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qualifications but which is required to con— suit with an advisory council in the State which meets the qualifications which the agency lacks. The agency must submit a State plan which sets forth a comprehensive, coordinated, and statewide system of extension and continuing education programs (administered by or under the agency) for which funds allotted to the State will be spent. The plan must provide for allocating Federal funds to institutions of higher education according to each institution's capacity and willingness to provide extension and continuing education programs, the need for such programs in the State, and the results of periodic evaluations of need for, and eifectiveness in carrying out of, such programs within the State. The plan must assure that Federal funds will supplement and to the extent practicable increase funds otherwise available for community service programs, and must provide for certain reports and accounting procedures. The Commissioner of Education is directed to approve any plan meeting the requirements of this section.

Section 105. Payments: This section provides that payments from a State's allotment will be made to the State agency to carry out the State plan. The Federal share of the cost of carrying out the State plan will equal 75 percent in the fiscal years ending in 1966 and 1967, and 50 percent in each of the 3 succeeding years. This section also prescribes the manner of payment and certain limitations on the extent to which funds under this title will be available to pay administrative costs and costs with respect to which payments have been received under other Federal programs.

Section 106. Experimental approaches and supplemental grants: This section provides that the Commissioner shall use 20 percent of the sums appropriated for each year pursuant to section 101 to make grants to and contracts with institutions of higher education to pay part of the cost of experimental approaches to extension and continuing education related to the solution of community problems, or to augment grants awarded under this title from funds allotted under section 103.

Section 107. Administration of State plan: This section requires a hearing before the Commissioner of Education before he finally disapproves a State plan and before he determines a State has become ineligible to participate further under this title, A State with an approved plan may become ineligible if its plan is so changed or administered that the plan or its administration does not comply with the requirements of section 105.

Section 108. Judicial review: A State dissatisfied with the Commissioner's action in disapproving its plan or in determining that the State is ineligible to participate further under this title may obtain review of such action by a United States court of appeals.

Section 109. National Advisory Council on Extension and Continuing Education: This section directs the President to establish a National Advisory Council on Extension and Continuing Education to advise the Commissioner on the preparation of general regulations and on policy matters arising in the administration of this title, including the approval of State plans and the approval of projects and activities under section 106. The Council would also advise the Commissioner with respect to policies designed to eliminate duplication and to coordinate the programs under this title with other exten— sion and continuing education programs, and it would review the administration and effectiveness of all such programs. The Council would consist of the Commissioner, at least 8 persons representing Federal agencies having extension and continuing education responsibilities, and at least 12 members ap— pointed by the President.

Section 110. Relationship to other extension programs: This section states that title I does not modify authorities under certain other Federal extension and vocational education programs.

Section lil. Limitation: This section provides that no grant may be made under this title for any education activities and services related to sectarian instruction or religious worship, or provided by a school or department of divinity,

TITLE Ill—COLLEGE LIBRARY ASSISTANCE AND LIBRARY TRAINING AND RESEARCH

Part A—College library resources

Section 201. Appropriations authorized: This section authorizes the appropriation of $50 million for the fiscal year ending on June 30, 1966, and for each of the 4 succeeding fiscal years, to enable the Commissioner to make grants to institutions of higher education. The grants will be for the purpose of assisting and encouraging such institutions to acquire for library purposes books, periodicals, documents, magnetic tapes, phonograph records, audiovisual materials, and other related library materials (including whatever binding may be necessary).

Section 202. Basic grants: Under this section, the Commissioner may make basic grants (for the purposes set forth in sec. 201) to institutions of higher education and combinations of such institutions from '75 percent of the sums appropriated for any fiscal year pursuant to section 201. The maximum basic grant shall be $5,000 for each institution and branch thereof which is located in a different community. Applications may be made by an individual institution or by a combination of institutions. A basic grant may only be made if the Commissioner approves the application therefor. Before approving an application, he must determine that it—

(a) Provides satisfactory assurance that during the fiscal year for which the grant is requested the applicant will spend, for all library purposes (except construction) and from funds other than funds received under the part, ( 1) an amount equal to not less than the annual average of the amounts it spent for such purposes during the 2-year period ending June 30, 1965, and (2) an amount from such other sources at least equal to the amount of such grant:

(b) Provides satisfactory assurance that the applicant will spend, for books, periodicals, documents, magnetic tapes, phonograph records, audiovisual materials, and other related materials, including whatever binding is necessary, from funds other than funds under the part, during the fiscal year for which the grant is requested, an amount at least equal to the average annual amount it spent for such materials during the 2-year period ending June 30, 1965;

(0) Provides for joint use of library facilities where feasible;

((1) Provides for necessary fiscal control and fund accounting procedures; and

(e) Provides for making reports needed by the Commissioner to carry out his functions under this section.

