Proposed Aid Cuts Would Multiply Student Debt Burden, GAO Warns

The Reagan Administration’s proposed cuts in student aid would more than triple the debt burden for some graduates and leave others with more than $60,000 to repay, a congressional study released Wednesday indicates.

“Under the Administration’s proposal, less aid would be provided, and there would be a shift from grants to loans, which would result in larger debt burdens for students upon graduation,” the General Accounting Office report concluded.

“This would be especially true for students at schools with higher tuition,” the report said. It also said a new income-contingent loan program could cost substantially more for students who choose low-income professions and take longer to repay their debt.

The Education Department is seeking to eliminate the $592-million college work-study program, curtail student loan subsidies and make outright grants available to 1 million fewer students.

It also wants to expand a $5-million pilot program of income-contingent loans to $600 million and 500,000 students. Monthly payments on the unsubsidized loans would be pegged to income.

Requests Study

Sen. Lawton Chiles (D-Fla.), chairman of the Budget Committee and the appropriations subcommittee on education, requested the GAO study.

The GAO reported that a student at the public University of Florida with divorced parents, a sibling in college and a family income of $27,613 would lose a grant, a low-interest loan and work-study. The loss would be offset by a higher-interest guaranteed $12,411 loan and a $1,596 income-contingent loan, increasing his or her debt burden upon graduation from $5,635 to about $20,700.

Education Secretary William J. Bennett, testifying before the Chiles education subcommittee on Wednesday, said the department has never denied that its proposals would increase indebtedness for some students.

Chiles questioned whether a student from a low-income family would continue on to college if he or she faced the prospect of a $53,000 debt. “Don’t you think you’re putting it beyond their reach?” he asked.

“They’ll do more comparison shopping, price-shopping, among institutions,” Bennett replied. He also said colleges should target needier students in their own financial assistance programs.