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Congress may bar direct student loans to MIT, others

As Congress and the White House resumed the battle of the budget this week, two months after the beginning of the federal government's 1996 fiscal year, MIT and many other universities don't know whether they will be allowed to participate in the direct student loan program in the 1996-97 academic year.

Direct lending is a popular campus program that provides federal student loan funds directly to students at colleges and universities, in addition to the guaranteed student loans issued by banks and loan-guarantee agencies.

The direct student loan program is one of the key elements at issue, and the present proposal for a 74 percent cut in direct loan dollar volume is almost certain to change before it becomes law. The president has said he will veto the current proposal partly because of the direct-lending cuts.

However, the current Congressional proposal is to eliminate participation by all colleges and universities except the first 102 institutions that started the program two years ago, and to limit the amount of loans to 10 percent of the year's new loans to students by the government and banks. Currently, 1,359 colleges participate and direct loans are expected to total about 38 percent of the estimated $28 billion to $30 billion total of new loans to students (PLUS loans).

MIT began participating this year, and the Institute and its students thereby would be eliminated from the program under the current pending legislation. MIT in this academic year expects to have about $20.6 million in direct student loans to about 3,150 students.

Also unresolved after the government shutdown and the November 20 compromise on a continuing budget resolution are these issues affecting the higher education community:

  • The amount of university scientific research to be funded by the Department of Defense, the National Institutes of Health, the National Science Foundation, the National Aeronautics and Space Administration, the Environmental Protection Agency, and the National Endowments for the Arts and the Humanities.
  • ������������������A proposed Congressional income-tax deduction of up to $2,500 for interest payments on student loans.
  • A proposed Congressional bill to tax employees who are taking graduate courses (but not undergraduate courses) on the amount of tuition assistance they receive as part of their employee benefits program under Section 127 of the tax code.

The continuing resolution agreement of November 20 provided funds to continue government operations through December 15. The deal over the new continuing resolution was made possible by mutually agreed-upon language that allowed both sides to claim victory.

Under the deal, President Clinton committed to a seven-year balanced budget using the numbers provided by the Congressional Budget Office (CBO). In return, the Republican-led Congress agreed to protect funding for education, Medicare and the environment.

This budget deal is prompting new negotiations between the White House and Congress this week over a budget plan previously approved by the House and the Senate.

President Clinton has declared the congressional plan unacceptable, in part because of the large cuts it would make in education programs such as direct lending.

Currently awaiting the signature of the President is the Defense Appropriations measure, which the President had earlier threatened to veto. If the President fails to veto the bill by Thursday (Nov. 30), it will become law. A veto had originally been promised by the President because the bill is $7 billion above the president's budget request. Now, according to committee staff quoted in the Washington Post, the President may sign the bill in order to fund troop deployment to Bosnia and to deny Congress the opportunity to add troop deployment restrictions to a new bill. If he does so, none of the $7 billion will be available for reallocation to other domestic programs, including education and science, when new budget negotiations begin again.

In limbo is the Labor/HHS/Education Appropriations bill, which funds the Department of Education and research conducted by the National Institutes of Health. While this bill has been approved by the House and by the full committee in the Senate, a couple of controversial issues, including striker replacement and abortion funding, have blocked the bill from coming to the Senate floor. At this time, there is no indication that the Senate is going to take up this measure any time soon.

Still to be considered by the House and Senate is the conference report on the VA/HUD/Independent Agencies bill which, in addition to providing funding for Veterans and Housing programs, also contains funding for the National Science Foundation, NASA and the Environmental Protection Agency research programs. While it is likely that the House and Senate will approve the conference report sometime this week, a veto threat looms large based upon heavy cuts to EPA and the proposed gutting of President Clinton's Americorps National Service program. Concerns have been expressed that if the President vetoes the bill, funding for NSF and other research programs may be cut back in order to fund other Administration priorities within the bill.

Another pending measure facing a potential presidential veto is the Interior appropriations bill. Deep cuts in the National Endowment for the Arts and the National Endowment for the Humanities are among the reasons a veto threat has been issued on this bill.

Among the bills signed by the President is the Energy and Water Appropriations bill, which provides funding for DOE research and basic science programs. While basic research programs fared well in the final Energy and Water bill, including high energy and nuclear physics and basic energy sciences, other areas such as renewable energy and fusion took large cuts.

Overall funding for magnetic fusion was reduced from $368 million in fiscal year 1995 to $244 million in fiscal 1996, an overall reduction of 37 percent. For MIT, funding for the Plasma Fusion Center's Alcator C-Mod tokamak has been scaled back $6 million and a subcontract for the Princeton TPX project has been cut. The cuts have forced layoffs of 30 technical and research staff, 15 in each project.

So far this year, only six of the 13 appropriations bills have been approved by Congress and signed into law by the President.

A version of this article appeared in MIT Tech Talk on November 29, 1995.

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