APPENDIX B INSTITUTIONAL REQUEST FOR FEDERAL AID 1971-75-UNIVERSITY OF CALIFORNIA, BERKELEY 1 NDSL formerly national defense student loan-currently national direct student loan. $4,500,000 4,500,000 3,262,222 2, 139, 883 962, 946 2,000,000 1,300,000 585,000 2,221,751 2, 221, 751 999, 788 PREPARED STATEMENT OF ROBERT L. RODRIGUEZ, VICE-PRESIDENT, STUDENT ASSOCIATION OF THE STATE OF NEW YORK Mr. Chairman, members of the Committee, we would like to thank you for opportunity to testify here today. I appear on behalf of the Student Association of the State University of New York (SASU, Inc.) to identify current problems in the administration of the federal student financial aid programs. SASU, Inc., a coalition of the student governments of the State University of New York (SUNY) is the corporate arm of the newly created Student Assembly of the State University. The two organizations work together to represent and advocate the interests of State University students on a state-wide basis to the Board of Trustees and the Central Administration of SUNY, as well as to the Legislature, the Governor, and the executive agencies of the state of New York. SASU, Inc.'s counterpart, the Student Assembly, was created by the Board of Trustees (SUNY) last spring as the official representative student governance organization of the University. An elected president, vice-president, and executive committee, as well as the sixty-six delegates who are elected by and from the students of the seventy-two campuses of SUNY, serve as an advisory body to the University by advocating the interests of the 382,000 students it represents. President Nixon has pledged that "no student will be denied access to postsecondary education for financial reasons," and Congress has also authorized such a goal in the Education Amendments of 1972. To stipulate here that current funding for the new and crucial Basis Opportunity Grant Program is dramatically insufficient, would be a gross understatement. If BOG is to accomplish the goals for which it was intended, the only logical argument favors expanded funding of this program. We support, however, the position adopted by Congress that the funding of BOG should not be increased by phasing out the Supplemental Student Educational Opportunity Grant and National-Direct Student Loan Programs, as has been recommended by the administration. I realize that this argument has been exhausted, but I do seek to point out problems in the mechanics of administering these programs. As stated in the Higher Education Amendment of 1972, BOG is an entitlement program which would maintain open-ended funding. Obviously, this objective was not met this year and until it is, the term "entitlement" is in effect meaningless. The greatest problem in the administration of the Basic Opportunity Grants Program in this first year was the extremely late date at which the funds for the program were appropriated. I commend the committee's efforts to create a unified program of federal student financial aid, but such a goal is unrealistic unless BOG is funded well before the beginning of the academic year for which the awards are to be made. The very name of the program "Basic Opportunity Grants illustrates this point. The award schedule for student-based programs should be defined as early as possible, because it is the "base" from which state and other federal programs can be better coordinated in determining the student financial aid package. Currently, there is a new program under consideration by the New York State Legislature called the Tuition Assistance Program (TAP). One of the TAP provisions stipulates that a student applying for a TAP award must also apply for a BOG award. This provision is designed to reduce the problem of state and federal financial aid programs duplicating one another. We therefore recommend "forward funding" as early as December 1, so that by no later than March 1, the college financial aid offices will know exactly what the student's entitlement is so that the student will know how much aid to expect for the coming academic year, before he or she goes home for summer vacation. Presently, the BOG program discriminates against low tuition institutions, a feature which creates pressure for increasing public college tuition. Instead of developing a separate cost schedule for students attending low and high tuition institutions, the BOG regulations consider students in the same sliding schedule and then add on restrictions that penalize the student attending a low-cost institution. No grant can be awarded that exceeds 50% of the cost of the institution, and under the present level of funding, no grant can exceed 50% of the "need" which is defined as the difference between the cost and expected family contribution. Because of these and other restrictions, it is unlikely even at full funding that the program would provide significant aid to middle income students attending low-cost institutions. To alleviate this problem, we recommend a modified capitation formula for low-tuition institutions as a supplement to the student aid programs. The BOG definition of the cost of attendance is unrealistic. Table I illustrates that the State University of New York (abbreviated SUNY), financial aid officers define the cost of attendance at SUNY schools to be about $3,000 a year, but the BOG regulations only provide $2,400, and even this amount