The Subcommittee met to hear testimony on the college student loan process, particularly whether, at a time of devolution of power to state and local levels, it is contradictory to continue with the relatively new Federal Direct Student Loan Program. Chairman Peter Hoekstra outlined how vital higher education has become for access to quality employment and the possible problems with direct federal lending. Representative Sawyer responded with positive information on the Ford program and a recommendation for no major adjustments. Representative Petri critiqued the program and suggested reform measures. Representative Istook testified that the direct lending program is a mistake and that this function should be privatized. Senator Paul Simon testified in support of direct lending citing feed-back from institutions that have participated. Representative Bart Gordon urged further testing of direct lending before allowing full implementation. A representative of Maine Education Services, a secondary market lender, testified on the success of that program. Financial aid directors from Hope College (Michigan), California State University, Northridge; and Roger Williams College (Rhode Island) also testified on their experience with the direct lending program. Extensive additional materials and prepared statements are included. (JB)