training, there might be some real man uncovered in that field? Is that right? I think you used the words "potential engineers" or some word like that.

Mr. WOHLFORD. That is right.

Mr. RANDALL. Would you care to elaborate just a little bit on that? Mr. WOHLFORD. All of these people are potential somethings and unless we get them in school, why, that potentiality may never blossom

out.

Mr. RANDALL. That is what I wanted to find out, how you felt about that.

That is all.

Mr. GEORGE. Mr. Wohlford, we thank you very much.

Mr. ADAIR. Mr. Chairman, could I ask one further question?

Mr. GEORGE. Certainly, Mr. Adair.

Mr. ADAIR. You are here as the representative of the State Approval Agencies?

Mr. WOHLFORD. Yes, sir, that association.

Mr. ADAIR. If legislation of this sort were enacted, would it be necessary to expand your activities or could the further work entailed by such legislation be handled by existing personnel in your opinion?

Mr. WOHLFORD. The legislation on the books now, as far as the action of State Approval Agency people under Public Law 550 and 346, that can remain as is, and the people that are working in our programs nationwide could and would handle the new program.

Mr. ADAIR. Without any augmentation of personnel?

Mr. WOHLFORD. Yes, sir, that is right. Because, as I mentioned in the beginning, I would say-90 or 95 percent of us, I guess, are presently employees of going State departments of education and things like that. It is not something that was set up to take care of this alone.

Mr. ADAIR. Suppose that this type of legislation were not enacted, would that have an adverse effect upon the amount of activity that would exist in your opinion?

Mr. WOHLFORD. No, we would, you might say, get back into our original field more than we are at the present time and have been over the past 15 years.

Mr. ADAIR. Thank you.

Mr. GEORGE. Thank you, Mr. Adair.

Mr. RANDALL. One question along that line.

Mr. GEORGE. Mr. Randall.

Mr. RANDALL. In other words, you would not lose your job either way here, is that right?

Mr. WOHLFORD. No, sir.

Mr. RANDALL. I want to get that point clear. You are not here for fear of losing your job?

Mr. WOHLFORD. I have been working down there for 29 years. Before they fire me, I will quit.

Mr. RANDALL. All right.

Mr. GEORGE. Mr. Wohlford, I judge that in your opinion the bill under consideration, the legislation which we are considering, is not the shotgun approach, is that right?

Mr. WOHLFORD. No, sir.

Mr. GEORGE. Thank you very much, sir.

We have some gentlemen from the General Accounting Office. Mr. Lloyd Nelson, will you introduce the men that are with you and proceed?

STATEMENT OF LLOYD A. NELSON, ASSOCIATE DIRECTOR, CIVIL ACCOUNTING AND AUDITING DIVISION, U.S. GENERAL ACCOUNTING OFFICE (ACCOMPANIED BY SIDNEY JERVIS, ASSISTANT DIRECTOR, CIVIL ACCOUNTING AND AUDITING DIVISION; AND WAYNE SMITH, OFFICE OF GENERAL COUNSEL, U.S. GENERAL ACCOUNTING OFFICE)

Mr. NELSON. Good morning, Mr. Chairman and members of the committee, I have with me here Mr. Sidney Jervis, who is Associate Director of Civil Accounting and Auditing Division, and Mr. Wayne Smith from the Office of the General Counsel.

Mr. GEORGE. Glad to have you. Please proceed.

Mr. NELSON. Mr. Smith has worked a great deal on these educational matters for some time.

Mr. GEORGE. You may proceed, sir.

Mr. NELSON. Mr. Chairman, I have a prepared statement that I would like to read into the record.

Mr. GEORGE. You may summarize it in your own language or read it, whichever you choose.

Mr. NELSON. It is not too lengthy and probably the quickest way to get our point across is to read the text as we have it drafted.

Our office made a review of the Senate bill S. 1138, and related bills introduced in the House of Representatives, regarding veterans' readjustment assistance. S. 1138 provides in general for the extension to veterans with peacetime service of the benefits provided under the education and training program and the home and farm loan program, heretofore established for veterans with wartime service, and for the broadening of the existing vocational rehabilitation program so as to include veterans who have incurred disability during peacetime service immediately following the periods of World War II and the Korean conflict.

