Testimonies are presented from U.S. Senate hearings on oversight of Title III of the Higher Education Act, Developing Institutions Programs. The new eligibility criteria established by the Education Amendment of 1980 for schools seeking to compete for grants under the Title III institutional aid programs are being reconsidered. The institutional aid programs were established to assist 2- and 4-year colleges expand their enrollments and attract outside financial resources. Four amendments that have been prepared to alter the program eligibility requirements are examined by representatives of government, colleges, and educational groups. It is suggested that Congress presumably intended the eligibility factors to identify institutions that need special assistance because they enroll large numbers of low-income students and because their ability to provide essential educational services is limited. The first two amendments would eliminate the requirement for a statistically high average student financial assistance award as a consideration for eligibility. For Part A, only Pell grants are considered; for Part B, all Title IV need-based student assistance is considered. The third amendment repeals the new formula for calculating full-time equivalent students for purposes of determining average education and general (E. & G.) expenses, and the fourth amendment deals with the computation of E. & G. expenses for institutional aid eligibility. The U.S. Department of Education supports the proposed amendments, without which many institutions that Congress presumably intended to participate in Title III will not be eligible. Letters and prepared statements by various schools and organizations are appended. (SW)