PENN ON THE HILL: Congress may curtail student loan program

The nature of financial aid is changing as schools move from the traditional federal guaranteed-loan program towards a direct-lending program. But the pace of this change could be a topic of debate in the U.S. House of Representatives. Federal dollars to be used for loans go directly to schools in the direct-lending program. Under the guaranteed loan program, loans are distributed through banks and guarantee agencies. Rep. William Goodling (R - Pa.), the new chairperson of the House Economic and Educational Opportunities Committee, is looking to limit the direct-lending program's expansion to 40 percent of the total money granted for loans. According to Kelly Presta, spokesperson for the Committee on Educational and Economic Opportunity, a bill currently under consideration in the House would expand the direct-lending program to 60 percent of loans granted by 1998-99. The Senate has yet to introduce a bill on the matter. One hundred and four colleges and universities are participating in the direct-lending program this year, and the number of participants is expected to increase substantially next year to 1,495, according to this week's issue of Chronicle of Higher Education. According to Student Financial Aid Director William Schilling, the University is not currently using the direct-lending program. He added that from what he has heard, the program appears to be effective. "Everything we've heard is that it has worked reasonably well for the institutions that got into it," Schilling said. University Federal Relations Assistant Director Carl Maugeri said it is too soon to say if the University will enact this program. Schilling cautioned, however, that it remains to be seen if the Department of Education, which administers the loans to schools, can maintain the "same level of responsiveness" with additional schools involved. Presta agreed, adding that he is not convinced that the Department of Education would be up to the task of seeing that the loans are payed off. "They're very good at giving money out, but they have no idea about collecting it," Presta said.