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092753 1 (1970-03-30)

handle is hein.gao/gaobacwqr0001 and id is 1 raw text is: W UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 LM092753 CIVIL DIVISION .MA 3 0 1970 Dear Mr. Gulledge: We have examined into certain aspects of the college housing program administered by the Department of Housing and Urban Development (HUD). Our review was made pursuant to the Budget and Accounting Act, 1921 (31 U.S.C. 53), and the Housing Act of 1954 (42 -U.S.C. 1435), and was performed, for the most part, at HUD headquarters in Washington, D.C., and at the HUD regional office in Philadelphia. Our review was concerned primarily with HUD's current policy of requiring private educational institutions to issue revenue bonds as security for direct Federal loans made for the construction of housing facilities. On the basis of our review, it appeared to us that if HUD's policy were changed to require private educational institutions to use general obligation notes, instead of revenue bonds, as security for their loans from the Federal Government, the basic program objective of helping educational institutions provide housing at the lowest cost to the student would be advanced and the cost of the loan to both the borrower and the Federal Government would be reduced. We estimated that, for the 77 direct loan projects approved by HUD for private educational institutions during fiscal year 1969, the Government could have realized annual savings of <pout $16,000 (or about $647,000 over an assumed 40-year loan period) if eral obligation notes, instead of revenue bonds, were used as security for the loans. At the same time, an even larger amount of savings could be realized by the borrowing institutions. Additional savings may be possible in the case of direct loans made to public educational institutions. The above matter is discussed in more detail in the following sections. Title IV of the Housing Act of 1950, as amended (12 U.S.C. 1749) gives the Secretary of HUD the responsibility for administering the college housing program which authorizes financial assistance to colleges, universities, eligible hospitals, and special college housing organiza- tions for the construction or acquisitiona of housing and essential service facilities. 0 f976 3

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