The Cost of a Degree Goes Up

By Ellie McGrath

Reagan's budget cuts stir protests on campuses

When the Reagan Administration announced its proposed new budget a week ago, students, parents and college administrators sent up a chorus of woe. Despite staggering college costs and shrinking disposable family income, Washington is looking to cut aid to students and universities by more than 25%.

This fiscal year the Federal Government is handing out $11 billion in aid to some 7 million U.S. students through a patchwork of programs: Pell Grants and Supplemental Educational Opportunity Grants (SEOG) to the very poor, low-cost National Direct Student Loans (NDSL) and the self-help College Work-Study plan. The largest program is Guaranteed Student Loans (GSL), which provides $7.7 billion to 3.5 million students (52% more than last year's number), many from families earning much more than $30,000 a year. Under Reagan's proposed budget, GSLs would require a far stricter determination of student need and a higher interest (the going commercial rate vs. a fixed 9%). Graduate students would not be eligible for GSLs at all, but could take out high-interest auxiliary loans. The Government also plans to cut Pell Grants by 40%, reduce Work-Study and do away entirely with SEOG and new funds for NDSL. Says Jack Peltason, president of the American Council on Education: "The Administration is advocating the abandonment of a 25-year-old commitment that college will not be denied to any person because of financial condition."

Wesleyan University in Middletown, Conn., was one of the first to react to the bad news. A private university known for its remarkably openhanded scholarship program and diverse student body, Wesleyan announced last week that it could no longer continue "aid-blind" admissions, accepting any qualified student regardless of ability to pay. Last year Wesleyan spent $2.7 million of its own funds on scholarships; with the proposed federal budget cuts that figure would nearly double. As a result, this spring some low-income applicants, who in better times would have received letters of acceptance, may be rejected in favor of waiting-list students who can pay next year's costs: about $12,000. Says Dean of Admissions Karl Furstenberg: "I don't see that we had any other choice."

If the Reagan budget is approved, University of Michigan's financial aid director, Harvey Grotrian, predicts, at least 10% of undergraduates may be forced to drop out. U.C.L.A. expects federal aid to students, which now runs to $50 million a year, to be cut by about half. The University of Texas at Austin asked 10,000 recipients of financial aid what they would do without federal support. Says Financial Aid Officer Pat Korbus: "Some parents said they would dig into their savings or retirement accounts. Others indicated their children would have to drop out or go to school part-time."

As Reagan's economic planners hoped, however, states and universities are beginning to look into contingency plans. In Massachusetts, the legislature has created an agency to raise money to be loaned at the modest interest rate of about 10% to students attending public and private colleges in the state. Illinois has approved the selling of tax-exempt bonds to provide an independent college student loan fund. Yale University is raising tuition by about 14%, partly to increase scholarship funds. Dickinson College, a small private school in Pennsylvania, has established a multimillion-dollar fund to loan money to parents whose children no longer qualify for guaranteed student loans.

Most of the cutbacks are not scheduled to occur until the 1983-84 school year. But one aspect of Reaganomics is already causing disruptions. After Congress voted to phase out Social Security educational benefits to children of deceased, disabled or retired parents last summer, more than 150,000 high school seniors realized that unless they enrolled as full-time college students by May 1 they would not receive the benefits averaging $2,760 a year. One result: many students are trying to skip part of their senior year to get early admission to nearby community colleges or state universities.

The nation's 1.1 million graduate students will clearly be hardest hit. About half of them receive guaranteed student loans of up to $5,000 a year. Law and business students will probably be considered good risks for auxiliary loans (with interest rates at 14%), but many banks may refuse to take on Ph.D. candidates with poor job prospects. At the University of Chicago, one of the most respected training grounds for philosophers, teachers and researchers, where 75% of the 5,500 graduate students received $14.5 million in federally sponsored loans last year, President Hanna Gray says: "The composition and character of the university itself would be affected by the cuts."

The Government insists most of the cuts apply to "posh student aid." Says Education Deputy Under Secretary Gary Jones: "There's a difference between a student gaining access to higher education and choosing an institution regardless of its cost and expecting the Federal Government to guarantee the amount of money he needs at that level."

In 1950 college enrollment was about equally divided between public and private institutions. Now, with so many public colleges, the ratio is approximately 22% attending private school and 78% in state institutions, laying a great burden on state budgets. Some educators fear the division will now be accentuated. Says Columbia University President Michael Sovern: "It would be folly to upset the balance of public and private education, to limit individual choice, to segregate rich students in private universities and the poor and middle class in public."

College presidents and educational groups are gearing up for a fight. Their strongest allies will be the students. University of Michigan students last week launched a letter-writing campaign and plan to join a March 1 national lobby day in Washington. Says Student Leader Daniel Perlman: "When we go into those Congressmen's offices, we'll be taking our voter registration cards to show them we mean business." --By Ellie McGrath. Reported by Jeanne Saddler/Washington and John E. Yang/Middletown

With reporting by Jeanne Saddler/Washington, John E. Yang/Middletown

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