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The Dartmouth
May 23, 2024 | Latest Issue
The Dartmouth

College prepares for service plan

President Clinton outlined his revised plans to help students pay for their college education two weeks ago, but how the proposed bills will affect Dartmouth students still remains unclear.

Clinton announced two new acts -- one dealing with national service, the other dealing with student loans.

The Student Loan Reform Act would initiate a pilot program of direct lending to students. The goal is to make repayment easier for students, to reduce costs for taxpayers by eliminating the excess profits that banks make, and to reduce the costs for students by lowering interest rates.

Currently, banks make educational loans to students. According to the New York Times, banks loaned $13.6 billion to students during 1992.

According to Virginia Hazen, director of financial aid, direct lending will replace Stafford loans, PLUS loans, and the Standard Loan for Students (SLS).

The plan would be beneficial for both the College and the students, Hazen said; the College would get paid faster, and students would have less of a hassle to deal with.

"To students it would be a godsend," she said.

Students would only need to fill out one financial aid form instead of the many different ones currently required, and the students would always know to whom they owed their loan.

Hazen said one of the main problems with loans now is the high default rate, which is partly caused because students confused about which loan servicer to repay.

Additionally, the proposed bill calls for the creation of Excel Accounts, which allow students to pay back their loans as percentages of their future income.

According to Jan Tarjan, associate dean of the Tucker Foundation, this will allow more students to take lower paying community service oriented jobs.

Presently, she said, students sometimes feel pressure to go into high paying professions in order to pay off their loans.

President Clinton said in his speech introducing the proposal, "Take a student torn, for example, between pursuing a career in teaching and corporate law. That student now can at least make the career choice based on what he or she wants to do, and not the size of the outstanding student loan, because we propose to let everybody have the option of paying the student loan back based on how much they earn, not just how much they owe."

The third part of the loan act allows the IRS to automatically take loan repayments out of a student's payment checks, which would help keep defaulting down.

When this plan will begin is still in doubt. Currently, a pilot program of the plan will be started at a few schools next summer at a cost of $500 million. It will be in place nationally by 1997.

Schools have to apply to be part of the pilot program this October, and selections will be made based on location, size, and other classifications.

Dartmouth is waiting to see the application before it decides if it want to participate, Hazen said.

The second of Clinton's new higher education bills, the National Service Trust Act, will provide grants to college students who wish to pursue community service projects.

The program will cost approximately $400 million in 1994 for 25,000 students in community service jobs. By 1997, 150,000 students are expected to participate in the program at a cost $3.4 billion.

Each student could get a maximum of $10,000 for two years of national service in "unmet educational, environmental, human, or public safety needs," according to a White House release.

The current Commission on National Service and Community Service will become a Corporation for National Service. The Corporation will work in conjunction with newly created state commissions on national service to decide what types of community service programs should be funded. Students would then apply to individual programs.

The students will work at minimum wage and would receive a grant of up to $5,000 for tuition, room and board, or loan repayment. Any student would be able to participate in the program regardless of family income.

"It's still not clear at all how it affects Dartmouth students," Tarjan said.

New Hampshire and the Corporation will have to decide what programs they consider to be national service before Dartmouth students will be able to think about participating in the program.

Many are concerned about how Clinton will fund either of these two new bills.

"It's going to be interesting to see if [Clinton] can get them both off the ground at the same time," Hazen said.

According to Hazen, funds for the Student Loan Act are probably going to be easier to come by because they are loans and will be repaid. The National Service Act gives money to students and will require significantly more funding.

Currently, the government expects that funding can be partially raised through the selling of government bonds. Clinton said he will not raise taxes to fund these programs.