Dr. Solterer, do you feel that the objective of the Government is to make money, or is it simply to furnish this financing at cost, and anything above the average cost represents profit to the Government? Is that correct?

Dr. SOLTERER. Yes, Senator.

Senator FULBRIGHT. Are you familiar with the statement made by Albert M. Cole? He said:

On the basis of our experience so far, we believe that the smaller margin of one-fourth percent would be inadequate, at least during the early years of the program, when administrative expenses are high in relation to income.

Mr. SOLTERER. I am familiar with that.

Senator FULBRIGHT. What about that?

Mr. SOLTERER. Mr. Cole considered only the point of the immediate cost to him or to the Government in that respect, without considering the advantages which would accrue to the same Government because of the consequences that follow from that loan. This is my chief point here. The costs that he is speaking of are the costs that appear to the Administrator at this particular point of time. What the cost to the Administrator is is not independent of the lending operations. Do I make myself clear, Senator?

Senator FULBRIGHT. Not entirely.

Mr. SOLTERER. Of course, the cost that appears to anyone is set by the immediate market situation. It is, of course, not independent of these acts.

Senator FULBRIGHT. But it is here nowhere in the aggregate costs, only written off the bonds, is that what you mean?

Mr. SOLTERER. Yes, sir.

Senator FULBRIGHT. He doesn't agree then that the real cost of the Government is the average cost. He is taking the cost of whatever the particular bond is?

Mr. SOLTERER. Of the particular bond.

Senator FULBRIGHT. Is that where you disagree?

Mr. SOLTERER. Yes, sir.

Senator FULBRIGHT. Is this one-quarter of a cent he is talking about, is he applying that only to his administrative cost?

Mr. SOLTERER. Yes.

Senator FULBRIGHT. He is saying that one-quarter of one percent does not include any administrative cost, is that right?

Mr. SOLTERER. That is it.

Senator FULBRIGHT. Anything further?

You had some figures there, more extensive than we developed. I wonder if you would reveal if they would be beneficial in certain effect for the information of the committee? If you have them there, I would like to have them even though we have not been able to explore all of them.

Father COLLINS. Right.

Senator FULBRIGHT. Do they illustrate some of these items about cost and effect?

Father COLLINS. Yes. It is the summary presentation of the program of the HHFA.

From all of the money available-it is $300 million-$165 million that has been taken out has been applied for. The Hoover Commission going over probably similar statistics as these made the conclusion that there is no need for it.

My answer is the need is great but the rate is too high and that is why they won't take it out.

Senator FULBRIGHT. If they put the interest at 5 percent, there would be no need for $165 million, would there?

Father COLLINS. That is it exactly.

Senator FULBRIGHT. That solves a lot of it.

They put the rate of

interest up on loans for agriculture at 5 percent and the need is fierce.

Father COLLINS. Precisely.

Senator FULBRIGHT. That is a good way to sum up the need.

Thank you very much.

The next witness, I believe, is George F. Baughman, vice president for Business Affairs, University of Florida.

Mr. Baughman, will you come forward.

Mr. Baughman, I believe you have a very thorough prepared statement. Do you think you could put that in the record and then give us a summary of it?

College housing

STATEMENT OF GEORGE F. BAUGHMAN, ON BEHALF OF THE ASSOCIATION FOR HIGHER EDUCATION

Mr. BAUGHMAN. That is exactly what I intend to do, sir. Senator FULBRIGHT. Fine, sir. The full statement will go into the record at the end of your remarks.

You may proceed, Mr. Baughman. Very glad to have you.

Mr. BAUGHMAN. Good morning. I am Mr. Baughman, vice president of the University of Florida. I have just returned from a 6-month educational survey for the Carnegie Corp. which covered 25,000 miles where I studied a cross section of institutions in our country in 42 States.

It is a privilege for me to speak in favor of Senate bill 1744 on behalf of the Association for Higher Education, a department of the National Education Association of the United States.

The Association for Higher Education is an association of individuals engaged full-time in college and university work, and it has approximately 17,000 members in over 1,500 colleges and universities, and it is composed of the administrative offices and faculty and personnel, professional people in every field.

