College Opportunity Act of 1978 eText - Primary Source

Primary Source

Rhode Island Senator Claiborne Pell sponsored the legislation that established the Basic Educational Opportunity Grant Program. © BETTMANN/CORBIS. REPRODUCED BY PERMISSION. Rhode Island Senator Claiborne Pell sponsored the legislation that established the Basic Educational Opportunity Grant Program. © BETTMANN/CORBIS. REPRODUCED BY PERMISSION. Published by Gale Cengage © BETTMANN/CORBIS. REPRODUCED BY PERMISSION.

Report, Table

By: U.S. Senate Committee on Human Resources

Date: 1978

Source: Congress of the U.S. Washington D.C. Senate Committee on Human Resources. College Opportunity Act of 1978. Report, with Additional Views. 95th Congress, 2nd Session. Washington, D.C.: Government Printing Office,1978. Available online at (accessed October 3, 2002).

About the Organization: The Senate Committee on Human Resources was a committee in the 95th Congress. Bills are reported to the Senate via a committee chair and placed on a calendar. Reported bills and written reports are numbered, and the actions of the committee are in the copy of the bill.


The Higher Education Act of 1965 (Public Law 89-329) provided insured student loans for eligible college students. The act also provided grants to colleges and universities and provided for a number of training programs. Amendments between 1968 and 1978 added programs, grants, and loans for disadvantaged students. All of these acts and amendments contributed to the necessity for the College Opportunity Act of 1978.

In the 1960s, grant and scholarship money mainly went to the very poor or the very rich. Students who were financially disadvantaged were singled out for grant programs by the federal government. Opportunities for higher education were viewed as vital for a group of the population that had been overlooked for decades. These programs focused particularly on African Americans, Hispanics, and other minority groups. Basic Opportunity Education Grants were authorized in 1972. These were renamed Pell Grants in 1980. Wealthy students had always been able to afford college and, therefore, were not included in the governmental programs. They could still count on scholarship money from private and public institutions.

Now the disenfranchised group was the middle class. Since financial need depended in part on the parents' discretionary income, students in the middle income brackets often did not qualify for grants from the federal government. The College Opportunity Act of 1978 sought to change the percentage of parental discretionary income that must be counted toward financial aid. Prior to this Act, the figure was 20 percent of the first $5,000 and 30 percent of the excess. Now the percentage would be no higher than 10.5 percent of the discretionary income, and more grant money would be available. The Act also increased funding for college work study programs: part time jobs for which the government provided 80% of the funding to colleges and universities. The Act brought college within reach of thousands of students who could not afford the cost to attend prior to 1978.


The College Opportunity Act of 1978 gave middle class students more opportunities to afford a college education. Previously, these students "were unable to find any form of assistance except, possibly, loans, to enable them to meet the staggering costs of college." The Act views students as consumers—customers who are looking for the best education for the most affordable price. Opportunity for aid increased the population of middle class students on college campuses across the country.

Along with increasingly available funds, the act sought to streamline the required paperwork to apply for financial aid. Financial aid forms would be sent to a central address and processed by a computer. A form would be returned telling the student how much and what kind of aid they were eligible for, and to return the form to the college of their choice. The goal was to reduce confusion for students and parents. The forms, called the FAFSA (Free Application for Federal Student Aid), can now be processed on the Internet.

Federal financial aid for college students continues to be a hot button issue in Congress. The Act sought to balance the campus population between the poor, middle class, and affluent student. Findings in Thomas Mortenson's 1990 report for the American College Testing Program show that while middle class and affluent students were receiving more gift aid, or grants and scholarships, the poorest students were often receiving more loans. In order to reduce the need for loans, students must work more hours, and so do not get the most from their college education. The Congressional debate reauthorizing allocations for federal financial aid goes on each year. As costs continue to rise and the college-age population grows, the debate about who will pay for college will continue as well.

Primary Source: College Opportunity Act of 1978 [excerpt]: Report

SYNOPSIS: In this excerpt and the accompanying table, Senator Claiborne Pell of Rhode Island reports that the Senate Committee on Human Resources favors adopting the proposed amendments to the Higher Education Act of 1965. He then explains what the College Opportunity Act of 1978 is expected to accomplish.

Need for the Legislation

In the past decade, the costs of sending a child to college have sky-rocketed. Between 1967 and 1976, the cost of sending a child to an average college has increased by 77 percent.

The average cost of tuition, room, and board at a nonpublic institution today is more than $4,800 per year, a staggering $19,200 for the 4 years necessary to obtain a bachelor's degree. The number of colleges which cost between $6,000 and $7,000 for a single year is increasing. And the costs of public institutions, whose charges are already partially subsidized by the taxpayers, are also rising sharply. At many public universities today, a student can be expected to pay more than $2,500 a year to cover education-related expenses.

