I assume, with doubling of enrollment and increased economies, unit I would not rise.

Furthermore, one must allow for the rise of national product and s as offsets to the increase of loans as enrollment gains.

In the last 10 years, the dollar value of gross national product almost døp = and gross savings more than doubled. There is an element of inflation in the figures, and we assume no inflation in the future. Nevertheless, the growt the economy estimated at 40-50 percent in 10 years is a relevant fact, the increase of numbers of students to be financed in the next 10 years b these proportions.

So much for the economy. What of the effects on IHL?

They should profit greatly. A rise of $500 in tuition, made possible } adequate loan program, would increase annual resources today by aborder million, or enough to double salaries and reestablish the economic stat faculty at a level commensurate with the attraction of talent. In ad perhaps $25 million could be saved, which goes for scholarships out of gener funds. Part of this would be used to administer the loan program.

What of the student? He (she) gains in that the burden is distri over many years. He also gains in that, on the basis of past experience t capita incomes should be at least three times as high at the time of retire and at least double on the average of his working life than at time of ar:2 tion. In other words, with growth and inflation, the burden is great! * duced.

How much a loan would cost depends on the rate of interest and the pen maturity. At 2 percent and 50 years, the annual cost per $1,000 is but 51% at 5 percent for 20 years, the cost is $80.20, or about 21⁄2 times as great. table in appendix.)

At present, the Government lends for college housing at 2% percent. T Federal Government in recent years has borrowed at 3-4 percent for lon money.

A rough calculation yields the following:

Lifetime incomes of college graduates at 1949 incomes.

At 1958 incomes_.

Annual income (45-year working life) –

400 **

This average is appropriate for college graduates out 15 years. (This is the weighted-average years out of college for living college graduates.) For a 20-year loan at 4 percent, the costs would be as follows: Average income first 20 years out of college, $7,500 (average of $5000 21 $10,000).

But we add 30 percent to $7,500 for estimated rise of income in 10 years an average of $9,750 for the first 20 years.

Hence, the annual costs would be $73.60 divided by $9,750, or 0.76 pers": for $1,000, or 2.28 percent for $3,000.1

In the first year, the cost would be 1.47 percent times 3, or 4.41 percent ($75) divided by $5,000); in the 20th year, 0.58 percent of income, or 1.74 perce for 3 years ($73.60 divided by $12,675 2).

For a 40-year loan at 3 percent, the average would be $43.20 divided by $124 or 0.34 percent of income per year per $1,000, or 1.02 percent for $3,000 In all instances, the charge should be reduced by at least one-third, since th payments would be deductible for income tax.

Over the lifetime of the student, the burden of the loan program world be minimal. At 4 percent for 20 years, the total outlay would be about $4,0 or, at 3 percent for 40 years, $5,200.

In relation to a lifetime income which may roughly be put at $800,000 £ current college graduates ($18,000 average), the respective lifetime costs financing the loans would be about 1 percent, and vis-a-vis the relative income of the college graduate over the non-college-graduate, 3 percent. I is on the assumption that the college graduate will maintain a one-third di ferential over non-college-graduates.)

In assessing the burden to present students over the years, the follow considerations are relevant.

1 The average stays in college less than 3 years. 2 Add 30 percent of $9,750 to $9,750.

assume 3 years.

First, incomes will rise as productivity increases, and even more as inflaon continues. That means for a 40-year loan the costs of payments relative income would probably decline by 50 percent relatively to income. I assume at payments would be made over 40 years and, hence, apply the income of the iddle year-that is, the 20th year-and that in these 20 years gross national oduct would rise by less than 80 percent (3 percent per year compounded, 3 compared to 42 percent in the years 1946 to 1956) and prices rise but 1 pernt per year and, hence, gross national product would rise by 100 percent, the average, over these 40 years. Hence, the relative burden of a payment ould be reduced by 50 percent. For a 20-year loan, the average relief should about 30 percent, even with a minimum of inflation.

Second, even this does not exhaust the relief. On the assumption that the bligation to repay would be a moral one, the debtor would receive relief of erhaps one-third (marginal rate) through deductions from gross income eported for taxes.

But there should be a small offset. We might inflate the costs by 10 percent 1 order to cover administrative costs and defaults or deaths. (An insurance olicy might also cover deaths.)

The burden might be reduced for those with low incomes through an assessment on the basis of a percentage of income with a ceiling for very high incomes. hus, possibly 1 to 2 percent of income might be the overall charge, though the amount would vary with years to maturity and rates of interest charged on

oans.

