PSU students' federal aid in jeopardy

By JASON ALT
and JON FEINBERG
Collegian Staff Writers

Talk is cheap, so they say. But when the talk in Washington, D.C., recently turned to reducing the federal deficit by eliminating student aid programs, talk suddenly became very expensive.

Financial aid administrators nationwide are now sounding the alarm in response to rumblings that Congress might eliminate all funds for college work study, Supplemental Educational Opportunity Grants and Perkins Loans. Penn State stands to lose $7 million to $12 million if legislators eliminate those three federal programs, which benefit about 9,700 of the University's students.

Legislators are also considering eliminating the in-school interest exemption for student loans, which would raise the loan debt facing students when they graduate. Students now accumulate no interest on their loans until after graduation. Pennsylvania has the third highest number of students receiving in-school subsidies.

For now, those deficit-reduction plans are only talk. But the possibility of turning that talk into reality has worried many Penn State officials.

"I would say that it would be devastating to the programs at Penn State," said Anna Griswold, assistant vice provost for student financial aid. "Because those programs are directed at the highest need levels, it's becoming harder for families at those levels."

But long before the renewed support for financial aid cuts, Griswold was concerned about Penn State's financial aid future. In 1992-93, the University was unable to meet $63.1 million in demonstrated student need. No short-term relief is in sight to close the gap between unmet need and available resources, but the University's ability to help students pay tuition costs would be complicated even more by any federal cuts.

But legislators who have generated the controversy believe good arguments necessitate the cuts.

Kelly Presta, spokesman for U.S. Rep. Bill Goodling, chairman of the House Economic and Educational Opportunities Committee, said there has been some early discussion of eliminating the federal government's payments for interest on student loans.

By cutting the payments, Presta said the federal government would save a substantial amount of money.

"It really means that students would be paying interest like any other loan," Presta said. "The other argument is that these loans are very good investments (for students)."

Even though many people have opposed eliminating the interest subsidy payments, Presta said the federal government needs to cut spending somewhere. By cutting the subsidies, he said, the government will be able to avoid a less popular money-saving alternative -- slashing the loan program completely.

"I don't know of anyone who wants to end student loans," Presta said. "If we want to continue to have student loans . . . it needs to be done so that they're affordable."

For many legislators, the decision to cut financial aid will come down to weighing priorities --specifically, between cutting the deficit and appeasing the concerns of students.

U.S. Rep. Bill Clinger, R-Warren, is one legislator who will be forced to make that difficult choice.

"Mr. Clinger is proud to have a lot of colleges and universities in his district," said Chris Krese, Clinger's spokesman. "He certainly understands the concerns of students."

If and when a bill comes up, Krese said Clinger will weigh the cuts' savings against the positive effects of the interest subsidy program.

"Some of the budgetary savings are going to be controversial," he said. "Reducing the deficit is quite possibly one of the issues with which (Clinger's) constituents are most concerned."

However, opponents of cutting the subsidy consider the Republicans' logic to be skewed.

"Republicans, in the name of cutting the deficit, are cutting student loans," said Barmak Nassirian, policy analyst for the American Association of State Colleges and Universities.

If the cuts go through, he explained, students who currently receive interest subsidies will lose $12 billion.

"That would be directly transferred, dollar for dollar, on poor and moderate-income students," Nassirian said. "This is a penny-for-penny cost transfer."

The recent push to eliminate the interest subsidies, he said, is the culmination of a pattern that has existed for years.

"As a nation over the past 15 to 16 years, we have gradually disinvested in students," Nassirian said. The federal government has been pushing students who cannot afford an education into getting grants, he said, and now it plans to make those grants more difficult to repay.

"It's a very social Darwinist kind of approach," he said.

In addition, Nassirian said, no politicians have legitimized the approach.

"Nobody has really stepped forward from the GOP to say that there are justifiable policy reasons to cut these payments," he said. So far, Republicans have only said that ending the payments will help to reduce the deficit.

