by Sachin Chheda United Council of UW Student Governments
Congress may rescind funding that many students are counting on for this fall. The rescission is a multi-billion dollar bill, with $1.7 billion in total education cuts. The proposed higher education cuts are broken down as follows: ¥ $210 million cut in AmeriCorps, the national service program initiated by President Clinton. This is a 50% cut in funding. ¥ $47 million cut in administrative costs for direct lending. Direct lending is a program that saves students money in interest costs and origination fees by lending money directly from the federal government instead of through banks. This is a 33% cut in funding, which will make it difficult to implement direct lending at many campuses expecting to do so. This cut will ensure that banks and guaranty agencies continue to suck profits out of student education dollars. ¥ $11 million cut in the Federal TRIO programs. TRIO is a set of six programs that help minority and disadvantaged students enter and remain in college. Programs funded by TRIO include Talent Search, Upward Bound, and the McNair Post-Baccalaureate Scholarship. ¥ $63 million cut in the State Student Incentive Grant (SSIG). SSIG is a federal matching program that provides money to state grant programs. This represents the elimination of the SSIG program. If this money is cut, there is a real danger of many state grant programs being eliminated, which could result in a real loss to students of hundreds of millions of dollars. ¥ Elimination of between 15-24 smaller financial aid and higher education programs. This includes the Javitz and Harris fellowships. The Senate is expected to take up this rescission bill immediately after its passage in the House, perhaps even the next day! The House Budget Committee is also scheduled to take up discretionary cuts for tax cuts offsets. What this means is that since the Republicans are proposing massive tax cuts, of $200 billion over five years; they want to find spending cuts to offset the revenue loss. The threat to federal student aid comes in at the Stafford Loan Interest Exemption (SLIE), otherwise called the in-school interest subsidy. The SLIE program benefits millions of college students by covering the interest on student loans while a student is in school. When a student graduates or leaves school, only the original principal is left to pay. If the SLIE program did not exist, students would be responsible for their accrued and capitalized interest when they left school, leaving their student debt loan increased 20%-50%, based on how long they were in school. While the federal government would save $13 billion over five years if SLIE were eliminated, the costs to students and working families could be well over $20 billion, based on capitalized interest costs (interest on your interest). According to the latest information available from the Committee on Education Funding, a Washington-based coalition of education groups, the SLIE is very much "at-risk" in the Budget Committee. The third threat to Financial Aid comes in the form of a Welfare Reform Bill that is part of the Contract with America. A House Committee will mark-up (amend and vote on in committee) legislation (Bill #HR 999) this week to eliminate eligibility for federal financial aid for LEGAL immigrant taxpayers. Immigrants are taxpayers who, in most cases, pay into the federal financial aid system. The United States Student Association, along with most other national student groups, opposes all three proposals which would gut federal financial aid: The FY 95 recission, the elimination of the SLIE, and the elimination of eligibility for legal immigrant taxpayers.