Hon. J. W. FULBRIGHT, SPRINGFIELD COLLEGE, Springfield, Mass., May 12, 1955. Senate Office Building, Washington, D. C. DEAR SENATOR FULBRIGHT: I have just read your statement in the Senate on Wednesday, April 20 in which you introduced amendments to the Housing Act of 1950 relating to housing for educational institutions. These amendments represent in my view a very sound and important approach to a very serious problem which confronts this Nation, namely, the need for aggressive action to cope with the vast increase of students who will be pounding at the doors of our colleges and universities in the immediate years to come. Perhaps you will be interested in my viows on this subject as expressed to Mr. Albert Cole, Administrator, Housing and Home Finance Agency, in a letter commenting on the recommendations of the Hoover Commission that the college housing program be terminated. Enclosed is a copy. Appreciating your interest and statesmanlike handling of this important subject, I am, Yours sincerely, Mr. ALBERT COLE, DONALD C. STONE, President. MARCH 30, 1955. Administrator, Housing and Home Finance Agency, Washington, D. C. DEAR MR. COLE: I note that the Hoover Commission on organization of the executive branch of the Government has recommended that the college housing program be terminated on the ground that it is no longer needed. This is non sense. With the impending vast increase in the number of students endeavoring to enter colleges, not only is this program imperative but it needs to be liberalized in order that the great contribution of the private colleges in American education may continue. Unless private colleges find ways in which to expand plant, we will see a great shift in the proportion of American youth who receive all of their education in governmental institutions. As a bureaucrat of many years standing, I am thoroughly sympathetic with the role of Government in education, but there are many values which can only be propagated in the private college. Housing projects at State institutions which can borrow with the full faith and credit of the State behind them, can be carried on at a much lower cost than those of private institutions. It is at this point that I feel that Government can be of great assistance to education, without raising any of the questions of control of educational programs. At the present time the college housing program is, as I would estimate, almost entirely self-financing. If the Government would provide a small subsidy so that interest rates could be set at sometime like 212 percent, we would have here a tremendous boon to education in this country with actually a very small outlay in terms of public support. We could make housing programs at 22 percent practically self-supporting, but we cannot do so at the present interest rate. The college housing program is an excellent one and is in the public interest of the people of the United States. It should be continued. Yours sincerely, Hon. GORDON ALLOTT, DONALD C. STONE, President. GREELEY, COLO., April 23, 1955. United States Senate, Washington, D. C.: Colorado State College of Education particularly is interested in the new provisions of Senate bill 1744 introduced by Senator Fulbright. Three aspects we believe will greatly improve the ability of the colleges to ready their selffinancing plants for enrollment expansion underway: (1) The provision for a ceiling interest rate on college program HHFA loans of 234 percent; (2) permission to include into the costs of dormitory structures and its debt service financing movable unattached furnishings; (3) the privilege of constructing justified ancillary food service and maintenance facilities under the HHFA loan program coextensive with new dormitory construction to round out optimum sized residence halls plants. The above features are specially important and will increase the practicability of building immediately for existent demand and pressures to be met within 3 years. GLENN C. TURNER, LORETTO HEIGHTS COLLEGE, Hon. EUGENE D. MILLIKIN and Hon. GORDON ALLOTT, DEAR SENATOR ALLOTT: We are informed that the Fullbright bill, No. 1744, will be introduced to reduce interest rates on housing loans to 2.75 percent. We also understand that there is an amendment to the original bill providing for furnishings and equipment. We should like to add the name of our college to the list of other colleges in support of such a bill. Our best wishes to you and the promise of our prayers for the great work you are doing. Very sincerely yours, Sister FRANCES MARIE, President. BREMERTON, WASH., May 9, 1955. Senator WARREN G. MAGNUSON, Senate Office Building, Washington, D. C.: (Attention: Irvin Hoff.) Would appreciate presentation of following statement before Senator Sparkman's committee holding hearing on S. 1766 the Northwest and Washington Association of Community Junior Colleges urge attention to the growing responsibilities of the Nation's community junior colleges in meeting the impending tremendous increase in college age persons. Every competent educator emphasizes development of community junior colleges as economical methods of meeting needs of Nation's undergraduate students. Recognition by all Federal agencies of the needs of community junior colleges and their merited eligibility for any Federal assistance to higher education is essential. Particular attention to assistance in student housing is necessary. Many community junior colleges organized as part of local public-school systems unable to qualify for Federal dormitory loan assistance, under title IV due to limited powers of local