[From the Daily Trojan, Feb. 7, 1974]

AID ALLOCATIONS FACE CHALLENGE

President Nixon has asked for some $2 billion in student aid funds to be spent nationally in 1975-76, but the manner in which he has allocated the funds is certain to be challenged by Congress again.

In the budget he submitted Monday to Congress, Nixon seeks $1.3 billion for the Basic Opportunity Grants Program, $250 million for the College WorkStudy Program, and $430 million for the Federally Insured Student Loan Program.

However, he asked only $6 million for the National Direct Student Loan Program and nothing for the Supplemental Educational Opportunity Grants Program.

Although these funds are included in the budget for the year starting July 1, the money is actually spent the following year.

Those who are sophomores now will be affected most by the expected battle between Nixon and Congress over the allocation of federal student aid funds, because the dispute will be over the level of funding in their senior year.

Excluding insured loans, USC students are receiving a total of $4.6 million from federal aid programs in the current academic year.

"I have a very negative reaction to what President Nixon is proposing this year," Pamela Walbom, director of the Student Aid Office, said in a telephone interview.

"I don't think his proposals would be a success in any way-not unless the basic grants program performs much better than it has so far."

The basic grants program was enacted in 1972 and funded for the first time last year.

Money is still available from the $122.1 million appropriation for 1973-74 so that students who have not attended college before April, 1973, may apply for basic grants. The current maximum is $452 per student.

"We are encouraging students to apply for that money, but as for next year (1974-75), the applications for that program haven't been printed yet," Walbom said. "It's in bad shape."

Under the basic-grants program, money is channeled directly to needy students, currently to those from families with under $12,000 in income. Applications are determined by a processing service under federal contract.

This differs from such programs as supplemental grants and direct loans, which are administered by educational institutions. Financial-aid officers select the recipients according to need.

President Nixon tried last year to end supplemental grants and direct loans (which carry 3% interest) in favor of a formula combining grants, insured loans (which carry 7% interest) and work-study jobs.

Last year, he asked for $959 million in basic grants, $310 million in insuredloan interest subsidies, and $250 million for work-study, but only $5 million for direct loans and nothing for supplemental grants.

But Congress refused to go along with this. Instead, it passed $500 million for basic grants, $210.3 million for supplemental grants, $293 million for direct loans, $270.2 million for workstudy, and $310 million for insured loans.

Nixon signed the bill Dec. 18. That money will be spent in the 1974-75 academic year, and the Student Aid Office is waiting for panels of the Department of Health, Education and Welfare to determine what USC will get.

Walbom is confident that Congress will force Nixon to compromise on aid funding once again.

"I suppose these budget proposals are based on the assumption that he'll be serving the rest of his term," she said in apparent reference to the impact of the Watergate scandals.

STUDENT FINANCIAL ASSISTANCE

(Miscellaneous)

FRIDAY, JUNE 14, 1974

HOUSE OF REPRESENTATIVES,

SPECIAL SUBCOMMITTEE ON EDUCATION

OF THE COMMITTEE ON EDUCATION AND LABOR,

Miami, Florida.

The subcommittee met at 9 a.m., pursuant to call in Miami-Dade Junior College auditorium, Miami, Fla.

Hon. William Lehman, presiding.

Present: Representative Lehman.

Staff members present: Al Franklin, majority counsel; Elnora Teets, clerk; John Lee, minority counsel.

Mr. LEHMAN. This session of the Special Subcommittee on Education of the House Education and Labor Committee will come to order. Before we call the first witness, I wish to thank Chairman James O'Hara for directing the subcommittee to hold these hearings in the 13th Congressional District which houses so many fine institutions of higher learning.

The testimony in this hearing will go into the record on which will be based the decisionmaking process of this committee in regards to financial aid to students for higher education.

The witnesses today who will testify will be instrumental in helping the subcommittee members, as I said, to help the middle income families and the young people of middle income families have a better chance to get the kind of financial assistance they need in order to complete their college education.

