HIGHER EDUCATION: WHO PAYS? WHO BENEFITS? WHO SHOULD PAY? (1973) THE EFFECTS OF Two PROPOSALS FOR HIGHER EDUCATION FINANCE The table below shows the level of government support for higher education for academic year 1970-71. Once again, the source for this information was Carnegie Commission, Who Pays? Who Benefits? (This table includes research, while the previous one excludes most research expenditures.) ALTERNATIVE 1: HEAVY GOVERNMENT SUPPORT IN ORDER TO PROVIDE ACCESS TO PUBLIC AND PRIVATE HIGHER EDUCATION This alternative considers what would have happended in the 1970-71 academic year if the following measures were taken : a. State and local governments increase their institutional support so that zero tuition and fees are maintained at all public institutions. b. States provide additional subsidies to students at private institutions so that the per student subsidy at public and private institutions are equal. c. Federal government initiates a Basic Grant Program with a maximum grant of $1.400 (this program is assumed to cost $1.5 billion). The following changes would have resulted from this approach: (1) Total government support would increase by $5.611 billion, an increase of 41 percent. State and local support would rise by $4.1 billion (52 percent), while federal support would rise by $1.5 billion (26 percent). (223) (2) State and local support for public institutions would rise by $1.887 billion (a 24 percent increase), while state subsidies for students in private institutions would be increased by $2.224 billion (a 1,500 percent increase). (3) Government per student support at public institutions would have risen from $2,272 to $2,866; subsidies for students in private higher education would have gone from $1,335 to $2,886. (4) Under this plan a student with no family means who attends a public institution would be $1,772 better off than previously ($1,400 from the federal graut and $372 from lowered tuition), while middle income students would be $372 better off at public institutions. ALTERNATIVE 2: RISE IN PUBLIC TUITION AND FEES, MORE GOVERNMENT FOCUS ON STUDENT AID This alternative considers the effects of a rise in tuition and fees at public institutions coupled with expanded student aid programs. The following assumptions have been made. a. State and local governments would raise tuition and fees at public institutions to 35 percent of educational expenditures, up from 20 percent in 1970–71. b. State and local governments would then use the income derived from the increased tuition and fees in need-based grant programs. c. The federal government would provide a basic grant program on top of the state grant programs. The federal program would have a maximum grant of $900 and would cost approximately $1.0 billion. If these changes had been effected in 1970-71, the following results could have been expected: (1) Total government support would increase by $1.0 billion, with all of the increase coming in the federal sector. State institutional support amounting to $1.5 billion would be converted into student aid, but the total amount of state support would remain unchanged. (2) Average tuition and fees at public institutions would rise from $372 to $663, and increase of $291. At the same time, governmental student aid support would increase by $2.473 billion, an increase of 104 percent. (3) Student aid would go to 50 percent of full time equivalent enrollments, up from the 30 percent estimated in 1970-71 under current financing arrangements. Student aid per aid recipient would increase by $262 (from $1,174 to $1,436), about equal to the tuition increase at public institutions. (4) The state scholarship program would provide a maximum grant of $1,400 (assuming state scholarships were limited to the Basic Opportunity Grant population), while the maximum federal grant would be $900. Thus, a student with no family means would receive $2,300 and face an increase in public tuition of $291, making him $2,000 better off than in 1970-71 if he was not a giant recipient under current financing rules. Middle nicome students would face the higher public tuition charge and adequate loans would have to be forthcoming to them. A guess is that loan supply would have to go up by $500 million to offset the tuition rise for students between $12,000-20,000 famliy income. STUDENT FINANCIAL ASSISTANCE (Miscellaneous) FRIDAY, JUNE 28, 1974 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON EDUCATION OF THE COMMITTEE ON EDUCATION AND LABOR, Washington, D.C. The subcommittee met at 10:15 a.m., pursuant to adjournment, in Cannon House Office Building, Hon. James G. O'Hara (chairman) of the subcommittee) presiding. Present: Representatives O'Hara and Dellenback. Mr. O'HARA. Today the subcommittee will take testimony on the report of the National Commission on the Financing of Postsecondary Education. Unlike the Carnegie Commission and the CED, which were essentially formed as a result of private initiative, and unlike the Newman Task Force, which was created by the executive branch, the National Commission was created by act of Congress-by section 140 of Public Law 92-318, the Education Amendments of 1972 as amended by Public Law 93-35. The relevant provisions of law will be printed, absent objection, at a proper place in the hearing record. [The information referred to follows:] EDUCATION AMENDMENTS OF 1972 (PUBLIC LAW 92-318) STUDY OF THE FINANCING OF POSTSECONDARY EDUCATION SEC. 140. (a) (1) It is the purpose of this section to authorize a study of the impact of past, present, and anticipated private, local, State, and Federal support for postsecondary education, the appropriate role for the States in support of higher education (including the application of State law upon postsecondary educational opportunities), alternative student assistance programs, and the potential Federal, State, and private participation in such programs. (2) In order to give the States and the Nation the information needed to assess the dimensions of, and extent of, the financial crisis confronting the Nation's postsecondary institutions such study shall determine the need, the desirability, the form, and the level of additional governmental and private assistance. Such study shall include at least (A) an analysis of the existing programs of aid to institutions of higher education, various alternative proposals presented to the Congress to provide assistance to institutions of higher education, well as other viable alternatives which, in the judgment of the Commission, merit inclusion in such a study; (B) the costs, advantages and disadvantages, and the extent to which each proposal would preserve the diversity and independence of such institutions; and (C) the extent to which each would advance the national goal of making postsecondary education accessible to all individuals, including returning veterans, having the desire and ability to continue their education. as (b) (1) There is hereby established, as an independent agency within the executive branch, a National Commission on the Financing of Postsecondary Education (referred to in this section as the "Commission"). Upon the submis(225) 42-884 O-75-16 sion of its final report required by subsection (d) the Commission shall cease to exist. Upon the submission of its final report required by subsection (d) the