Although Federal assistance, in the form of grants, loans, and work-study opportunities, has been steadily rising during the past decade, it has not been able to keep pace with the more rapidly rising demand for aid. Given limited Federal dollars, more and more emphasis has been given to aiding those with greatest financial need. Middle-income families, who do the work of our society, pay the bills, and bear the brunt of the tax burden, found themselves increasingly unable to get aid for their children's higher education. Colleges found themselves increasingly facing student bodies made up of the able poor, who could get Federal aid, and the able rich, who could afford to pay their own way.

It was the able children of middle-income families who were unable to find any form of assistance except, possibly, loans, to enable them to meet the staggering costs of college. Many promising careers undoubtedly were abandoned because of inability to seek further education, whether at an institution of higher education or in a trade or technical school. The Nation is the loser.

The bill proposed by the committee is designed to meet this overwhelming need to increase student assistance so that it meets the needs of middle-income families. S. 2539 builds upon the basic building blocks of student aid—basic educational opportunity grants, supplemental educational opportunity grants, college work-study, State student incentive grants, and guaranteed student loans—already familiar to schools and colleges across the country, as well as to millions of parents and students in postsecondary education.

In framing S. 2539, the committee has attempted to make as few changes in the provisions of the programs as possible, to reduce confusion and to assure that the greatest number of eligible students benefit from the programs. Another major goal of the committee bill is the reduction of paperwork already accompanying Federal aid program, such as the needs test in the guaranteed loan program. A third is the avoidance of the creation of any new bureaucracy to monitor or administer any of the programs contained in the bill. By building on existing structures, the committee is confident that no new bureaucracies will grow up.

Provisions of the Committee Bill

Basic educational opportunity grant programs

The basic educational opportunity grant program, commonly known as basic grants, was originally enacted in 1972. In the past 5 years, it has grown from a mere idea to a program which aids more than 2.1 million students a year in pursuing their postsecondary education.

Prior to the enactment of basic grants. Federal student assistance programs administered by the Department of Health, Education, and Welfare, with the exception of the guaranteed loan program, were administered through participating colleges and schools. Appropriated funds were divided pursuant to statutory State-level formulas. Distribution within-State to schools and colleges was initially determined by a regional panel of student aid experts, based on their judgments of institutional requests for funds. The Commissioner of Education retained final authority over all institutional allotments.

However, the essential element in this process was that it was the institution, not the student, which was the focus of attention and decisionmaking. In too many cases, a student was forced to choose his college because funds were available, whereas a preferred institution was unable to offer assistance. Even the amount of aid was, within statutory limits, totally dependent on institutional decisions. Selection of a student to receive assistance, from a pool of equally qualified candidates, was equally totally within the discretion of institutional officials.

Basic grants were developed to provide a counterforce to these pressures. Under the basic grant program the student is the consumer. He takes his grant eligibility to the institution of his choice, regardless

Existing Program
Recipients Funds
Income Number (thousands) Percent Amount (millions) Percent Average award
0 to $5,300 464 21.1 $483 23.5 $1,041
$5,301 to $9,900 733 33.3 811 39.5 1,106
$9,901 to $15,900 745 33.8 624 30.4 838
$15,901 to $19,900 227 10.3 124 6.0 546
$19,901 to $26,500 35 1.6 12 .6 343
$26,501-plus 0 0 0 0 0
Total 2,204 100.0 2,054 100.0 934
Program Proposed by S. 2539
Recipients Funds
Income Number (thousands) Percent Amount (millions) Percent Average award
0 to $5,300 464 12.6 $483 14.9 $1,041
$5,301 to $9,900 735 20.0 837 25.8 1,139
$9,901 to $15,900 881 23.9 897 27.7 1,018
$15,901 to $19,900 627 17.0 505 15.6 805
$19,901 to $26,500 698 19.0 412 12.7 590
$26,501-plus 276 7.5 106 3.3 384
Total 3,680 100.0 3,240 100.0 880
Estimated Grant Awards, Average Family of Four
Income S.2539 President's proposal
$6,000 $1,800 $1,800
$8,000 1,630 1,600
$10,000 1,450 1,270
$12,000 1,280 940
$15,000 1,020 250
$19,000 700 250
$21,000 540 250
$23,000 390 250
$24,000 310 250
$25,000 250 250
Total cost (billions) 1.2 1
SOURCE: Tables from U.S. Congress. Senate. Committee on Human Resources. College Opportunity Act of 1978. 95th Cong., 2d sess., 1978. S. Report 95-643, 5.

of the institution's other financial aid resources. Any equally situated students are treated in exactly the same manner by basic grants.

The mechanism is relatively simple. The statute sets the grant ceiling—$1,400 for the first several years, $1,800 under the education amendments of 1976 (although appropriations for fiscal year 1977 were sufficient only to increase the maximum grant to $1,600). A student and his family fill out a form setting forth income and assets for the preceding calendar year, a form not unlike the one generations of students have been filling out for their colleges in order to establish eligibility for student aid. This form is mailed to a central address for a calculation, free of charge, of possible eligibility for a basic grant.

