Mr. RIBICOFF. I don't think there is any question that this is a minimum program. I would say that, as you have indicated, most people in this field would like more, but the President of the United States has responsibilities in many fields. It is his job to try to weigh all of these and come up with a balanced program, and in weighing all the basic needs of our Nation and its various capacities he felt that this was a proper allocation to be made at this time in the field of higher education.

Mr. GIAIMO. I have just one more question, Madam Chairman. You described to us the fact that you would be having commissions established in each State to run competitions for the scholarship program. Can you give us any further information, or has that yet been worked out on the mechanics of the competition? Will there be interviews? Will there be written examinations? Will the standards be provided on a Federal level across the board? Will they be the same in each State, or will they be devised in each State?

Mr. RIBICOFF. In almost all legislation that is coming out of this Department for submission to Congress, you will notice that these are very, very carefully thought out States' rights programs. I am a great believer in States' rights myself. I recognize the responsibility of the States, and we have tried to devise these programs in such a way as to place the responsibility on the States. Each State will create its own commission. The State will then give its own examination. The State, of course, will have to submit to the Commissioner of Education a State plan for carrying out the purposes of the scholarship program, and the plan will include objective criteria to make sure that it is really a competition. I mean, you certainly aren't going to have 1 plus 1 equals 2 for boys and girls who go into college, but basically these examinations will be given and made up by the State scholarship commissions themselves and they will be laying down the basic rules, provided that these rules really measure scholarship and ability.

Mr. GIAIMO. Thank you, sir.

Mrs. GREEN. The gentleman from Minnesota, Congressman Quie. Mr. QUIE. Mr. Secretary, I understand under this bill that the loans for academic facilities will carry an interest rate of 234 percent or onefourth of 1 percent above the interest rate paid by the Commissioner. Mr. RIBICOFF. Whichever the going college housing program rate is at any given time. The provisions of the bill on interest-they will be found in sections 103 (b) and (d)—follow exactly those of the college housing program. I think the present going rate on college housing loans is 312 percent. Now, if the interest rates change so that the going rate is 3 percent, that is what it will be under the bill. If it is 4 percent, that is what it will be. In other words, there is no single fixed rate set in the bill. Under present conditions, it would be geared to the average annual interest rate on the entire U.S. public debt as of the end of the last fiscal year, adjusted to the nearest oneeighth percent. To that rate would be added another quarter percent to cover administrative and carrying charges.

Mr. QUIE. But there is a floor of 234 percent in the bill?

Mr. RIBICOFF. No, the provisions are the same as those of the college housing program. Under that program, as under the bill, the law provides for a maximum rate of either 234 percent, or one-fourth

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of 1 percent above the rate at which the lending agency borrows money from the Treasury, whichever is higher. Under present conditions, of course, the 234 percent provision has no application.

Mr. QUIE. What did it cost the Treasury to secure money in this past year?

Mr. RIBICOFF. I think we have a table on that. In fiscal 1961 it cost 311⁄2 percent for two Treasury bond issues with maturities of 20 and 38 years respectively.

Mr. QUIE. Take the year previous, do you have the figures for 1960?

Mr. RIBICOFF. In July-I am trying to figure, looking at it, that was a particular issue, what you have here. I could give you the amount of the college housing loan program.

Mr. QUIE. No, this would be what the Government has to pay for interest on its issues of bonds?

Mr. RIBICOFF. In fiscal 1961 the rate charged to colleges under the college housing program was 312 percent, so you would subtract a quarter of a percent to determine the rate payable by the HHFA to the Treasury, which indicates that at the beginning of fiscal 1961 the average interest rate on the Government's public debt was about 314 percent.

Mr. QUIE. You mean the Government was borrowing money for 314 percent on an average.

Mrs. GREEN. In order to save the time of the committee, and so we can get to some other questions, I wonder if I might ask you, Mr. Secretary, to provide that information and it will be inserted at this point in the record.

Mr. RIBICOFF. We will get a complete table from the U.S. Treasury covering this period, which we will submit for the record. (The tables follow:)

Average computed annual rate on interest-bearing obligations forming a part of the public debt, end of fiscal year, 1953–60

Average market yields of taxable Treasury bonds, by month, for 1956, 1958,

1 Based on closing bid quotations in the over-the-counter market; includes only bonds which are neither due nor callable before 10 years.

Source: Treasury Bulletin, February 1961, p. 66.

Mr. QUIE. What I would like to know, what it was in this past year, and then we can add a quarter of 1 percent to that figure and find out what the interest rate would be on these loans for academic facilities.

