Washington May Require Students To Arrange Loans Outside College

Students who have borrowed money under the National Defense Education Act will have to go to private and state lending agencies if proposals made by President Johnson are written into law.

Under Johnson's plan, students would have to negotiate loans from state loan programs, other non-profit lending agencies and private banks at up to six per cent interest. The government would guarantee the loan and pay all the interest while the student is in college.

When he graduates and begins to repay the loan, the government would pay up to three per cent of the interest. This is roughly the way the government now handles G.I. loans and insured mortages.

Thus instead of dealing with the University, which presently administers Federal funds, students would have to forage for themselves.

Student loans are currently available through the eight-year-old National Defense Education Act, which allows graduate students and undergraduates to borrow up to $1000 a year interest free while they are in school. After graduation, they begin to pay back the principal and pay interest at three per cent.

Ninety per cent of the funds for this program come directly from the Federal government. The school puts up the remaining ten per cent in "matching funds," and is paid back along with the government when the student graduates.

Almost all Cliffies who have borrowed money have done so through the NDEA, and a large percentage of the loan funds at Harvard have come from the same source. Exact figures were not available last night.

Pamphlet Expected

The details of the new system are spelled out in a pamphlet that will be circulated for a month among university admissions officers and bank officials to give them a chance to suggest changes.

Fred L. Glimp '50, dean of Admissions, said last night that there may be some major obstacles to implementing the new plan. It is not clear, he explained, just how the banks will inform schools of the amount of their loans; a school, therefore, may find it difficult to decide how much financial aid--in the form of scholarships, school loans or jobs--will be available for other students.

Glimp added that there may be problems in meshing the new proposal with already existing state loan systems. Only 16 states, Massachusetts included, have such programs, and some sort of machinery for administering the loans might have to be established in the others, he observed.