The Comptroller General sent the committee a letter dated October 6, 1959, containing the General Accounting Office detailed comments on the provisions of S. 1138. This letter, I believe, has been introduced into the record.

Therefore, this statement will only summarize some of the major items covered in that letter.

The provisions of the proposed new chapter 40 of title 38 of the code, as expressed in S. 1138, are patterned substantially in accordance with existing chapter 33 of the code relating to "Education of Korean Conflict Veterans."

It would seem, therefore, that the purposes desired by the new chapter 40 could be accomplished by appropriate amendments to the existing provisions of chapter 33, title 38.

The purpose of section 2 of the bill, as stated in section 1908 (c), of

providing vocational readjustment and restoring lost educational opportunities to those servicemen and women whose educational or vocational ambitions have been interrupted or impeded by reason of active duty—

during peacetime, and

of aiding such persons in attaining the educational and training status which they might normally have aspired to and obtained had they not served their country

during peacetime, seems somewhat incompatible and inconsistent with the existing concept and policy underlying the administration of the selective service law which is designed to minimize as much as possible any disrupting effect peacetime service might have on the particular educational, vocational, and profesisonal objectives of individuals selected for active peacetime service.

Also, a substantial number of individuals who choose the military service as their field of endeavor-career service men and womenbecome specialists and receive commissions, and remain on active duty for many years.

The initiation of a program of educational training by such veterans for the attainment of a predetermined and identified educational, professional, or vocational objective, following a career in the service and participation in the many advantageous educational and vocational opportunities there available, could not reasonably be regarded as in keeping with the stated purpose of the bill.

Section 1909 (a) (4) of the bill should be clarified so that where a husband and wife are both eligible for educational assistance, their child may be counted as a dependent for only the husband or the wife and not for both.

A termination date for the education program has not been fixed. Section 1913 of S. 1138 as now written would, if enacted into law, continue the educational assistance program indefinitely.

Under section 1923-"Disapproval of enrollment in certain courses"-attention is invited to the provisions of section 1723 (c) of chapter 35, title 38, of the code, providing war orphans' educational assistance, which prohibit the approval of enrollment

in any course of apprentice or other training on the job, any course of institutional on-farm training, any course to be pursued by correspondence, television, or radio.

It is realized that a similar prohibition was not included in chapter 33 providing for educational assistance to Korean conflict veterans. However, at the time the later war orphans assistance program was proposed, cogent reasons based on educational and administrative considerations were advanced for the prohibition of these courses. A question also arises as to whether a more liberal program should be afforded peacetime veterans than that provided for war orphans. Uniform course requirements under the program seem desirable and would tend to simplify administration.

Section 1933 of the bill, if enacted, will likely give rise to many complex situations. It provides for a system of financial assistance in the form of grants or loans depending on the veteran's standing in his class. This provision will be most difficult to administer when some veterans receive grants if their class standing is high enough, while others obtain loans which are convertible to grants after a showing of adequate class standing.

The bill appears inequitable in the treatment of peacetime service veterans enrolled in institutions of higher learning and veterans en

rolled in other institutions. The veteran enrolled in other than an institution of higher learning does not have to place in the upper half of his class to continue receiving a grant for education, while the veteran enrolled in an institution of higher learning may be placed on a loan basis if his standing in the class falls below the upper half. The bill and present law are both in need of clarification regarding the payment of $1 for monthly reports from schools.

Section 1954, "Approval of nonaccredited courses," as in chapter 33, makes no provision for the approval of correspondence courses. If courses pursued exclusively by correspondence are to be included. in the program, it is suggested that criteria for their approval be included.

Section 4 of the bill would extent to post-Korean conflict veterans the loan benefits now available to World War II and Korean conflict veterans under chapter 37 of title 38 of the code by the addition of a new section 1818 and other amendments to this chapter. The benefits would include the guarantee of home loans, farm loans, and loans to refinance certain types of delinquent indebtedness.