Section 203. Supplemental grants: Under subsection (a), the Commissioner is authorized to make supplemental grants for library resources to institutions of higher education and to combinations of such institutions. Supplemental grants would be made from whatever remains (after basic grants have been made) of the 75 percent of the sums appropriated for any fiscal year, plus, any sums the Commissioner determines will not be needed for making grants under section 204. A supplemental grant shall not exceed $10 for each full-time student enrolled in each such institution (including the full-time equivalent of the number of part-time students). The number of fulltime students and their equivalent shall be determined by the Commissioner for each

institution in accordance with regulations to be promulgated by him. A supplemental grant may be made only upon application therefor. An application must be in such form and must contain such information as the Commissioner may require. The application shall—

1. Meet the application requirements set forth in section 202 (except for the matching requirement in sec. 202(a) (2) );

2. Describe the size and quality of the applicant’s library resources in relation to its present enrollment and to any expected increase in its enrollment;

3. Set forth any special circumstances which are impeding, or which are expected to impede, the proper development of its library resources; and

4. Explain how a supplemental grant would be used to improve the size or quality of its library resources.

Subsection (b) provides that the Commissioner shall approve applications for supplemental grants in accordance with basic criteria developed after consultation with an Advisory Council established under section 205 and prescribed in regulations. The criteria will be those that will tend to best achieve the objectives of part A. They may take into consideration such factors as the age and size of the library collection, student enrollment, and financial resources and endowment, and they would be required to give priority to needy institutions.

Section 204. Special purpose grants: Subsection (a) provides that 25 percent of the sums appropriated for part A for each fiscal year shall be used to make special grants. These special grants shall be made (a) to institutions of higher education which demonstrate a special need for additional library resources and which demonstrate that the additional resources will make a substantial contribution to the quality of their educational resources; (b) to institutions of higher education to meet special national or regional needs in the library and information sciences, including those in the physical and social science fields; and (c) to combinations of institutions of higher education which need special assistance in establishing and strengthening joint use facilities. Grants under this section, however, may only be used for books. periodicals. documents, magnetic tapes, phonograph records, audiovisual materials, and other related library materials (including neecssary binding).

Subsection (b) provides that in order to obtain a special purpose grant for any year, an applicant would have to provide satis— factory assurance that it would expend during that year from other sources and for the same purposes for which the grant was made an amount equal to at least one-third of the amount of the grant, and that it would expend during that year for all library purposes (exclusive of construction) not less than the average annual amount it had expended for those purposes during the 2-year period which ended June 30, 1965.

Section 205. Advisory Council on College Library Resources: Under subsection (a), the Commissioner of Education must establish an Advisory Council on college library resources in the Oflice of Education. The Council will consist of the Commissioner, as chairman, and eight members appointed by the Commissioner with the approval of the Secretary and without regard to the civil service laws.

Subsection (b) provides that the Advisory Council will advise the Commissioner in establishing criteria for the making of sup— plemental grants under section 203 and special purpose grants under section 204. The Commissioner may appoint special advisory and technical experts and consultants who may be useful in carrying out the functions of the Council.

Under subsection (c). members of the Council, while serving on its business, will receive compensation at a rate to be fixed by the Secretary (but not to exceed $100 per day, including travel time). While serving away from their homes or regular places of business, they may be allowed travel expenses, including per diem in lieu of subsistence.

Section 206. Accreditation requirement for purposes of this part: This section provides that, for the purposes of part A, if the Commissioner determines that there is satisfactory assurance that upon acquisition of the library resources with respect to which assistance under this part is sought, or upon acquisition of those resources and other library resources planned to be acquired within a reasonable time, an educational institution will meet the accrediting standards of a nationally recognized accrediting agency or association, the institution shall be deemed to have been accredited by such agency or association.

Section 207. Limitation: This section provides that no grant may be made by the Commissioner under part A for the acquisition of books, periodicals, documents, or other related materials to be used in sectarian instruction or religious worship, or primarily in connection with any part of the program of a school or department of divinity. For purpose of this section, the term “school or department of divinity" means an institution, or a department or branch of an institution, whose program is specifically for the education of students to prepare them to become ministers of religion or to enter upon some other specifically religious vocation, or to prepare them to teach theological subjects.

Part B—Library training and research.

Section 221. Appropriation authorized: This section authorizes the appropriation of $7.5 million for the fiscal year ending June 30, 1966, and $15 million for each of the 4 succeeding fiscal years, for carrying out the purposes of part B.

Section 222. Definition of "librarianship”: For the purposes of part B, this section defines the term "librarianship" to mean the principles and practices of the library and information science (including acquisition, organization, storage, retrieval, and dissemination of information) and reference and research use of library and other information resources.

Section 223. Grants for training in librarianship: Subsection (a) authorizes the Commissioner to make grants to institutions of higher education to assist them in training persons in librarianship, including the training of specialists in the communication of information in the physical and social sciences. Grants made under this section may be used by such institutions to cover all or part of the cost of courses of training or study for such persons, and for establishing and maintaining fellowships or traineeships. Fellows and others undergoing training and their dependents will receive stipends (including allowances for traveling, subsistence, and other expenses) not in excess of such maximum amounts as may be prescribed by the Commissioner.

Subsection (b) provides that the Commissioner may make a grant under the section only upon application by an institution of higher education and only upon his finding that such program will substantially further the objective of increasing the opportunity, throughout the Nation, for training in librarianship.