However, the issue of cutting the deficit always raises a controversial question of priorities.

"Precisely because our deficit is so out of hand," Nassirian said, "we need to make sure we don't have a nation of Slurpee fillers paying this debt, but a nation of educated people."

So far, Penn State has been shielded from devastating cuts in early Congressional action. But many more battles remain to be fought, as deficit-reduction proponents and education-funding advocates try to convince politicians where their loyalties with voters must ultimately rest.

"It's a little too early to read the cards, really," explained University President Joab Thomas. "We're still within the first 100 days of the 'Contract With America.' We don't know what the ultimate reaction will be."

Thomas' task of finding financial aid solutions has also been complicated by Gov. Tom Ridge's recent budget proposal, which falls $23 million short of the University's request. The double shot of bad news has surprised Thomas.

"I expected some of the difficulty we're facing, but not all of it," Thomas said. "In federal terms, it's just the scope of it. Federally, we really don't have a very good signal yet.

"On the state level, I really expected more support for public education than we have seen in the initial budget. But we really have only the first recommendations from a governor that didn't have a lot of time to put that budget together."

The uncertainty of the status of federal financial aid has prompted heavy lobbying on Capitol Hill.

"We've had complaints from some members of Congress about the number of calls they're getting," said David Merkowitz, director of public affairs for the American Council on Education and a spokesman for the Alliance to Save Student Aid. "That's a good sign. It means they're feeling some heat."

Early recision bills have not axed federal financial aid programs, but many more political steps are ahead. Merkowitz said Republicans will be under enormous pressure to maintain their discipline and cut funds for deficit-reduction purposes.

"They don't want to say yet, but they know they'll get a lot of heat when they do. They're getting a lot of heat from students," Merkowitz said.

For now, though, Merkowitz is encouraged by student aid advocates' early victories.

"This is like a Saturday movie serial -- you get a cliffhanger every week," he said of the long, step-by-step Congressional process. "You could still get things on the table that aren't on the table now."

Griswold's past experience has prompted her to not expect the federal government to fully eliminate work study, Supplemental Educational Opportunity Grants, Perkins Loans and in-school subsidies for student loans. She acknowledged, however, that the political climate surrounding financial aid today is harsher than before.

"Many, myself included, believe it will not be as dramatic as what we're learning," Griswold said, stressing that universities and colleges must still watch carefully and lobby effectively. Past showings of bipartisan support for federal financial aid programs have kept her encouraged, yet cautious.

"The programs have always been put on the table for consideration during critical periods," Griswold said. "But there are forces greater than in the past. We can't just sit back and assume these cuts won't happen. I'm more concerned than ever that it could occur, but I want to believe there is enough reaction that it won't come to pass in full."

Undergraduate Student Government President Mike King is less confident about the future of federal aid programs. Their status, he said, may hinge on students' ability to bring forward the magnitude of proposed cuts.

"The 'Contract With America' is really going to screw students hard if we don't do something about it," King warned. "I think there's strength in numbers. And I think the key to any problem is motivating as many people as possible in an informed, articulate manner."

But what he perceives as a pervading apathetic atmosphere among students discourages King, who said the youths of America fail to make their voices heard through voting.

To other students, however, early talk about eliminating student aid programs is right on track. Because the U.S. Constitution does not call for federal involvement in education, that responsibility should be transferred to the states, said Brian Gillott, vice chairman of Penn State Young Americans for Freedom.

"By states controlling it, the people in the states have a better control about how the money being taken from them is being taxed," he said.

But for John Cahir, vice provost and dean for undergraduate education, financial aid support transcends the boundaries of politics and enters the realm of societal interest.

Higher education benefits both individuals and the country at large by boosting the gross national product, he explained, adding that talk about dismantling federal aid programs and eliminating in-school interest exemptions disturbs him.

"One can't look at that with much equanimity if one believes as I do that one of the greatest investments you can make in a society is in education," Cahir said. "All one needs to do is go to some country where there isn't much education and decide in which place you'd prefer to live."