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profit or nonprofit. Certainly a proprietary nonprofit school should be required to comply with the criteria. The Congress should take this opportunity to further strengthen these criteria in certain areas where they have proven inadequate.

Senator AIKEN. You would require the State to set up some accrediting agency for each school where they do not require it now? I think in every State schools are accredited by the State board of education usually.

Representative TEAGUE. Up to this time most of our distinction has been profit and nonprofit. For example, in your private-school set-up over the country you have two associations, and one of them is more or less the accredited group, and the other one the nonaccredited. It seems to me that the point in question is whether the school is an accredited school and not whether it is profit or nonprofit.

Some of the schools say to me, “We are taxpaying schools.”

Senator AIKEN. In my State the private schools are also accredited by the State board of education.

Representative TEAGUE. Yes, sir. Senator, I might say that we have not gone specifically into your State, but so far as we know your State has done an excellent job under the GI bill.

Senator, I would like to mention a few points that I think are omissions.


1. S. 1940 does not clarify the relationship and relative authority of the Veterans Administration and the State approving agencies.

Up in Pennsylvania, for example, we found a complete breakdown of the State approval agency, and since that time the head of the State approval agency has been removed, and they closed, I believe, some 80 schools, and there are a number of indictments which have been made up there.

Senator Hill. You had 80 schools up there that really and truly were not qualified to take part in this program?

Representative TEAGUE. Right, sir. This weakness was inherent in Public Law 346, Seventy-eighth Congress, and has caused difficulty in the administration of the program.

Senator Hill. In that connection Senator Aiken has made a suggestion here. I wonder how many of those schools were just set up for the purpose of participating in this program, primarily for the purpose of making a profit out of it.

Representative TEAGUE. There is no question, Senator, that this bill was set up in a way that encouraged people who were not interested in education but were interested in dollars to come into the educational field, and that was true to a great extent in Pennsylvania.

Senator Ives. Could you tell me whether any schools have been in existence of any type, either private, public, profit, or nonprofit, prior to the act affecting the veterans of World War II which were found to be of a type which could not be accredited for this purpose ?

Representative TEAGUE. Senator, I am sorry I missed the first part of your question.

Senator Ives. I was wondering whether any of the existing schools prior to the effectiveness of the act which pertained to veterans of


World War II, many of those schools in existence fell in the category which could not be accredited, which did not conform to the requirements established under the act ? Do you know whether there are any such schools?

Representative TEAGUE. Yes, I am sure there are. I cannot remember a specific instance at this moment, however. Senator, I do not think I have a very good answer to your question at the moment. I know that we found some during our investigation.

Senator Ives. The reason I raised the question was because I think Senator Aiken put his finger on one of the key points. A lot of them have been created out of whole cloth in order to make money rather than to provide education facilities. It occurred to me that probably the ones prior to this time were possibly all right.

Representative TEAGUE. I remember one here in the District of Columbia, a man had a school, and it has been in existence for some 20 years, but the VA program came in, and all his students became veterans, and it drove the other people away. His school, after the criteria was set up, was declared ineligible to receive benefits.

Senator Ives. What kind of school was that?
Representative TEAGUE. It was typing, shorthand.
Senator Ives. A sort of trade school, commercial school?
Representative TFAGUE. Right, sir. I remember that one now.

Senator AIKEN. Of course, I think we want to take into consideration that not all the schools that were set up at that time were set up for the express purpose of seeing how much of the veterans' funds they could get, because the GI program in itself resulted in crowding the facilities of the older schools, and certainly expansions and in some cases the establishment of new schools was just about necessary.

Representative TEAGUE. Certainly that is true.

Senator AIKEN. But the kind of school to which Congressman Teague was referring was the kind set up for the express purpose of getting as much of this educational fund as possible with the idea that after a few years they would either have an established school or else they could go out of business with a profit.

Representative TEAGUE. Right. In Pennsylvania when they checked the school they checked the physical side of the school, but there was nobody, neither the Veterans Administration nor anybody in the State, that checked the people that were going to run the school.

