sities Association would prefer to study its implications a little bit further before taking a position. Senator CLARK. I am sure if some of my friends on the right side of the table were here they would ask you to spell out for the record why the State Universities Association is, shall we say, dubious. I want to be fair, to be sure all the arguments for and against appear in the record; since none of them are here this morning, I think it is only fair to ask that question. Mr. CALDWELL. I think I would have to put it this way, Senator: Generally speaking, the presidents of the institutions I represent would prefer not to lay upon students the burden of financing libraries, classroom buildings, and laboratories. Now, we feel that they ought to be financed from some other source. Senator CLARK. Namely, grants? Mr. CALDWELL. I beg your pardon? Senator CLARK. Are not those grants going to have to come in large part from some unit of government? Mr. CALDWELL. Yes, sir. As far as the public institutions are concerned, they would ordinarily come from the States. Senator CLARK. With respect to private institutions, it is pretty difficult to get governmental grants and, if you bring it right on top of the table, with the church-state problem, with respect to religious institutions, I am wondering whether you feel, President Caldwell, that the State of Arkansas is going to be able to dig deep enough down into its pocket to give you the legislative grants you need, to give you the facilities I know you need, and that you think you have to have. Mr. CALDWELL. The evidence is right now that they are not. But I wanted to say that I believe that any reluctance on the part of the presidents to endorse this method is that the very existence of this Federal loan program for these nonrevenue-producing facilities might encourage some of our State legislatures not to do the job that they ought to be doing, and, therefore, as a result, we would have to saddle the students with additional charges to finance the academic buildings on the campus. Now, we are doing that to some extent on our own campus right now. Senator CLARK. The view of those who oppose this loan program then would be that if it were adopted it would get in their way in seeking larger grants from either their tax-levying bodies or their alumni? Mr. CALDWELL. I am certain that that is part of the reluctance, part of the reason. Senator CLARK. That, of course, is a question of judgment. Senator CLARK. It also involves the willingness of State legislatures to measure up to the educational needs. It involves a question of the inherent wealth of the particular State. And, as far as the private institutions are concerned, it involves giving up pretty much, I would think. Mr. CALDWELL. Exactly. But assuming that the other sources might not be available, I must say that the very existence of a lowinterest rate Federal loan for these purposes might be very welcome indeed. Senator CLARK. Thank you very much, sir. Mr. CALDWELL. I think that is all I have to say, Mr. Chairman. Thank you so much for hearing me. Senator CLARK. Thank you very much, President Caldwell. It has been a pleasure to have you before the committee. (Mr. Caldwell's prepared statement follows:) STATEMENT OF JOHN T. CALDWELL, PRESIDENT, UNIVERSITY OF ARKANSAS, ON BEHALF OF THE AMERICAN ASSOCIATION OF LAND-GRANT COLLEGES AND STATE UNIVERSITIES AND THE STATE UNIVERSITIES ASSOCIATION Mr. Chairman, and members of the committee, my name is John T. Caldwell, and I am president of The University of Arkansas at Fayetteville, Ark. I am here today representing both the American Association of Land-Grant Colleges and State Universities and the State Universities Association. The State Universities Association has 24 members, the nonland-grant 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 degreegranting institutions in this country. My testimony today is on three pieces of legislation before your subcommittee, all affecting the college housing program. These are S. 3213, by Senator Fulbright; title II of S. 3399 by Senator Capehart; and S. 3713 by Senator Clark and others. Senator Clark's bill deals with academic facilities, and I will leave its discussion to the last part of my testimony. Before starting any detailed discussion of the provisions of these bills, I want to emphasize that while we talk in terms of interest rates and the like, the real effect of what is done must always be thought of in human terms. What we are talking about is 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 long-term loans-in which they have had little interest before. And it has tended to keep private interest rates com-> petitive. S. 3213 proposed to increase the total limitation on loans under the college housing loan program by $250 millions, to a total of $1,175 millions, and make no substantive changes in the present legislation. We recommend that the increase in total authorization for the program be $325 million rather than $250 million, and that the present limitation of $100 million on loans for auxiliary facilities related to housing be raised to $150 million (within the total ceiling authorized for the program). If an increase is made in the authorization for loans for housing of student nurses and internes (now $25 million), our recommendation of a total increase of $325 million should be increased correspondingly. Our reasons for recommending an increase of $325 million in the total authorization, rather than $250 million or a lesser amount, are as follows, Mr. Chairman: (1) Both the $250 million increase proposed in S. 3213 and the $200 million increase proposed in S. 3399 do not involve an increase in the $100 million authorization within the total program for auxiliary facilities related to housing. This $100 million limitation is now exhausted, and we recommend it be increased by $50 million and corresponding funds made available. The auxiliary facilities authorized within the total special limitation include student unions with extensive cafeteria facilities, other