is exaggerated because of the regulation cited above that the BEOG grant cannot exceed 50% of the cost. The most important factor here is that the BEOG regulations only allow $350 a year for books, supplies, travel, personal, and all other incidental expenses. Another unrealistic regulation is that which allows only $950 a year for room and board costs for those students who live off-campus, but not with their parents; many of whom have moved out of dormitories because room and board charges have become too expensive. Further, no consideration is given to differences in "cost of living" expenses as they vary from region to region. The difference between the cost of living in New York City, and in Upper Sandusky should be taken into account when determining the award to which the student is entitled. The amount of parental contribution demanded under present BOG regulations are far too strict. Most financial aid officers believe that the needs analysis standards used by the College Scholarship Service (CSS) and the American College Testing (ACT) are also too strict; yet when compared to the BOG regulations promulgated by the U.S. Office of Education, they would almost appear generous. Although, theoretically, needs analysis is the best system for distributing financial aid monies, it should be employed only if the program is funded at an adequate level so that the expected family contribution will be computed on the basis of how much the parent at a particular income level should really be expected to contribute to the college education of their son or daughter. It should not be awarded on the basis of how much aid the program can afford to award to the student. A needs analysis should be applied regardless of how much money is available for the program. Perhaps the committee should consider using alternate filing systems for BOG. By allowing the already existing agencies of CSS and ACT to compute the BOG awards, the program would be one step closer to coordinating the student financial aid package. Further, this could be accomplisheed by making application for a BOG award automatic, for any student who uses these college testing service needs analysis for other awards. It has been a common complaint that poor publicity and confusion surrounding the relatively new BOG program, the number of student applicants fell short of the program expectations. Since so many students have to use the services of CSS and ACT for other awards, the number of BOG awards would be expanded to more of those in need. It should be noted that all students who use the CSS or ACT forms should be made aware of its automatic application for the BOG awards. This last provision is mentioned as the inherent right to information that all persons should have when they submit for review and action an analysis of their financial status. Under the present guidelines of the BOG program, the student must fill out an application form. After this form is submitted and processed, the student receives a Family Contribution Analysis Report (FCAR) which indicates the amount of money the student's parents will be expected to contribute to the cost of education. The student and parents have little or no idea how much of an award to expect with the present procedure. This is true also of all other federal student financial aid programs, both student based and campus based. At the time of application, the student has no idea how much money he or she can expect to receive. A conversion table which would allow the student and parents to at least make a reasonable approximation would be helpful in two ways. First, the students could get a better estimate of their overall financial opportunities for continuing their education. Secondly, it would eliminate the unwieldly BOG award notification process. When a student is eligible for and award, he or she will first get the "Preliminary Notification of Award" notice that will show the probable award. When the final award schedules are determined, the student gets a "Final Award" notice which will show his or her actual entitlement. If BOG awards included a conversion table with its application, similar to the conversion tables used to schedule awards under the New York State Regents Scholarships and Scholar Incentive programs, the intermediary step of preliminary award notification could be eliminated, saving time for financial aid officers who must administer them. Another problem in the FCAR form is the wording, which if misread, could jeopardize a students' application for the BOG award. The wording is unclear, in Section 4, the notice of Final Award. This section must be signed by the student and notorized upon receipt of the final award. Because it is not explicitly stated as such, many students forward their FCAR form signed and notorized in the initial phase of the application process, thereby invalidating the students application and forcing him or her to re-apply. This year, BOG publicity in New York State was a failure. The applications did not become available until the high schools had recessed, making it difficult, if not impossible, to notify students of this new financial opportunity. With the forward funding suggested already, high school guidance counselors and financial aid officers could take advantage of the captive audience of students in every high school to publicize the BOG program. Furthermore, it would be a wise