board. S. 1766 designed to remove inequities in Federal aid among junior colleges. Amendment would permit educational corporation delegated by college to undertake dormitory construction to qualify for Federal loan assistance in same manner as other colleges qualified for Federal dormitory loans through original enabling powers. A high proportion of newer community junior colleges serving large areas needs Federal loan assistance in dormitory construction but are unable to qualify under present college section of title IV. We earnestly solicit passage of S. 1766. L. J. ELIAS, Past President of Northwest Association of Junior Colleges and Senator FULBRIGHT. The first witness this morning is Dr. Raymond C. Magrath, vice president of Tufts University, Medford, Mass. Dr. Magrath, will you come forward, please, sir. I may say that on Monday morning many of the Senators are delayed by accumulated mail, and so on, but I think we had better proceed in the hope that they will come in. At this time of the year, between constituents and correspondence, it is very difficult for Senators to do anything else. You may proceed, Dr. Magrath. College housing STATEMENT OF RAYMOND C. MAGRATH, ON BEHALF OF AMERICAN COUNCIL ON EDUCATION Dr. MAGRATH. I am Raymond C. Magrath, comptroller of Tufts University. I am appearing on behalf of the American Council on Education to present the views of the council's committee on relationships of higher education to the Federal Government. Membership of the council includes 142 educational organizations and 954 educational institutions, including nearly all the accredited colleges and universities in the United States. Members of the committee on relationships are listed in an attachment to this statement. I would like to submit it as part of the testimony. Senator FULBRIGHT. That will be all right. Dr. MAGRATH. The American Council on Education, in cooperation with several other educational organizations represented here today, participated in the formulation of the college housing loan program and its presentation to the Congress in 1949. Certain principles were established then which the council and these other organizations believe should be continued. (1) The college housing loan program was conceived as a bona fide and essential part of the Federal Government's program to encourage the provision of low-cost housing. (2) The objective was and is to assist in the construction of housing: and feeding facilities that will provide accommodations at rates which students and faculty members can afford to pay. (3) Since the need for college housing, even in 1949, was much greater than the amount recommended for the Federal loan program, provision was made that no Federal loan should be made if private financing could be secured that would meet the need. This is still a sound principle, and should be retained. (4) The program was so planned that there would be no ultimate cost to the taxpayer. It was never contemplated and is not now desired that a Federal subsidy to higher education should be involved. The council's committee on relationships of higher education to the Federal Government has carefully studied S. 1744 in the light of these principles. On behalf of that committee, I present the following conclusions and recommendations. (A) S. 1744 would permit loans to be made for college and university facilities outside the general scope of housing. We agree with Administrator Cole that this program should continue to be restricted to housing and other service buildings and facilities essential for housing and feeding students and faculty. Specific recommendations for amending S. 1744 to meet this objective are contained in an appendix to this statement. These recommendations include only minor modifications of provisions of existing law to meet special conditions, such as that in which it is more economical for an institution to feed students in a portion of a union building than in a portion of a dormitory. (B) There has been a confusion, in some of the testimony presented to this Committee, of two separate concepts: (1) the need for housing facilities and (2) the volume of applications for Federal housing loans under existing conditions. The need for college housing, present and future, has been estimated as high as $6 billion. No college or university can contemplate the actual construction of a dormitory, however, unless it is certain that when completed the rooms can be rented at a rate that will assure substantially full occupancy. That is the controlling factor in the demand for loans from any source, governmental or private. Hence, the rate of interest charged and the length of the period of amortization have a critical effect, not on the need for housing but on the acceptability of loans for the purpose of providing it. If the conditions imposed under the college housing loan program are such that applications for loans fall off, the effect is not to increase the market for private investors offering loans on the same terms. On the contrary, the effect is to force the colleges to postpone any action until they can secure direct subsidies, either through private gifts or public appropriations. In the judgment of the committee on relationships, the provisions in S. 1744 regarding the method of setting the interest rate to the colleges have the right objective, since they would keep the rate low and therefore make the loans usable by many additional institutions. In some instances it may also be essential to extend the amortization period to 50 years, as authorized in this bill, for the same