Commission shall cease to exist, except that it shall, if necessary, have a reasonable time (but not later than June 30, 1974) to terminate the affairs of the Commission. (2) The Department of Health, Education, and Welfare shall provide the Commission with necessary administrative services (including those related to budgeting, accounting, financial reporting, personnel and procurement) for which payment shall be made in advance, or by reimbursement, from funds of the Commission and such amounts as may be agreed upon by the Commission and the Secretary of Health, Education, and Welfare. (3) The Commission shall have authority to accept in the name of the United States, grants, gifts, or bequests of money for immediate disbursement in furtherance of the functions of the Commission. Such grants, gifts or bequests, after acceptance by the Commission, shall be paid by the donor or his representative to the Treasurer of the United States whose receipts shall be their acquittance. The Treasurer of the United States shall enter them in a special account to the credit of the Commission for the purposes in each case specified. (c) In conducting such a study, the Commission shall consider— (1) the nature and causes of serious financial distress facing institutions of postsecondary education; and (2) alternative models for the long range solutions to the problems of financing postsecondary education with special attention to the potential Federal, State, local, and private participation in such programs, including at least (A) the assessment of previous related private and governmental studies and their recommendations; (B) existing State and local programs of aid to postsecondary institutions; (C) the level of endowment, private sector support and other incomes of postsecondary institutions and the feasibility of Federal and State income tax credits for charitable contributions to postsecondary institutions; (D) the level of Federal support of postsecondary institutions through such programs as research grants, and other general and categorical programs; (E) alternative forms of student assistance, including at least loan programs based on income contingent lending, loan programs which utilize fixed, graduated repayment schedules, loan programs which provide for cancellation or deferment of all or part of repayment in any given year based on a certain level of a borrower's income; and existing student assistance programs including those administered by the Public Health Service, the National Science Foundation, and the Veterans Administration; and ́(F) suggested national uniform standards for determining the annual per student costs of providing postsecondary education for students in attendance at various types and classes of institutions of higher education. (d) No later than December 31, 1973, the Commission shall make a final report to the President and Congress on the results of the investigation and study authorized by this section, together with such findings and recommendations, including recommendations for legislation, as it deems appropriate, including suggested national uniform standards referred to in subsection (c) (2) (F) and any related recommendations for legislation. No later than 60 days after the final report the Commissioner shall make a report to the Congress commenting on the Commission's suggested national uniform standards, and incorporating his recommendations with respect to national uniform standards together with any related recommendations for legislation. (e) In order to carry out the provisions of this part, the Commission is authorized to (1) enter into contracts with institutions of postsecondary education and other appropriate individuals, public agencies and private organizations; (2) appoint and fix the compensation of such personnel as may be necessary; (3) employ experts and consultants in accordance with section 3109 of title 5. United States Code; (4) utilize, with their consent, the services, personnel, information and facilities of other Federal, State, local, and private agencies with or without reimbursement; and (5) consult with the heads of such Federal agencies as it deems appropriate. (f) (1) The Commission is further authorized to conduct such hearings at such times and places as it deems appropriate for carrying out the purposes of this section. (2) The heads of all Federal agencies are, to the extent not prohibited by law, directed to cooperate with the Commission in carrying out this section. (g) (1) The Commission shall be composed of- (A) two members of the Senate who shall be members of the different political parties and who shall be appointed by the President of the Senate; (B) two Members of the House of Representatives who shall be members of different political parties and who shall be appointed by the Speaker of the House of Representatives; and (C) not to exceed thirteen members appointed by the President not later than ninety days after the date of enactment of this Act. Such members shall be appointed from- (i) members of State and local educational agencies; (ii) State and local government officials; (iii) education administrators from private and public higher education institutions and community colleges; (iv) teaching facility; (v) financial experts from the private sector; (vi) students; (vii) the Office of Education; and (viii) other appropriate fields. (2) The President shall designate one of the members to serve as Chairman and one to serve as Vice Chairman of the Commission. (3) The majority of the members of the Commission shall constitute a quorum, but a lesser number may conduct hearings. (4) The terms of office of the appointive members of the Commission shall expire after submission of the final report. (h) There are hereby authorized to be appropriated $1,500,000 for the period beginning on the date of enactment of this Act and ending July 1, 1974 for the purpose of carrying out the provisions of this section. (20 U.S.C. 1070) Enacted June 23, 1972, P.L. 92-318, sec. 140, 86 Stat. 282, 284, and amended May 16, 1973 by Public Law 93-35 87 Stat. 72. Mr. O'HARA. The Commission was duly appointed, began and completed its work, and filed a final report at the beginning of this year. The report of the Commission deserves particular attention by this subcommittee because two of our distinguished members-the gentleman from Indiana and the gentleman from Oregon-were among the members, and, I am advised, the hardest working members of the Commission. The Chair notes the presence in the room this morning of Mr. Dellenback and conveys Mr. Brademas' apologies. The Commission witnesses this morning include its chairman, Mr. Don Leonard, attorney at law, of Lincoln, Nebr.: the executive director, Dr. Ben Lawrence, now with the National Center for Higher Education Management Systems, Boulder, Colo.; Dr. George Weathersby, associate director, now at Harvard University; Mr. Dan Martin, of the Associated Colleges of the Midwest; and Dr. Peter Muirhead of the U.S. Office of Education. All of these witnesses are distinguished educators and experts in their own right, but I think they will all forgive me if I single out one of them for special mention at this time. Ever since I first came to the Congress, whenever there has been a question to be asked about Federal education policy-and partic |