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THE VOICE
May 6,1981
Higher Education Response
Student Aid Cuts
(Editor’s Note: In our continuing effort to keep our readers informed of the
Reagan administration proposed cuts in student aid, we present the higher
education community response to those proposals.)
I. Pell Grants
A. FY 81 Administration recommendations:
(1) Do not increase the poverty subsistence allowance by the CPI increase, as
done in earlier years -- saving $150-200 M (this action is what has stopped
processing by the ED contractor of 81-82 applications).
(2) Do not implement the cost of education modifications contained in the
1980 Amendments - cost savings $400 M -- implementation would have increased
awards in the public sector for those presently affected by half-cost.
(3) Do implement a new $750 self-help requirement, which would reduce
awards only for lower-middle-income students in low-priced institutions - would
save less than $100 M.
B. Higher education community recommendations If cuts must be
made (FY 81):
(1) Do increase the poverty subsistence allowance by the CPI increase to
allow a partial inflation increase for students already eligible for a Pell Grant: this
annual update does not increase the number of eligible students nor increase
program costs, but provides a partial adjustment for inflation for students
whose family Incomes did not Increase.
(2) Do not implement the cost of education modifications contained in the
1980 Amendments -- postpone till 82 when the new expected family contribution
becomes effective.
(3) Do utilize a modified form of scheduled reduction to reduce awards
if necessary so that awards would be cut proportionate to family income while
holding harmless the awards for students with a zero family contribution - that
is, the poorest students.
These recommendations would save approximately the same amount as the
Administration’s changes, but would be more equitable (CBO agrees to this
assessment).
C. FY 82 Administration recommendations:
(1) Do increase the poverty subsistence allowance by the CPI but only for
one year - that is, there would be no catch-up for deleting the 1981 update.
(2) Increase the tax rate on discretionary net income from 14 to 20 percent -
that is, increase the amount of the family’s income which the family “should”
contribute, thereby reducing the student’s Pell Grant award by a larger amount -
savings of $290 M - would delete several hundred thousand students from the
program - from $26,000 family income down to $19,000.
(3) Implement the $750 self-help requirement.
C4) Do not implement the cost of education modifications contained in the
1980 Amendments — another annual savings of $400 M — students affected by
half-cost would have no increase in their grant award because of the arbitrary
formula used by ED for students’ costs for students who live off-campus.
(5) Do not implement the subtraction of state and local income taxes from
discretionary income as provided by the 1980 Amendments — this would effec
tively increase the amount of expected family contribution.
D. Higher education community recommendations If cuts must be
made (FY 82):
(1) Do increase the poverty subsistence allowance in 1982 as well as in 1981.
(2) Do implement the cost of attendance modifications contained in the 1980
Amendments to make one-half the cost of attendance a realistic amount, which it
is not now.
(3) Do review the tax rate on discretionary net income and determine whether
“THE VOICE”
“SPEAKING for OURSELVES”
Volume 35, Number 8
May 6,1981
“The Voice” Is published twice monthly September through May and on
ce during each of the Summer Sessions. Subscriptions and Ad rates are
available upon request.
Editor Jacquelyn Stewart
Associate Editors Curtis Pritchard
Valery Frazier
Willie Smith
Photographer Ronald Spicer
Business Manager Lawrence Brandon
Typists Valery Harkley
Vivian Kelly
Staff Writers Brenda Bethea Cindy Medley
Michael Moore Ronnie McLean
FIdele Essono Angela Yeoman
Timothy Moore Emanuel Vaughn
Layout Beverly Edge
/^jjvlsor Charles Mooney
FAYETTEVILLE STATE UNIVERSITY
COMMENCEMENT CALENDAR OF EVENTS 1981
FRIDAY, MAY 8, 1981
5:00 ' 8:00 p.m. Alumni Registration - Saint James Inn
Hospitality Hour - Room 370 and 372
8:00 p.m. "Little Miss FSU Pageant”
J. W. Seabrook Auditorium
Admission: $2.50
SATURDAY, MAY 9, 1981
11:00- 11:45 a.lTl. Mini Concert' FSU Concert Band
J. W. Seabrook Auditorium
Dr. Richard Jones, Director
Assemble for Processional
J. W. Seabrook Auditorium
Alumni Convocation - J. W. Seabrook Auditorium
Speaker: Dr. Lelia T. Allen, ’56
Senior Associate
A. L. Nellum and Associates
Washington, D. C. 20036
FSU National Alumni Association: Annual Luncheon
Meeting (Immediately After Convocation)
Emily’s Restaurant
115 Rosemary Street
Chancellor’s Reception for Seniors (Parents & Guest)
Multi-Purpose Room
Rudolph Jones Student Center
Alumni Dance (Cash Bar)
Lakeview Country Club
462 E. Mountain Drive
SUNDAY, MAY 10, 1981
Chancellor’s Luncheon for Commencement
Speaker
Multi-Purpose Room
Rudolph Jones Student Center
(Invitation Only)
Assemble for Processional - Cumberland County
Memorial Arena
Commencement Ceremony:
Cumberland County Memorial Arena
Speaker: Mr. Thomas N. Todd
Attorney-at-Law
Chicago, Illinois
REUNION OF CLASSES
1931, 1941, 1951, 1961, 1971
a graduated tax rate would not be more equitable than a flat 14 percent, but do
not accept the Administration’s flat 20 percent - whether state and local income
taxes should be an allowable deduction could be evaluated at the same time.
(4) Count Social Security and Veterans Benefits as student aid.
(5) Use a modified form of scheduled reduction to reduce awards if necessary
rather than distort program goals by arbitrary adjustments to the grant formula.
These recommendations could save approximately as much as the Ad
ministration proposals.
II. Guaranteed Student Loans
A. Administration recommendations:
(1) Eliminate the in-school interest subsidy the Federal Government curren
tly pays while the student is in school.
(2) Restrict loans to “remaining need” - the amount remaining after expec
ted family contribution and other aid is subtracted from total costs.
(3) Set Parent Loan interest rate at market rate rather than 9 percent.
B. Higher education community recommendations:
(1) Retain the in-school interest subsidy, but establish a Family Income
Loan EligibiUty Index ($30,000 - $40,000 adjusted gross income) below which
there would be no needs test. Students with family incomes over the Index who
show need would be eligible for loans under the same terms and conditions as
students whose family incomes fall below the Index.
(2) Set Parent Loans either at market rates or at 12 percent plus special
allowance.
(3) Count Social Security and Veterans Benefits as student aid for assessing
GSL eligibility (to avoid duplication of benefits).
(4) Eliminate the six-month grace period following deferment periods for
Tiilitary or Peace Corps-type service. (This grace period, additional to the six-
month grace period already provided in law following graduation, was added by
the 1980 Amendments).
(Eliminate the new provision of the 1980 Amendments which allows indepen
dent students to borrow $500 more per year than dependent students. This will
reduce the amount of data which must be collected, as well as the amount of sub
sidy.
(6) Provide incentives for early repayment of outstanding loan principal by
discounting of loans which are fully paid within 30 days of graduation, or within
the six-month grace period, or by the end of the first year in repayment status.
These recommendations would save approximately $625 million in GSL costs -
almost as much as the $700 million in savings the Administration estimates for its
own proposals.
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