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Statement by
David Longanecker
Assistant Secretary for Postsecondary Education
on
Fiscal Year 1998 Request for
Postsecondary Education Programs
Mr. Chairman and Members of the Committee:
I am pleased to appear before you to discuss the fiscal year 1998 budget request for programs administered by the Office of Postsecondary Education.
Our fiscal year 1998 budget request is an integral part of this Administration's comprehensive strategy to make education more affordable and give every American the chance to go to college. Our strategy is made up of three components.
First, our Department's budget proposal significantly increases grant aid, support services, and work-study assistance while reducing student borrowing costs. Second, our budget request is complemented by the Administration's proposed higher education tax initiatives that will help working students and families pay for college through a combination of income tax credits, deductions, and savings incentives. The America's HOPE Scholarship tax credit of up to $1,500 for the first two years of postsecondary education would help make two years of college as universally available as high school is today. The Middle Class Bill of Rights tax deduction of up to $10,000 for payment of tuition and fees would be an option for the first two years, and would also be available for further undergraduate and graduate education, or job training. Further, the Administration also proposes broadening eligibility for Individual Retirement Accounts and allowing penalty-free IRA withdrawals for higher education.
These two sets of proposals establish the foundation for the third component of our higher education agenda -- our Higher Education Act reauthorization proposals -- which we plan to send to Congress in the spring. Our reauthorization proposals will be aimed at helping American postsecondary education meet the challenges of the 21st century.
Our budget request would provide $47 billion in student financial aid to more than eight million students in fiscal year 1998. This is an unprecedented amount that focuses our new investments on programs that help America's neediest postsecondary students.
Research has shown that the most effective way to ensure access and encourage graduation among financially disadvantaged students is to supplement their own ability to meet college costs with need-based grants. Therefore, targeting additional resources to the Pell Grant program is one of our highest priorities. We are requesting $7.6 billion to provide Pell Grants to more than four million students. We would increase the maximum Pell Grant award by $300 to $3,000 -- the highest level ever. We are also proposing that the need analysis formula be changed to treat independent students without dependents more equitably and allow them to expand their participation in the higher education system.
We would also continue our mutual commitment to expand the Federal Work-Study program by requesting $857 million in funding. This request is $27 million more than the fiscal year 1997 level, and would add 28,000 more Work-Study jobs while keeping us on target to meet the President's goal of providing Work-Study opportunities to one million students by the year 2000. The President has challenged participating institutions to use one-half of last year's Work-Study increase for community service opportunities, and especially to encourage more students to work as reading tutors in the President's America Reads Challenge. The Secretary waived the 25 percent institutional matching requirement for students who tutor kindergarten and elementary students in reading during the next school year in support of the President's initiative. Today, I'm pleased to report that more than sixty college presidents have answered the President's challenge, including several right here in Washington. These work-study students will join with other Americans to ensure that every child can read well and independently by the end of the third grade.
Finally, we are requesting level funding for the Supplemental Educational Opportunity Grants (SEOG) and Federal Perkins Capital Contributions programs. These programs are vital to continuing to provide low-income students with access to 4-year colleges and universities. We are also proposing an increase of $10 million in Perkins loan cancellation payments. This increase would support the growing number of borrowers entering repayment who are eligible for loan cancellation under the expanded statutory requirements enacted in the Higher Education Act Amendments of 1992.
In conjunction with our strong commitment to need-based grants, our budget proposal would also significantly change the Federal Family Education Loan (FFEL) and Direct Loan programs, in order to decrease the burdens of the many students who borrow to finance their education, while also improving the effectiveness and efficiency of these programs. First, our proposal would cut loan origination fees from 4 to 2 percent for need-based loans, and to 3 percent for other loans. This would save four million students -- both the neediest and middle-income students -- $2.6 billion over a 5-year period. Second, we propose making FFEL and Direct Loan terms more similar. Additionally, we propose reducing interest rates charged during in-school, grace, and deferment periods by one percentage point, since lender costs during these periods are less. Finally, we propose reducing the percentage of default collections that guaranty agencies may retain from 27 percent to 18.5 percent -- about the same rate the Department expects to pay its collection contractors in the future. Our proposals eliminate excess lender profits and streamline the guaranty agency system to make it more efficient and cost-effective, so that students benefit while taxpayers would save more than $3.5 billion over a 5-year period. We are submitting these changes now, so that students can immediately benefit from reduced fees and lower interest rates while we achieve savings crucial to the President's plan to balance the budget by the year 2002.