Section 224. Research and demonstrations relating to libraries and the training of library personnel: Subsection (a) authorizes the Commissioner to make grants to institutions of higher education and other public or private nonprofit agencies, institutions, and organizations and to individuals, for research and demonstration projects relating

to the improvement of libraries or of training in librarianship, and for the dissemination of information derived from such research and demonstrations. The Commissioner is also authorized to provide by contracts with public or private profit or nonprofit agencies, organizations, or institutions. or with individuals, for the conduct of such activities.

Subsection (b) authorizes the Commissioner to appoint special or technical advisory committees to advise him on matters of gen

ral policy concerning research and demonstration projects relating to the improvement of libraries and of training in librarianship.

Subsection (0) provides that the Commissioner shall appoint, from time to time, panels of experts competent to evaluate various types of research and demonstration projects under this section. The Commissioner shall obtain the advice and recommendations of such a panel before making a grant under this section.

Subsection ((1) provides that members of any committee or panel appointed under this section who are not regular full-time employees of the United States shall be entitled to receive compensation at rates fixed by the Commissioner (but not to exceed $100 per diem, including travel time) while serving on the business of such a committee or panel. They may, while serving away from their homes or regular places of business, also be allowed travel expenses (including per diem in lieu of subsistence).

Part C—Cataloging of library materials

Section 241. Authorization: This section authorizes appropriations to enable the Commissioner of Education to transfer funds to the Librarian of Congress for the purpose of insuring that the Library acquires all library materials which are of value to scholarship and of providing and distributing catalog and bibliographic information. Authorized to be appropriated for these purposes are $5 million for fiscal year 1966, $6.315 million for fiscal year 1967, and $7.77 million for fiscal years 1968, 1969, and 1970.

TITLE III—STRENGTHENING DEVELOPING

INSTITUTIONS Section 301. Statement of purpose and appropriations authorized: Subsection (a)

states that the purpose of title ID: is to assist in raising the academic quality of colleges which have both the desire and the potential to make a substantial contribution to our national resources in higher education, but which because of a lack of iinances (and for other reasons) are struggling to survive and are isolated from the main currents of academic life. Title III seeks to raise the academic quality of these colleges by enabling the Commissioner to establish a national teaching fellow program and to assist in establishing cooperative arrangements under which these developing institutions may draw on the talent and experience of America's finest colleges and universities, and on the educational resources of business and industry.

Subsection (b) authorizes the appropriation of $55 million for the fiscal year ending June 30, 1966, and $60 million for each of the 4 succeeding fiscal years, to carry out the provisions of title III. Fifty million dollars of the sums authorized for each fiscal year would be divided equally between institutions which do intend and institutions which do not intend to award a bachelor's degree during that year, and the remaining $5 million ($10 million after 1966) would be allocated among these classes of institu— tions by the Commissioner.

Section 302. Definition of "developing institution": For the purposes of title III, this section defines the term “developing institution" to mean a public or nonprofit educa~ tional institution which—

(a) Admits as regular students only persons having a certificate of graduation from

high school, or the recognized equivalent of such a certificate;

(b) Is legally authorized to provide and provides within the State an educational program for which it awards a bachelor's degree, or a 2-year program which is acceptable for full credit toward a bachelor's degree, or a 2-year program in engineering, mathematics, or the physical or biological sciences;

(c) Is accredited by a nationally recognized accrediting agency or association determined by the Commissioner to be reliable authority as to the quality of training offered or is, according to such an agency or association, making reasonable progress toward accreditation;

(6.) Has met the requirements of (a), (b), and (c) during the 2 academic years preceding the academic year for which it seeks assistance;

(e) Is making a reasonable effort to improve the quality of its teaching and administrative staffs and of its student services;

(f) Is seriously handicapped in its efforts to improve such staffs and services by lack of financial resources and a shortage of qualified professional personnel;

(g) Meets such other requirements as the Commissioner may prescribe by regulation; and

(h) Is not an institution, or department or branch of an institution, whose program is specifically for the education of students to prepare them to become ministers of religion or to enter upon some other religious vocation, or to prepare them to teach theological subjects.

Section 303. Advisory Council on Developing Institutions: Under subsection (a) the Commissioner must establish an Advisory Council on Developing Institutions in the Office of Education. The Council will consist of the Commissioner (who will be Chairman), a representative from each Federal agency which has responsibility with respect to developing institutions and which may be designated by the Commissioner, and eight other members appointed, without regard to the civil service laws, by the Commissioner with the approval of the Secretary.

Subsection (b) provides that the Council will advise the Commissioner on policy matters arising in the administration of title III. and shall particularly assist the Commissioner in identifying those developing institutions through which the purposes of title III can best be achieved, and in the establishment of priorities to be used in approving applications under title III. The Commissioner may appoint special advisory and technical experts and consultant to assist the Council in discharging its functions.