As we know, there have been longstanding programs for economically deprived young people, and of course the children of very affluent families do not have a serious problem in pursuing studies in higher education. But in the last few years the middle income family and the young people from middle income families have been caught in a bind between the rising cost of education and institutions of higher learning and the pinch of inflation.

We're threatened with the probability that our college campuses will not longer see the mass of people in their institutions from socalled middle America, and of course our subcommittee and I feel that there really should be no substantial financial barrier to higher education, regardless of income, social position and any other consequence. There should be no roadblocks to a person seeking the opportunity to acquire a higher education, not only for the person themselves, but for our whole political, social, and economic society which so badly needs the kind of trained people and the kind of input from all segments of our society.

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I would also like to bring to your attention that one of the factors to be taken into consideration is the new majority age of 18 and how it will affect the ability and capacity for young people to go to college and responsibilities that these people will have and their families will have in regards to this.

There are many other problems, and many of them will be common to all of the witnesses who appear here today, and we would be interested in hearing any problems that you would like to discuss at this time.

Before I would go any further I would like to introduce the counsel for our subcommittee, Al Franklin, and then I would like for Al to introduce the other members of the staff of the committee that are here with us today.

Mr. FRANKLIN. To my left is Elnora Teets, who is the clerk of the Special Subcommittee on Education, and on the far right is Mr. John Lee, who is here representing the minority, the Republican members of the committee.

Mr. LEHMAN. John, would you like to make a statement for John Dellenback, the ranking minority member who was very anxious to be here, but also several days ago told me he couldn't make it? Mr. LEE. Thank you.

This committee has been working very hard for the last few months and will continue to do so to rewrite title IV of the Higher Education Act, which outlines the major financial aid programs.

We're looking forward today to getting your input so that we can better look at those problems and those issues and the primary changes. I can assure you I'll go back to Mr. Dellenback and let him know what you're concerned about and hopefully, some of the resolutions that you can provide for us.

Mr. LEHMAN. Thank you, John.

Now, we've held many days of hearings on this matter in Washington. Both Chairman O'Hara and myself thought it would be a good idea to get testimony not just from the people who are able and willing to come to Washington, but from areas of the country where the problems really are and really exist.

I think that's an important part of getting the facts and the available information that we're going to need to continue this process and arrive at the proper decision.

Without further ado I would like to call our first witness and my old boss when I was working for this school, Dr. Peter Masiko, president of Miami-Dade Community College.

Dr. Masiko and the other witnesses, you're free to either read the statement as it appears or you can summarize it, but in either respect the statements in complete form will appear as part of the testimony. STATEMENT OF DR. PETER MASIKO, PRESIDENT, MIAMI-DADE COMMUNITY COLLEGE, ACCOMPANIED BY DWAYNE HANSEN. VICE PRESIDENT, AND TOM MCFARLAND, DIRECTOR OF FEDERAL AND STATE RELATIONS, MIAMI-DADE COMMUNITY COLLEGE

Dr. MASIKO. Thank you, Congressman Lehman.

I am Peter Masiko, president of Miami-Dade Community College. I am pleased to have this opportunity to appear before you

today and present our views on the Federal student financial aid programs.

First, I would like very much to extend my appreciation and congratulations for the outstanding contribution which you personally have made to the work of the House Subcommittee on Education and which the comittee itself has made in the Education Amendment Acts of 1972.

This very comprehensive and farsighted legislation established the basis for resolving many institutional problems, including the provision of needed funds for higher education.

The funding, however, has been appropriated for only a portion of the program authorized by the legislation. The act assured an appropriate balance of student financial aid programs by requiring the continuation of institutional-based programs which complement the basic education opportunity grant program and the guaranteed student loan program.

The launching of the basic grant program for the current academic year was not too successful as only 3 percent of the students estimated to be qualified submitted applications for these grants.

