Federal student loan consolidations

Six weeks into fiscal year 1998, Congress has finally completed action on legislation that will boost funding for historically Black colleges and universities (HBCUs), TRIO, and many student-aid programs through next year.

The House and Senate passed the bills by overwhelming margins after resolving a series of thorny disputes with the White House - primarily on K-12 issues. Because the government's new fiscal year began October 1, higher education programs were operating with only temporary funds during these talks.

Funding for HBCUs would increase by $9.5 million to $118.5 million next year. HBCU graduate institutions also would receive a $5.3 million increase, for a total funding of $25 million in fiscal 1998. Hispanic-serving institutions (HSIs) would get $12 million from the spending bill, up from $10.8 million in 1997. Grantees in these programs could use the funds to help build endowments.

The approved funding follows guidelines in the existing Higher Education Act, which is due to be reauthorized in 1998 (see Black Issues, November 13, for a full discussion of proposed changes.)

TRIO programs to recruit disadvantaged, first-generation college students would receive $529 million, an increase of nearly $30 million, thanks to an agreement which also includes $210 million for Howard University, $14 million more than in fiscal 1997.

As expected, the measure would increase the maximum Pell Grant from $2,700 to $3,000 next year. House/Senate conferees also allotted $286 million to help address eligibility problems for independent students and dependent students who work. Advocates have said working students begin to lose their eligibility for Pell Grants even if they earn small amounts of money.

Currently, independent students can earn only $3,000 a year and dependent students $1,750 a year before they begin to lose eligibility for Pell Grants Student groups have said the government will need about $700 million, nearly three times the funding in the bill, to raise these income eligibility standards to a more reasonable level.

Funding for college work/study programs would remain unchanged at $830 million, while Congress earmarked an extra $30 million for Supplemental Educational Opportunity Grants - for total funding of $614 million.

Lawmakers also voted to save the State Student Incentive Grant (SSIG) program, which provides matching funds for states to offer their own need-based financial aid. Both the Education Department and the House of Representatives had recommended no new funding for the program in 1998.

The $25 million for SSIG in the final bill is a decline from 1997, however, when Congress appropriated $50 million.

One other student-aid program, Perkins Loans, would receive less funding next year as Congress cut $23 million in capital contributions to this campus-based program. The bill contains $165 million for Perkins Loans, a $13 million decline overall from the 1997 level.

Lawmakers did provide an extra $6 million for Graduate Assistance in Areas of National Need, for total funding of $30 million. Congress has envisioned this program as one to carry out the aims of now-terminated graduate fellowships, including the Patricia Roberts Harris program.

Also included in the spending bill was language to make it easier for college students to consolidate loans. The Clinton administration last summer shut down consolidations in its direct loan program temporarily, leaving no other options for students with direct loans.

Under the new plan, students can consolidate direct loans and other borrowing under the bank-administered Federal Family Education Loan program.

Elsewhere, the spending bill contains $4.35 billion for Head Start, up $375 million from current funding. The administration wants to expand the program from 800,000 to 1 million children by the year 2002.

Funding for Title I education of the disadvantaged programs also would increase next year. The measure contains $8 billion, an increase of $214 million from the 1997 level.