[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.