Subsection (c) provides that those members of the Council who are not regular fulltime employees of the United States shall. while serving on the business of the Council. be entitled to receive compensation at rates fixed by the Secretary of Health, Education, and Welfare, but not exceeding $100 per day. including travel time. While serving away from their homes or regular places of business, members may be allowed travel expenses, including per diem in lieu of subsistence.

Section 304. Grants for cooperative agreements to strengthen developing institutions: Subsection (a) authorizes the Commissioner to make grants to developing institutions as well as to other colleges and universities to pay for a part of the cost of planning, developing, and carrying out cooperative arragements which promise to be effective as measures for strengthening the academic programs and the administration of developing institutions. The cooperative arrangements themselves may be between developing institutions or between developing institutions and other colleges and universities or organizations, agencies and business entities. This subsection further suggests, as types of projects and activities for which such grants may be used—

1, Exchange of faculty or students, including arrangements for bringing visiting scholars to developing institutions;

2. Faculty and administration improvement programs utilizing training, education (including fellowships leading to advanced degrees) , internships, research participation, and other means;

3. Introduction of new currlculums and curricular materials;

4. Development and operation of cooperative education programs involving alternate periods of academic study and business or public employment;

5. Joint use of facilities such as libraries or laboratories, including necessary books, materials, and equipment; and

6. Other arrangements which offer promise of strengthening the academic programs and the administration of developing institutions.

Subsection (b) provides that a grant under this section may be made only upon application to the Commissioner submitted at such time or times and containing such information as the Commissioner deems necessary. The Commissioner shall not approve an application unless it—

1. Sets forth a program for carrying out one or more projects or activities which meet the requirements of subsection (a) and provides for proper and eflicient methods of administration ;

2. Sets forth policies and procedures which assure that Federal funds granted under the section in any fiscal year will be used, not to supplant, but to supplement and (to the extent practical) increase the funds that would in the absence of such Federal funds be made available for the purposes of subsection (a);

3. Provides for necessary fiscal control and fund accounting procedures; and

4. Provides for such reports as the Commissioner may require to carry out his functions under the title.

Subsection (c) requires the Commissioner to consult with the Advisory Council and then to establish criteria for eligible expenditures for which grants made under the section may be used. These criteria shall be designed to prevent the use of such grants for expenditures unnecessary to achieve the purposes of the part.

Section 305. National teaching fellowships: Under subsection (a), the Commissioner is authorized to award fellowships to encourage highly qualified graduate students and junior members of the faculty of colleges and universities to teach at developing institutions. The Commissioner shall award such fellowships only upon application by an institution approved by him for this purpose, and only upon a finding by him that the program of teaching set forth in the application is reasonable in the light of the qualifications of the teaching fellow and of the educational needs of the applicant.

Subsection (b) provides that these fellowships may be awarded for such period of teaching, not to exceed 2 academic years or extend beyond June 30, 1970, as the Commissioner may determine. A fellowship under the provisions of this section shall consist of a stipend for each academic year of teaching of $6,500 or less, as determined by the Commissioner upon the advice of the Council, plus $400 for each year on account of each of his dependents.

TITLE Iv—s'runsN'r ASSISTANCE
Part A—Undergraduate scholarships

Section 401. Statement of purpose and appropriations authorized: Subsection (a) states that the purpose of the part is to provide scholarships, through institutions of higher education and State scholarship programs to qualified high school graduates from low-income families who for lack of

financial means would be unable to obtain the benefits of higher education without such aid. Subsection (a) also states that it is the purpose of Congress to encourage educational institutions to use work-study and loan programs and any other means of student aid available to them to supplement scholarship aid under the part.

Subsection (b) authorizes $70 million to be appropriated for the fiscal year ending June 30, 1966, and such sums as may be necessary for each of the 4 succeeding fiscal years, to enable the Commissioner to make payments to institutions for use by them in making payments to students for the initial year of scholarships awarded to them, and for defraying part of the cost of the cooperative motivational program for high-school students described in section 407(a)(5), and to make payments to States for State scholarship programs. Also authorized to be appropriated, for the year ending June 30, 1967, and each of the 6 succeeding fiscal years, are such sums as may be necessary for institutions to make scholarship payments under the part to students for years other than the initial year of their scholarship. Appropriated funds will be available for payment until the close of the fiscal year succeeding the fiscal year for which they were appropriated.

Section 402. Amount of scholarship—an— nual determinations: An institution which awards a scholarship to a student under the part will, for the duration of the scholarship, pay to the student for each academic year during which he is in need of scholarship aid, an amount (not in excess of $800, or $1,000 for a student in the upper half of his college class) determined by the institution to be required by the student to pursue his educational program during that year. If the amount so determined is less than $200, no payment shall be made to the student for that year. To guide participating institutions, the Commissioner will prescribe basic criteria or schedules for the determination of the scholarship amounts. These criteria or schedules will take into account the objective of limiting scholarship aid under the part to students from low-income families, and other factors that the Commissioner deems relevant.

