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Congressional Cuts Hit Student Loans

By Sarah Y. Keightley
and Jeremy Hylton
Staff Reporters

As the Republican-controlled Congress moves to balance the budget by 2002, it is proposing broad cuts in all areas of domestic spending, many of which will have a serious impact on MIT and the nation's higher education system.

A resolution passed late last month by the House of Representatives proposes to eliminate the Departments of Energy, Education, and Commerce as well as the in-school interest exemption for government student loans. By contrast, the Senate version eliminates only one department - commerce - and would eliminate only the interest subsidy for graduate and professional students.

In addition to abolishing the three departments, the House bill would lower funding for civilian science research in the House budget from about $32 billion last year to $24 billion in 2000, a cut that translates to a total reduction of about $24 billion over the four years.

The House and Senate budgets will be reconciled over the summer, and a final bill will probably be voted on by both houses of Congress in September.

Professor J. David Litster PhD '65, vice president and dean for research, cautioned that while the cuts would be serious if implemented, the budget was still far from being approved.

"What finally counts is what the appropriation committees appropriate, what the Senate passes, what emerges from the House-Senate conference, and what the president signs," he said. "It will be a long summer."

By way of explanation, Republicans say the cuts, which take aim at programs ranging from weather satellites to nuclear fusion programs, target waste and backing of corporations rather than basic science research.

But Democrats in Congress and the Clinton administration say the cuts would have a more debilitating effect. "Whatever the reduction is - a quarter or a third - it's big, and it's a reversal of historic trends," said John H. Gibbons, presidential science adviser.

"We've lost sight of federal funding in education and research as investments," said President Charles M. Vest. "People are looking at them as costs and costs to be cut down." [See story, page 21.]

Many administrators and faculty have "been working very hard over the past few years to let people see the importance of MIT and the nation's other research universities," Litster said.

"We will be calling upon that goodwill, and will be working hard in the next few weeks to explain the significance of many of the proposed cuts," Litster said.

Student loans will be hurt

Stanley G. Hudson, director of student financial aid, described the House cuts in student loan programs as "draconian." The House budget, while not specifying cuts, indicates that the interest exemption would be eliminated for all students.

A late amendment to the Senate version of the bill restored $9.4 billion of $13.8 billion in cuts to student loans. The Senate cuts "are a bit less troublesome but still considerable," Hudson said.

It is possible that President Clinton could veto the budget, Hudson said. He has made strong statements against cuts in education, but it might be difficult to veto the whole budget, Hudson said.

At any rate, there will be a "clear reduction in grant money being available," and possible loss of the in-school interest subsidy, Hudson said. The interest subsidy helps not only the neediest families, but also middle income families, he said.

One Senate proposal is a compromise on the interest subsidy where it would only be eliminated for graduate students. For students in long-term PhD programs in departments that do not have many fellowships, costs could go up by 22 to 25 percent, Hudson said.

A secondary effect of these cuts is that potential students might be discouraged to apply to places like MIT - even if the cuts are not as severe, Hudson said. "We think we saw the effect back in the 1980s in terms of a drop-off in the number of applicants from low income families," even though the cuts did not go through.

The Massachusetts delegation of senators and representatives support higher education because it is an important factor in the state's economic livelihood, Hudson said.

MIT is working "closely with higher education associations that are trying to get the message to Congress," Hudson said.

Mission agencies hit hard

NASA, DOE, and civilian research funded by the Department of Defense would see some of the biggest cuts. For example, the House proposes reducing NASA funding from $14 billion to $11.7 billion by 2000.

Despite the cuts at NASA, the overall goal of the measures is to take it out of unnecessary infrastructure and to preserve research programs, according to Professor Earll M. Murman, head of the Department of Aeronautics and Astronautics.

It is difficult to predict the effect on MIT research, because programs are not specifically being cut, Murman said.

Energy research funding will see large cuts - a total of $7 billion over five years in the House bill - but would continue even if the department were eliminated. The largest energy cuts will be in environment restoration and cleanup, which provides little funding for MIT, according to Head of the Department of Nuclear Engineering Mujid S. Kazimi.

"At universities, including MIT, these cuts will affect the research support available for nuclear physics and plasma fusion," Kazimi said.

The cuts may not have as serious affect at MIT, because "MIT developed research projects that are funded by utility groups from the United States and abroad," Kazimi said. "I will not be surprised if this trend towards global funding of MIT research will expand in the next few years."

The recent threat to the Bates Linear Accelerator [see article, page 1] is not part of the budget resolutions passed last month. The cuts to Bates were proposed in a follow-on bill that authorizes funding within the framework set out by the budget resolution.

The National Science Foundation and the National Institutes of Health face less severe cuts than many other agencies. The House would leave the NSF budget largely untouched, while the Senate proposes $100 million in cuts from its $3 billion budget.

The House proposed a 5 percent cut in the NIH's budget, while the Senate proposes a 10 percent cut.

Humanities face deep cuts

Though most of the money MIT receives from the federal government funds science and engineering, MIT does receive a small amount of funding from the National Endowment for the Humanities.

MIT has probably received about $2 to $3 million in NEH funding over the last five years, said Philip S. Khoury, dean of the School of Humanities, Arts, and Social Sciences. The funding has focused on multimedia studies, especially at the Laboratory for Advanced Technologies in the Humanities.

The NEH is the largest source of research funds in the humanities in the United States, Khoury said. Though the annual funding is only about $177 million, it is important because researchers can use NEH money as leverage to get more resources from private foundations or individuals.

Elimination of the NEH would be a "major loss for MIT," he said.

There have also been proposals to cut NSF funding for social science research. "We don't think that is going to happen next year, but the future isn't looking very promising," Khoury said. MIT's prominence in linguistics, economics, and political science is heavily dependent on NSF grants, he said.