Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, February 3, 1993 TAG: 9302030074
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
SOURCE: The Washington Post
DATELINE: WASHINGTON LENGTH: Medium
REVISED COLLEGE AID PROPOSED
A congressionally mandated commission, citing "rising anxiety in America" over the cost of a college degree, is to call today for a radically different college-aid system and far more relief for poor and middle-income students.During the 1980s, the cost of attending a private college or university soared 146 percent - a higher rate than medical, home, food and car costs, the commission's report said. At the same time, federal aid failed to keep pace or to help families with the mounting burden, now second only to the cost of a home in the average American family's budget.
The report said student-aid programs are so confused and complicated that many families either overextend themselves with huge debts or never know if their children qualify for federal assistance. The problems, it said, have contributed to a $3 billion-a-year government loss in defaulted student loans.
The bipartisan panel's report, a copy of which was obtained by The Washington Post, recommends that the federal government spend an additional $7 billion a year to help students pay for college.
President Clinton has promised to revamp the federal student-aid system, and many of the panel's recommendations are in keeping with his campaign pledges.
The proposal seeks, for the first time ever, to set a $14,000-a-year standard for the amount of federal aid students may receive.
The amount, which could be divided among several federal grant and loan programs, is based on an average estimate of the cost of educating a student in public and private colleges and would change annually.
Now, the amount of grants and loans students receive from the government varies with the cost of tuition. The amount also can vary drastically depending on how much Congress appropriates in a given year.
Under the proposed system, all students, regardless of family income, would have access to $14,000 a year in federal aid. But the amount would be divided into grants, work study and loans, depending on a family's wealth.
Other recommendations by the National Commission on Responsibilities for Financing Postsecondary Education include:
A direct government lending system eliminating banks and other lenders as middlemen.
A new national service program far less extensive than the one Clinton promised during his campaign. The panel recommends that for the first year, 50,000 students would be involved and that 20 percent of their government loan - for an estimated average of $2,000 - could be forgiven in a given year of service. While some estimates for Clinton's plan are well over a $1 billion, the commission's plan would cost $100 million.
A new mechanism easing the repayment burden on students who take lower-paying jobs.
The interest on students loans would become tax deductible, as it once was.
Families would be encouraged to save for college by allowing penalty-free withdrawals from Individual Retirement Accounts for college tuition payments.