It is possible to reduce the burden by giving borrowers alternatives in making he payments. For example, no payments while at college and graduate schools, maller percentages generally in the first 10 years out of college and largest in the 10 to 20 and 30 to 40 year period. (The 20 to 30 year out period is likely o be a troublesome one because children are at college-though a program of this sort would help the parents at this time.)

It remains only to discuss the Government's contribution. Government is now experiencing great pressures to provide scholarships or various tax aids. A scholarship to the top 20 percent of $750 would cost about $450 million annually now and $900 million 10 years from now. A large proportion of the recipients would have gone to college in any case and to that extent the program would be wasteful.

An alternative proposal is to finance about 100,000 students each year who fail to go to college but would if economic resources were available. The costs for all four classes would be about $400 million (at $1,000 per student) and $800 million in 10 years. And it is not clear how it would be possible to finance these students without helping other students equally able and impecunious who somehow get to college and graduate.

Tax credits and increased exemptions are also costly and wasteful because they are made irrespective of need. A tax credit of $500 would cost a maximum of $1.5 billion today (less since a substantial proportion would not pay taxes of $500).

An additional tax exemption of $600 per student would be less costly-perhaps $300 million per year now. But a tax exemption yielding as much relief as a 8500 tax credit would be much more costly. Furthermore, both tax credits and special tax exemptions are unfair, since they discriminate against those not paying income taxes or paying little.

Hence the least costly program for the Government would be a guaranty of college loans-this would reduce rates, as under housing mortgages.

In the last 6 years, Government loans and guaranties rose by $46 billion, or $7.6 billion annually, with the major rise in guaranties. There are about $85 billion in loans and guaranties outstanding (estimated for June 1958). The Government could guarantee college loans or provide direct financing with little cost. It could even lend below cost of raising the money and save money compared to the alternative programs being pushed. Even a bounty of 1 percent on the interest charged would cost the Government only $10 million a year on loans of $1 billion. College loans could then be had at 2 to 3 percent net.

In summary, the financing techniques of higher education could be greatly improved. The most promising approach is through loan finance. With the Spreading of costs over time, the burden for the student would be greatly reduced, both because of the reduced costs per year and because of rising income in the future; the financial gains to IHL would be great because higher charges

could thus be carried; and insofar as Government help is needed, loans? guaranties would be the most economical approach.

APPENDIX

Costs per $1,000 (amortization and interest)

2 percent. 3 percent. 31⁄2 percent. 4 percent.. 41⁄2 percent.. 5 percent..

57.80 50.00

I have asked for a few minutes of your time because I feel that your commitfee has an historic opportunity to improve the effectiveness of education in our country.

As a parent, a businessman, and a citizen I am well aware that we face a problem in education. From every side we are presented with statistics as to our growing school population, the need for more schools, more classrooms and brore teachers. The facts are inescapable. Much needs to be done and, I believe, much is being done.

Vot so widely publicized, but of equal import, I believe, is the problem which faces our teachers and school administrators and our students as well. As our & bool population has grown, the body of knowledge which each student must or should absorb has grown even faster. Think of the discoveries, the breakthrough in scientific knowledge since you and I attended elementary and secondary scbools. Gigantic steps forward have been made in the physical sciences and our present store of knowledge is being increased every day.

Much has been said about getting back to the basic study of the liberal arts and sciences, of eliminating some of the frills from education to leave time for real learning. But seldom have we stopped to think how tremendously much more there is for the youngsters of today to learn. Even eliminating the frills, does not leave time for the absorption of all this knowledge unless we find a way to assist the process.

I think this can be accomplished by making available to education for wide and immediate use the great wealth of modern teaching tools and materials which our society has developed as our communications skills and techniques bave progressed.

It seems to me that this can be done without any of the complications involved in building a new educational system, or even in altering the present structure. Items to me that this is an area where Federal assistance on a matching basis ran best be applied, with the widest possible application and the least possible saste motion, to affect at once those key areas of education with which all of us are presently concerned—the natural sciences, physical and social, and the bumanities.

My own interest in education motion pictures goes back to 1937 when I was a student at the University of Chicago. Along with an entire class I was struggling to absorb the complexities of the nervous system of the human body. The corse was taught by a brilliant physiologist, Dr. Anton J. Carlson, The words red were words we could detine. Yet our grasp of the subject was anything but secure until one day the class was shown a sound motion picture of the nervous system. As a result of a 20-minute film, what had taken thousands of words to describe and weeks of classrooin time, became crystal clear. We saw, heard, understood-experienced. It was this experience that intensified my interest in seeking a position in the educational department of Bell & Howell Co., 20 years ago. My interest in education has continued as a trustee of the University of Chicago and as a director of the Fund for Adult Education of the Ford Foundation.

