Show New math for college loans Albert B. B Crenshaw The Washington Post i The House Committee on Education and the Workforce working to meet reduction deficit-reduction goals set by the Republican leadership leadership leadership leader leader- ship has approved a bill that could take a significant bite out of gov gov- subsidized emment-subsidized student loans There is no way of knowing at this point how much if any of the bill will actually become law but its progress is something that families expecting to depend on student loans for much of their college expenses expenses and and that's just about everyone everyone- should be watching The measure comes as other federal income students are being held flat flatin flatin flatin in nominal terms and therefore are tion-assistance tion programs programs such as the Pell Grant program for lowI low- low I 1 shrinking after inflation inflation inflation tion is figured in It is our sense that the federal student-aid student programs are careening careening careening careen careen- ing toward some sort of calamity here David L. L Warren president of the National Association of Independent Colleges and Universities an organization organization organization orga orga- of private colleges said last week The education panels panel's bill would produce savings for the government government government govern govern- ment of about 15 billion from the student-loan student program over five years leaving lenders to grumble that overall student loans account Loans Cont on Page 2 Loans Cont from front for less than half of 1 I percent of all entitlement spending but 30 percent of all the spending cuts being proposed by the House Total federal financial assistance assistance assistance assis assis- tance for secondary post students is more than 67 billion billion billion bil bil- bil- bil lion this year according to the Education Department The bill would raise revenue largely in the form fonn of additional additional additional addi addi- fees on lenders So in inmost inmost inmost most cases the impact on students students students stu stu- stu- stu dents would be indirect depending on the extent to which either the fees can be passed on or lenders leave the market or find other ways to squeeze borrowers And for those entering college college college col col- col- col lege in the next few years there is a benefit of sorts The bill would increase the maximum maximum maximum maxi maxi- mum that freshmen and sophomores would be allowed to borrow under the federal program to from 2625 and from respectively However the limit of for third and later years would remain the same as would the overall loan limit of meaning that students students students stu stu- stu- stu dents who find they need a fifth year to finish and many do could see their borrowing J U oi t limited ability ability bili limited i r i- i in in lii t their Jt nf Final final iK A 1 t year Other provisions in the bill would give borrowers a choice between a variable or fixed interest rate when they consolidate student loans Rates on consolidated loans are fixed under current law under a formula that created very low rates last summer triggering a rush to consoli consoli- date But it also imposes a variety of fees on lenders in the guaranteed guaranteed guaranteed guar guar- student loan program Lenders say that marketplace competition makes it likely that they will end up paying most of these but they also contend that such an outcome outcome outcome out out- come which would reduce profit margins would drive many lenders out of the busi busi- ness Educators are re complaining that these cutbacks along with limitations already in place are making it tougher and tougher for both students and colleges Students and their families have to dig deeper and borrow more while colleges try to fill the void left by federal cutbacks with their own money a move that creates budget pressures of its own The Senate Budget Committee last week beefed up some federal grants especially especially especially espe espe- for math science and andt t language students deemed important for national ty But that isn't likely to tomake tomake tomake make a large difference assuming assuming and and theres there's no certainty of this this that that it survives survives survives sur sur- vives to enactment Other schools are gapping gapping gap gapping gap gap- ping students meaning that they give less aid than the amount they know the student really needs to attend I see a lot of little signs that students and families are being pushed closer to the edge issues edge issues about bills getting getting getting get get- ting paid on time students asking for extensions looking for unusual loans said Douglas Bennett president of Earlham College a small liberal liberal liberal lib lib- lib lib- eral arts school in Indiana One student Bennett recalled last week even took out a personal ad in a newspaper per looking for someone who would help with his college bills These are painful moments to see people stretch that hard Of course families and some economists increasingly wonder why college needs to tobe tobe tobe be so expensive and perhaps in some theoretical sense it So what we can look forward forward forward for for- ward to is a steadily more desperate struggle among families colleges and government government government govern govern- ment over who pays for higher high high- er education with no t H sight sigH di Ir j I r I I 1 |