Axing Student Aid

by Sachin Chheda United Council of UW Student Governments

Congress may rescind funding that many students are counting on for
this fall. The rescission is a multi-billion dollar bill, with $1.7
billion in total education cuts. The proposed higher education cuts
are broken down as follows:

	 $210 million cut in AmeriCorps, the national service program
initiated by President Clinton. This is a 50% cut in funding.

	 $47 million cut in administrative costs for direct lending.
Direct lending is a program that saves students money in interest
costs and origination fees by lending money directly from the federal
government instead of through banks. This is a 33% cut in funding,
which will make it difficult to implement direct lending at many
campuses expecting to do so. This cut will ensure that banks and
guaranty agencies continue to suck profits out of student education

	 $11 million cut in the Federal TRIO programs. TRIO is a set
of six programs that help minority and disadvantaged students enter
and remain in college. Programs funded by TRIO include Talent Search,
Upward Bound, and the McNair Post-Baccalaureate Scholarship.

	 $63 million cut in the State Student Incentive Grant (SSIG).
SSIG is a federal matching program that provides money to state grant
programs. This represents the elimination of the SSIG program. If this
money is cut, there is a real danger of many state grant programs
being eliminated, which could result in a real loss to students of
hundreds of millions of dollars.

	 Elimination of between 15-24 smaller financial aid and
higher education programs. This includes the Javitz and Harris
fellowships. The Senate is expected to take up this rescission bill
immediately after its passage in the House, perhaps even the next day!

	The House Budget Committee is also scheduled to take up
discretionary cuts for tax cuts offsets. What this means is that since
the Republicans are proposing massive tax cuts, of $200 billion over
five years; they want to find spending cuts to offset the revenue
	The threat to federal student aid comes in at the Stafford
Loan Interest Exemption (SLIE), otherwise called the in-school
interest subsidy. The SLIE program benefits millions of college
students by covering the interest on student loans while a student is
in school. When a student graduates or leaves school, only the
original principal is left to pay. If the SLIE program did not exist,
students would be responsible for their accrued and capitalized
interest when they left school, leaving their student debt loan
increased 20%-50%, based on how long they were in school. While the
federal government would save $13 billion over five years if SLIE were
eliminated, the costs to students and working families could be well
over $20 billion, based on capitalized interest costs (interest on
your interest).
	According to the latest information available from the
Committee on Education Funding, a Washington-based coalition of
education groups, the SLIE is very much "at-risk" in the Budget
	The third threat to Financial Aid comes in the form of a
Welfare Reform Bill that is part of the Contract with America. A House
Committee will mark-up (amend and vote on in committee) legislation
(Bill #HR 999) this week to eliminate eligibility for federal
financial aid for LEGAL immigrant taxpayers. Immigrants are taxpayers
who, in most cases, pay into the federal financial aid system.
	The United States Student Association, along with most other
national student groups, opposes all three proposals which would gut
federal financial aid: The FY 95 recission, the elimination of the
SLIE, and the elimination of eligibility for legal immigrant

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