For a long time I wondered at the small extent to which these modern tools were applied in education, where their values were first proved and where the basic techniques were formulated and researched. I knew from contacts with educators that a large majority were enthusiastic about what could be accomplished with audiovisual aids. By audiovisual aids I mean sound motion pictures, filmstrips, slides, tape recordings, and other similar materials.

But many educators who have sought to use these modern tools have found themselves handicapped by lack of equipment and materials. They have found that nearly every available educational dollar has had to go to build more classrooms and pay additional teachers.

That is because in America we are committed to universal education, not merely ont of sentimental, humanitarian concern for mankind, nor even from general, abstract democratie principles, but because we as a people believe that America's best hopes depend upon her human rather than natural resources.

To strengthen our human resources, to make the most of our greatest assets, the youth of America, we need the kind of educational experience that will increase the use of human intelligence. We need the fullest possible development of the capacity to think, to reflect, to weigh and judge, to make choices among alternatives, and to foresee the results of these choices. This is the modern mind we need--the mind of the scientist, the key executive, the mathematician.

Recent international events have emphasized this point more strong (2 can any words of mine. The eerie sounds and signals reaching earthword! the satellites can be heard quite clearly within any circle discussing ed Our future as a nation, I believe, depends upon what action we take to are plish these educational goals.

I believe that this is what critics of education today have in mind when * cite "soft" courses, point to "poorly prepared" teachers, demand “minds t for the scientific era," and "self-disciplined students."

What they are really seeking cannot be accomplished by increasit; difficulties of the process of education; it can be done by giving teachers students the basic materials and tools they need for the kind of education must have.

Perhaps the biggest educational job the world has ever witnessed was teaching and training of the American Armed Forces immediately prior to during the course of World War II. For a period of 3 years I was involved it! program as a naval gunnery officer in charge of three naval districts for advanced base aviation training units. The subject matter to be covered vast, time of the essence, and competent, trained teachers few and far betwe Our only answer was to place modern teaching tools at their disposal to ta mize the effectiveness of the teachers we had. No less an authority than George Marshall indicated that without audiovisual equipment the training could not have been done. If I recall correctly, his actual figures were that it many cases retention of learning was increased 60 percent and teaching t halved with the use of motion pictures.

Audiovisual aids do pay off. In business when we want a job done, we le start by making it harder to do the job, or harder to learn to do it. Inse we provide the best machines and tools we can to help the worker get max productivity and we use the best teaching tools we can find to teach him. W teach through the eye and ear, through carefully, skillfully used repetition at drill; we let him use his hands and eyes and brain, to feel and see the effects what he is doing. We give the learner every possible chance to learn th every channel we can find.

It pays off*** not only in increased learning in less time, but in higher duction sustained throughout a complex operation. That is why industry at business rely on audiovisual materials and equipment; they work.

It has always seemed unfortunate to me that almost 70 percent of all auf visual materials and equipment are purchased by industry and business, wh education, where they are most urgently needed and can make their greatest i tribution to our national welfare, has been able to afford only a limited use “ these teaching tools.

There is little disagreement on the need for aiding education in some brow and efficient way. Our present shortage of teachers, especially in the sciel and mathematics, merely emphasizes the coming crisis if our educational sysie. fails us.

Our American technological development puts a high premium on eduste human intelligence, and creates an enormous demand for people capable of their intelligence.

Far from encouraging intellectual conformity, our developing needs demar men and women who can and will think for themselves. This is no phenot of the postwar boom, but a long-range, growing and expanding fundamental t coupled tightly to the future of America.

Action now is needed. This committee has before it a bill, H. R. 10381, cited as the National Defense Education Act of 1958.

I am specifically confining my testimony only to title V of the bill which consti the acquisition of science teaching facilities and title X for research int more effective utilization of television, radio, motion pictures, and related ums for educational purposes.

Good as it is, I believe title V can be strengthened and broadened by sp inclusion of audiovisual equipment and materials in the definition of 3* teaching facilities which appears in section 103 (e) of title I. I would like suggest that this be accomplished by changing the wording of this definition read: "The term 'Science teaching facilities' means specialized equipment ** instructional materials (including audiovisual materials and equipment, 6 printed materials other than textbooks), suitable for use in providing educate in science, mathematics, engineering or modern foreign languages." (Ch8749/ wording italicized.]