Date: 1981-03-31
Speaker: ROBERT C. BYRD (democrat)
Chamber: S

Mr. President. the administration has proposed many budget cuts in student aid programs for higher education including reducing Pell grants. guaranteed student loans. and varied health manpower training programs. A college education means opportunity. Just as we invest in our industry and factories. we must invest in our young people for a better future. More than three times as many young Americans are enrolled in colleges and universities today than 20 years ago. This is tremendous progress. I fear the administrations recommendations on student assistance could reverse this trend. Limiting the availability of loan money could have a tremendous impact on private colleges and universities. which depend upon tuition payments to a much greater degree than do public institutions for postsecondary schooling. In my own State of West Virginia. the survival of nine private independent colleges. and one university is endangered by the proposed changes. The administration has proposed to limit the guaranteed student loan program by restricting the loans to students who demonstrate financial need after that need has been dete .. ined through a tight income formula. It would also eliminate the inschool interest subsidy. and the special allowance that lenders receive for making loans to parents of students. The administrations plan has caused some confusion and uncertainty. Preliminary reports. particularly from small banks. indicate that participation in the student loan program may no longer be feasible because of the increased cost of needs analysis. the removal of the inschool subsidy. and the reduction of loans to small amounts that banks are unwilling to handle. It is my hope that there will be a detailed study of the administrations proposals in the very near future. Under the proposed guaranteed loan plan. students could suffer a significant increase in the cost of their loans. College and university tuitions are rising rapidlyby some estimates from 14 to 18 percent annually in private and 9 percent in public institutions. Adequate financing is a prerequisite for quality education. The Higher Education Act of 1965 has been amended a number of times since its enactment. and each time the Congress has sought to make the legislation more responsive to the changing needs of aid recipients and more reflective of the changes in our education system. Revisions in the guaranteed student loan program have demonstrated Congress continued concern with inflation and the rising cost of education and their impact on lower- and middleincome families. The need for Federal assistance to young people from these families is easily understood. Without aid. many young people would be denied the pros-. pect of pursuing studies that would benefit themallow them to make a greater contribution to society. I am strongly committed to the goal of advancing equal opportunity in education through Federal financial assistance. At the same time. student aid programs must not be viewed as free reservoirs of money. fraud must be cut in these as well as in other Government programs. When a student accepts a loan. that student also accepts the responsibility to repay it under the agreed upon terms. Unfortunately. many of our student loan programs have been troubled by high default rates. Under pressure from the Congress. the Office of Student Financial Assistance was established 4 years ago to improve collection efforts. At the time that the office was created. there were some 300.000 guaranteed student loan accounts on record. of which only 21.000 were being paid on a regular basis. Just 2 years later. 106.000 accounts were being paid on a regular basis. and more than 51.000 had been paid in full. Last year. additional measures were taken to curb loan defaults. A new system was established for the Federal Government to share information on defaulted loans with credit bureaus. The Department of Justice has also followed the Congress lead. and last February it began a broad new crackdown on student loan defaults with the filing on some 500 lawsuits. The guaranteed student loan program is the major vehicle through which middleincome families find the financiai resources necessary to send their children to school. The program means that a student may elect to assume independent responsibility for his or her college expenses. The administrations guaranteed student loan plan deeply concerns me. Funds for the loans are currently supplied by thousands of private lenders. The idea that banks and other lending institutions may drop out of the program because of the increased paperwork troubles meparticularly because there are such smaller banks in rural areas. and these banks are the ones which can lease afford the increased cost of paperwork. Other aspects of the plan trouble me as well. If students pay interest on guaranteed loans while in school. will they not have to borrow more to pay for the interest? While a student may be able to manage higher borrowings the first year. after the second or third. many would be borrowing heavily to finance the next years interest payment. Last year. we raised interest rates for the guaranteed student loans and made other program modifications. We took a great deal of time examining and revising the program. Let us again look carefully before we take other steps. we want to be marching forward. not backward.