DEFENSE EDUCATIONAL ACTIVITIES STATEMENT OF PETER MUIRHEAD, ASSOCIATE COMMISSIONER FOR HIGHER EDUCATION; ACCOMPANIED BY RICHARD L. BRIGHT, ASSOCIATE COMMISSIONER FOR RESEARCH; ALEXANDER M. MOOD, ASSISTANT COMMISSIONER, NATIONAL CENTER FOR EDUCATIONAL STATISTICS; RALPH J. BECKER, ACTING DIRECTOR, DIVISION OF PLANS AND SUPPLEMENTARY CENTERS; SAMUEL G. SAVA, DIRECTOR, DIVISION OF EDUCATIONAL PERSONNEL TRAINING; S. WILLIAM HERREL, EXECUTIVE OFFICER, BUREAU OF HIGHER EDUCATION; NORMAN KARSH, ASSISTANT COMMISSIONER FOR ADMINISTRATION; JOE G. KEEN, BUDGET OFFICER; JAMES B. CARDWELL, DEPARTMENT BUDGET OFFICER APPROPRIATION ESTIMATE "DEFENSE EDUCATIONAL ACTIVITIES "For grants, loans, and payments under the National Defense Education Act of 1958, as amended (20 U.S.C., ch. 17; Public Law 88-665), [$412,608,000] $273,544,000, of which [$180,900,000] $34,187,000 shall be for capital contributions to student loan funds and Cloans for non-Federal capital contributions to student loan funds under title II, of which not to exceed $1,600,000 shall be for such loans for non-Federal contributions, $88,200,000] $63,200,000 shall be for grants to States and loans to nonprofit private schools for equipment and minor remodeling under title III and for grants to States for supervisory and other services under title III: Provided, That allotments under sections 302 (a) and 305 for equipment and minor remodeling shall be made on the basis of [$79,200,000 $54,200,000 for grants to States and on the basis of [$10,800,000] $7,390,909 for loans to private nonprofit schools, and allotments under section 302(b) for supervisory and other services shall be made on the basis of $9,000,000; and $24,500,000 of the amount appropriated herein shall be for grants to States for testing, guidance, and counseling under title V: Provided, That no part of this appropriation shall be available for the purchase of science, mathematics, and modern language teaching equipment, or equipment suitable for use for teaching in such fields of education, which can be identified as originating in or having been exported from a Communist country, unless such equipment is unavailable from any other source: Provided further, That no part of this appropriation shall be available for graduate fellowships awarded initially under the provisions of the Act after the date of enactment of the Department of Health, Education, and Welfare Appropriation Act, 1962, which are not found by the Commissioner of Education to be consistent with the purpose of the Act as stated in section 101 thereof. "[Loans and payments under the National Defense Education Act, next succeeding fiscal year: For making, after March 31 of the current fiscal year, loans and payments under title II of the National Defense Education Act, for the first quarter of the next succeeding fiscal year such sums as may be necessary, the obligations incurred and the expenditures made thereunder to be charged to the appropriation for the same purpose for that fiscal year: Provided, That the payments made pursuant to this paragraph shall not exceed the amount paid for the same purposes for the first quarter of the current fiscal year.]" 60-302-66--20 EXPLANATION OF LANGUAGE CHANGE Deletion of the words "loans for non-Federal capital contributions to student loan funds under title II, of which not to exceed $1,600,000 shall be for such loans for non-Federal contributions," and of the last paragraph of the appropriation language, is proposed. Under proposed legislation, the student loan program will be merged with the insured student loan program authorized in the Higher Education Act of 1965; therefore, these provisions relating to title II will no longer be necessary. The amendments will also authorize the sale of student loan notes now held by educational institutions to financial institutions and the return to the Federal Government of its 90-percent share of student loan funds which are recovered. Retention of the clause "$34,187,000 shall be for capital contributions to student loan funds" will continue obligational authority for direct loans during a transitional period at the start of fiscal year 1967. Gross increases___ Decreases: 1. Student loans: a. Contributions to loan funds.. b. Loans to educational institutions_. 2. Instructional assistance: a. Acquisition of equipment and minor remodeling: (1) Grants to States----. Subtotal decreases- Total net change requested_. EXPLANATION OF CHANGES $412, 608, 000 273, 544, 000 -139, 064, 000 25, 996, 000 1, 500, 000 300,000 400, 000 5, 103, 000 33, 299, 000 -145, 113, 000 -1,600,000 -650, 000 -25, 000, 000 -172, 363, 000 -139, 064, 000 An increase of $25,996,000 for graduate fellowships will provide a total of $81,957,000 to support 6,000 new awards, and 9,000 fellows who began study in the previous 2 years. An increase of $1,800,000 is requested for advanced training-$750,000 for expanded support to the existing language and area centers and establishment of 8 new centers, $750,000 for an additional 260 stipends for foreign language training, and $300,000 for an additional 12 new projects in foreign language research. An increase of $400,000 for educational media research will permit continuation of research and dissemination currently underway and the innovation of about 14 additional new projects. An increase of $5,103,000 will provide an additional 85 institutes to train over 4,000 teachers, and will permit expansion in the areas of economics, civics, and industrial arts, which have been added by the Higher Education Act of 1965. Under the proposed legislation, the student loan program would be merged with the insured student loan program authorized by the Higher Education Act of 1965. The private credit market will supply loan capital through guaranteed programs. A decrease of $147,363,000 for title II provides a 1967 request of $34,187,000 in order to continue obligational authority for direct loans during a transitional period at the start of fiscal year 1967. A reduction of $25 million for grants to States for acquisition of equipment and minor remodeling will be more than offset by increased grants under the Elementary and Secondary Education Act of 1965. 