Mr. RIBICOFF. Well, the college housing loan rate in fiscal 1960 was 3% percent, indicating that the average interest rate on the U.S. public debt at the beginning of that year was about 2%. In other words, we are taking what these housing loans carried, and then we are deducting a quarter of 1 percent, and then we would assume that these are, roughly, the Treasury figures on the average interest rate on the public debt, because the HHFA charges one-quarter of a percent more to colleges than the rate at which it obtains funds from the Treasury.

Mr. QUIE. You can secure that from the Treasury for the record? Mr. RIBICOFF. Yes, we can.

Mr. QUIE. How many of the colleges and universities are private and church related and how many are State supported?

Mr. RIBICOFF. Thirteen hundred private and about 700 public. Mr. QUIE. There has been quite a controversy over providing loans for church-related schools in elementary and secondary level. It would not be possible in any way to provide adequately for the higher education needs of the young people in this country if loans were not given to private and church related colleges; is that not right?

Mr. RIBICOFF. This is a different situation than a private elementary school, sir. First, the scholarships go to the students. Secondly

Mr. QUIE. We are not talking about scholarships, just the loans for academic facilities.

Mr. RIBICOFF. The loans go for college facilities.

Mr. QUIE. That is right.

Mr. RIBICOFF. It is different than an overall loan that is going for chapels or that might go for housing those of a religious order who might be connected with an institution. These go purely for academic facilities. Again, you have a situation where college education is not compulsory. There is no compulsion as you have in the laws of most State requiring people to go to elementary and secondary schools. Again, religion and religious teaching plays only a minor part outside of the theological schools in college education, and you have got a long tradition of the use of these funds, and there has never been any question of their constitutionality, and we believe that there is a definite demarcation and a definite difference between elementary and secondary schools as against colleges and universities.

Mr. QUIE. I believe you are taking a defensive position. What I am asking here is if someone raised the point that this would not be constitutional and the Congress should agree, which I don't believe it will, then my question is whether we would be able to provide adequately for the higher education needs if we restrict these loans only to institutions that are tax supported?

Mr. RIBICOFF. If you just restricted these funds to State-supported institutions you couldn't possibly provide adequately for higher education because you have 1,300 private schools as against 700 public in higher education.

Mrs. GREEN. There are two memorandums that I think would help the subcommittee. One is a memo on the Department's position in regard to the constitutional question of loans; and second, could you provide a memorandum on Federal aid that is now going to private colleges and universities, and also Federal aid that is now going to hospitals and other institutions?

Mr. RIBICOFF. That will be supplied to you for the purpose of the record.

Mrs. GREEN. Thank you very much.

(The documents follow :)

MEMORANDUM ON THE IMPACT OF THE FIRST AMENDMENT TO THE CONSTITUTION UPON FEDERAL AID TO EDUCATION

The extent to which Government, whether Federal, State, or local, may consistently with the U.S. Constitution, aid religious schools is a problem which, surprisingly enough, is a relatively new one.

Prior to 1947 Federal judicial concern with this field was limited. The only case presented to the Supreme Court involving the expenditure of federally controlled funds to religious schools was Quick Bear v. Leupp (210 U.S. 50 (1908)), which held merely that provisions in certain Indian appropriation acts prohibiting the use of public funds for the education of Indians in sectarian schools did not prevent trust funds belonging to the Indians and administered by the Federal Government from being used for such schools at their request and such action did not involve the prohibitions of the first amendment.

It was only recently that State action in this field was held subject to first amendment limitations.' The first amendment provides that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof * * * " [Emphasis added.] By itself this language is not a limitation on State action, though similar provisions exist in many State constitutions. In 1934, however, freedom of religion as guaranteed by the 1st amendment was construed to be among the liberties protected by the due process clause of the 14th amendment limiting State action (Hamilton v. Regents of the University of California, 293 U.S. 245 (1934)). Later, in 1947, the now leading case of Everson v. Board of Education (330 U.S. 1), made it clear that the due process clause forbade State action which would effectuate "an establishment of religion" prohibited by the first amendment. The impact of that case is that State and Federal action affecting religion must now satisfy the standards of the amendment. Under those standards, what is forbidden to a State is also forbidden to the Federal Government, and what is forbidden to the Federal Government is also forbidden to a State. It is possible, however, that what the Federal Government and the States may properly do without offending the first amendment may nevertheless be prohibited to a particular State because of its own constitutional prohibitions. In Everson, the Supreme Court in a 5-to-4 decision, held that where a local school district, as authorized by State law, reimbursed parents for the bus: fare paid by them for public transportation of their children to parochial as well as public schools, such aid did not violate the establishment of religion clause of the first amendment. It was followed in 1948 by McCollum v. Board of Education (333 U.S. 203). With only Mr. Justice Reed dissenting, the Court there held that the 1st amendment (as made applicable by the 14th amendment to the State) forbade a public school program of "released time" under which religious teachers provided by various denominations were permitted by the board of education to hold classes in public school buildings for students who had volunteered for religious instruction. The children not desiring such instruction continued their regular studies in other rooms. In