investment to appropriate a significant sum of money to finance a massive advertising campaign using television, magazines, radio, and newspapers. With the maximum grant of $1,400 (at full funding), the BEOG program is inadequate to meet the needs of low-income students, and therefore, the SEOG program must also be continued and expanded. The SASU membership opposes any effort by the administration to cut appropriations for SEOG. The administration has recently requested the abolition of the Guaranteed Student Loan Programs; the impact of which would be felt by hundreds of thousands of middle-income students. SASU condemns this proposal and urges congress to reaffirm its support for Guaranteed Student Loan Program (GSL). We urge Congress to eliminate or significantly readjust the needs test on GSL, which this year, as you know, has been the major reason for the 32% nationwide decrease in the number of approved loan applications. I would like to applaud representative James O'Hara in his efforts to deal with this problem. The introduction of his bill that would allow students from families with annual incomes of up to $20,000 to qualify for fully subsidized guaranteed student loans of up to $2,000, shows imagination and insight to the problems that middle-income students face in financing their post-secondary education. Students are often compelled to submit records of parental income even though they receive no monies from the parents towards the cost of education. Determining whether or not a student is financially emancipated from his or her parents is difficult. Thus far, the BEOG definiton of financal emancipation is fair, but very strict. We propose two amendments to the federal regulations governing the definition of financial emancipation. First, the regulations should apply the three criteria for independence to the calendar year in which aid is received and the calendar year prior to the academic semester for which aid is requested, rather than to the calendar year prior to the full academic year for which aid is requested. This proposal would still permit documentation of the student's claims by submission of the federal income tax return. We therefore see no reason to include the additional semester. Secondly, the financial aid officer should be allowed a measure of discretion in determining the independent and dependent status of a student. Therefore, I recommend that the appropriate campus financial aid administrator, in extraordinary circumstances, to waiveany or all of the three criteria. The committee might also want to undertake a thorough study of the administration of the College Work Study Program. Financial aid officers in New York state have often complained of the irrational fund juggling that goes on in this program. The monies available to a college for a work-study program often do not match the needs of the students at that college as well as the realistic employment opportunities in that college's community. Many institutions are left with excess or insufficient funds for the student needs. There has been very little effort to study this problem, and little information as to why the mechanics of CWS funding would vary widely from the institutional needs, but it would appear to be an area where funds are wasted through misdirection. A new method of determining the institutional appropriation might closely resemble the one presently used for BEOG. In conclusion, I would like to thank you in behalf of the students of the State University of New York for your tireless efforts on our behalf. I hope you will find our comments and recommendations helpful in your deliberations. PREPARED STATEMENT OF PETER WONG, EDITOR, DAILY TROJAN, UNIVERSITY OF SOUTHERN CALIFORNIA Mr. Chairman and members of the subcommittee, I am pleased to appear before all of you this morning to discuss Federal student assistance programs on my campus. I should mention that I look at the impact of these programs not only from the student perspective-although that is the most important-but also from a legislative perspective, which reflects my brief service as a staff assistant in the other body. Before I comment specifically on each program, I would like to explain why private institutions of post-secondary education, including the University of Southern California, need Federal student assistance programs. The University is located in Los Angeles, four miles south of downtown. (It should not be confused with the University of California at Los Angeles, a state-controlled institution eleven miles to the west.) Some 20,000 students attend the university-about 10,000 full-time undergraduates, 4,000 full-time graduate and professional students, and the rest part-time students. It has been said that access to private institutions of post-secondary education-including the one that I attend-is barred to students from low-income families. It is also said that only students from wealthy families can afford to attend private universities-and that they dominate enrollments. If it were not for Federal student assistance programs, these statements would be correct. The costs at a private university have increased considerably in recent years, at a rate of inflation much greater than that of the national economy. In fact, this is one of the major reasons for the recent decline in the proportion of students who enroll in private institutions, although