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Student Aid May be Threatedned As Budget Negotiations Begin

By Daniel C. Stevenson
Editor in Chief

Proposed Congressional cuts in student aid - affecting everything from direct government loans to scholarships and fellowships - remain a threat after a budget veto by President BillClinton pushed negotiations back to the drawing board.

A House-Senate budget compromise reached last week would have eliminated earlier measures to cut student aid by $5.1 billion, but the entire budget package was vetoed by President Clinton.

Clinton and Congressional leaders are negotiating for a new budget before the Dec. 15 deadline.

"Now that the budget was vetoed and things are going to talks, it's actually a very precarious time for student aid funding," said Graduate Student Council President Barbara J.Souter G.

"In an attempt to make a deal with the Republicans, we may be compromised out of the picture," she said.

"As the horse trading begins, who knows what is going to be traded in and traded out," said Paul Allvin of the National Association of Students for Higher Education.

"The president has said he is going to stand strong, and he has been firmer on this than just about anything we've seen in his presidency,"Allvin said.

However, "as long as there is a question about the funding, there is no reason to feel comfortable."

Additionally, the 1997 budget process is just around the corner, and all the loan and grant programs will be just as much at risk, he said.

Master's students rely on loans

MITmaster's degree students could be particularly affected because they often have to take out big loans to cover tuition and living expenses, since they do not typically get research or teaching associateships, Souter said.

Funding cuts may also affect the number of graduate fellowships at the Institute.

"I don't think that MIT students are particularly wealthy. They're particularly smart and good at earning scholarships and fellowships," and could be hurt in that way, she said.

Additionally, many MIT students, particularly undergraduates, rely on loans and the interest exemption on those loans.

Cuts may be disastrous'

Proposals to eliminate the interest exemption, along with an idea to tax university-paid tuition as income for graduate students, could be disastrous for students,Souter said.

"It's going to be a tough time for at least the next 10 years as the amount of money going into research and education drops. MIT students are definitely going to feel it,"she said.

"If we can get our voice in Washington heard, the situation won't be as severe as it otherwise would be."

Among the MIT graduate student body, "there isn't very much going on. It's been very difficult to get very much interest in" the possible funding cuts, Souter said.

"A lot of graduate students don't see their money threatened," and thus don't feel compelled to get involved, she said. "People act reactively rather than proactively."

Souter, as a representative to the National Association of Graduate-Professional Students, has spoken out against the cuts and recently signed a letter from student leaders to the president. GSCVice President Patrick S. Wojdowski G is the other MITrepresentative to NAGPS.

Direct lending threatened

The vetoed budget compromise restored many of the earlier cuts to student aid, with the notable exception of the direct lending program.

The program, begun by President Clinton in 1993, allows schools to get their loan money for students directly from the federal government, rather than through an intermediary bank.

Currently, about 30 percent of federal loans are delivered through direct lending. The president proposed a cap of 40 percent of the total, but the House wants to entirely eliminate the program. The Senate proposed a 20 percent cap, and the House-Senate compromise was at 10 percent.

Direct lending is good for students because "it allows students to receive funds immediately," eliminating "weeks and weeks of waiting time," Allvin said.

However, "the private sector has not liked this" because administering federal loans is a guaranteed profit for companies, since the government pays the interest until the student graduates, and the entire principal if the student defaults on the loan.

Private sector financial interests "fought tooth and nail to kill direct lending,"Allvin said.