Section 403. Duration of scholarship: The duration of a scholarship will be the period, not in excess of 4 years, required by the recipient to complete his undergraduate course of study at the institution awarding the scholarship. A scholarship will entitle the recipient to payments only if he (1) is maintaining satisfactory progress in the course of study which he is pursuing, and (2) is devoting essentially full time to that course of study.

Section 404. Selection of recipients of scholarships: Subsection (a) provides that an individual will be eligible for a scholarship if he is from a low-income family and applies to an eligible institution at the time and in the manner prescribed by it.

Subsection (b) provides that the institution will select individuals who are to be awarded scholarships and determine, pursuant to section 402, the amounts to be paid to them. No institution will award a scholarship to an individual unless it determines that (1) he is in need of the scholarship to pursue a course of study at the institution, (2) he is capable of maintaining good standing in such course of study, and (3) he has been accepted for enrollment as a full-time student at the institution or, in the case of a student already attending the institution, is in good standing and full-time attendance there as an undergraduate student.

Section 405. Apportionment of scholarship funds among States: Subsection (a) provides for the apportionment of funds appropriated for making initial year payments to scholarship recipients and for the cooperative motivational program described in section 407

(a)(5). The Commissioner will apportion an amount equal to not more than 2 percent of these funds among Puerto Rico, Guam, American Samoa, and the Virgin Islands according to their respective needs for assistance under this part. The remainder of such funds will be apportioned among the States of the Union and the District of Columbia as follows:

(a) One-third will be apportioned on the basis of the number of students in institutions of higher education in each State and the District of Columbia;

(b) One-third will be apportioned on the basis of the number of secondary school graduates in each State and the District of Columbia; and

(c) One-third will be apportioned on the basis of the number of related children in each State and in the District of Columbia who are under 18 years of age and are living in families with annual incomes of less than $3,000.

The Commissioner could reapportion any part of a State's apportionment not required by that State.

Subsection (b) provides that sums appropriated for making other than initial year payments to scholarship recipients will be apportioned among the States in such manner as the Commissioner determines to be necessary to carry out the purposes for which these sums were appropriated.

Section 406. Allocation of apportioned funds to institutions and for State scholarship plans: Subsection (a) provides that the Commissioner will allocate funds among institutions within a State in accordance with criteria established by the Commissioner to achieve an equitable distribution of the funds among these institutions.

Subsection (b) provides that upon request from the Governor of any State, up to 15 percent of that State’s apportionment for any fiscal year shall be paid to that State for use in granting scholarships to students in institutions of higher education. The State would have to contribute an equal amount of new money for the same purpose, and the scholarships provided with the Federal funds and the State matching funds would have to be granted on the same basis of need, and on substantially the same basis in other respects, as applies to scholarships granted by institutions of higher education under this part.

Section 407. Agreements with institutions—conditions: Subsection (a) states that an institution of higher education which desires to obtain scholarship funds under the part must enter into an agreement with the Commissioner under this part. This agreement must (1) provide that funds received by the institution under the part will be used by it only in accordance with the provisions of this part; (2) provide that in determining whether an individual is an eligible student from a low-income family the institution will make an appropriate review of the financial status of that individual and of any individual upon whom the student relies primarily for his support; (3) provide that in the selection of students to receive scholarships under this part preference will be given to students who are beginning their first year of undergraduate study, and to students who are transferring from a 2- to a 4-year institution of higher education; (4) provide that the institution will, where appropriate, combine financial assistance in the form of loans, work-study opportunities, and scholarships under this part, in an effort to meet the full financial needs of students from low-income families; ( 5) provide that the institution, in cooperation with other institutions of higher education where appropriate, will make vigorous efforts to identify qualified youths from low-income families and to encourage them to continue their education beyond secondary school through activities such as establishing or strengthening close working relationships with secondary school principals and guidance personnel and making, to the extent feasible, tentative commitments for scholarships to qualified students enrolled in grade 11 and lower grades and to secondary school dropouts who have a demonstrated aptitude for college study; (6) provide assurance that the institution will not reduce its own scholarship efforts, and will continue to spend in its own scholarship and student aid program, from sources other than funds received under this part, not less than the average expenditure per year made for that purpose during the most recent period of 3 fiscal years preceding the effective date of the agreement; (7) include provisions designed to make scholarships available (to the extent of available funds) to all eligible students in the institution in need thereof; and (8) include such other provisions as may be necesary to protect the financial interest of the United States and promote the purposes of the part.

Subsection (b) provides that an institution may spend for the administration of the program described in paragraph (5) of subsection (a) up to 5 percent of the funds ap— propriated pursuant to the first sentence of section 401(b) and paid to it for any fiscal year ending prior to July 1, 1970.

Section 408. Contracts to encourage full utilization of education talent: This section authorizes the Commissioner to enter into contracts, not to exceed $100,000 per year, with State and local educational agencies and other public or nonprofit organizations and institutions for the purpose of (a) identifying qualified youths from low-income families and encouraging them to complete secondary school and undertake post-secondary educational training, (b) publicizing existing forms of student financial aid, including scholarship aid furnished under the part, and (c) encouraging secondary-school dropouts of demonstrated aptitude to reenter educational programs, including postsecondary school programs. This section also authorizes appropriations of such sums as may be necessary to carry out these objectives.

