ticularly helpful to private colleges. They are willing to make loans in the open market and occasionally do so. As a general rule, however, the fact that their bonds are not tax-exempt and that their credit rests on a narrower basis than that of the larger institutions rules out the possibility of private loans except at a prohibitive rate of interest.

Senator CLARK. Is it not generally true too, sir, that most of these colleges do not have large enough or rich enough alumni bodies to make it feasible to raise all the money you need from that source? Father BUNN. Very definitely.

I tried personally to raise a loan for a nursing dormitory back in 1954, and I could not get any proper rates at all.

It is no exaggeration to say that without the Federal loans these colleges would not be able to meet the demand of the increasing number of students that seek higher education, and we know the demand that is in the future.

Our association is opposed to the amendments of the existing law which are embodied in title V of S. 3399 which would have the general effect of making it harder for our members to obtain Federal loans.

The views of our association are expressed in the following resolution:

Be it resolved, That the association record its conviction that the College Housing Program has played an indispensable part in enabling our colleges and universities to meet the increasing demands made upon them in recent years, its gratitude for the action taken in the first session of the 85th Congress to increase the funds available for the program and to maintain the present interest formula, and its earnest hope that the Congress will continue to preserve the terms established by the existing law for the colleges and universities to obtain housing loans.

I would like to say a word about one particular provision which appears for the first time in this bill and which is evidently directed to the special problems of the small private colleges. I refer to the provisions proposed in section 405 for taxable bonds of educational institutions up to an overall total of $100 million to be guaranteed by the Federal Government under debt service guaranty contracts. We do not object to this provision in principle, but we are extremely skeptical about its practical value.

A comprehensive study of college housing finance carried out just over a year ago by the American Council on Education showed that very few private investors would be interested in the bonds of private educational institutions at an interest rate of less than 5 percent.

So wide a gap can hardly be closed by any device for making college bonds more attractive to private investors except in a few individual cases where unusually favorable circumstances would enable the institution to raise a private loan in any case. The gap will certainly not be closed merely by a Federal guarantee against default. To my knowledge, there have not been any defaults on college housing loans, public or private.

Senator CLARK. I think your argument is buttressed by our experience with the FHA and VA programs where the Federal guaranty has certainly not resulted in decreasing the interest rate to anything like what you are paying under the present college program.

Father BUNN. That is right.

In these circumstances, we are afraid that section 405 would just establish a further procedure for our colleges to go through-one more hurdle to be surmounted-before they could obtain loans and get on with the job of providing needed facilities for their students. We are content with the college housing program as it stands. It enables our colleges to borrow on terms which they can meet-and this is important-without an unreasonable increase in their charges which at the same time are elastic enough to give fair protection to the Federal taxpayer.

All we ask is that, with such additions to the fund as are needed to meet reasonable demands on it, the program be continued in its present forin.

Senator CLARK. Father, do you have any views either personally, or does your association have any views, as to the desirability of extending the college housing program so as to make it available for the construction of alboratories, libraries, classrooms, and the like?

Father BUNN. I do not think the members of our Association-I think the members of our Association would favor loans for that purpose. I am not sure whether they would favor grants.

Senator CLARK. The present bills only have to do with loans.
Father BUNN. Loans, yes.

Senator CLARK. Would you be concerned about any possibility of Federal control of education if such a program were adopted?

Father BUNN. No, I do not see any difficulty about Federal control. Senator CLARK. Have you seen any such difficulty so far as the present program is concerned?

Father BUNN. None whatever. Not in the least.

Senator CLARK. Thank you very much, Father.

So that the college witnesses may appear together, we will ask Mr. Caldwell, representing the American Association of Land-Grant Colleges to come forward next. I should have said President Caldwell of the University of Arkansas. We are very happy to welcome you here, President Caldwell, and look forward to hearing your testimony. STATEMENT OF JOHN T. CALDWELL, PRESIDENT, THE UNIVERSITY OF ARKANSAS, REPRESENTING THE AMERICAN ASSOCIATION OF LAND-GRANT COLLEGES AND STATE UNIVERSITIES, AND THE STATE UNIVERSITIES ASSOCIATION

Mr. CALDWELL. Thank you.

