Bennett Says He Is ‘Consumer Advocate’ : Many Fear Effect of Cuts on College Plans

Elizabeth Malkin, a 19-year-old freshman at Wheelock College, shook her head as she discussed the Reagan Administration’s proposal to deny federally subsidized loans to anyone whose family’s adjusted gross income exceeds $32,500 a year.

“My parents make over that amount,” she said, “but they don’t have the money to pay for my education.” To help meet the $10,000 cost of tuition, room and board at Wheelock, she worked three jobs last summer and still had to borrow $2,000 through the subsidized student loan program.

On many college campuses, students like Malkin are decrying Education Secretary William J. Bennett’s charge that some of them use their federal aid to pay for stereos, cars and beach vacations. Instead, many are wondering if the proposed cuts would derail their college plans.

College administrators are equally upset, particularly at high-priced private schools that fear an exodus of students if the cuts are enacted.

They point to students like John Lussier, a high school senior from Brooklyn who wants to attend Tufts University in Massachusetts in the fall but believes his dream is slipping away. “If I don’t get the aid I need,” Lussier said during a recent college-hunting trip here, “I’m going to wind up going to a state school.”

$2.3-Billion Saving

Education Secretary Bennett has little patience with Lussier’s predicament. “Given limited funds,” he said in an interview, “helping a student get to a college has got to be a higher priority than saying we will provide the money for any student to go to any college of his choice no matter what the cost. That we can’t afford.”

The Administration says that out of a total of 5.3 million students receiving federal tuition aid, 1 million would be cut off if Congress approves its reductions, and $2.3 billion a year in federal spending would be saved. These are the major proposals:

--For subsidized loans, the $32,500 ceiling on family income would replace a more flexible system under which students must merely demonstrate to their schools that they need a loan to meet their college expenses. Private lenders provide the loans and the federal government makes all the interest payments while the students remain in school.

Students Pay 8%

After that, at current interest rates, the students pay 8%, substantially less than the market rate, and the government pays the difference. Students from families above the $32,500 ceiling could continue to qualify for federal guarantees of their private loans--but not for interest subsidies.

--For federal grants, the family income ceiling would be reduced from $27,700 to $25,000, approximately the U.S. median family income. The same cap would apply to direct federal loans and the work-study program, the recipients of which are now chosen by colleges on the basis of need.

--There would be a limit of $4,000 placed on total federal assistance--grants, direct loans and guaranteed loans--in a single year.

Cost Rises to $3.7 Billion

At the Education Department, officials say that they are particularly concerned about the skyrocketing costs of the guaranteed loan program. Sally K. Kirkgasler, director of policy development for post-secondary education, pointed out that the government’s cost of subsidizing the loans has increased sevenfold in seven years to $3.7 billion.

Many loan recipients, she said, could easily obtain unsubsidized loans from private lenders. “Some middle-income students received assistance who probably didn’t absolutely have to have a federal subsidy,” she said.

Cynthia and Jerome Paige of Washington earn more than the proposed $32,500 ceiling for federally subsidized loans, and they concede that their 17-year-old daughter, Gina, would still be able to go to Stanford University without her $2,500 loan. “But we wouldn’t be able to do anything except send her to school,” Cynthia Paige said.

Graduate students would feel the pinch too. At Harvard University, Gail Lewis said that only her $5,000 in subsidized loans, combined with state loans, school grants and “scrimping” from jobs, enables her to pay the $18,620 it costs her in tuition, room and board for a year in her law and business program. Under the proposed budget cuts, she could receive no more than $4,000 in total federal assistance.

‘Going for the Jugular’

Critics charge that Reagan’s cuts would squeeze many middle-class students out of such costly private institutions as Stanford and Harvard. Allen E. Koenig, president of Emerson College in Boston, called the proposals “going for the jugular of the middle class.”

At Wellesley, a highly selective private school where annual tuition, room and board cost about $13,000, Karl E. Case, chairman of the economics department, contends that the Reagan cuts could keep out all students but the very wealthy and the few poor who could get private scholarships.

“We’ve been fighting like hell to get diversity on this campus,” he said, “and I don’t want to teach at a finishing school with a handful of poor kids.”

Of Wellesley’s 2,200 students, 561 would have been disqualified from the subsidized loan program this year because their family incomes exceed $32,500, said Amelia Botsaris Nychis, the school’s financial aid director. Those students received a total of $1.3 million in federally subsidized loans, she said.

A $2.1-Million Loss

Nychis could not say how many beyond the 561 would be affected by the other cuts proposed by Reagan, but she said that Wellesley students would lose a total of $2.1 million in federal grants and loans under the Reagan plan.

At Harvard, where undergraduate tuition, room and board cost $14,100, officials say the proposals would mean a $6-million loss in federal aid--a substantial sum even for a wealthy school. “Let’s put it this way,” said Phyllis Keller, associate dean for academic planning, “we don’t produce a $6-million surplus.”

Even officials at the President’s alma mater, Eureka College in Eureka, Ill., find fault with his proposals. Executive Vice President George Hearne suggested that the new family income ceilings, like those in effect today, should be flexible so that families over the ceilings could be considered needy if they had heavy expenses.

Reagan’s proposals have created alliances among students, faculty members and administrators to advance the argument that today’s student aid programs are as important as the GI Bill, which helped thousands of former servicemen go to college.

Activists Plan Rallies

Many student activists are planning campus rallies and letter-writing campaigns to Congress. Lynne Powell, president of the Student Government Assn. at Simmons College in Boston, predicted success, asserting that politicians are “courting us as young professionals who already vote and soon will be earning money and exerting influence.”

Such arguments are apparently being felt in Congress. The Democratic-controlled House has traditionally resisted cuts in education programs. In the Senate, Robert T. Stafford of Vermont, the Republican chairman of the Senate Labor and Human Resources subcommittee on education, vowed to fight the proposed cuts.

“I think we have the votes in Congress to continue those programs,” he said.

But even if the proposals are rejected this year, they will still leave the higher education community on edge. John T. Skarr, director of financial aid at Emerson, said that Reagan already “has won a victory because there’s a mind-set in Congress saying it’s OK to cut something.”

‘A Jerk of the Knee’

If enacted, the proposals would not go into effect in time to affect applicants for the coming school year, but campus officials and activists worry that the threat of cutbacks will discourage students and parents from seeking aid. To combat that possibility, students and administrators are spreading the word that the proposals are just that.

Bennett insisted in the interview that they are serious proposals that “ought to be given a lot of thought and not just reacted to with a jerk of the knee. And to the degree that I precipitated the jerk of the knee, I’m sorry.”

But the outspoken education secretary stood by the most provocative remark of his first press conference in his new job: that the cutbacks might force some students to engage in “divestiture of certain sorts: stereo divestiture, automobile divestiture, three-weeks-at-the-beach divestiture.” He said that he knew of cases, although he refused to identify any.

Wellesley freshman Cynthia Spahl is not one of them. “The last time I had three weeks off,” she said, “was when I had mononucleosis.”