Financial Aid Debate Is Raging

As the U.S. House of Representatives and Senate continue to debate the future of financial aid funding, University officials are expressing optimism that significant scalebacks will not become reality for Harvard.

Even so, a new White House study suggests that current Congressional proposals could prove quite burden-some for Harvard students paying for school with loans.

This week the Senate will consider proposal to impose a tax on all loans made by universities to students. If it became law, that measure would be a "terrible precedent" for a University that doles out about $60 million in loans every year, according to Nan F. Nixon, Harvard's director of governmental relations and a full-time Washington lobbyist.

As the debate rages, the outlook for Harvard seems to be improving.

Pell Grants in particular have so far been spared. In fact, both the House and the Senate passed bills raising the maximum grant by $100, from $2,340 to $2,440. That increase represents the largest per-student increase in history, according to spokesperson for Rep. Bop Livingston (R-La.), chair of the House Appropriations Committee.

In order to fund that increase, the House approved a measure raising the minimum Pell Grant from $400 to $600. Under this plan, students who receive grants of between $400 and $599 would no longer be eligible for the grant.

House Republicans have championed those measures as helping those who are in most dire need.

"If you're receiving $400-$600, you're not as needy," says Elizabeth A. Morra, a spokesperson for the House Appropriations Committee. "The idea is to target the federal dollars to students who are most needy."

Democrats have blasted the Pell Grant proposals, emphasizing that the GOP plan cuts the overall appropriation for Pell Grants by $482 million and drops 280,000 students from the program.

"As grants are denied to deserving students and as individual loan debts skyrocket, millions of students will no longer be able to go to college," Senator Edward M. Kennedy '54-'56 said in a statement last week.

The Senate did not raise the minimum Pell Grant, and Harvard officials say they hope the Senate proposal wins out and the grant emerges from the joint conference committee at its current minimum level.

As Congress haggles over levels of Pell Grants, the funding for Perkins Loans is also up in the air.

As usual, the pool of funds from repaid loans will be made available for new loans. The Senate has proposed $100 million in new money for the loans, while the House passed a measure calling for no capital contri-

As the debate over student aid rages in Washington, Harvard's prospects are looking marginally better. But there's still trouble on the horizon...bution.

Democrats have charged that the failure to make a capital contribution would deny the campus-based, low-interest loans to about 150,000 students, according to a memo Democrats are currently circulating in Washington.

In the meantime, a committee of House Republicans has proposed keeping intact certain measures that had been likely candidates for the budget axe in recent months.

In a statement released Thursday, members of the House Economic and Educational Opportunities Committee proposed preserving the in-school interest subsidy for students, which University officials have long feared would be scrapped.

The committee proposes keeping the loan origination fee paid by students at its current level of 3 percent. And it proposed maintaing the interest rate reduction on new loans scheduled to take place in July, 1998.

Finally, President Neil L. Rudenstine said last week that he was particularly pleased by the Senate's decision to restore the Javitz and Harris loans for graduate education. When asked about where Harvard's lobbying should be focused next, Rudenstine said the University should focus on restoring the Javitz and Harris programs in the House.

Meanwhile, Rudenstine said he hoped that the education lobby could find a way to "reconceptualize" the budget to defer interest payments for graduate students still in school. According to Rudenstine, current Congressional cuts would make graduate in-school interest the "single largest hit there."

Trouble

While some items have been salvaged, several proposals to remove key funding sources remain on the table.

In order to meet their goal of cutting $10.1 billion from the financial aid budget, Republicans in Congress have considered several measures that could cost Harvard and its students millions.

The House committee released a plan late last week calling for reduction of a federal subsidy to guaranty agencies, lenders and other secondary markets. That measure would save $4.9 billion.

According to Nixon, fewer secondary lenders might continue to lend under the program, since elimination of the subsidy would weaken the lenders' financial position and remove an incentive to lend to students.

Harvard, as a direct lender, would not be severely hurt by that measure. But it would be affected by a proposal to eliminate the government's direct lending program, at a savings of $1.5 billion, Nixon said.

Currently Congress appropriates funds to the University which may be distributed to students on a need basis by the Office of Financial Aid.

The Senate is currently mulling another measure that would adversely affect the University's lending ability. That proposal, which will be debated this week, would impose a 2 percent fee on all loans to educational institutions--a "tuition tax," according to Vice President of Government, Community and Public Affairs James H. Rowe III '73.

Since Harvard makes some $60 million in loans every year, the measure would require a payment of $1.2 million which could otherwise be used for financial aid.

In addition, House Republicans have proposed modifying the six-month post-graduation "grace period" for interest rates on student loans.

Under current procedures, interest on loans does not begin to accrue until six months after a student graduates.

The House Republicans have proposed requiring borrowers to repay the interest accrued during that six month period.

Republicans say the elimination will provide significant federal savings--$3.5 billion--and will not significantly increase the burden on students.

A spokesperson for Rep. John Porter (R-III.) said elimination of the grace period will amount to an added cost of $4 per month for students who have graduted.

According to Nixon, reports indicate that the Senate may also try to eliminate the six-month grace period.

White House Study

A recent White House study has attempted to translate the impact of the Republican proposals to Harvard students.

According to the study, sponsored by the Department of Education and released last week, Harvard students could pay as much as $16.3 million more for federal college loans if Republican proposals become law.

A student who borrows $17,125, in subsidized loans the maximum allowable over four years--would see an increase of $1,426, according to White House calculations.

