Bok Wants More Grants, Fewer Loans in Aid Bill

Calling on the House of Representatives to avoid "creating on nation of debtors," President Derek C. Bok yesterday submitted testimony to a House committee, advocating revisions on a key student-aid bill.

Bok wrote in the testimony, sent to the House subcommittee on Post-secondary Education, that the Higher Education Act should be revised to emphasize grants over guaranteed loans. Otherwise, he wrote, students would continue to be forced to search for high-paying jobs later in life and minorities and the poor would be discouraged from attending college.

The House committee currently is revising the act, which is reauthorized about every six years and funded annually. A spokesman said the new version, which he estimated will call for about $11 billion in student-aid funds annually, will become effective in 1987.

This year, Congress funded about $8 billion for programs under the 1980 version of the act, which had recommended close to $12 billion.

About 50 percent of students at Harvard receive funds through programs like Pell Grants and guaranteed student loans (GSL), which are alloted under the bill.

Bok wrote that he lamented the steady decrease in student aid funding in general and the fact that the majority of student aid has shifted from grants to loans.

"The federal government should have an interest in educating informed citizens, fulfilling the commitment to equal educational opportunity, promoting a vigrous economy through education and training and enabling students to be educated to their highest potential," Bok wrote.

"Creating a nation of debtors does not seem the right way to achieve these goals," he added.

Bok wrote that emphasis on loans over grants had a number of "pernicious" consequences, including:

*an increase in defaults as debt rates rise faster than students are able to repay loans;

*the postponement or cancellation of graduate study plans as students desire to enter the job market as quickly as possible;

*a move away from teaching, ministry and social service type careers because of their low pay;

*and the prevention of some minority and needy students from "even contemplating" a higher education.

Bok suggested extending repayment plans for loans and emphasizing grants over loans in the process of formulating the act.

"There is really only one long-term solution [to the indebtedness problem]," Vice President for Government and Community affairs John Shattuck said yesterday. "We can only recommend that Congress look hard at the effects of what they are doing."

Shattuck said the the deficit-reducing climate has contributed to a number of serious policy considerations that have hit Harvard and other private colleges especially hard, including the indebtedness problem and tax reform proposals.

Thomas R. Wolanin, staff director for the postsecondary education subcommittee, said representatives had seriously considered changing the balance of grants and loans, now about one-to-one, closer to its 1975 level of about eight-to-two.

He said that through a variety of technical measures and revisions, the 1985 Higher Education Act should redress the balance as much a possible in light of the deficit.

But, Wolanin said, if Congress decides the $11 billion price tag is too much to pay annually, grants, not loans, will be cut. He said the government guarantees such loans to banks far in advance, and thus cannot retrospectively vote to cut loan allotments.

In his statement, Bok also asked Congress not to base policy on the theory of "cost-containment." He wrote that the increasingly popular theory, which might base aid or grants on a maximum reasonable tuition cost, would unfairly punish private universities not subsidized by tax-payer