STUDIES ON FINANCIAL ASSISTANCE TO STUDENTS IN HIGHER INSTITUTIONS

Available from the Superintendent of Documents, U. S. Government
Printing Office, Washington 25, D. C., at the prices stated

Scholarships and Fellowships: A Selected Bibliography, Bulletin 1957, No. 7 by Richard C. Mattingly. 15 cents.

Financial Aid for College Students: Graduate, Bulletin 1957, No. 17 by Richard C. Mattingly 50 cents.

Financial Aid for College Students: Undergraduate, Bulletin 1957, No. 18 by Theresa B. Wilkins. $1.00.

READJUSTMENT BENEFITS FOR INDIVIDUALS ENTERING THE ARMED SERVICES AFTER JANUARY 31, 1955

THURSDAY, FEBRUARY 25, 1960

HOUSE OF REPRESENTATIVES, COMMITTEE ON VETERANS' AFFAIRS, Washington, D.C.

The committee met at 10 a.m., pursuant to adjournment, in room 356, Old House Office Building, Hon. W. J. Bryan Dorn presiding. Mr. DORN. The committee will come to order.

But I do want our visitors to understand that so many of our members are tremendously busy. I might say that this is my 12th year in the Congress, and every year there is an increasing amount of mail and an increasing number of errands to run, and it is just almost impossible to get around. I have 2 days' mail about this high to get to sometime today, I hope, plus a dinner with constituents from South Carolina tonight.

In other words, I leave before my family gets up tomorrow morning, and I tiptoe in late tonight; so I live with them, but I do not get to see them. I do hope to see them Saturday.

Mr. Teague is unable to be here this morning, because he is presenting the $600 million budget of the Space Agency. Obviously this is very important.

We will place in the record at this point a letter of February 24, 1960, from Maurice H. Stans, Director, Bureau of the Budget, and a letter of February 21, 1960, from Edward Aderkas, with respect to the proposed legislation.

(The letters referred to follow :)

EXECUTIVE

OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET, Washington, D.C., February 4, 1960.

Hon. OLIN E. TEAGUE,

Chairman, Veterans' Affairs Committee,

House of Representatives,

Washington, D.C.

MY DEAR MR. CHAIRMAN: This is in reply to your letter of July 23, 1959, requesting the recommendations of the Bureau of the Budget regarding S. 1138, a bill "To provide readjustment assistance to veterans who serve in the Armed Forces between January 31, 1955, and July 1, 1963."

The proposed bill would provide three types of benefits for peacetime exservicemen: vocational rehabilitation for the service-disabled; educational and vocational training allowances; and home and farm loan guarantees and direct loans. The estimated cost would be more than $3.2 billion through June 30, 1973, and some expenditures would continue beyond that date.

The educational and vocational training benefits, though extended wholly on the basis of military service in peacetime, are generally similar to those provided in the Korean GI bill. The period of entitlement would be 11⁄2 times the duration of service and total entitlement would be limited to 36 months; training would have to be started within 3 years and completed within 8 years after discharge (or enactment of S. 1138). Monthly allowances would be identical with those in the Korean program. However, the active duty requirement for eligibility is increased from 90 to 180 days, and in the case of college students interest-free loans instead of grants would be made after the first year in school if the student does not place in the upper half of his class in any school year. Educational entitlement would expire June 30, 1973, but those who continue in military service on a career basis without substantial interruption would be permitted to obtain educational benefits after that date. The cost of these educational benefits through June 30, 1973, would be about $3 billion, of which roughly half would be noncollege instruction or job training.

The proposed new home loan guarantee and direct loan programs also would be generally comparable to the existing programs for World War II and Korean conflict veterans with the exception that ex-servicemen would be required to pay a fee not to exceed one-half of 1 percent of the loan, with the fees credited to a mortgage guaranty fund to offset loan program losses. To the extent that the fund could not meet such losses, appropriations would be authorized by the bill from the Veterans' Administration "readjustment benefits" appropriation. Administrative expenses would also be paid from regular appropriations.

Section 3 of S. 1138 would extend vocational rehabilitation training benefits similar to those provided for World War II and Korean conflict veterans to the peacetime ex-servicemen. The program for peacetime ex-servicemen would be permanent, but coverage of benefits would be restricted somewhat by requiring that those with disabilities of less than 30 percent show a pronounced employment handicap.

The President has recommended that vocational rehabilitation be extended to all peacetime ex-servicemen having substantial service-connected disabilities. Such ex-servicemen now receive unemployment compensation benefits, employment service and reemployment rights, service-connected disability or death compensation, and other benefits. The addition of vocational rehabilitation to these benefits will enable the Federal Government to discharge adequately its responsibility as an employer to peacetime ex-servicemen. At full operation the new vocational rehabilitation benefits would add an estimated $19 million annually to the costs of present programs.

