CREDIT CHECKS MAY JEOPARDIZE STUDENT LOANS

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, February 15, 1992                   TAG: 9202150107
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium
CREDIT CHECKS MAY JEOPARDIZE STUDENT LOANS
Thousands of students may be ineligible for student loans under a law extending unemployment benefits for millions of jobless Americans.
The $2.7 billion package, which President Bush signed into law in November and extended unemployment benefits for an extra 13 weeks, included a requirement that students over the age of 21 undergo credit checks when applying for federally guaranteed student loans.
Students will pay $25 for the credit checks, designed to weed out borrowers considered likely to default on loans.
Critics, however, believe the credit reports will block many students from qualifying for loans because most have low incomes with poor or inadequate credit histories.
Educators and lawmakers say the provision, which drew little attention when the measure was passed, will prevent thousands of low-income students from going to college or trade schools.
The White House Office of Management and Budget estimates the government can save $15 million to $25 million from the credit checks and from a separate requirement that older students with poor credit histories have cosigners on federally guaranteed student loans.
But David Carle, an aide to Sen. Paul Simon, D-Ill., said the Congressional Budget Office has estimated the savings will be negligible.
Simon and Rep. William Ford, D-Mich., are leading efforts to rescind the provision before the Education Department finalizes rules later this summer to begin the credit checks.
In citing the need for the credit reports, the Bush administration said the cost of student loan defaults has grown from $151 million in 1981 to an estimated $2.7 billion last year.
The overall default rate of Guaranteed Student Loan participants has risen to nearly 17 percent, but it is substantially higher for trade schools - 27 percent.

by Bhavesh Jinadra by CNB