Senator Ives. I did not want to create the idea that all of the schools that came into existence since this act became effective were of dubious character. For instance, Champlain College in Plattsburg, N. Y., was set up of necessity. We had to have the facilities.

Representative TEAGUE. In our investigation we were concerned that we were dealing with abuses and that we did not give all profit schools a black eye, because many of them have done a good job. But we did not think we got our money's worth out of it.

Senator Hill. Do you recall offhand what the program has cost

Representative TEAGUE. As I remember, approaching $14,000,000,000. Mr. Monk is here, and he could tell us, I am sure. I believe it was approximately $14,000,000,000.

Senator, I would like to cover a few points of omission. I started out as to the relationship between the State approving agencies and

up to date?

the Veterans' Administration. In our investigation the Veterans Ad

' ministration people testified that they should have all the power. I say some of the Veterans Administration people and the regional manager in Tennessee recently testified that.

The State people testified that they should have the authority. Where, in between there, there should be a compromise, that I do not know exactly what it is, but I do not believe the Veterans' Administration should have all the authority, and I do not believe the States should.

The authority to approve educational institutions as being qualified and equipped to train veterans was properly vested in the States. The Veterans Administration is required to reimburse schools for services rendered in training veterans. Such a plan creates a joint Federal-State program. Public Law 346 did not clearly define the relative authority of the State and Federal Governments, and the obligations and responsibilities of the State approving agencies are not clearly outlined. The Administrator of Veterans Affairs is pre-cluded from interfering with the operation of a State approving agency or State educational institution, and this restriction might be interpreted to mean that the Administrator cannot act so long as the school is approved, regardless of evidence of fraud or violation of law. The new act for Korean veterans should clearly settle these issues.

2. I have mentioned previously the final authority of the Administrator to render decisions which are not subject to judicial review. This situation was partially corrected by Public Law 610, Eightyfirst Congress, which amended Public Law 346 in that a Veterans” Education Appeals Board was established which could review tuition claims by schools and certain other acts of the Administrator and make a final administrative determination. S. 1940 does not extend the authority of the Veterans' Education Appeals Board to the program proposed for Korean veterans.

Senator AIKEN. You refer to “Korean veterans.” It was testified here yesterday that this bill is intended to cover all servicemen in the future. Are your studies in the House being conducted with that end in view ?

Representative TEAGUE. Yes, Senator.

Senator AIKEN. And you are simply using “Korean veterans" as a term?

Representative TEAGUE. That is right. As I said to begin with, I think that whatever we pass now will be a basis for the future. We have had a program and have seen what happened and certainly we should be able to write a law that would be a sound basis for all future veterans educational benefits

Senator AIKEN. I asked a question of a witness yesterday whether enactment of a law of this kind which provides a month's education for a month's service would result in the boys going to college for 2 years and then going into service for 2 years in order to get the last 2 years of education free. Do you think it is likely to have such an effect?

Of course they have to serve 2 years in the armed services anyway, so that in that way they will be foolish from a financial standpoint to complete their 4-year course and then have to serve 2 years, and under the bill here they would then be entitled to a year's refresher



Representative TEAGUE. Senator, it so happened that I had to work my way through school, and if after 2 years I could have gone into the service and come back and finished up I would have done it.

Senator AIKEN. It would help more boys finish up their college; would it not?

Representative TEAGUE. Right. If you go down to get labor statistics, the country will gain that much back over a period of a man's life.

Senator AIKEN. Does it not seem likely that as a result of legislation such as is contemplated you would have a boy spend 2 years in college and then 2 years in service and then 2 years in college, or he might go into service after high school?

Representative TEAGUE. I think if a boy could not get by he would do it, but if he had the money he would go to college.

3. S. 1940 proposes that the veteran will pay one-half of his own tuition from funds received directly by him from the Veterans' Administration and the Veterans' Administration will pay the remaining half. Apparently it is contemplated that the Veterans Administration will negotiate a contract under which it will disburse one-half of the tuition received by the school. Reclaims for erroneous payments could be effected under this contract. In cases where veterans were overcharged or made erroneous payments of tuition and other charges from funds paid to them by the Veterans' Administration, there appears to be no recourse, since S. 1940 does not establish authority for recovery of tuition payments illegally secured from veteran trainees.

