    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
    [May 5, 1993]
    [Pages 574-576]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Message to the Congress Transmitting Proposed Legislation on National
    Service and Student Loan Reform
    May 5, 1993

    To the Congress of the United States:
        I am pleased to transmit today for your immediate consideration and
    enactment the ``National Service Trust Act of 1993'' and the ``Student
    Loan Reform Act of 1993.'' These Acts represent innovative public policy
    founded on traditional American values: offering educational
    opportunity, rewarding personal responsibility, and building the
    American community. In affirming these values, the Acts reject wasteful
    bureaucracy--instead reinventing government to unleash the ideas and
    initiative of the American people. Also transmitted is a section-by-
    section analysis.
        Throughout the Presidential campaign last year, Americans of all
    backgrounds and political persuasions responded to national service like
    few other ideas. The reasons are clear. Higher education is fundamental
    to the American Dream, but complex procedures and inflexible repayment
    plans have created serious problems for many students with education
    loans to pay back. Defaults are too high today--and taxpayers are left
    to foot the bill. Americans are yearning to reaffirm an American
    community that transcends race, region, or religion--and to tackle the
    problems that threaten our shared future.
        The two Acts are designed to meet these basic American needs. The
    National Service Trust Act of 1993 establishes a domestic Peace Corps,
    offering hundreds of thousands of young people the opportunity to pay
    for school by doing work our country needs. The Student Loan Reform Act
    of 1993 overhauls the student loan system. Through a one-stop direct
    student loan program, the Act will save taxpayers billions of dollars,
    lower interest rates for students, and simplify the financial aid
    system. And through new EXCEL Accounts and other repayment options, the
    Act will offer borrowers greater choice and lower monthly payments while
    reducing the chance of defaults.
        The National Service Trust Act of 1993 establishes a definition of
    national service that is clear but broad. National service is work that
    addresses unmet educational, environmental, human, or public safety
    needs. It enriches the lives of those who serve, instilling the ethic of
    civic responsibility that is essential to our democracy. And national
    service does not displace or duplicate the functions of existing
    workers.
        Building on the National and Community Service Act of 1990 and the
    flourishing community service programs of nonprofit organizations and
    States, the initiative rejects bureaucracy in favor of locally driven
    programs. In the spirit of reinventing government, the Act will empower
    those with the greatest expertise and incentives to make national
    service work.
        The Act enables citizens of all backgrounds to serve and use their
    educational awards where they see fit. While many participants will be
    recent college graduates, Americans will be eligi-

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    ble to enter the program at any time in their adult lives. Both full-
    time and part-time service will be encouraged. And whatever their
    education level, those who complete a term of service will receive an
    award of $5,000. The award will be payable toward past, present, or
    future educational expenses in 4- and 2-year colleges, training
    programs, and graduate and professional schools.
        The Act demands that programs meet tough guidelines for excellence
    and requires measurable performance goals and independent evaluations.
    Within these limits, however, the Act enables the people who run
    programs to design them. The smallest community-based organizations and
    largest Federal agencies will be able to compete for funding. A variety
    of program models will be eligible, ranging from youth corps that enable
    at-risk youth to meet community needs, to preprofessional programs that
    give college students ROTC-like training and then placements in specific
    problem areas, to diverse community corps that involve Americans of all
    backgrounds in meeting common goals.
        With the economic market as a model, there is competition at every
    level of the system: programs compete for State approval, States compete
    for Federal approval, and programs at the national level compete against
    each other and States for Federal approval. To build public/private
    partnerships that earn support far beyond government, the Act requires
    programs to make a cash match and to increase nongovernment support as
    time passes.
        The Act is designed to reduce waste and promote an entrepreneurial
    government culture. The Act establishes a new Government Corporation for
    National Service that combines two existing independent agencies, the
    Commission on National and Community Service and ACTION. With flexible
    personnel policies and a small, bipartisan Board sharing power with a
    Chairperson, the Corporation will operate as much like a lean nonprofit
    corporation as a Government agency.
        The State level will mirror the Federal level and build a strong
    partnership between the two. Bipartisan State commissions on national
    service will be responsible for selecting programs to be funded by
    States. To ensure genuine Federal/State cooperation, a representative of
    the Corporation will sit on State commissions and a representative of
    the States on the Corporation Board.
        The National Service Trust Act of 1993 encourages Americans to join
    together and serve our country--at all ages and in all forms. The Act
    enhances the Serve-America program for schoolage youth; extends and
    improves the VISTA and Older Americans Volunteer Programs authorized
    under the Domestic Volunteer Service Act; supports the Civilian
    Community Corps and Points of Light Foundation; and pulls these efforts
    under the new Corporation. The Act will help instill an ethic of service
    in elementary and secondary school students, encourage them to serve in
    their college years, and give them further opportunities later in their
    lives.
        The Student Loan Reform Act of 1993 will taken an important first
    step toward comprehensive reform of the student loan system. It saves
    money, makes loan repayment more affordable, and holds students more
    accountable. The measures in no way replace the Pell Grant program,
    which will remain the cornerstone of financial aid for millions of
    students.
        The Student Loan Reform Act of 1993 replaces the current Federal
    Family Education Loan program with the Federal Direct Student Loan
    Program over a 4-year period. By eliminating subsidies to private
    lenders and making loans directly to students, direct lending will save
    taxpayers $4.3 billion through Fiscal Year 1998 and still allow interest
    rates to drop for student borrowers. Many schools will make loans
    directly to students on campus, though none will be forced to do so. In
    addition, no institution will service or collect loans. This reform
    simplifies the system for many students, enabling most to receive all
    their aid through ``one-stop shopping'' at their institutions' financial
    aid offices.
        The lending reform expands choice and reduces burdens for all
    student borrowers by offering a variety of repayment plans--including
    fixed, extended, graduated, and income-contingent schedules. In the same
    way that multiple financing options help homeowners, these plans offer
    real choice to all and lower monthly payments to those who want them.
    Income-contingent repayments--through the new EXCEL Accounts--also
    encourage service by students who do not participate in service under
    the National Service Trust Act. With more manageable monthly payments,
    more students will be able to take jobs that pay less but do more for
    their communities, without risking default. And whatever plan they first
    choose, students will be able

    [[Page 576]]

    to change their repayment schedule as their circumstances change.
        The Student Loan Reform Act of 1993 will also reduce default rates.
    By electing income-contingent repayment schedules, students with lower
    incomes will be able to repay their loans on a manageable plan, without
    defaulting. Through cooperation with the IRS, the Act will improve
    collection and monitoring of student loans. And for those who are able
    to pay but do not, the Act will give the Secretary of Education
    authority to require payment on an income-contingent basis.
        Opportunity, responsibility, and community go beyond politics. They
    are basic American ideals. Enactment of these two Acts will express the
    Nation's commitment to these ideals and to our shared future. I urge the
    Congress to give the legislation prompt and favorable consideration.

                                                          William J. Clinton

    The White House,
    May 5, 1993.

    Note: This message was released by the Office of the Press Secretary on
    May 6.