Secretary WEINBERGER. As of January 30, cumulative defaults totaled $80 million. Of this amount, $57 million is for loans directly insured by the Federal Government and the balance of $23 million is for loans insured by the State and private agencies and reinsured by the Federal Government.

Mr. CONTE. Last year you stated that the default rate for student loans had risen from about 5 to 8 percent. This year the rate is 18 percent, and apparently rising. What is being done to lower the default rate?

You stated last year that efforts were made to increase collections on defaulted student loans. Has any effort been made to prevent defaults? Secretary WEINBERGER. We have three major efforts underway to reduce the default rate and prevent defaults. First of all, we published regulations in final form on February 20, which provide procedures for limiting, suspending, or terminating schools and lenders which have. high default rates or otherwise abuse the program. They also include standards for refund policies so that students are protected if they do not complete a course or the school fails on its part. The failure of schools to provide refunds, when due, has led many students to feel cheated and to go into default. Second, we transmitted a legislative proposal to Congress on February 27-two major provisions of which would prohibit proprietary schools from being school lenders and which exclude student loans from bankruptcy for 5 years after leaving school. Third, we have significantly increased our collection activities. and we believe this is having a deterrent effect on future defaults. To further our efforts in this area we are requesting an increase of 117 positions.

Mr. CONTE. Has the Office of Education completed a profile on student loan defaulters? Does this give any clue as to how best to prevent defaults?

Secretary WEINBERGER. Yes; the Office of Education has done some work here and it appears from the data that the most significant factor influencing defaults is the type of institution attended. The sample showed that over 75 percent of the defaults in the Federal program were generated by students attending specialized and vocational schools. As I have already mentioned, we have regulations in effect to limit, suspend, or terminate schools which abuse the program. We have also requested authority to eliminate schools as lenders.

PRIVATE EDUCATION

Mr. CONTE. Private educational institutions across the country are in serious financial trouble. Yet again this year you recommend a lower priority for institutional aid. How do you propose to prevent a rash of closings of private educational institutions?

Secretary WEINBERGER. I don't believe that Federal aid, per se, is the answer to the financial troubles of educational institutions, either private or public. Furthermore, the institutional aid programs which HEW has funded do not address school financial problems.

I should also like to point out that one of the major problems causing financial difficulty is the fact that enrollment is down and the school budgets are still geared to the enrollment levels that existed.

several years ago when the postwar baby boom hit the colleges. Our basic opportunity grants program is a major effort directed toward recruiting new students to college.

OVERHEAD IN EDUCATION PROGRAMS

Mr. CONTE. The administration has maintained in the past that individual education assistance should be stressed over institutional aid because of the amount of overhead associated with institutional aid. What is the overhead associated with the individual assistance programs, including the amount lost due to student loan defaults? How does this compare with the overhead for institutional aid?

Secretary WEINBERGER. I think there is some confusion over the use of the term overhead. We have never advanced the argument that student aid is preferable to institutional aid because of the amount of overhead associated with institutional aid. Our point is that student aid has an advantage over institutional aid because it allows the student greater choice in pursuing the type of education that best suits his need.

STUDENT AID PROGRAMS

Mr. CONTE. Does the basic educational opportunity grant program still require individuals to provide a copy of their tax return at the time the application is made? What other alternatives for determining assets could be used?

Secretary WEINBERGER. The basic educational opportunity grant program has never required that the income tax return be submitted with the application. The Office of Education has asked that certain figures be extracted from certain lines on the income tax form to assure uniformity in the answers to these questions. No information is requested from the income tax return concerning assets. Applicants are asked to list the market value of such assets as land and houses. Mr. CONTE. What is the maximum amount of education assistance available to a student under the various Federal programs.

Secretary WEINBERGER. It is possible for a student to receive Federal assistance for the total cost of his education through a combination of Federal educational assistance programs. However, assistance is limited to the actual amount of money needed to complete the educational program. For example, a student may receive a basic educational opportunity grant for up to one-half the cost of his educational program and a guaranteed student loan for the remainder; or he may earn money under the work-study program, receive a basic grant, and receive a federally supported State scholarship, supplemental grant, or direct loan.

Mr. CONTE. Why is the administration again seeking to reduce funding for the work-study program?

Secretary WEINBERGER. We are seeking $250 million for that program. There is a reduction in that activity from the 1976 appropriation, but it is more than made up by nearly $400 million in increase in the basic opportunity grants program.

REVENUE SHARING

Mr. CONTE. Testimony before this subcommittee last year indicated that State and local governments had used approximately 24 percent

of their general revenue sharing moneys for education. Has this increased or decreased?

Secretary WEINBERGER. I believe that the use of general revenue sharing funds for education has remained approximately the same. As I recall, Treasury's last report showed a figure of about 22 percent.

BILINGUAL EDUCATION

Mr. CONTE. The Supreme Court in Lau v. Nichols mandates increased bilingual learning opportunities for children from families whose primary language is other than English. The fiscal year 1976 budget, however, recommends a decrease in budget authority for bilingual programs. Why isn't more of an effort being made to comply with the Court's decision?

Secretary WEINBERGER. First of all, compliance with that decision is a State and local responsibility. The bilingual education program administered by the Office of Education is essentially a demonstration and technical assistance program which is designed to help the States and school districts carry out their bilingual programs. And we are proposing $70 million in 1976, the same amount as in the President's revised 1975 request.

EDUCATION FOR THE HANDICAPPED

Mr. CONTE. There are indications that over 40 percent of the handicapped children in this country are not receiving the educational services they need to prepare themselves to take a place in society. The administration proposes no funding increase in programs to assist the handicapped for fiscal year 1974-76. Recent court decisions and State laws have required more effort be made to assist the handicapped. Why is this not given a higher priority at HEW?

