Proposed Student Loan Rule Not Likely to Affect Harvard

A proposal to discontinue student loan payments to colleges whose default rates on a federal aid program for especially needy students exceed 25 per cent will have little effect on Harvard students, University officials said yesterday.

Secretary of Education Terrel H. Bell seeks to penalize institutions with default rates of 10 to 25 per cent on the National Direct Student Loan Program (NDSL), which grants money directly to colleges.

The Education Department defines a default rate as the percentage of students in a university who fail to repay their federal loans within prescribed time limits.

Harvard administrators said yesterday that the University's student loan payments will not be endangered because Harvard's 7.5 per cent default rate falls below NDSL's proposed limits. Harvard students receive approximately $1.5 million annually from NDSL grants.

Bell called the 16.3 per cent national average for defauts "disgraceful."

Thomas O'Brien, financial vice president, said yesterday that the NDFSL proposal represented only one facet of a very ambiguous and complex Reagan Administration program.

"The uncertainty right now is almost as bad as the proposals themselves," O'Brien added.

Black said yesterday that the Reagan Administration may propose the elimination of the NDSL subsidies for 1983 in accordance with its program of fiscal restraint.

Elimination of the federal allocations would significantly effect Harvard, which has compiled $17 million in outstanding unpaid student loans since the programs conception in 1958, Robert H. Scott, director of financial systems, said yesterday.

"That's not a small amount of money," he added.

The University may also face a more subtle problem in making the effects of budget cut clear to "less sophisticated families", William R. Fitzsimmons '67, director of admissions, said yesterday.

People who have less access to good college counseling "may be hurt the most if they don't read beyond the headline," he added.

Bell's program, if adopted, will take effects after September 30.