my university has not yet suffered heavily. At the University of Southern California, tuition by itself was $1,800 in the 1969-70 academic year. It is $2,700 this year-and it will be $2,910 in 1974–75. The increase from 1969 to 1973 was 50 percent, certainly more than the rate of inflation nationwide. However, tuition is only one part of student expenses. This year our office of institutional studies did a survey on the costs of attendance. That is attached as an appendix. It indicates that student costs have risen to more than $5,000— and no end can be forecast to these increases. It could be truly said that only students from wealthy families can afford to attend such private institutions as our university, but they do not dominate our enrollment. It has been shown that our student body includes a greater proportion of those from low-income families in comparison with student bodies at other major private institutions in the United States. I would like to note that of a 1971 sample of entering freshmen, 26 percent of them said their parents' total income was $10,000 or less. This compares favorably with the findings of a 1971 national freshman sample, which indicate that 18 percent of the respondents at private universities had parents with incomes of $10,000 or less. (Data is included in appendix A to this testimony.) Furthermore, the diversity in socioeconomic backgrounds of students is reflected in university statistics on parental occupations and levels of formal education, as well as ethnic composition of the student body. (Appendices B, E) What accounts for this diversity? Federal student assistance programs make the difference. Without them, private institutions such as ours would be dominated by students from one sector of society-undesirable for the nation, I think, and certainly for the institutions and students. About 50 percent of our students receive some form of financial assistance from university, private or government sources. At our university, the student aid office controls $9.7 million of a general budget of $130 million. At least $4.6 million comes from the Federal government under four programs. (This excludes an estimated $4 million students receive under the Federal Insured Student Loan Program, administered by banks and other lending institutions.) Only $2.8 million comes from university general funds. If Federal student assistance programs were to be discontinued suddenly, the university would have no means by which it could assume the additional burdens. You are, of course, familiar with the history of Federal student assistance programs. Though Federal aid to education is not a recent idea, student assistance programs really began with the Serviceman's Readjustment Act of 1944, the so-called GI Bill. The National Defense Education Act of 1958, the Economic Opportunity Act of 1964, the Higher Education Act of 1965, the Education Amendments of 1972-these are the laws that have authorized these programs. You are also familiar with the three-part formula used by college financial aid officers-scholarships/grants, loans and jobs. As a 1967 university report stated: "It is held that no student should receive total gift aid, no student should be overburdened by loan commitments against his future income, and no students should find it necessary to work beyond the point where his health or his academic survival is threatened." When the Basic Educational Opportunity Grants Program was enacted under the Education Amendments of 1972, the congressional intent was clear. The funding of three previously established student assistance programs-the Supplemental Educational Opportunity Grants Program (1965, renamed in the 1972 act). College Work-Study Program, and National Direct Student Loan Program (1958, renamed in 1969)-was to continue at specified minimum levels before basic grants could be funded. Through this action, the Congress recognized the need to supplement basic grants and insured loans. President Nixon's budget proposals for fiscal 1974, then, were quite disturbing. In that document, presented January 29, 1973, to the Congress, the President proposed the elimination of supplemental grants and new direct loans. He claimed that increased funding of basic grants and insured loans, together with steady-state funding of the work-study program, would provide the necessary assistance to students. This posed a problem for the Congress. The chairman of this subcommittee [Mr. O'Hara] phrased the congressional response quite well. He was quoted as saying to another House subcommittee, "Let us obey the law the way we wrote the law, and let us turn down the request of the administration that it be granted amnesty from observing a law which it finds uncomfortable to live with." Fortunately, the Congress appropriated student assistance funds for the 1973-74 and 1974-75 academic years in accordance with its own program priorities-not those of the President. It took this action twice in 1973-both in the Urgent Supplemental Appropriations Act, signed April 26, and in appropriations for the Departments of Labor and Health, Education and Welfare, signed December 18. Yet in his fiscal 1975 budget submitted to the Congress February 4, Mr. Nixon persists in his own course of action. He again wants to eliminate supplemental grants and new direct loans and to maintain the work-study program at the present level of funding. |