See

1 For this reason the limited number of earlier cases touching upon State action affecting religious schools came up in the context of the question whether property rights were impaired without due process of law in violation of the 14th amendment. Pierce v. Society of Sisters (268 U.S. 510 (1925)), upholding as a constitutional right the maintenance of private, including parochial, schools; Cochran v. Board of Education (281 U.S. 370 (1930)), holding that the use of State moneys to provide textbooks for schoolchildren, including those attending private schools, whether sectarian or nonsectarian, is not a taking of property for private purposes.

1952, Zorach v. Clauson (343 U.S. 206), was decided. By a 6-to-3 vote, a voluntary "released time" program, basically differing from that involved in the McCollum case only in that the religious instruction was provided off the school premises, was held constitutional. These three cases constitute the most important judicial precedents in the field. The paucity of Supreme Court precedent is due to two factors: First, it was only in 1934 that the Court read the 14th amendment as embodying the pertinent provisions of the 1st amendment; second, despite the existence of a number of Federal educational programs in recent years, judicial review in Federal courts at the instance of a taxpayer of the lawfulness of Federal expenditures has not been available since Massachusetts v. Mellon (262 U.S. 447), decided in 1923.2 It should therefore be emphasized that the questions discussed in this memorandum are probably not open for judicial determination, unless adequate special statutory provisions are enacted to authorize judicial review.

The difficulties of obtaining a court test of legislation in this area impose a solemn responsibility upon both Congress and the Executive to be especially conscientious in studying the Constitution and relevant Supreme Court decisions SO that any enactment will scrupulously observe constitutional limitations.

I. THE CONSTITUTIONAL PRINCIPLES

At the outset it is evident that resolution of the constitutional problems of present concern requires us to deal with the interrelation of three constitutional limitations. Two are contained in the provisions of the first amendment: neither Congress nor the States may pass any law "respecting an establishment of religion"; neither may they pass any law "prohibiting the free exercise thereof." The third constitutional limitation is found with respect to the Federal Government in the due process clause of the fifth amendment and, for the States, in the due process and equal protection clauses of the 14th amendment. These limitations prohibit the Federal Government or a State from unreasonable discrimination in governmental programs. (See Bolling v. Sharpe (347 U.S. 497 (1951)); Brown v. Board of Education (347 U.S. 483 (1954).) In many instances these three constitutional limitations overlap in one regard or another to prohibit Federal or Station action. For example, a government program of compulsory education exclusively at State-operated schools which taught religion would violate all three. In other factual circumstances, however, a program which satisfied one or more of the limitations might violate another. For example, a program of educational grants to returning war veterans for their readjustment into civilian life perhaps could not have constitutionally excluded from its benefits applicants who wished to attend sectarian institutions. This would probably be regarded as a classification so unrelated to the expressed public purpose as to offend due process requirements.

There is agreement that education serves a fundamental public purpose (see Brown v. Board of Education, supra at 493) and accordingly that the Federal Government or a State may use public funds for that purpose. In addition, to that end States with respect to education under their control may also compel children, within reasonable limits of age and maturity, to attend schools. Moreover, they may set reasonable standards for education. At the same time, there seems little doubt that Government may not use its authority in the field of education in order to instruct children in religion generally or in any specific religion. This would violate the establishment of religion clause of the first amendment. Nor may government, without interfering with the religious freedom guaranteed by the first amendment and the due process clause, reserve educational functions to public schools and forbid education by private institutions meeting the standards prescribed by law for the public school (see Pierce v. Society of Sisters, supra). And in any educational program in which public funds are expended there must be equal treatment for all children; that is, a State may not classify children on the basis of their religion, race, or similar irrelevant considerations without violating equal protection and due process requirements.

It is also evident that these constitutional limitations must be interpreted in the light of specific factual situations. It is the difficulty of attempting to interpret and apply them under contemporary conditions that brings about a

2 In Doremus v. Board of Education (342 U.S. 429 (1952)), the Supreme Court dismissed an appeal for want of jurisdiction in a suit filed by a State and local taxpayer who had not, on the facts alleged, shown a requisite financial interest.