The calculation is purely mechanical, made by a computer. Information provided by the student or his parents is programmed to arrive at a single figure

representing parental discretionary income—that income to which a student might look for some assistance with his education. To arrive at this figure, certain subtractions are made from net income—tax liability, a family size offset (that amount necessary for the family to meet daily living expenses such as rent and food), any unusual expenses such as high medical bills. additional costs for siblings in college or in private elementary and secondary schools, and any special circumstances or disasters which might have affected the family's ability to pay during the year. After all of these deductions have been made, the figure that remains, if any, is labeled "parental discretionary income." Under current practice, a family is expected to contribute 20 percent of the first $5,000 of this figure, and 30 percent of any excess, toward their child's education.

This contribution is deducted from the grant ceiling; the remainder is the size of the student's basic grant.

Of course, a student and his family are not required to make these calculations themselves, although detailed explanations are available. The student receives a single sheet of paper indicating the size of the grant for which he or she is eligible. or the reasons for ineligibility. This Student Eligibility Report is taken by the student to the school of his choice and submitted to the student financial aid officer for payment or credit toward the student's bills. No individual checks are required to be issued, as the institutions operate under a letter of credit system with the Department of Health, Education, and Welfare, and certify to the Department as payments are made to students as they enroll.

The amendment made by the committee bill would effect a simple change in the computer's calculations of families' ability to pay. Where the computer is now programed to assess discretionary income at 20 percent and 30 percent, the committee bill would require a flat assessment rate of 10.5 percent.

This would cost approximately $1.2 billion over the current level of $2.054 billion, but would add approximately 1.5 million new students as eligible basic grant recipients.…

The amendment to the basic educational opportunity grant program proposed by President Carter would have expanded the program to aid middle-income families by guaranteeing a flat grant of $250 to students from families with incomes between $15,000 and $25,000. The committee rejected this approach, as it did not believe it to be a fair reflection of the relative abilities of families within that income range to finance their children's education. While a family at the $25,000 range of the scale might be conceived to have a liquidity problem as propounded by Secretary Califano in the joint hearing, it appeared to the committee that a family at the $15,000 end of the scale had actual need for grant assistance, and assistance above the level of $250.

Therefore, the committee bill provides for a graduated program of grants, based on families' actual income and ability to afford the spiraling costs of postsecondary education.…

One of the major concerns of the committee in proposing this legislation is that it not lead to the creation of massive new bureaucracies to administer it. S. 2539 avoids this pitfall. By building on an existing program, and by making a change in a computer program rather than in any other element of the legislation, the bill assures that no new bureaucracy will be needed. The form a student and his parents must fill out will remain unchanged. No new data items will be required by the committee bill, so no additional burden of data collection and reporting will be placed on students and parents. If anything, the committee would urge the Department of Health, Education, and Welfare, as it has consistently done in the past, to simplify the existing form as much as possible, so that it serves as no conceivable deterrent to any individual's applying for the grant to which he is entitled. The committee pledges to continue to work with the Department in seeking ways to simplify the legislation, if that is necessary to simplify the basic grants form.

One area of change in the basic grant program which the President proposed, on which the committee did not act, relates to the treatment of the assets of a single independent student who has dependents. Under current regulations, assets of independent students are considered to be available for such students' education up to 33 percent per year of their total value. While this may make some sense in the case of an independent student in his early twenties who has a small bank account, such treatment can work substantial inequities upon the widow who must return for further postsecondary education in order to support her family. Witnesses before the committee last September urged the Department to reconsider their treatment of the single independent student with dependents and to change the current regulations. While the committee does not at this time propose to amend the law to change HEW's regulations on this point, it would add its voice to that of the higher education community in urging the Department of Health, Education, and Welfare to take administrative steps currently well within its authority to remedy this inequity of treatment.

Further Resources


Finn, Chester E. Scholars, Dollars, and Bureaucrats. Washington, D.C.: Brookings Institution, 1978.

McPherson, Michael S. and Morton Owen Schapiro. Keeping College Affordable: Government and Educational Opportunity. Washington, D.C.: Brookings Institution, 1991.

Mortenson, Thomas G. The Reallocation of Financial Aid from Poor to Middle Income and Affluent Students, 1978 to 1990. ACT Student Financial Aid Research Report Series 90–92. Iowa City, Iowa: American College Testing Program, 1990. ED319312.


Chase, Alston. "Financing a College Education." Atlantic Monthly 245, no. 4, April 1980, 92–98.

Mohrman, Kathryn. "Unintended Consequences of Federal Student Aid Policies." The Brookings Review 5, no. 4, Fall 1987, 24–31.


Financial Aid–U.S. Department of Education. Available online at⊤=Financial+Aid; website home page: May 29,2003).