Secretary WEINBERGER. It is a high priority and the 1976 budget requests increases totaling more than $25 million for teacher training, research, and demonstration programs designed to increase the capacity of State and local educational agencies to provide a high quality of service. The basic responsibility for providing the services, though, is a State and local one.

LIBRARIES

Mr. CONTE. You propose a substantial reduction in library assistance programs. Testimony before this subcommittee during consideration of the supplemental appropriations request last year indicated that 20 percent of the population are not served by a library. What efforts are being made to fill this need?

Secretary WEINBERGER. The figures I have heard are that well over 90 percent of the population has access to some form of public library service and we believe that the need for continued Federal support is no longer required. The statistics indicate to me that the Federal Government has been more than successful in acting as a catalyst for the extension of library services and that it is now up to the States and localities to continue the efforts. We view our role now as one of improving the utilization of libraries and achieving greater efficiency of operations through the sharing of library resources and other ways.

This is the thrust of the new library partnership legislation we have proposed.

VETERANS COST OF INSTRUCTION PROGRAM

Mr. CONTE. The administration is again proposing termination of the veterans cost of instruction program, saying "the high point of the need has passed." February's unemployment figures show that veterans aged 20 to 24 have an unemployment rate of 19.7 percent. The veterans cost of instruction program is designed to recruit veterans. Wouldn't continuation of this program remove some of the strain from the labor market?

Secretary WEINBERGER. We do not believe that the cost of instruction program needs to be continued in order to assure successful recruitment of veterans to college. In the first place it duplicates services provided by the Veterans' Administration and, second, it provides no financial aid to the veteran, and it is level of benefits received by him which determines whether he can go to college or not. With the recent rate increases, the Veterans' Administration educational benefits are a significant incentive to go on to college, especially if he is unemployed-I believe that the basic benefit is around $270 per month for the unmarried veteran. And if he is married he receives additional benefits. Furthermore, the veteran is also eligible for OE's student aid programs-basic opportunity grants, work study, and guaranteed loans.

COST REDUCTIONS

Mr. CONTE. The fiscal year 1976 HEW budget request, and your statement this morning, stress the need to bring Federal spending under control. You propose a ceiling of 5 percent on social security cost-of-living increases. It is becoming increasingly evident that the Congress will not go along with such a request, and I suspect this was realized when the budget was finalized. What is HEW recommending to reduce its own costs?

Secretary WEINBERGER. During fiscal year 1975 we made a special review of administrative expenses throughout the Department and are now in the process of implementing about a $100 million reduction in our operating expenses. This lowered base forms the starting point for our request for administrative expenses in 1976 and we will continue to explore ways of further economizing in our own operations.

Mr. CONTE. The fiscal year 1976 HEW budget would also place greater reliance upon State governments in financing various assistance programs. What indications do you have that the States are able to shoulder these added burdens?

Secretary WEINBERGER. Our proposal to have the States carry a larger share of the burden of public assistance and other programs is based on the perception that the States are in a relatively better financial condition than the Federal Government is. Although we recognize that States are facing serious problems, we believe that even within the budget constraints now faced by the States, the programs of cash and medical aid to the poor could receive a higher relative priority in making claims for State funding.

I would also note that the SSI programs permitted the States to shift to the Federal Government a large share of the financial burden

for providing welfare benefits to the aged and disabled. Finally the extra funds provided through general revenue sharing have permitted most States and localities to either reduce taxes or avoid imposing new taxes. These sources of revenue may now need to be tapped.

Mr. CONTE. What has been the effect of increased decentralization on HEW's overhead?

Secretary WEINBERGER. This is really a hard question to answer since we really haven't done much decentralization, because of congressional opposition to our plans. Where decentralization has occurred it has not had any significant impact on overhead.

Mr. CONTE. What savings do you anticipate from grant consolidation? How are these savings reflected in the fiscal year 1976 budget?

Secretary WEINBERGER. The savings would accrue to the States and show up as improved effectiveness in the programs aided by Federal dollars. We believe that the States will use the consolidation in education to develop an allocation of Federal aid which meets their needs more effectively than was possible under the categorical approach. We have not proposed any reduction in our budget because of this. We believe that the States should be able to take advantage of this flexibility without any fiscal penalty.

The consolidation will, however, reduce the administrative costs of the Office of Education. We proposed in the regular budget for 1975 a reduction of some 200 positions in the Office of Education related to consolidation proposals.

Mr. CONTE. In testimony before this subcommittee last year, you indicated concern over HEW staffing levels and stated that you were initiating a thorough review of HEW manpower allocations. Has this review been completed? What savings have been realized as a result of the review?

Secretary WEINBERGER. A system has been set up for the review of each agency's total staffing level over the next several years. We make periodic reports on our progress to the President. I believe that our review of the manpower requirements for the fiscal year 1976 budget were more systematic than in past budgets but we still have a long way to go to do the job the way it really should be done.

NATIONAL INSTITUTE OF EDUCATION

Mr. CONTE. To what extent does the National Institute of Education duplicate other research and development programs in education? Secretary WEINBERGER. Although the authorizing legislation is sufficiently broad so that there could be overlap between the Office of Education and the National Institute of Education, I do not think that there is any significant duplication in practice. NIE and OE have an understanding on what the proper division of labor should be. This kind of regular working relationship should minimize the problem of duplication.

Mr. CONTE. The fiscal year 1976 budget recommends cutbacks in many programs, yet proposes increases for educational R. & D. What is the rationale for limiting programs providing direct assistance to individuals and institutions while increasing research and development funding? Couldn't R. & D. wait until the economic picture brightens?