1 First supplemental appropriation of $40,000,000 not considered by House. Included $5,000,000 for transfer to "Payments to school districts." JUSTIFICATION OF ESTIMATES The fiscal year 1967 budget estimate for Defense Educational Activities is $273,544,000, a decrease of $139,064,000 from the amount of $412,608,000 available for the same purposes in fiscal year 1966. The decrease is due primarily to the merging of title II student loans with the insured student loan program authorized by the Higher Education Act of 1965. A 1967 request of $34,187,000 for title II will provide obligational authority for direct loans during a transitional period at the start of fiscal year 1967. The special teacher cancellation benefits of the program will continue, as amended by the Higher Education Act. For grants to States for acquisition of equipment and minor remodeling, a decrease of $25 million will be more than offset by increased grants under the Elementary and Secondary Education Act. Title IV-D of the Higher Education Act adds economics to the list of subjects for which grants may be made. Loans to nonprofit private schools and grants to States for supervision and administration will continue at the 1966 levels of $1,500,000 and $7,500,000, respectively. An increase of $25,996,000 for graduate fellowships will provide a total of $81,957,000 to support 6,000 new awards, and 9,000 fellows who began study in the previous 2 years. Grants to States for guidance, counseling, and testing and institutes for counseling personnel will continue at the 1966 levels of $24,500,000 and $7,500,000; the latter represents the full authorization for 1967. For language and area centers and research, an increase of $1,800,000 will provide a total of $15,800,000-$5,830,000 for expanded support to the language and area centers, $6,870,000 for foreign language training, and $3,100,000 for foreign language research. An increase of $400,000 for educational media research will provide a total of $4,400,000, which will permit continuation of research and dissemination currently underway and the initiation of about 72 new projects. The estimate for grants to States for statistical services continues the 1966 level of $2,250,000. An increase of $5,103,000 for institutes will provide a total of $40 million. The Higher Education Act has expanded the program to include economics, civics, and industrial arts. JUSTIFICATION OF ESTIMATE Purpose and scope of activity Title II of the National Defense Education Act authorizes annual appropriations to (1) establish and develop capital funds at institutions of higher education to provide low-interest, long-term loans to regularly enrolled financially needy students pursuing courses of study at the undegraduate, graduate, or professional level; (2) provide loans to institutions to help finance their contributions to the loan fund; and (3) make payments to the institutions to cover their share of the reduction in the student loan funds resulting from teacher cancellations. Program for fiscal year 1966 Total loan funds available to the institutions for fiscal year 1966 are estimated as follows: It is estimated that in fiscal year 1966, $223,800,000 will be loaned to approximately 400,000 students, including those in business schools and technical institutes, with an average loan of $525 to $550 per student, slightly above the previous experience of $490, on the assumption that institutions will increase the amount loaned per student in order to allow for increased college costs and to provide for the higher loan limitations for graduate students. Program for fiscal year 1967 The sum of $34,187,000 is requested under the advance authority provision which is contained in the 1966 appropriation act. This authority each year has made a portion of the following year's appropriation available after March 31 of the current fiscal year. The requested $34,187,000 will be used to enable the colleges and universities to make definite commitments to their students for the fall semester of 1966. Included in the Public Health Service appropriation estimates are funds for similar use, which will also provide commitment authority to institutions involved in the health professions and student nurses training programs. Proposed legislative program In fiscal year 1965, the loan program was expanded to include available capital from private lending institutions, under the guaranteed loan program in the Higher Education Act. It is intended that future lending programs will give primary emphasis to this type financing. Legislation will be proposed which is designed to provide the mechanisms for converting the present NDEA program from direct Federal financing to private or other non-Federal financing. The legislation authorizes an appropriation of $150 million in fiscal year 1967 to establish a revolving fund from which capital contributions may be made to institutional loan funds. The participating institutions will be asked to cooperate fully in arranging for the transition from public to private financing. The proposed legislation provides for this conversion through the use of four mechanisms: (1) Returning students eligible for NDEA loans will be encouraged to secure their loans from private credit institutions participating in the Federal insured loan program, and at the same time refinance their prior NDEA notes from these same lenders. A portion of the proceeds from the sale of their notes will be returned to the newly established Federal revolving fund. (2) Institutions of higher education will be encouraged to arrange for private or other non-Federal loan financing to provide loan capital for the fiscal year 1967. The Federal Government will insure these loans and subsidize interest charges to insure no cost to the institution. |