reason. Perhaps the most important advantage of the new method of setting the rate, however, is that it repeals section 24 (b) of Public Law 94 of the 83d Congress, which removed any upper limit on the rate which the Administrator, at his own discretion, might establish. That provision obviously gave the Administrator the power, if he chose to exercise it, to nullify the will of Congress simply by setting the rate so high that no institution could use a loan. (C) There is no desire on the part of the council, or of any other educational organization, so far as we know, to eliminate private financing of college housing. We have seen no conclusive evidence that the formula provided in S. 1744 would set a rate of interest so low as to prevent participation of private investors. We reemphasize the fact that if the interest rate of the Federal program is so high as to deter the great majority of colleges from using it, and if private investors adopt the same rate, the entire loan market for college housing is curtailed. The Federal program to date has expanded the operations of private investors in several ways. As Administrator Cole has testified, private investors have been permitted to purchase short-term portions of Government-approved long-term loans. The Agency has also incurred the expense of helping numerous institutions to prepare satisfactory proposals, after which private investors have agreed to undertake the financing. (D) We believe that the program can be operated, on a margin of one-fourth of 1 percent, in such a way as not to call for any Federal subsidy to the institutions receiving loans. Obviously, the amount of money available for administration is dependent on the total amount loaned. As originally enacted in 1950, the college housing loan program would have offered a total of $300 million to colleges and universities at a rate predetermined to be acceptable. This volume of business would have been ample to provide for administrative expenses. The volume has been restricted by two factors: Reluctance of the Bureau of the Budget to release the funds, and an increasing interest rate which has made the loans progressively less attractive. Recent management practices in the Federal Housing and Home Finance Agency have also set aside substantial sums as reserves for contingencies which experience indicates will probably never arise. Senator DOUGLAS. May I ask the witness a question? Senator FULBRIGHT. Yes. The Senator from Illinois. Senator DOUGLAS. Mr. Magrath, I wonder if you would develop these last points a little bit more fully, because there is obviously a great deal behind these sentences. You say the volume of loans has been restricted by reluctance of the Bureau of the Budget to release the funds, by an increase in interest rate, and by recent management practices of the Federal Housing and Home Finance Agency. I wonder if you would describe those. Dr. MAGRATH. I wonder if I may suggest that someone else has the details which he will present at a later time. I should like to make my statement just as a general statement and then have the other phases developed by others present. Senator FULBRIGHT. Who will develop that? We believe, therefore, that if an adequate amount of money is made available at a reasonable rate under reasonable administrative procedures, the margin provided for administrative expenses in S. 1744 will be ample to protect the Federal Government against any need for subsidy. It is in this connection that the provision in this bill to increase the authorization to $500 million is of special significance. The additional funds will, of course, be needed in time, if loaned at acceptable rates; but approval of this increased authorization will also serve notice on the Bureau of the Budget and the FHHFA now that the Congress desires this program not only to be effective but also to be conducted on a larger scale. In summary, then, the American Council on Education continues its firm support of all the basic principles on which the college housing loan program was originally established, and believes that with minor modifications S. 1744 will reaffirm and strengthen those principles in future practice. RECOMMENDED CHANGES IN S. 1744 On page 1, change lines 6 and 7 to read— providing housing and other service buildings and facilities essential for housing or feeding their students and faculty the Administrator may make loans of. Senator FULBRIGHT. Is it the intention simply to eliminate student unions that are not involved in feeding? Dr. MAGRATH. The intention was to provide for just dormitories and feeding facilities, the feeding facilities that are part of the student union building, but not to provide for buildings other than housing and feeding of students and faculty. Senator DOUGLAS. Not to provide for recreational halls? Senator FULBRIGHT. The difficulty would be that many unions provide for both. Practically every one I have ever seen provides for both, that is, eating and living and recreation using the same building. Dr. MAGRATH. This is for housing and feeding. I recognize that there will always be the problem of differentiating between housing and feeding and other services. Senator FULBRIGHT. I approve of your intention. It is quite all right with me. I do not wish to insist on it, but it is rather difficult to find a line to draw in many cases. Dr. MAGRATH. I agree. Also on page 2, change line 11 to read, "and service buildings and facilities may, in connection therewith". Also on page 2, change line 14 to read, "made for any housing and service buildings and facilities, the”. |