STATEMENT OF HON. DAVID R. OBEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN Mr. OBEY. Mr. Chairman, I appreciate your letting me get in quickly before I have to go to the HEW conference to deal with a subject we have dealt with for some time, namely abortion. In my opinion there are few programs in the Federal Government more likely to induce widespread acrimony throughout the country than will BEOG's if over the course of the next several years we do not effect significant changes in eligibility requirements. The Department of Labor has developed figures for this past year showing that a family of four with younger children requires an income of $10,000 to meet minimal standards of nutrition, housing, and other necessities. For what the Labor Department describes as a modest but adequate standard of living, $18,000 is required. If you were to consider older children, the cost would go up and there is nothing in these figures to allow for the cost of attending school. In many cases, the family living at or even below what the Labor Department lists as minimal standards would receive considerably less than the maximum grant under this program due to the family contribution schedule, and a great many families living on less than what the Labor Department describes as a modest but adequate income even before they start paying the cost of a college education receive nothing from the program at all to offset college expenses that range well over $3,000 a year. There are three basic inequities in the family contribution schedule which are responsible: First, income. Currently, HEW regulations assume that a family of four living on more than $5,900 should contribute 20 percent of any income they have over $5,900 to the cost of their child's education. The basic grant the child will receive is reduced by that amount. Second, personal assets. Ownership of a small home will, in many cases, preclude families from receiving any assistance at all under the program. The program reduces the grant of any child whose family has personal assets of more than $12,500, including equity in a home, by 5 percent of every dollar over $12,500. In one instance in my district, a deputy sheriff earning only $16,000 who has six children, learned that his eldest daughter who was to start to college this fall did not qualify for any funds under BEOG because the family had $30,000 equity in a home. I guess the rationale was that he should sell the house and move his wife and six children into an apartment so he could send his children to college. Third, small business and farm assets. Secretary Califano told the Appropriations Subcommittee on Labor-HEW that he felt the greatest inequity in the BEOG program was the manner in which it treated small business and farm assets. I agree. Under the current structure of the family contribution schedule, it is an unusual circumstance when the children of a farmer or a small businessman can qualify for any help under the basic opportunity grant program, regardless of whether or not the family had any income at all. BEOG's are reduced by $50 for every $1,000 in farm or business assets an individual has in excess of $25,000. That means there is no way a farmer with much more than 40 acres and a mule can get help even if his cash income is consistently below the poverty level. 97-379 O - 78 - 2 I believe that we should attack all of these problems and asked the Appropriations Committee for sufficient funds to do so. While the House included most of the funds that would have been needed, the Senate eliminated these funds in favor of increased spending in the field of health. In conference, we agreed on $2.160 billion for basic opportunity grants, or $90 million above the amount required for funding a $1,600 grant, according to administration estimates. It was the position of the Appropriation conferees that this money would at a minimum permit a doubling of the $25,000 offset for farms. and small businesses, the cost of which OE has estimated at $24 million, and using the remainder to increase the $12,500 offset for personal assets. OE estimates that the $66 million remaining could increase that offset to $17,000. As I see it, Mr. Chairman, I don't think I have to apologize for my position because I think my record clearly shows that I have done. everything possible over the years to assist the poorest of the poor in this country. But the fact is, no program can long survive if the middle class of this country perceives it to be a program that deals with a problem affecting most Americans but provides assistance only to the poor. I think if you compare what someone can get in the way of a maximum BEOG grant if they are on welfare and also be eligible for a supplemental grant or work study, and other assistance with the situation in which a couple finds themselves if they had their kids late in life, they are a few years away from retirement and maybe they have two kids just going into college. They are living on a modest income and the only things they want to do in life are put their last kid through college and retire. But they have paid off their home and because of that they find themselves ineligible for a grant which their children must have to attend school. That means just a few years away from retirement they have to get a lien on their house in order to put their kid through school. I don't think we can sustain that kind of program in this country and that is why I think it is critically important that this committee do whatever it can to insure that we do expand the eligibility standards and loosen up the income standards and make them reflect a little more realism. I don't think they do that now. I know that it is not the easiest thing in the world to deal with. I don't pretend to understand fully the BEOG program. I am certainly not familiar with, to the extent I would like to be, the independent student problem for instance but I would certainly hope the committee can do something along the lines that I have described here and I thank you for your time. Mr. FORD. Thank you very