The 10th Annual National Conference on Higher Education sponsored by the Association for Higher Education, meeting in Chicago in March of this year, passed resolutions calling upon the Congress to enact legislation similar to that embodied in S. 1744.

Senator Fulbright inserted in the Congressional Record a copy of the conference resolutions as subsequently approved by the executive committee of the association at the time of his introduction of S. 1744 on April 20.

The ninth annual conference also passed a similar resolution.

At this point, I would like to indicate that the executive committee has voted to support the changes in S. 1744 as submitted by the American Council on Education.

A very significant statement is that of the president, John A. Perkins, of the University of Delaware:

It has been estimated that in the next 15 years as much floorspace will have to be provided for higher education as was built in the 300 previous years of collegiate history.

That is the problem we are facing today.

Unfortunately, this unprecedented need for facilities comes at a period of hard times for many of our institutions. Information has already been given to you on the economic report of the President, but supplemental data on that goes on to estimate that an average of $11⁄4 billion a year will be required for 10 years to work off the collegiate construction backlog and to provide the additional facilities required for the current growth of enrollment.

Many institutions, both public and private, did little building during the thirties and forties because of the depression and World War II. Now the collegiate enrollment for this academic year is estimated by the United States Office of Education to be 2,750,000, the all-time high, surpassing that of the crest of the GI bulge; and the students now in college were born at a time when the birth rate was at an all-time low. Obviously a greater percentage of our youth are attending college than ever before.

In 1900 less than 4 percent of youth of college age, 18 through 21, attended college. At present 30 percent are in attendance.

The number of births in the United States in 1954 was almost exactly double that of 21 years ago. The number of births over deaths last year resulted in a net population increase of more than 212 million.

The children are already born. We can plan now specifically for the added numbers who will come, and know the year they will come, which is so different than what it was after World War II. We can look forward to more than 4 to 5 million students by 1970.

It is of the utmost importance that the limited capital improvement resources available to our institutions of higher learning be channeled and used primarily for essential expansion of educational and general facilities and relieving the need for expanded auxiliary service, particularly residences and feeding facilities by means of substantial self-liquidation of bonded indebtedness.

The financing of dormitories and residence halls has been revolutionized since the war and expanded since the war. Partial responsibility for this revolution has been the college housing loan program. Congress responded to the urgent request of the educators and their associations by passing what is known as title IV of the Housing Act of 1950. You gentlemen are familiar with that act in considerable detail.

The Housing and Home Finance Agency in answer to a recent request from the Association for Higher Education replied that the total amount of $200 million released by the Bureau of the Budget for this program would all be obligated within the next 2 months. The statement is as follows:

As of April 30, 1955, the Housing and Home Finance Agency had received 424 applications, totaling $287 million; 191 of these applications have been approved, totaling $153 million; 20 of those approved, amounting to $20 million, have been rescinded when private investors bid in the bonds. This leaves 171 current approved loans, amounting to $132.6 million. As of the same date HHFA had given preliminary approval and reservation of funds to 58 applications, totaling $32 million. Thus, including both approved applications and reservations of funds, HHFA's total commitments are $165 million out of the $200 million released by the Bureau of the Budget to date.

Including applications for which reservations of funds have been made, a total of 93 applications for $50 million are under active review.

Housing and Home Finance Agency advises that it expects unobligated $34 million to be committed by June 30 of this year, pointing out that $23 million in applications are in preparation by the State colleges of California alone. Based on request for applications received by its regional offices, it expects that about 150 applications will be filed during the next current year.

Now even with the 40-year maximum amortization and the current 3.25 percent interest rate provided under the college housing loan program, it is almost impossible to work out projects which are substantially self-liquidating from the moderate rentals which are economically feasible for college students today. Nearly every college housing loan program requires additional revenue and/or sponsor's contributions from other debt-free buildings, student fees, endowments, or other sources.

Senator DOUGLAS. Mr. Baughman, have you any estimate as to what the average rental has to be to carry on 314-percent interest rate and maximum 40-year amortization? In other words, are these tables of Senator Fulbright's approximately accurate?