Meanwhile, a student not supported by his or her parents who borrowed the maximum of $35,125 over four years would see an increase in loans costs of $3,100, according to the study.

And a graduate student who borrows the maximum of $34,000 in subsidized loans would see a cost increase of $9,400, according to the White House.

"These proposals are a direct attack on our nation's students," President Clinton said in a statement last week.

"If Congress approves these changes, the dream of a college education will become a financial nightmare for many young people and their parents," he added.

Republicans have blasted the White House and Congressional Democrats for employing a "scare campaign" and spreading misinformation in the battle over financial aid funding.

GOP leaders say balancing the budget and stopping the accumulation of national debt is best, in the long run, for today's students.

"We believe that balancing the federal budget may well be the single best thing we can do for our children, and we are proud of the fact that we are getting the job done," said Rep. Bill Goodling (R-Pa.), chair of the House Economic and Educational Opportunities Committee.

Overall, however, University officials are hopeful that financial aid levels can be maintained as the debate rages into the next century.

"On balance, I would say [there is] pretty good support, bearing in mind that one, it's not over yet, and two, it's only year number one out of seven," Rudenstine said last week.Crimson File Photo

Democrats have charged that the failure to make a capital contribution would deny the campus-based, low-interest loans to about 150,000 students, according to a memo Democrats are currently circulating in Washington.

In the meantime, a committee of House Republicans has proposed keeping intact certain measures that had been likely candidates for the budget axe in recent months.

In a statement released Thursday, members of the House Economic and Educational Opportunities Committee proposed preserving the in-school interest subsidy for students, which University officials have long feared would be scrapped.

The committee proposes keeping the loan origination fee paid by students at its current level of 3 percent. And it proposed maintaing the interest rate reduction on new loans scheduled to take place in July, 1998.

Finally, President Neil L. Rudenstine said last week that he was particularly pleased by the Senate's decision to restore the Javitz and Harris loans for graduate education. When asked about where Harvard's lobbying should be focused next, Rudenstine said the University should focus on restoring the Javitz and Harris programs in the House.

Meanwhile, Rudenstine said he hoped that the education lobby could find a way to "reconceptualize" the budget to defer interest payments for graduate students still in school. According to Rudenstine, current Congressional cuts would make graduate in-school interest the "single largest hit there."

Trouble

While some items have been salvaged, several proposals to remove key funding sources remain on the table.

In order to meet their goal of cutting $10.1 billion from the financial aid budget, Republicans in Congress have considered several measures that could cost Harvard and its students millions.

The House committee released a plan late last week calling for reduction of a federal subsidy to guaranty agencies, lenders and other secondary markets. That measure would save $4.9 billion.

According to Nixon, fewer secondary lenders might continue to lend under the program, since elimination of the subsidy would weaken the lenders' financial position and remove an incentive to lend to students.

Harvard, as a direct lender, would not be severely hurt by that measure. But it would be affected by a proposal to eliminate the government's direct lending program, at a savings of $1.5 billion, Nixon said.

Currently Congress appropriates funds to the University which may be distributed to students on a need basis by the Office of Financial Aid.

The Senate is currently mulling another measure that would adversely affect the University's lending ability. That proposal, which will be debated this week, would impose a 2 percent fee on all loans to educational institutions--a "tuition tax," according to Vice President of Government, Community and Public Affairs James H. Rowe III '73.

Since Harvard makes some $60 million in loans every year, the measure would require a payment of $1.2 million which could otherwise be used for financial aid.

In addition, House Republicans have proposed modifying the six-month post-graduation "grace period" for interest rates on student loans.

Under current procedures, interest on loans does not begin to accrue until six months after a student graduates.

The House Republicans have proposed requiring borrowers to repay the interest accrued during that six month period.

Republicans say the elimination will provide significant federal savings--$3.5 billion--and will not significantly increase the burden on students.

A spokesperson for Rep. John Porter (R-III.) said elimination of the grace period will amount to an added cost of $4 per month for students who have graduted.

According to Nixon, reports indicate that the Senate may also try to eliminate the six-month grace period.

White House Study

A recent White House study has attempted to translate the impact of the Republican proposals to Harvard students.

According to the study, sponsored by the Department of Education and released last week, Harvard students could pay as much as $16.3 million more for federal college loans if Republican proposals become law.

A student who borrows $17,125, in subsidized loans the maximum allowable over four years--would see an increase of $1,426, according to White House calculations.

Meanwhile, a student not supported by his or her parents who borrowed the maximum of $35,125 over four years would see an increase in loans costs of $3,100, according to the study.

And a graduate student who borrows the maximum of $34,000 in subsidized loans would see a cost increase of $9,400, according to the White House.

"These proposals are a direct attack on our nation's students," President Clinton said in a statement last week.

"If Congress approves these changes, the dream of a college education will become a financial nightmare for many young people and their parents," he added.

Republicans have blasted the White House and Congressional Democrats for employing a "scare campaign" and spreading misinformation in the battle over financial aid funding.

GOP leaders say balancing the budget and stopping the accumulation of national debt is best, in the long run, for today's students.

"We believe that balancing the federal budget may well be the single best thing we can do for our children, and we are proud of the fact that we are getting the job done," said Rep. Bill Goodling (R-Pa.), chair of the House Economic and Educational Opportunities Committee.

Overall, however, University officials are hopeful that financial aid levels can be maintained as the debate rages into the next century.

"On balance, I would say [there is] pretty good support, bearing in mind that one, it's not over yet, and two, it's only year number one out of seven," Rudenstine said last week.Crimson File Photo