Under the provisions proposed each veteran obtaining a guaranteed or direct loan would be required to pay in advance to the Administrator a fee not to exceed one-half of 1 percent of the total loan amount. Within this limitation, the amount of the fee would be established by the Administrator periodically and deposited to the Treasury to the credit of a mortgage guarantee fund which would be created under the amendments.

It is indeterminable as to whether even the maximum allowable fee of one-half of 1 percent would be adequate to cover the costs of claims and other transactions related to these guaranteed loans.

In comparing the fees that would be paid on a $10,000 small home loan when guaranteed in accordance with the provisions of the bill with the fees that would be paid on a similar loan insured by the Federal Housing Administration, it appears that, regardless of the terms of the mortgage, the maximum fee payable under the bill would be $50.

On the other hand, the total fees payable on an FHA insured loan would be about $760 if the term of the mortgage was 25 years and about $895 if the term was 30 years. FHA insurance premiums are computed at the rate of one-half of 1 percent per year on the declining balance of the mortgage.

We believe that consideration should be given to amending the provisions of section 4 so as to provide that all costs related to the administration of the loan program would be borne by the guarantee fund and that such costs would be considered by the Administrator in establishing the rate of the guarantee fee to be charged.

With reference to the general purposes of the bill, it would seem that the establishment of education and loan programs for peacetime veterans as proposed by the bill would likely result in making these benefits available to a great majority of all our citizens, men and women, who may enter military service.

Under Public Laws 78-16, 78-346, and 82-550 the Congress considered it appropriate to provide such benefits to veterans who, by reason of their military service during war periods, were in need of

assistance in readjusting themselves to civilian life during a period of economic instability.

The same degree of economic instability does not exist today. During wartime the normal activities of those called into service are seriously disrupted, whereas during peacetime many individuals may enter the service at an age when their college training has been or could have been completed. Also the available arrangements for military service provide so many alternatives that an individual may plan his program in such a way as to obtain his education either before entering or, in part, while in service.

If the proposed bill should become law, it seems likely there would be a tendency for young men and women to enter the service following completion of high school, rather than enter a college or other training facility, in order to gain the advantage of receiving education or training at Government expense after ther discharge from service. There might develop, as a result of making these benefits available generally, a greater tendency, not only on the part of those entering the service, but also on the part of those who are already serving in the Armed Forces, to leave after they have served the minimum period required to earn their desired entitlement.

It seems illogical to provide assitance in the form of a gratuitous benefit which, with respect to many who may become eligible for military service, might cause them to change their normal programs for attaining their education, vocational, or professional objectives, or which might encourage those in the career service of the Armed Forces to curtail or terminate their periods of service, in order to receive financial assistance from the Government.

The element of cost is a factor in the proposed legislation. The Veterans' Administration estimates the cost of the education and training program at about $3 billion for the period 1961 through 1973 and a peak annual cost of about $379 million.

Under the provisions of S. 1138, a veteran with no dependents would recive $110 per month, and a veteran with two or more dependents would receive $160 per month, while in full-time training.

Since S. 1138 provides 112 days of training for each day of service, a veteran can gain the 36 months of full-time training by being in service for 24 months. The total payment to a veteran without dependents would be a maximum of $3,960 and to a veteran with two or more dependents a maximum of $5,760. Converting these maximums to a monthly rate while in service indicates that the veterans without dependents could receive $165 in educational assistance for each month of service and the veteran with two or more dependents could receive $240 for each month of service.

That concludes our statement, Mr. Chairman. We will be glad to work with the committee and the staff in perfecting the legislation if you desire.

Mr. GEORGE. Mr. Nelson, thank you for testifying.
Mr. Adair?

Mr. ADAIR. No questions.

Mr. GEORGE. I would like to ask you one question.

You talk about the training and discharge and incentive to leave the service. Is not one of the purposes of the draft to create a large body of organized trained men who have the training back in civilian life ready for emergencies?