Senator CLARK. I think you can just proceed to read your statement. If there is any part of it you want to skip over more lightly, please feel free to do so.

Mr. CALDWELL. I appreciate that. There would be some repetition in the points of view expressed here, some that I will repeat as a matter of emphasis.

Senator CLARK. Why do we not just put your statement in the record in full at the end of your remarks and then ask you to emphasize those parts you would like to call particularly to our attention. Mr. CALDWELL. I shall do so.

Mr. CALDWELL. For the record, my name is John T. Caldwell, and I am president of the University of Arkansas. I am here today repre

senting the American Association of Land-Grant Colleges and State Universities and the State Universities Association.

The State Universities Association has 24 members, the nonlandgrant State universities. The Land-Grant Association has 70 members, of which 68 are land-grant institutions-State colleges or universities for the most part. The combined nonduplicating membership of the two associations is 93 colleges and universities, which enroll more than 25 percent of all students in degree-granting institutions in this country.

My testimony today is on three pieces of legislation before your subcommittee, all affecting the college housing loan program. They are S. 3213 by Senator Fulbright, title II of S. 3399 by Senator Capehart, and S. 3713 by yourself and others, your bill dealing with academic facilities, and I will leave it to the latter part of my testimony. You may wish to ask some questions on that too.

I want to emphasize that the testimony of our association is directed toward the human element as more than just the matter of dollars and cents in their barest and simplest form. We are talking about whether thousands of young men and women will be able to go to college or not, either in terms of places to live, or places to live at prices which they can afford to pay.

The college housing loan program has made a tremendous contribution to the expansion of college housing-much more than that represented by the actual volume of loans. Its very availability has interested those responsible for private lending in the possibility of longterm loans-in which they have had little interest before. And it has tended to keep private interest rates competitive.

S. 3213 proposed to increase the total limitation on loans under the college housing loan program by $250 million, to a total of $1,175 million, and make no substantive changes in the present legislation. The position of our association is that the total authorization should be increased by $325 million, Mr. Chairman, rather than $250 million. Without going into a great many details on that, I would say that that additional $75 million we are talking about would represent an increase of $50 million in that portion of the program which is earmarked for auxiliary enterprises, dining rooms, student unions, infirmaries, and the like. As a matter of fact, it seems very clear to us that the very purpose of the whole legislation to provide for the increased housing of additional students implies the making of provision for these additional facilities, and we do not believe $100 million, which will be exhausted very shortly, sufficient. It ought to be increased by $50 million.

Then, the additional $25 million which is over and above what you may have heard in the preceding testimony here reflects the fact that, whereas administratively the Bureau of the Budget and the administration had held out $25 million in this present fiscal year, it has now been restored. It will be used up and therefore will not be carried over into the next fiscal year.

Senator CLARK. You are pretty sure it will be used up?

Mr. CALDWELL. Well, we feel it will. There is every indication it will be used up. The University of Arkansas will be using up part of it.

Now, that will mean an increased authorization of $75 million over the legislative proposal here of $250 million to make a total increase

of $325 million. I do not believe I need to dwell on that any further, Mr. Chairman. The case is pretty much made by the facts of the need. Now, title V of S. 3399 proposes several changes in the college housing loan program, which has proved very successful and useful in meeting increased needs. We believe the changes proposed in title V of S. 3399 taken as a group would make the program less useful for all colleges and universities and might conceivably destroy its effectiveness almost entirely as far as many of us are concerned.

Section 501 of that title V proposes that the Administrator of the college housing program would not be required to make a direct loan to an educational institution "unless he determines that private financing is not available to it under terms and conditions which he considers reasonable and consistent with the purposes of the college housing law."

Mr. Chairman, enactment of this provision would change the college housing loan program from a basis clearly defined by Congress into dependence for its effectiveness on the personal views of the Administrator and officials of the Bureau of the Budget and the Treasury. Senator CLARK. I think you know we have had this proposed change up several times in the Senate in the last 2 years.