In order to take advantage of postsecondary education, many students need supplemental forms of support -- particularly those students whose parents have not been to college and whose incomes have been near the poverty level. That is why we continue our strong commitment to the Federal TRIO programs and are requesting $525 million for them -- a $25 million increase. These programs complement the Nation's significant investment in student assistance by encouraging and assisting qualified individuals from disadvantaged backgrounds to enter and complete postsecondary education. This budget increase would expand and strengthen outreach and student services for approximately 725,000 low-income and first-generation college students.
To ensure that educationally and economically disadvantaged postsecondary students receive a quality education, we are requesting an increase of $7.2 million in aid for institutional development that assists colleges and universities that serve large numbers of disadvantaged students. Approximately $6 million of the increase would strengthen academic programs, operations, and endowments in the Nation's Historically Black Colleges and Universities, while more than $1 million of the increase would strengthen Hispanic-serving Institutions. The Department is also requesting continued funding for the Minority Science Improvement program. This program complements institutional development by supporting activities designed to improve science, mathematics, and engineering programs at institutions enrolling large numbers of minority and low-income students.
We are further requesting $3.7 million for the Minority Teacher Recruitment Program -- an increase of $1.5 million -- to serve an estimated 3,000 pre-collegiate students and about 250 college students. This program promotes a more racially and ethnically diverse teaching force, while developing new and effective strategies to recruit, educate, and place minorities as teachers. The proportion of school-age children who are minorities has grown from 13 percent to 30 percent over the past three decades, and continues to grow. In contrast, the proportion of teachers who are minority is projected to be only 5 percent by the year 2000. Greater numbers of minority teachers are needed for schools to foster diversity and serve as important role models to minority students.
Our budget proposal also includes funds for a number of programs that encourage high achievement and effective learning. It includes $132 million for a new Presidential Honors Scholarship program, which would provide $1,000 scholarships for the first year of postsecondary study to an estimated 132,000 high school seniors who graduate in the top 5 percent of their classes. These scholarships support the President's emphasis on responsibility and opportunity, and reward hard-working high-school students by making it easier for them to afford college. We are also seeking $6 million for first-time funding of the Advanced Placement Fees program, which supplements State efforts to subsidize the Advanced Placement Test fees for more than 136,000 low-income students. This program would help low-income students obtain college credit for high school courses by subsidizing this cost and encouraging them to take these tests, thus reducing the time and cost required to complete a postsecondary degree.
The Department also fosters advanced scholarship through the Graduate Assistance in Areas of National Need program. The $30 million we are requesting would support an estimated 1,212 new and continuing fellows, including continuing Javits Fellows. We are also requesting $60.3 million for continued support of our international education programs, as these programs support the development of expertise in foreign languages, area and international studies, and the preparation of a more internationally literate citizenry.
We also propose continued support for the Fund for the Improvement of Postsecondary Education (FIPSE). FIPSE has been very successful in supporting the most effective and innovative higher education projects, and we hope to enhance the dissemination of information about these projects.
We are developing performance indicator plans for all of our programs, and have submitted to you seven program performance indicator packages that we believe represent a strong foundation for ensuring effectiveness and accountability in our student aid and support programs. We will, of course, be using what we learn from performance monitoring trends to develop appropriate corrective actions to further ensure program effectiveness for our postsecondary education programs. These performance indicators are essentially a "work in progress," and I look forward to working with you to improve and strengthen them.
I want to briefly mention one of our TRIO performance plans as an illustrative example. Like the performance indicator plans developed for all of our programs, TRIO's plan includes a goal, objectives, indicators, data sources, and implementation strategies. TRIO's goal is to increase the educational attainment of disadvantaged students. An objective under this goal is to increase participation and completion rates of disadvantaged persons from middle-school through high school, and then through postsecondary enrollment. Two of the indicators we will use to measure progress toward this objective are: 1) the postsecondary enrollment rates of Upward Bound participants compared to comparable nonparticipants, and 2) the number of Talent Search and Educational Opportunity Center participants who apply to college and/or financial aid compared with the overall number of participants served by the two programs. The data sources for these indicators will be annual performance reports of grantees, national evaluation studies, and the National Educational Longitudinal Study. Our implementation strategies include: disseminating information on effective project practices and strategies, using national evaluation studies' data , and redesigning grantee performance reports to better measure program effectiveness.
President Clinton has pledged to make at least 14 years of education the standard in America. Our budget request, along with the Administration's tax proposals, moves us toward this goal by significantly expanding access and educational opportunity for all citizens.
My colleagues and I will be happy to respond to any questions you may have.
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