Statement on the Guaranteed Student Loan Program.
IT IS regrettable that a parliamentary impasse prevented the Congress from completing action, before its recess, on legislation needed to assure the continued success of the Guaranteed Student Loan Program during the academic year which opens soon.
Since its inception in the fall of 1965, this program has become an important element in the series of student aid programs supported by the Federal Government. For the fiscal year just ended, more than 738,000 students borrowed a total of $670 million from 19,000 lending institutions. For the present year, it has been estimated that the number of students benefiting would rise to 920,000 and the loan volume to $800 million.
It has become apparent, however, that with a fixed interest rate of 7 percent, these student loans would not be competitive in a money market where the prime rate is now 8 1/2 percent. There are indications that without some adjustment in the rate, at least 200,000 students depending on these loans for the coming school year would not be able to obtain them. Accordingly, this administration recommended legislation which would permit a market adjustment allowance of up to 3 percent, in addition to the fixed interest of 7 percent to be paid by the Federal Government to lending institutions.
This incentive allowance was approved August 12 by the Senate, and while it was not brought to a vote in the House, it has already been approved by the appropriate House committee.
I have congressional assurances that favorable action will be completed soon after Congress returns from its summer recess. This would be consistent with the action taken last year in increasing the interest rate from 6 percent to 7 percent when a similar problem existed. Certainly, this administration will lend the full weight of its support to prompt approval of the adjustment allowance, and it is inconceivable to me that the Congress would turn its back on 200,000 young Americans who need these loans for their education.
Meanwhile, with the start of the school year rapidly approaching, I strongly urge the lenders to proceed with the loans to avoid further indecision and delay, and I have directed the Secretary of Health, Education, and Welfare to communicate with the leading lending institutions of our Nation. The legislation before the Congress, I should point out, provides that the interest adjustment payments above the 7 percent figure would be made retroactively at least to August 15, so loans made for the school term beginning this fall would be fully covered.
I have every confidence that Congress will do its part to see that no deserving student is forced to give up his education because he cannot obtain a loan for which he qualifies. I trust that the lending institutions across the land will be equally responsive to this clear national need.
Note: The Emergency Insured Student Loan Act of 1969 was approved on October 22, 1969 (Public Law 91-95, 83 Stat. 141).
The statement was released at San Clemente, Calif.
Richard Nixon, Statement on the Guaranteed Student Loan Program. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/240037