Section 409. Definition of “academic year": This section states that as used in the part. the term "academic year" means an academic year or its equivalent as defined in regulations of the Commissioner.

Part B—Federal, State, and private programs of low-interest insured loans to students in institutions of higher education

Section 421. Statement of purpose and appropriations authorized: Subsection (a) of this section states that it is the purpose of this part to enable the Commissioner (1) to encourage States and nonprofit institutions and organizations to establish adequate insurance programs for students in eligible institutions, (2) to provide a Federal program of student loan insurance for students who do not have reasonable access to a State or private nonprofit student loan insurance program, and (3) to pay a portion of the interest on certain student loans insured under this part or under certain State or private loan insurance programs. "Eligible institution" is defined in section 435.

Subsection (b) of this section authorizes the appropriation (1) of $1 million. plus such further sums as may be necessary, for the establishment of a student loan fund, (2) of such sums as may be necessary to make interest payments on insured loans under section 428, and (3) of $17.5 million to make advances under section 422 to State and nonprofit private student loan insurance reserve funds.

Section 422. Advances for reserve funds of State and nonprofit private loan insurance programs: Subsection (a) of this section authorizes the Commissioner to make repayable advances to any State with which he has made an agreement pursuant to section 428(b). for the purpose of helping to estab

lish or strengthen the reserve fund of the student loan insurance program covered by that agreement. If a State will not have a student loan insurance program covered by an agreement under section 428(b)—as determined for each of the fiscal years 1966, 1967, and 1968—then for any such year advances could be made to one or more nonprofit private programs to cover students in that State. Advances could be made to both State and private funds if necessary in order to assure that students at every eligible institution have access through such institution to a student loan insurance program. Advances and repayments under this subsection will be upon terms and conditions prescribed by the Commissioner.

The $17.5 million authorized for advances to State and nonprofit private programs under subsection (a) is to be allocated among the States in proportion to their population aged 18 to 22, inclusive, but with no State receiving less than $25,000.

Section 423. Effect of adequate non-Federal programs: This section prohibits the Commissioner from issuing insurance certificates to lenders in a State when he determines that every eligible institution has reasonable access in that State to either a State or private nonprofit student loan insurance program covered by an agreement under section 428(b).

Section 424. Scope and duration of loan insurance program: Subsection (a) limits the total principal amount of new loans made (and installments paid pursuant to lines of credit) to students covered by insurance under this part to $700 million in the fiscal year ending in 1966, $1 billion in the fiscal year ending in 1967, and $1.400 million in the fiscal year ending in 1968. Thereafter, insurance under this part may be granted only for loans made (or for loan installments paid pursuant to lines of credit) to enable students, who have obtained prior loans insured under this part, to continue or complete their educational program; but no insurance may be granted for any loan made or installment paid after June 30, 1972.

Subsection (b) permits the Commissioner to assign insurance quotas to States, areas, or eligible lenders.

Section 425. Limitations on individual loans and on insurance: Subsection (a) of this section limits the amount of insured loans made to a student to $1,500 per year in the case of a graduate or professional student, and to $1,000 per year in the case of any other student. The overall amount of insurance on the unpaid principal of loans may not at any time exceed $7,500 in the case of a graduate or professional student, or $5,000 for any other student. Under subsection (b) the liability of the United States on an insured loan is limited to the amount of unpaid principal and does not extend to accrued interest.

Section 426. Sources of funds: This section permits insurance of loans made from funds held in trust or a similar capacity.

Section 427. Eligibility of student borrowers and terms of student loans: Subsection (a) of this section provides that loans are insurable only if they meet the following conditions: The borrower must be accepted for enrollment or be in good standing at an eligible institution, must carry at least half of the normal full-time workload, and must provide the lender with the institutions statement of tuition. fees, and estimated room and board.

The loan must be evidenced by an unsecured note, which may be required to be en— dorsed only if necessary to create a binding obligation. The note must provide for repayment within 15 years of its execution in installments during a period of 5 to 10 years beginning between 9 months and 1 year after the student ceases to carry half of the normal full-time workload at an eligible institution.

Interest on the loan cannot exceed the rate prescribed by the Commissioner for the geo—

graphic area, and is payable over the period of the loan unless the note provides for deferral of interest not paid under section 428 until the first payment of principal. The lender must agree not to try to collect from the borrower interest payable by the Commissioner under section 428. The note must permit the borrower to accelerate repayment.

Subsection (b) limits the interest rate on insured loans to 6 percent, except that under certain exceptional circumstances the rate may be as high as 7 percent.

Subsection (c) requires a minimum annual repayment by a borrower on all of his loans insured by the Commissioner under this part of $360 or his outstanding balance, whichever is less.