4. Public Law 346 and S. 1940 are both silent regarding Veterans Administration and State employees owning interest in private schools or receiving profits or payments from private schools which are under contract with the Veterans' Administration for the training of veteran trainees and which are under the direct supervision of State employees. S. 1940 does not propose to restrict a Veterans Administration employee from leaving the Veterans' Administration and immediately becoming associated with a private school under contract with the Veterans Administration.

It has been a common practice under the present program for contract officers to establish a very favorable rate for a school and then leave the Veterans Administration to take a job with the school at a much higher salary. The new law should prohibit ownership of private schools by Veterans' Administration and State employees, and those employees should be prohibited from receiving payments, profits, or gifts from such schools. Such employees should not be allowed to enter the employment of a private school under contract with the Veterans' Administration for a period of 1 year following termination of their employment with the Veterans' Administration.

Senator, in Texas we found 56 GI schools being operated by former Veterans Administration employees. We went to the State capital there, and we found many cases where a man was still in the Veterans' Administration and owned an interest in the school.

In many cases two men had worked in the Veterans' Administration, and they had worked up this school. One of them would leave the Veterans Administration and run the school, and the other would stay in the VA apparently to take care of the school in the contract.

Senator HILL. You found 56 cases in your State alone?



Representative TEAGUE. Yes, sir. One of the reasons for that was that the Ştate legislature was not in session to set up a State approval agency when this law was passed, and for a period of time I do not think the Veterans’ Administration was aware that this was going

We had no State approval agency, and it was up to the VA to approve those schools.

In Pennsylvania a school owner, who testified that he made about 70-some-odd-thousand dollars the previous year under the GI bill, testified that he hired this contract officer from whom he received a very good contract. We have no way of knowing what went on, but we know he got an excellent contract and the man left the Veterans’ Administration and went to the school and was receiving a much better salary than he was receiving in the Veterans' Administration.

5. The status of veterans having eligibility under Public Law 346, Seventy-eighth Congress, and also accruing eligibility under the proposed program should be clarified.

Senator Hill. Let me ask you this question: With a more diligent policing of this thing, could not much of that have been prevented ?

Representative TEAGUE. We think a lot of it could, but also, Senator, at that time a lot of emphasis was being placed on getting the boys into the schools. The Veterans' Administration had placed on them a tremendous burden. I think in the Texas office the head of that office should have been more aware of local condition than he was.

I do not know; they certainly had a job on their hands.

Senator Ives. As a matter of fact, at that time it was contemplated that this set-up was going to be strictly temporary, and it was to meet the situation occasioned by World War II, and no one was anticipating the situation where we might find ourselves faced with war during our lifetime and the lifetime of a good many of the younger ones?

Representative TEAGUE. Correct.

5. The status of veterans having eligibility under Public Law 346, Seventy-eighth Congress, and also accruing eligibility under the proposed program should be clarified. Current Veterans' Administration regulations provide that a veteran who initiated a course of training under Public Law 346 prior to July 25, 1951, and who was called into active military service prior to July 25, 1951, or the last date for his regular reentrance into training may reenroll under Public Law 346, Seventy-eighth Congress, upon discharge from military service. No provision is made for the veteran of World War II who has been called to active military service during part of the period of his entitlement to enrollment under Public Law 346 and who had not initiated a course of training. This veteran should have the privilege of electing benefits under Public Law 346 or the new program and should have a period equivalent to the period of eligibility for training which he lost as a result of military service during which he could elect training under either program.

6. S. 1940 does not provide specific penalties for conspiracy and fraud by schools or veterans or acts of bad faith and gross misconduct in the use of his entitlement on the part of a veteran. The new law should establish severe penalties for those schools and veterans who abuse the privileges established by the law.

Now, Senator, in Pennsylvania we had a number of veterans to come before our committee and testify that they were driving cabs

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