The College Housing Loan Program:

More Effective Management Needed

CED-80-75: Published: Mar 26, 1980. Publicly Released: Apr 2, 1980.

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GAO was requested to report on the Department of Housing and Urban Development's (HUD) administration of the college housing loan program. The program, authorized in the Housing Act of 1950 to assist educational institutions with low cost loans to provide student and faculty housing, was suspended in 1973; but severe localized shortages of student housing and a need to renovate buildings for energy conservation prompted Congress to renew the program after 4 years of inactivity. Since 1977, HUD has reserved $255 million for new construction loans and $101 million for energy conservation. However, the HUD process for selecting projects was inadequate to ensure that only essential projects based on current severe housing shortages were funded.

The HUD formula for ranking construction projects used enrollment data and estimates of a housing deficiency supplied by applicants. These figures were used without question, although many successful applicants have not followed instructions in reporting their enrollment. Many successful applicants estimated that over 50 percent of their students living at home commuted an unreasonable distance and over 50 percent of the students living elsewhere off campus were inadequately housed. According to national survey data, two-thirds of all college students living at home commute 30 minutes or less to campus, but HUD officials did not question the high estimates. It has often taken 2 years or more to process loan agreements and release funds for both energy conservation and construction projects. Demand for the HUD college housing loan program has been strong since 1977 because of the advantage of obtaining a 3 percent interest loan from HUD compared to a much higher interest loan elsewhere and the increasing number of foreign students requiring campus housing. The current demand for new college housing may be short lived because of the expected decline in the college age population. A number of loans have been made to institutions which had not previously housed students. These projects were strongly related to the schools' plans for expanding their enrollment markets. Expansion of the enrollment markets of commuter institutions can affect enrollment and dormitory occupancy at traditionally residential institutions, many of which have outstanding loans from HUD.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The college housing loan program is scheduled for transfer after fiscal year 1980 to the new Department of Education. To improve the program, the Secretary of Housing and Urban Development and the Secretary of Education should: require applicants to submit documentation supporting the reasonableness of their estimates of housing deficiencies; verify that full-time enrollment data is reported consistently; require State institutions to secure approval of State coordinating agencies before applying for a loan reservation; review and revise the project selection criteria; and direct that particular scrutiny be given applications from schools which have not previously housed their students to assure housing is not being requested to expand the schools' enrollment market. The Secretary of Housing and Urban Development should: instruct area offices to give higher priority to the final review of projects and execution of loan agreements to avoid further unnecessary cost increases and lost energy savings. An attempt should be made to clear the backlog of unsigned agreements before the program is transferred to the Department of Education. The Secretary of Education should: biennially assess the need for new campus housing construction by monitoring such indicators as enrollment trends, occupancy of existing campus housing, and rental housing vacancy rates.

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