Mr. CALDWELL. Yes, sir.

Senator CLARK. So far we have been able to beat it back.

Mr. CALDWELL. You have declined to change it, and this has been much appreciated by the association.

Senator CLARK. I had hoped we would not buy it this time.

Mr. CALDWELL. Yes.

The present law very clearly calls for a minimum charge of 2.75 percent in interest rate, and beyond that the law prescribes a formula which constitutes both a floor and a ceiling for a Federal loan to an institution which qualifies.

The proposal is that the formula be changed so as to raise the interest rate and then leave it to the Administrator whether or not a college can get a loan at a higher rate, which we feel is quite disadvantageous.

Our colleges and universities have great respect for those charged with the administration of the college housing loan program. We would like that to be clear. But, frankly, we do not wish to leave to the Administrator the decision as to whether or not a college will be denied a Federal loan on the ground that it can get one some place else which the Administrator considers as reasonable and consistent with the purposes of the College Housing Act.

Senator CLARK. I hope you do not have to labor that point. You certainly made it very clearly in your statement.

Mr. CALDWELL. Yes, sir. I think I can skip over that. I believe the point has been made very clearly there.

With respect to section 504 of title V, that has been dealt with in the testimony that President Jones gave you this morning and I do not feel that that ought to be labored really. The question of the interest rate formula

Senator CLARK. I think you are right about that. I see you have made that point very clearly, as have the other witnesses.

Mr. CALDWELL. It is in the record here. The point is made, and it has been presented to you previously today.

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Senator CLARK. I think the committee is very alert to the problem. Mr. CALDWELL. Yes, sir.

Senator CLARK. And we are happy to have your support for those of us who agree with you.

Mr. CALDWELL. May I add one specific point in support of our point of view for the lower interest rate. Assuming a $5,000 cost per student in the construction of a given facility on a 30-year loan, the cost to the student would be about $20 a year more under the proposed formula than it is now. Any of these increased charges falls directly upon the students living in the facilities. It is our purpose to keep these costs low.

Senator CLARK. Do you think this increase would seriously affect the ability of any students to go to college?

Mr. CALDWELL. There is a cutting line, Mr. Chairman, at which many a student makes a decision to go or not to go and to take advantage of an educational opportunity.

Now, we refer in our testimony here to sections 505 through 509, which provide for a new program of Federal guaranties of taxable bonds of educational institutions, and from the viewpoint of our association this would be of no particular value. We are informed that the nonpublic institutions feel that the program would be of little value to them.

Senator CLARK. I think it is very interesting, and I would like to emphasize for the record, for those who read it later, that not a single one of the academic witnesses who have appeared before this committee has shown the slightest interest in this proposal of the administration.

Mr. CALDWELL. Yes, sir. That is correct as far as we know, too. Now we come to your bill, S. 3713, which provides for an amendment to the college housing loan program, but in a separate section, to start a program of loans to colleges and universities for construction of classrooms and laboratories and other nonhousing facilities. Authorization for this program initially would be up to $250 million. There is no question but that our colleges and universities urgently need help in providing nonhousing facilities. Since classrooms and laboratories are nonrevenue-producing, many college and university presidents are hesitant about entering into loan arrangements for them at all. They are fearful that the result may be still another increase in charges to students who already pay more of the total cost of their education than in any other major country of the world.

However, experience has shown that other methods of financing amortization can be used than saddling the cost on the students, although those other means are quite limited and not sufficient at all to meet it.

Senator CLARK. In point of fact, if you cannot get a grant from the Federal Government and a few of your group are opposed to loans and you have no rich alumni bodies and your States are pretty well broke, how are you going to get these facilities?

Mr. CALDWELL. Well, as far as the public institutions are concerned, they would depend upon legislative appropriations of their States. But I was wanting to get to this sentence to say that the executive committee of the Association of Land-Grant Colleges and State Universities is inclined to favor this provision, while the State Univer