for action, and in 1963 the Health Professions Educational Assistance Act (Public Law 88-129) was signed into law. It authorized loan programs initially for students in medicine, osteopathy, and dentistry. Funds were authorized for fiscal year 1964, but no appropriations were made until fiscal year 1965.

The AAMC undertook a nationwide study in late 1963 to obtain information on how medical students were financing their education. The relevant information was to be obtained before funds were made available under the Health Professions Act. The study supported the recommendations of the AAMC and justified the funding of the new Federal program.

The Department of Health, Education, and Welfare asked the Public Health Service through its Bureau of Health Manpower to administer the new program.

B. PROVISIONS OF THE PROGRAM

The school is required to provide $1 for every $9 of Federal contribution to the loan fund. Previously, if the school was unable to provide this amount, institutional loans from Federal funds were available. However, under the Allied Health Professions Personnel Training Act of 1966 (Public Law 89-751), loans to institutions for matching-fund purposes are no longer available under the health professions student loan program after June 30, 1967. In fiscal year 1968 the school must either provide its own funds for matching or borrow the full amount of its loan funds from the revolving fund. (See ch. IX.)

The purpose of the health professions student loan program (HPSLP) was to increase the opportunities for the training of physicians, dentists, and others in the health professions by making available long-term loans with low interest rates for students who have demonstrated need. The maximum any student may borrow in a given academic year is $2 500; no total borrowing limit is set. The student pays no interest while in school, only after the expiration of the grace period and during the repayment stage. The interest rate is established for each fiscal year at the "going Federal rate" by the Secretary of the