Mr. BAUGHMAN. Yes, sir; I believe they would be approximately accurate. They are based on certain assumptions which might not be true.

Senator DOUGLAS. The 10-percent vacancy factor?

Mr. BAUGHMAN. That was 1 point, and also a $3,000 per person construction cost. Those are variables. In my own institution, we do not have a vacancy loss; we have such a long waiting list.

Senator DOUGLAS. Isn't it probable since the need is so great you wouldn't have vacancies?

Mr. BAUGHMAN. That is a vast probability.

A student who would be considered for a room pays his room rent in advance, and if he drops out during the year he does not receive a refund. So our vacancy is not a loss but really a 2-percent profit.

So, if you would adjust that 10 percent, that would make some adjustment in your own

Senator DOUGLAS. What about the $3,000 figure per bed?

Mr. BAUGHMAN. That, of course, depends on the areas and college circumstances. We have just finished a college housing loan program, developing a most attractive and functional dormitory for that cost. Senator DOUGLAS. Do your architects check

Mr. BAUGHMAN. Very much so. As a matter of fact, our architects were responsible for some of the savings that were effected. It depends on their philosophy of construction on the campus.

Senator FULBRIGHT. If the Senator will yield, I think the record will show that in Florida there is a considerable difference of cost. The record ought to show that you are speaking about the University of Florida; aren't you?

Mr. BAUGHMAN. That is correct, sir.

Senator DOUGLAS. It would be done in stucco?

Mr. BAUGHMAN. No, sir. It is brick, fire-resistant construction. Senator FULBRIGHT. Florida is the fastest growing and most crowded community in the United States. It might not be considered normal with regard to vacancies, is that not so?

Mr. BAUGHMAN. You are correct, sir.

Senator DOUGLAS. Well, but presumably these grants will only be paid where the need is great. Therefore, when the percentage of vacancy would be low

Senator FULBRIGHT. The only point I wish to make is, those were calculated as average figures and not specifically for a rather unusual situation that Florida faces in many respects.

Senator DOUGLAS. I see.

Mr. BAUGHMAN. Another development for financing housing facilities which should be mentioned is the need for married student housing. Many of our students are now coming with their families, and that is a responsibility of education because they are in many instances our graduate students who are really the future in many of our fields of science. They are making a great contribution to our future.

To conclude some of my general remarks, I should like to point to one additional fact, and it is important to our need for assistance: There is general failure on the part of governing boards, administration, faculty, staff, the public, and our own Government to realize that the anticipated flood of new students bears little resemblance to the GI bulge which followed World War II. Fundamental and important differences must be recognized:

First, the increase following World War II was a bulge. The impact was immediate. Today, we may expect an ever-increasing trend upward from a relatively high plateau. To think in terms of temporary expedients is dangerous. This is not an all-at-once need but requires additional expansion each year as demands will increase continually.

Following World War II, many a State had a surplus in its treasury. During the war, while tax income continued to flow into the treasuries, opportunities for expenditure, particularly for capital improvements, were limited. Many institutions were in excellent shape financially. Endowment income accrued while operations were at a decreased level. Expenditures for salaries were sharply curtailed, for many members of the faculties were serving in the Armed Forces, in industry, or in sponsored research.

Colleges and universities are aware that they will encounter difficulties as they attempt to put their house in order. Already overcrowded and harassed by budget troubles, they must find the funds to build new facilities and hire teachers, and all are in short supply. With increasing competition for the tax dollar, the outlook is not encouraging. Large surpluses are not available, as they were in 1945 and 1946, to finance construction, equipment purchases, and salaries for an enlarged faculty.

Following the war, the United States Government helped materially by making available surplus buildings of every type. Surplus property valued in millions was made available to furnish and equip the facilities at little or no cost to the institution. This time no comparable program is available.

Through Public Laws 16 and 346, the Government helped veterans to attend schools of their own choice. The veteran was willing to undergo hardships to begin or continue his college education. He was willing to live, eat, and study under almost any condition.

The temporaries erected 10 years ago have deteriorated to the point where further mintenance is prohibitively expensive. Replacement is essential. Such replacements, unfortunately, cost money and