Section 428. Federal payments to reduce student interest costs: This section directs the Commissioner to make payments to holders of insured student loans to reduce student interest costs. Each student whose adjusted family income is less than $15,000. and who has received a loan insured under this part, or under a State or nonprofit private program meeting required standards, will be entitled to have paid on his behalf to the holder of the loan, over the period of the loan, a portion of the interest on the loan. In order to entitle student borrowers to the benefit of the interest subsidy with respect to loans insured by any State or private nonprofit program, such program must, after June 30, 1967. have an agreement meeting all of the requirements provided in section 428(b) concerning the terms of the loan insurance program. During the transitional period prior to July 1, 1967, such program must only meet the standards limiting the interest rate to no higher than 6 percent yearly on the unpaid principal balance of the loan and the provision that repayment of the insured loans shall not be required to begin earlier than 60 days after the student ceases to pursue his course of study at an eligible institution. (Adjusted family income will be determined as of the time of execution of the loan note and will be determined under regulations of the Commissioner which will take into account appropriate factors such as family size.)

The payment a student is entitled to have made on his behalf under this section will, during the period which precedes the repayment period of the loan, be equal to the total amount of the interest which accrues prior to the beginning of the repayment period, and will, during the repayment period, be equal to 3 percent per annum of the unpaid principal amount of the loan. However, the payment may not exceed, for any period, the amount of the interest, which (but for such payment) would be actually payable by the student, taking into consideration interest payments on his behalf for that period under any State or private loan insurance program. The holder of an insured loan will have a contractual right, as against the United States. to be paid by the Commissioner the portion of interest which has been determined under this section. The Commissioner will prescribe the manner of payment and the form of certain reports to be made by the holder of the loan.

Subsection (b) of this section sets forth the conditions under which students whose loans are insured under State or private programs will receive payments to reduce their interest costs under this section. Any State or any nonprofit private institution or organization which has a student loan insurance program may enter into an agreement with the Commissioner to permit students who receive loans which are insured under its program to have made on their behalf payments under subsection (a), if the Commissioner determines that the insurance program—

(A) Authorizes the insurance of up to $1,000 but not more than $1,500 in loans per student per academic year;

(B) Authorizes the insurance of loans to any individual student for at least 6 academic years of study;

(C) Provides that (i) the student borrower may accelerate without penalty the whole or any part of an insured loan, (ii) the period of any insured loan may not exceed 15 years from the date of execution of the note evidencing of the loan, and (iii) the note contain certain default provisions prescribed by the Commissioner's regulations;

(D) Subject to the preceding subparagraph, provides that, if a student's insured loans held by any one person exceed $2,000, then repayment of such loans will be in installments over a period of not less than 5 years nor more than 10 years beginning between 9 months and 1 year after the student ceases to pursue a full-time course of study at an eligible institution (except that if the program provides for the insurance of loans for part-time study at eligible institutions. the repayment period will begin between 9 months and 1 year after the student ceases to carry at least one-half the normal fulltime academic workload);

(E) Limits interest (exclusive of the insurance premium) to 6 percent per annum on the unpaid principal balance of the loan;

(F) Insures at least 90 percent of the unpaid principal of loans insured under the program;

(G) Does not provide for collection of an excessive insurance premium;

(H) Provides that the benefits of the loan insurance program will not be denied any student because of his family income or lack of need. if his adjusted family income is less than $15,000;

(1) Provides that a student may obtain insurance under the program for a loan for any year of study at an eligible institution; and

(J) Provides, in the case of a State program, that the program will be administered by a single State agency, or by one or more nonprofit private institutions or organizations under the supervision of such an agency.

Agreements under this subsection will require reports and have certain other provisions necessary to carry out this part.

Section 429. Certificates of insurance—effective date of insurance: This section details the method by which an eligible lender obtains insurance on a student loan. Subsection (a) provides that loans which meet the requirements of the act may be insured after they are made, on application by the lender, but that the Commissioner on appli— cation may make an advance commitment to insure a proposed loan or line of credit. Subsection (b) prescribes another alternative under which the Commissioner may issue to eligible lenders certificates of comprehensive insurance coverage which would insure all insurable loans made by a lender during a period and up to an amount specified in the certificate. Subsection (e) authorizes the Commissioner to charge a yearly insurance premium of up to one-fourth of 1 percent of the unpaid balance of the principal of an insured loan.

Subsections (d) and (e) relate to assignment and consolidation of insured obligations.

Section 430. Procedure on default, death, or disability of student: This section sets out the procedure by which eligible lenders ( and their assignees) collect any amounts for which the United States is liable by reason of the default, death, or disability of the borrower. The Commissioner may forbear his collection rights (under the subrogation provisions of the section) in the case of deceased or disabled borrowers.

Section 431. Insurance fund: This section establishes a student loan insurance fund into which will be deposited amounts appropriated under the authority of section 421 (b)(1), insurance premiums, and amounts

recovered by the Commissioner from defaulted borrowers. All payments in connection with the default of loans insured under the act will be paid from the fund. and in the event that the moneys in the fund are not sufiicient to make such payments the Commissioner may obtain additional moneys by issuing to the Secretary of the Treasury notes or other obligations as a public debt transaction.