central eating facilities serving several dormitories, necessary expansion of power plants and other facilities to serve expanded student housing, student infirmaries, and the like. Experience has shown that in many instances such facilities are essential for an adequate housing program. Central eating facilities serving a dormitory group or in some instances an entire campus are frequently more economical to construct and operate than separate facilities in each unit. The same holds true of certain recreational facilities. Administrators of the program have sufficient authority to see, and have seen, that this section is not used for other than essential facilities. It should not now be abandoned for lack of further funds. (2) Our second reason for recommending the $325 million figure is that the $250 million increase proposed in S. 3213 and the $200 million recommended in S. 3399 were based on the statement in the budget message that there would be a carryover of $25 million from the present authorization into the coming fiscal year. This is not going to happen, unless the program is stopped during the last weeks of the current year and a heavy volume of loan applications is also carried over. To put it every simply: We believe that to the $250 million represented in S. 3213 should be added $25 million representing the carryover which will not occur, and $50 million for expansion of the present $100 million limitation on auxiliary facilities. If the demand is not as great as the total limitation represented by the $325 million increase it will not be used. The indications are that it will be needed. The only reason a $25 million carryover into fiscal 1959 was contemplated at the time the budget message was issued was that the Bureau of the Budget had decided there should be this much carryover. The recession caused a relaxation of this limitation and also showed that the demand was present for the full amount authorized by the Congress. Title V of S. 3399 proposes several changes in the college housing loan program, which has proved very successful and useful in meeting the increased needs for student housing. We believe the changes proposed, taken as a group, would make the program much less useful for all colleges and universities and might conceivably destroy its effectiveness almost entirely as far as many are concerned. In section 501 of title V it is proposed 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 Treasury. The present law calls for a minimum charge of 2.75 percent, and beyond that the use of a formula which constitutes both a floor and a ceiling on interest rate charges for a Federal loan to an institution which qualifies for one. S. 3399 proposes first that the formula be changed so as to raise the interest rate, and then to leave it to the Administrator whether or not a college can get a loan at that higher rate. Our colleges and universities have great respect for those charged with the administration of the college housing loan program. But frankly we do not wish to leave to Mr. Cole 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 Mr. Cole considers is "reasonable" and "consistent with the purposes of the college housing loan law." The original law was changed a few years ago, at the request of the Administration, to give the Housing Agency something of the authority-though in less broad language-than is here requested. The result was that some colleges had to pay a full quarter of 1 percent above the Federal lending rate or not get a loan. The result was that the Congress changed the law and said a Federal loan should be made unless loans were available from private sources on terms "equally as favorable" as the Federal loan rate. This is clear language and there has been no difficulty on this score since. We urge you to retain the present language. College housing loan policy should be fixed by the Congress rather than by the Administrator, particularly in veiw of the constant pressures exercised by the Treasury and outside interests to reduce the value of the program or make it ineffective. Member institutions of our association have fully demonstrated their desire and willingness to use private loans for housing expansion whenever they are available at rates which make dormitory financing feasible through them. In fact they have frequently gone to private financing at interest rates higher than these available under the Federal program, both because of a desire to use private financing when feasible and the fact that certain costs may be saved when private loans are used. SECTION 504 OF TITLE V Mr. Chairman, our associations are opposed to the change in the interest rate formula involved in section 504 of title V, S. 3399. The proposal is to make the basic interest rate computation on the basis of long-term maturities of outstanding Federal borrowings, rather than the average of all maturities as at present. This proposal has been made by the Administration year after year, Mr. Chairman, and has just as regularly been rejected by your committee and the Congress after hearing all the evidence. The argument is that college housing loans are longterm loans, and therefore should bear the interest rate of the Treasury for longterm maturities. The fallacy in this is that a college housing loan is not an issue for a fixed maturity date but is paid off serially on an annual basis, as are most mortgages on private homes. Thus part of the loan is paid off not in 15 or 30 or 40 years but in 1 year, another part the second year, and so on. College housing loans are in fact a combination of short- and long-term maturities. We fail to understand why the Housing Administration and the Treasury keep insisting that we should pay the long-term rate on Federal borrowings, rather than the average of short- and long-term rates. Mr. Chairman, the difference in interest rate between the present basic formula and that proposed in S. 3399 is about % of 1 percent at present. What does this mean to the student? Assuming $5,000 as the cost per bed