Poor Subsidize Student Aid to Rich, President Charges

President Reagan, defending his proposal to cut back substantially on federal loan programs for college students, said Thursday that it “defies common sense” and “insults simple justice” for poor families to subsidize the educations of rich people.

“Yes, our proposal may cause some families to make difficult adjustments,” Reagan conceded to a convention of private school principals. “But, by bringing the (federal) budget under control, we will avoid the far more painful adjustment of living in a wrecked economy.”

A few hours later, the leader of the organization that the President addressed issued a statement sharply disagreeing with him.

Reagan’s proposed budget for the 1986 fiscal year, beginning next Oct. 1, calls for a $2.3-billion reduction in financial aid for college students, largely by eliminating federally subsidized guaranteed loans for students from families with adjusted gross incomes exceeding $32,500. Essentially, there now is no income limit, but a student must demonstrate a financial need.

Under Reagan’s budget, there would also be a $4,000 annual limit on any student’s total federal assistance. By contrast, students now may receive up to $11,000 from various federal sources.

“We have recommended reserving aid for the needy, limiting aid per student to a level we can afford, closing loopholes that lead to abuse and error and cutting excessive subsidies to banks and others,” Reagan told 2,000 delegates to a National Assn. of Independent Schools conference.

“As things stand now, our nation provides some aid to college students from the highest-income families--some to students who come from families with incomes higher than $100,000. This defies common sense, insults simple justice and must stop. Government has no right to force the least affluent to subsidize the sons and daughters of the wealthy.”

However, the White House was unable to provide any data about federal assistance to students from families with incomes of more than $100,000. A spokesman, who did not want to be identified, said: “It’s theoretically possible if the parents had several children in private schools with high tuitions, this could show need.”

Still Could Get Loans

An estimated 30% of college students now receiving federally subsidized guaranteed loans come from families with incomes exceeding $32,500. Reagan noted that, under his proposal, students from higher income families still could qualify for guaranteed loans without subsidized interest rates.

But John Esty, president of the National Assn. of Independent Schools, later issued a statement saying that his organization is “concerned about the proposed cuts.” If they are enacted, he said, parents might be forced to forgo sending their children to private elementary and secondary schools to save money for the students’ college educations.

Esty said that this could reverse gains in non-public-school enrollments by low-income and minority-member students.

Tuition Tax Credits

But Reagan’s indirect response to that argument was his proposal to provide tuition tax credits for parents who send their children to private schools. “This would be only fair, since these parents are also paying their full share of taxes to support our public schools,” the President said.

The Administration estimates that its tuition tax credit program would cost the federal Treasury $200 million during its first year of enactment, $500 million in the second year and $800 million in the third.

Reagan lamented that, although “America boasts thousands of fine teachers, in too many cases teaching has become a resting place for the unmotivated and unqualified.”

Supports Merit Pay

“We must give our teachers greater honor and respect,” he continued. “We must sweep away laws and regulations such as unduly restrictive certification requirements. And we must pay and promote our teachers according to merit. Hard-earned tax dollars have no business rewarding mediocrity. They must be used to encourage excellence.”

Reagan received his only significant applause when he mentioned merit pay.

The President called also for closing what he termed the U.S. “learning gap” in math and science, compared to the Soviet Union.