Advertisement

Archive for Wednesday, February 3, 1993

FINANCIAL AID OVERHAUL PROPOSED

February 3, 1993

Advertisement

— A restructured college financial aid system, including direct student loans and community service repayment plans, is needed to avert a crisis that could alter the nation's ``economic and social landscape,'' a federal commission says.

The National Commission on Responsibilities for Financing Postsecondary Education, in a report being released today, also urged Congress to consolidate many existing financial aid programs, fully fund the Pell Grant program and issue some loans without regard to family income.

The commission advocated a community service program for students similar to that proposed by President Clinton.

Clinton has yet to unveil his National Service Trust, which he has said would allow students to borrow money for college and repay the entire amount through public service or payroll deductions at tax time.

Clinton's plan would replace the federal loan program, which provided $13 billion in loans to 4.8 million students in 1991, but not tamper with Pell Grants. He has not promised other revisions.

Some recommendations made by the congressionally chartered commission are likely to be more controversial than others. For instance, large universities are more supportive than smaller schools of direct student loans, in which colleges rather than banks act as lenders using federal money. Small schools don't have the staffs to handle the paperwork.

A PLAN TO cap student aid at $14,000 probably won't be popular with expensive private institutions, which can cost more than $20,000 a year.

Diane Del Buono, director of financial aid at Kansas University, said today that she has not yet seen the recommendations, but that implementing them could be costly and could change the roll of KU's financial aid office.

She said it is "essential to fully fund the grant programs" but that a recommendation that would allow direct lending by KU and other institutions could require a considerable staff increase.

"It is very difficult to determine how effective a direct lending program would be," she said. "We rely on people in the community (loan officers of private banks) to provide many lending services."

About 7,500 to 8,000 students at KU currently receive about $29 million in financial aid each year, she said. Those figures are expected to increase next year, she said.

DEL BUONO said consolidating lending programs could make it easier for students to go through the financial aid process.

"Any design that would ultimately make loan borrowing . . . and repayment more real to students would be more favorable."

Some programs would be costly. Experts say the government would have to shell out $15 billion up front to fund a direct student loan program while full funding for Pell Grants would cost as much as $8 billion. A pilot program in community service involving 100,000 students would have a $2 billion price tag.

With the cost of education soaring, the commission said it believed there was a ``crisis in the postsecondary education finance system'' that ``threatens to fundamentally change the economic and social landscape of our nation.''

It said the nation ``will pay an enormous price'' through dropouts who are ``unemployed, underemployed or who fail to understand the basic principles of our democratic institutions and political system.''

FIGURES show that from 1980 to 1990, the average cost of a college education rose 126 percent, more than twice the rate of inflation. During the same time, median income for families with heads of households age 45-54, those more likely to have children in college, increased 73 percent.

``We need to get back to the point we were at in the late 1970s when access to higher education was much greater,'' said Jamie Merisotis, the commission's executive director.

Despite of the cost of some programs, he said the commission was ``not recommending any new federal commitment,'' but was ``talking about restoring a previous commitment we had that has slid in the last decade.''

Sen. Claiborne Pell, the Rhode Island Democrat for whom the Pell Grant program is named said in a statement that the report ``documents the tragedy of the 1980s: That in a decade in which technology exploded and the need for a more educated work force became a national issue, federal support for financing college education failed to keep pace.''

THE COMMISSION worked for two years on the recommendations contained in its report, titled ``Making College Affordable Again.'' Members of the panel included higher education officials, business people and a former member of Congress.

Under the commission's STEP (for Student's Total Education Package) plan, students would be eligible for financial aid regardless of family income, but income would figure prominently into the type of assistance.

For instance, a poor student might receive grants and work-study, a student from a middle-income family work-study and interest-free loans and a student with wealthier parents loans with interest charged. Students would repay loans either based on their income after graduating or through a predetermined schedule payments collected by the IRS.

Commenting has been disabled for this item.