We note that paragraph (b) of section 3 of the bill would eliminate the presently established termination dates for the vocational rehabilitation training programs for veterans who served during the Korean conflict. The Bureau of the Budget believes that it is desirable to follow the established principle of providing definite terminal dates in all the readjustment benefit and related programs and therefore recommends against the indefinite continuation of the present vocational rehabilitation training program for the Korean conflict group. This group is afforded, under present law, up to 9 years to complete vocational -rehabilitation training from the official termination date of the Korean conflict of January 31, 1955. In addition, the law provides that individuals who were unable to avail themselves of these benefits because of illness or certain other specified reasons are to be allowed to continue training for up to 4 years beyond the general terminal dates stipulated in the law. Korean conflict veterans who would not qualify under the present Korean conflict program should, however, be allowed to apply for and obtain training under the permanent program for ex-servicemen, provided that they met the requirements under the new program. While favoring the enactment of vocational rehabilitation benefits for peacetime ex-servicemen, the President has stated

**** I oppose the establishment of special educational and loan guarantee programs for peacetime ex-servicemen. Such benefits are not justified because they are not supported by the conditions of military service. Moreover, they would be directly contrary to the incentives which have been provided to encourage capable individuals to make military service a career."

The principal arguments for special educational and loan benefits for peacetime ex-servicemen are: (a) peacetime military service, when selective service is in effect, disrupts a selectee's civilian career plans (particularly for obtaining education) and warrants readjustment benefits like those which have been

granted for wartime service, and (b) such benefits would serve the national interest by encouraging ex-servicemen to obtain more education or training or by increasing home ownership.

These arguments are not supported by the facts:

(1) The present conditions of military service, even during a period of cold war, differ substantially from wartime conditions in a number of important respects. The draft has a lesser impact on disrupting of educational and career plans; service personnel are exposed to fewer rigors and hazards; and educational and vocational training opportunities while in service are excellent. This can be illustrated in the following ways

(a) Selective service procedures and military reserve programs under peacetime conditions can be and are operated to avoid interference with educational or vocational training programs. The period of required service is definitely known and is shorter than in wartime. Young men under age 22 are not now being drafted, which provides them ample time to complete educational and vocational programs prior to service. Deferment policies, liberally applied, also permit deferments for individuals in any field of study and continuing them up through the graduate level. Moreover, military reserve programs afford over 30 ways to fulfill the military obligation; most of these allow completion of educational programs prior to service. Far fewer individuals are affected by the draft. In 1959 only 96,000 individuals were drafted, as compared to over 3 million during 1943, the peak year of World War II, and 550,000 in 1951, the peak year of the Korean conflict.

(b) Peacetime service is clearly much less hazardous than that in wartime. Exposure to combatlike conditions is rare and affects relatively few individuals. The amount of service in isolated posts is minimized by rotation policies and is offset by provision of amenities not possible during wartime. The pace of peacetime service permits greater attention to safety and comfort even in circumstances of direct battle training. A high percentage of servicemen now serve in jobs comparable to civilian occupations and runs no more risks than their civilian counterparts. This can be strikingly summarized by service mortality statistics which show that 1.7 deaths per 1,000 were reported in 1959, as compared with 5.5 per 1,000 annually during the Korean conflict and 11.6 per 1,000 annually during World War II.

(c) Educational and vocational training opportunities provided by the armed services in peacetime exceed those in wartime. Since World War II, the types of jobs in the armed services have changed considerably, to the point where civilian-type jobs greatly outnumber the traditional military jobs. To meet these space-age changes the Armed Forces have established a much more extensive program of on-the-job training and on-duty formal schooling in skills related to civilian jobs. The services spend over onehalf of a billion dollars annually on service schools alone; in 1959 about 300,000 servicemen received such training, many in skills that will be useful to them when they return to civilian life. Off-duty educational activities are also encouraged by the services and substantial financial aid is provided. Hundreds of thousands of servicemen are studying by correspondence with the U.S. Armed Forces Institute or with 44 affiliated colleges, are studying Vocational or educational courses in classes given on base, or are attending high schools, technical schools, and colleges located near the base. The net effect of on- and off-duty opportunities is that a serviceman can obtain a high school diploma, progress significantly in vocational proficiency, or complete a substantial amount of college.

(d) Two further considerations illustrate additional differences between wartime and peacetime service: First, military pay as increased by the Military Pay Act of 1958 and the services' fringe benefits are presently at higher levels than ever before; second, peacetime ex-servicemen are being released in comparatively small and steady numbers and do not encounter problms of economic adjustment of the magnitude that resulted from the mass demobilization of millions of wartime veterans.

(2) Enactment of S. 1138 would tend to lessen the effectiveness of various steps which have been taken during the past few years in order to retain qualified personnel in the Armed Forces on a career basis. The Military Pay Act of 1958, enacted at a first-year cost of $500 million, is an example. Enactment of S. 1138, however, would lead to expenditures averaging $300 million