The Nation : Strict Tuition Aid Weighed

The Department of Education released a proposal to increase dramatically a new and controversial student financial aid program that does not subsidize interest rates and links repayment schedules to a student’s earnings after college. If approved by Congress, the program of “income-contingent loans” would grow from a $5-million pilot project during the 1987-88 school year to $600 million in 1988-89. The program would allow students to borrow more than they are allowed under current financial aid formulas but would require them to pay the full cost of interest. Under most financial aid programs, the federal government covers the interest costs above a set ceiling. The funding proposal--part of the department’s fiscal 1988 budget proposal to be released Monday--would provide 500,000 loans to students at 1,500 schools.