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

DATE: WEDNESDAY, June 7, 1995                   TAG: 9506070040
SECTION: NATIONAL/INTERNATIONAL                    PAGE: C-5   EDITION: METRO 
SOURCE: Knight-Ridder Newspapers
DATELINE: WASHINGTON                                LENGTH: Medium

PROPOSED AID CUTS COULD HURT MANY

But her idealism might become a casualty of too much debt if federal student aid cuts go through.

At 21, the University of Oregon junior already owes $11,000 in college loans. Proposed aid cuts in the GOP budget that House and Senate negotiators are working on could add thousands of dollars in interest costs to her law school bill.

``I'd like to work for a nonprofit, but it might not be an option,'' said Williamson, who's also the newly elected student body president of her school in Eugene, Ore. ``I might have to join a law firm or become a corporate lawyer to cover my debt.''

Next to the plan to restrain Medicare spending, perhaps no other item in the congressional budget has more potential to irritate the middle class than student aid cuts. The federal government supplies most of the financial aid available for college education, a tradition going back to the GI Bill after World War II.

``The thing that kills me is that a lot of [lawmakers] took advantage of these programs while they were in school, and they're willing to cut them now,'' Williamson said. ``Apparently, it was OK for them, but it's not OK for us.''

Colleges have mounted a major lobbying effort to head off the cuts, and House and Senate Republicans already disagree over how much to take out of student aid. For its part, the Clinton administration is proposing tax breaks to help pay for college.

Though several types of aid are in line for cuts, most of the controversy is over the Stafford loan program, which offers low-interest loans to students. The current rate is about 8 percent.

In addition to getting a loan, moderate- and low-income students can also benefit from a government subsidy that pays their interest costs while they're in school. About 5 million students now receive the so-called ``in-school'' subsidy, but the House budget would eliminate it and save $18.7 billion over seven years.

Under the House plan, low-interest loans still would be available to students. However, borrowers would be responsible for all the interest costs. The finance charges could be added to the loan amount and repaid after graduation. Students usually have 10 years to repay their Stafford loans.

Proponents argue that because college-educated people tend to earn significantly more during their work lives than those who don't go to college, graduates can afford to pay.

However, colleges say fear of taking on more debt will cause some lower-income and middle-class students to drop out, or simply forgo higher education.