and a 30-year loan, cost to the student would be about $20 a year more under the proposed formula than it is now. This represents, for an academic year, an increase of about $2.25 per month in charges to students, as a minimum. If in addition discretion is given the administrator to refuse a loan if he thinks an outside load is "reasonable" it is difficult to say how much the increase would be, but from past experience it would be another dollar a month. Keep in mind, also, that we are in a period of relatively high interest rates, and that the rates fixed now will hold for the life of the loan. SECTIONS 505 THROUGH 509 OF S. 3399 Mr. Chairman, the above sections provide for a new program of Federal guaranties of taxable bonds of educational institutions, and thus would be of no value to most of the members of the two associations which I represent. We are informed that the nonpublic institutions feel that the program would be of little value to them. LOANS FOR ACADEMIC FACILITIES S. 3713, also before your committee, 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 millions. 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. 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 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. If I can summarize the attitude of the two associations for which I speak, Mr. Chairman, it is that the executive committee of the American Association of Land-Grant Colleges and State universities is inclined to favor S. 3713, while the State universities association would prefer to study its implications further before taking a position. Mr. Chairman, I appreciate greatly the apportunity to appear before you. We are thankful to your committees for the vigorous support it has given this fine program in the past, and confident that this will continue in the future. Senator CLARK. We have letters concerning college housing which will, without objection, go into the record at this point. (The letters referred to follow :) Hon. JOHN J. SPARKMAN. ASSOCIATION OF COLLEGE UNIONS, May 16, 1958. Chairman, Sub-Committee on Housing, Committee on Banking and DEAR SENATOR SPARKMAN: The Association of College Unions, representing 323 colleges and universities, respectfully submits the attached resolution adopted unanimously by 300 delegates assembled at the national conference of the association on April 23. This resolution urges that Congress continue the existing college union and student center phase of the college housing program. The resolution supports the recommendation of the American Council on Education that Congress authorize an addition $50 million for loan to colleges and universities to aid in financing unions and student centers. We understand that the $100 million fund originally authorized for unions and student centers will be exhausted by July 1958, and that this part of the college housing program therefore will soon come to and end unless additional funds are authorized. Lack of Federal loan funds for unions and student centers would present a most serious problem to colleges and universities in their efforts to meet the living needs of the greatly increased number of students predicted for the 1960's. It is generally recognized that the basic living needs of students are for bedrooms and board. Dining facilities are provided in one of two ways: either as part of a dormitory or in a separate structure. Such separate structure is commonly called a "union building" or "student center". The main core of most unions and student centers is the space devoted to dining facilities, supplemented by the common rooms and essential services students need between and after classes. The trend in recent years has been to build a central dining hall for dormitory students within the union-because it is much cheaper to build a central dining hall, add a few common rooms and services, and thus establish a union, than it is to build and operate separate dining rooms and common rooms within each dormitory. For example, most of the projects approved by HSFA under the original union and student center authorization (59 out of 71 projects through November 1957), provide for the dining halls which serve dormitory students, or commuters, or both. On urban campuses, where most students commute, the crucial need is for dining for such students, and not for bedrooms. But it is possible to build central dining halls for commuters and for dormitory students living in buildings which provide only sleeping rooms only under the union and student center authorization of the college housing act. To terminate the union and student center phase of the program at this time would thus result in a serious imbalance in meeting the living needs of students. It would mean that those institutions which have already built "sleeping room only" dormitories, or are committed to this pattern in their campus planning, would be without the means of financing the necessary dining halls, unless they could obtain private financing, which is very difficult for many institutions to arrange at terms they can afford, or to arrange at all. In other words, many institutions would have facilities where students could sleep but none where they could eat. In the case of other institutions where dormitory commitments have not been made, if there are no Federal funds for financing unions and student centers and the institutions are forced by the terms of the housing act to build the necessary dining facilities and common rooms as part of the dormitories, this would mean that much of the fund authorized for dormitories would have to be spent on dining halls and common rooms; and therefore fewer bedrooms could be built and many less students provided for under the housing act than would otherwise be possible. Thus, the union and student center phase of the housing program has the following important advantages: 1. It permits colleges and universities to meet the living requirements of students in a balanced way and in accordance with the local circumstances and needs of a given campus. |