Had you yielded to the pressures to limit student financial aid to basic grants and the less successful-or less than successful guaranteed student loan program, most financially needy students would have been denied higher education during the academic year.

Your persistence in carrying out the intent of the amendments of 1972 by including funds for the national direct student loans and the supplemental education opportunity grants programs assisted very substantially in meeting the increased cost of education and the widening gap between cost and family resources.

In your committee deliberations to appropriate funds for the fiscal year 1975, we urge you to continue your resolve to withstand pressures to eliminate the institutionally based programs, the SEOG and the NDSL.

We would like to recommend for your consideration appropriation minimums of the following: $230 million for the supplemental educational opportunity grants, $400 million for the national direct student loans, $420 million for the college work study programs, $650 million for the basic educational opportunity grants under which freshmen, sophomores, and juniors would be authorized basic grants. Congress has taken steps to improve the acceptability of the basic grant program, but we believe that further modification is needed to assure substantial increases in student applications, and I would recommend that the present BEOG family contribution schedule be abandoned.

The separate family contribution schedule, required for the basic grant program, is not an equitable financial need assessment. Instead, I suggest the use of the need analysis systems of the American college testing program and the College Scholarship Service. Both systems have been proven through years of research and implementation, and both the ACT and CSS systems meet the basic criteria of the Education Amendments of 1972.

Students' financial needs would be best served by compatible analyses for basic grants and college-based programs. The elimination of the dual application process which is troubling to students, parents,

and the educational institutions, could resolve the major problem we have encountered with the BEOG—the majority of eligible students are not applying despite extraordinary efforts on our part and by our financial aid administrators to encourage students to make application. Earlier this year, Congress did an excellent job in correcting the deficiences and misconceptions involving the guaranteed student loan program. The elimination of the needs test, where adjusted family income is below $15,000, together with the clarification of congressional intent to provide loans for middle-income families should result in substantial increases in guaranteed student loans for next year.

When you consider education amendments for 1974, I recommend, No. 1, an administrative expense of 1 percent be authorized to reimburse institutions for the greatly increased workload of financial aid administrators.

No. 2, an increase in the Federal interest subsidy to 11 percent to provide incentive for banks to participate.

In your deliberations for fiscal year 1975, I also recommend that you consider reimbursement to institutions for the added administrative burden of the basic educational opportunity grant program. The administrative workload for this program is often greater than for traditional programs such as the SEOG and NDSL. The traditional administrative expense of 3 percent, however, would be an acceptable reimbursement.

There is probably no Federal assistance program which is more effective than the college work-study program. It helps the student pay educational costs. It provides worthwhile work experience, frequently in the student's academic field, and assists institutions and off-campus employing agencies in providing additional services.

Seldom has a Federal program done so much for so many students. We would, however, recommend one modification to the college workstudy program. We suggest that institutions be given the authority to carry over up to 10 percent of an allocation to the succeeding fiscal year, or to utilize up to 10 percent of the allocation for the succeeding fiscal year to meet current year obligations.

Since it is very difficult to estimate precisely the total earnings of each student awarded work-study employment, there is risk of a surplus which results in loss of funds to the institution and students, or excess earnings which must be paid by the institution from its own funds, which could cause unnecessary hardship on most institutions. Allowing for a 10-percent shift of funds between fiscal years would greatly improve utilization of college work-study funds for all institutions.

We also propose an amendment to the national direct student loan program to authorize the transfer of up to 10 percent of an institutional allotment of NDSL funds to college work-study program, the SEOG, and vice versa.

The same rationale exists for NDSL as for the current authority to transfer the college work-study program and the supplementary grants. The applications for funding of these programs are prepared and submitted prior to knowledge of appropriation levels.

Subsequent variations in funding levels among programs destroy the packaging logic utilized in preparing the original institutional application. The availability of other forms of assistance also varies