much, David, and we on this committee are grateful for the extra effort that you have put into getting money for the programs that this committee has responsibility for. I hope you will take a copy of Mr. Kornfeld's statement with you because it looks like on page 16 he has heard what you had to say. Mr. OBEY. I have seen it and I am happy about that. Mr. FORD. We are pleased to see it also and we are pleased that you were able to get the extra $90 million in the appropriation bill that will made it possible to expand the constituency. The point you make at the beginning of your statement about attempting to expand the constituency for the program is extremely important because I think you are correct when you assess the future of these programs and recognize that their political viability depends on having a broad base of people who perceive them as needed programs, needed from their perspective. If the BEOG program were allowed to be more remote from ordinary working people, I am afraid that I would not support either the program or people who supported the program and our chances for expanding access to colleges and universities would not be very great. I think your actions have been farsighted in the right direction. I believe you will find the majority of this committee is committed to supporting the initiatives that you have undertaken for us. Mr. OBEY. I know you have been, Mr. Chairman, and I just want to reiterate again that the kinds of people who are not being served by this program are the kind of people who feel that they work very hard and really have not relied on anybody through their lives. They don't rely on the Government very often and if the only time they go to the well is to get assistance when their kid goes to college and if they find when they go there the well is dry, they are going to come to believe that Government is neglecting them and concentrating exclusively on the needs of other people. Mr. BIAGGI. Thank you, Mr. Chairman. Thank you, David. You have expressed views that I have expressed for the past number of years and I am delighted to hear your testimony today and hopefully we will be able to have something substantial develop out of it. There is a large segment of our population that requires some assistance in order to further the kind of education we are talking about and they will be very sadly neglected, almost to a sacrificial point, and I don't think that is the intent of the Congress or of the Federal Government. We advocated pursuit of education but not at any price. I think you for your testimony. Mr. FORD. Mr. Preyer has been in contact with the subcommittee on several occasions regarding constituents of his who have been denied the basic grant fund to attend school. We are very pleased to have you. Without objection, the statement of Representative Richardson Preyer will be printed in full at this point in the record and you may proceed to add to it. [The statement of Representative Preyer follows:] Congress of the United States Washington, D.C. 20515 STATEMENT BY CONGRESSMAN RICHARDSON PREYER Mr. Chairman, I first want to thank you for the opportunity to testify at this hearing today. I know how crowded your schedule is, and I am extremely pleased that you are considering the range of issues associated with the BEOG Program. I am particularly concerned with the BEOG Program as it affects the independent student. My interest in this matter stems from the experiences of constituents who, though barely self-sufficient, have been denied the BEOG. I presume this has occurred on the premise that the majority of the income of independent students should be going towards their education. However, it seems to me that before one can consider education, he or she must account for the basics of survival, such as food, clothing, and shelter. Understandably, there is little money left over to support college costs, and as day-to-day costs continue to rise, self-sufficiency becomes more and more improbable. I have seen where this approach inadvertently discriminates against many independents. There is a young woman from my district who applied for a BEOG, claiming no dependency relationship, as she is an orphan. Her claimed income was $2,592, based on income received from Social Security and Veterans Benefits. She lives with an aunt and uncle during the week, and with a sister on weekends. Lamentably, her eligibility index enabled her to receive only $226. Another young woman from my district is in a similar bind. Raised by adoptive parents, her adoptive mother died while she was in high school. She has had to quit college on at least three occasions since graduation from high school for lack of funds. She even qualified for a BEOG one year, but the grant was rescinded the next year because her eligibility index was too high. A third woman, who represents a more common situation, has been denied eligibility despite an adjusted gross income of only $3,528. Obviously, my sympathy is directed to the orphan and others who are circumstantial victims of bad luck. But the problem runs deeper than that, because many independent students are merely living on their own trying to make ends meet, with no particular disadvantage other than financial insecurity. I can understand the reluctance of this Subcommittee and of HEW to offer a "carte blanche" to independent students who have gained their independent status for potentially abusive reasons. Certainly, I do not think our tax dollars should be providing grants to children of wealthy parents who claim independence to save their parents from paying for their college education. However, there are legitimate cases which warrant our attention. A hypothetical 23 year old man who has been helping his father at the local market for four years and is now living alone, should be entitled to federal help in the form of a grant to pursue his education. To deny him this opportunity is, in essence, to deny him an education. I want to make it clear at this point that my argument is philisophical in nature, and it is not founded on any expertise in the |