The text of federal oversight hearings on Title III of the Institutional Aid Program is presented. Statements by various college administrators, higher education association representatives, and state legislators are included. The proposed regulations were issued pursuant to Title III of the Education Amendments of 1980. In addition to clarifying the Department of Education's (ED) proposed regulations, the hearing is also designed to identify the data needed to carry out Congress's intent and to assure smooth operation of the grant process. Attention is directed to four basic issues: (1) institutional eligibility and use of 1978-1979 Pell Grant data in determining institutional eligibility; (2) the definition of "substantial" as proposed in the regulation; (3) emphasis on achieving institutional self-sufficiency or graduation from the Title III program; and (4) the regulatory limitations placed on explicit statutory set-asides for community colleges and historically black colleges. To be eligible, an institution must enroll a substantial percentage of students receiving need-based student financial assistance under Title IV, and the average amount of this student assistance must be high as compared with similar institutions. Based on the ED assumption that Congress expected that the statutory eligibility criteria would identify institutions that serve low-income students, the Department suggests that 35 percent be used as the definition of "substantial percentage," and advises that the high-average award requirement in the law be deleted. (SW)