Institutional Aid Under Title III of the Higher Education Act of 1965

GAO testified on the changes made to the title III program of the Higher Education Act of 1965, which is the largest source of direct federal aid to higher education institutions. The program was created to strengthen the academic quality of developing institutions, those accredited or making progress towards accreditation, with financing for special projects and programs and with increased usage of consortia and cooperative arrangements. However, GAO found a number of problems in the program and in the Department of Education's administration of the program, including: (1) Education made subjective decisions for grant selection; (2) there was no mechanism to target grants to institutions which showed the greatest need or to select projects which would lead to institutional development; (3) financial controls over title III funds were inadequate; and (4) Education provided little guidance on how the annual project evaluations were to be performed. In 1980, Congress made major revisions which added new eligibility requirements and subdivided the program into three parts: (1) the Strengthening Institutions Program; (2) the Special Needs Program; and (3) the Challenge Grants Program. Many changes addressed the problems, such as: (1) availability of funds to any institution; (2) improved grant award processes; (3) nonrenewable grants so institutions would cease to rely on program funding; (4) requirements for schools to submit long-range development plans; and (5) controls over funding and financing projects. However, no institutions have attained a developed status through the use of title III funding, and Education officials had no evidence that any schools were approaching such a status even though some were no longer receiving grants. The question that still remains is whether institutions receiving title III funds are moving toward financial stability and being brought into the mainstream of academic life, or is title III a form of continued subsidy to institutions which are no more developed after years of assistance than when their participation first began.