Section 432. Legal powers and responsibilities: This section authorizes the Commisisoner, in carrying out the act, to make regulations, sue and be sued, prescribe and modify the terms of insurance contracts, permit the modification of student loan agreements, and to settle insurance claims. The Commissioner's financial operations are subject to the Government Corporation Control Act.

Section 433. Advisory Council on Insured Loans to Students: This section requires the Secretary of Health, Education, and Welfare to establish in the Office of Education an Advisory Concil on Insured Loans to Students. The Council would consist of the Commissioner, who would be chairman, and eight other members, including persons representing State and private nonprofit loan insurance programs, financial and credit institutions, and institutions of higher education. The Council would advise the Commissioner in the preparation of general regulations, and with respect to policy matters arising in the administration of this part.

Section 434. Participation by Federal credit unions in Federal, State, and private student loan insurance programs: This section permits Federal credit unions to use up to 10 percent of their assets for making'to their members student loans insured under this part or under certain State or private loan insurance programs.

Section 435. Definitions for reduced-interest student loan insurance' program: This section defines, for purposes of this part, the term "eligible institution,” “eligible lender,” and "line of credit."

Part C—College work-study program extension and amendments

Section 441. Transfer of authority and other amendments: Section 441 amends parts C and D of title I of the Economic Opportunity Act of 1964 and (1) transfers authority to administer the work-study program under part C from the Director of the Oflice of Economic Opportunity to the Commissioner of Education; (2) restates the statement of purpose pertaining to the work-study program (sec. 121) to provide that the purpose of the program is to stimulate and promote the part-time employment of students, particularly from low-income families, in institutions of higher education who are in need of the earnings from such employment to pursue courses of study at such institutions (the present program is solely for students from low-income families); (3) revises section 123 of the act to adopt the definition of "institution of higher education" which is proposed in section 461 of the bill for the National Defense Education Act of 1958 (the present work-study program adopts the definition used in the Higher Education Facilities Act of 1963); (4) revises section 124(a) of the act to apply, in substance, the same requirements to work for an institution of higher education as are applied to work for a public or private nonprofit organization; (5) revises clause (c) of section 124 to require that agreements provide that, in the selection of students for employment, pref— erence is to be given to students from lowincome families; (6) adds to section 125 (which permits institutions to draw from any source other than Federal work-study payments for paying their share of the compensation of students under work-study programs) authority for institutions to pay their share to students in the form of services and

equipment (including tuition, room. board. and books) furnished by such institutions; and (7) makes a clarifying change, necessitated by the transfer of the work-study program, with respect to the authorization of appropriations provided for in section 131 (part D) of the Economic Opportunity Act of 1964.

Section 442. Appropriations authorized: Section 442 authorizes the appropriation of $129 million for the fiscal year 1966, $165 million for fiscal year 1967, $200 million for fiscal year 1968, and $235 million each for fiscal years 1969 and 1970, to carry out college work-study programs. This section also contains certain technical provisions necessitated by the transfer of responsibility for the program to the Office of Education.

Part D—Amendments to National Defense Education Act of 1958

Section 461. Definition of institution of higher education: Section 461 amends section 103(b) of the National Defense Education Act with respect to the definition of "institution of higher education.” In the case of an institution which is not accredited by a nationally recognized accrediting agency approved by the Commissioner for this purpose, a new provision states that the in— stitution may meet the accreditation standards of the act if the Commissioner has determined that there is satisfactory assurance that it will meet the standards of such an agency or association within a reasonable time. Section 103(b) is also amended to provide that, for purposes of title II, certain nonprofit schools which provide not less than a l-year program of training to prepare students for gainful employment in a recognized occupation are to be treated as institutions of higher education. Section 103(b), as amended by this section, also confers additional authority upon the Commissioner, in cases where he has determined that a particular category of schools does not meet the accreditation requirements because there is no nationally recognized ac— crediting agency or association qualified to accredit schools in such category, to appoint advisory committees to (i) prescribe standards to be met in order to qualify such schools to participate in the student loan program under title II, and (ii) to determine whether these schools meet those standards.

Section 462. Conditions of agreements; administrative costs: Section 462 amends clause (3) of section 204 of the National Defense Education Act to require that agreements between the Commissioner and institutions participating in the loan program provide that student loan funds may be used for routine expenses (within specfied limits) incurred by the institution in administering the student loan fund, and for collection costs (in addition to costs of litigation) agreed to by the Commissioner.

Section 463. Technical amendment for part-time students: Subsection (a) of this section amends section 205(b) (2) of the National Defense Education Act to authorize institutions to determine whether loans shall be repaid in equal (or if the borrower requests, in graduated periodic installments determined in accordance with schedules approved by the Commissioner) quarterly, bimonthly, or monthly installments. It also amends section 205 (b) (2) to provide that repayment of principal, together with interest, is to commence 9 months after the date on which the borrower ceases to carry at least half the normal full-time academic workload, and end 10 years and 9 months after such date except that interest shall not accrue and no installment need be paid while the borrower is carrying (at an institution of higher education or comparable institution outside the States, approved for this purpose by the Commissioner) at least one-half the normal full-time academic workload, as determined by the institution.

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