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Reagan Criticized for Radio Broadcast on Student-Aid Cuts

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Washington--President Reagan "misinformed" millions of Americans on April 10 when he defended his budget for financial aid to college students in a nationwide radio broadcast delivered from the resort island of Barbados, higher-education officials and Congressional leaders charged last week.

Mr. Reagan, they said, understated the effects of his proposed cuts in the Guaranteed Student Loan (gsl) program on a student's ability to attend college, and totally ignored the issue of his proposed cuts in the Pell Grant, Work-Study, and National Direct Student Loan programs.

"Since I can't imagine that President Reagan would knowingly mislead the American people, let's just say that his statements on student aid in the course of [his] 'surfside chat' were shockingly confused and misinformed," said John Phillips, president of the National Association of Independent Colleges and Universities.

"The President's statement is amazingly confused," echoed Representative Paul Simon, Democrat of Illinois and chairman of the House Subcommittee on Postsecondary Education.

"Never before in U.S. history has an Ad-ministration believed that it could build a better future for the country while slashing education funds more than 35 percent in a two-year period, and that does not even count the effects of inflation," he said in a prepared statement.

J.M. Peltason, president of the American Council on Education, added, "It is unfortunate that the President's advisors failed to provide him with accurate information."

"The President's assertions that there will be no reduction in the number of student loans and grants available to college students in fiscal 1983 is contrary to the facts as we know them," he said.

The President's decision to devote his speech--the second in a series of 10 Saturday broadcasts modeled after President Franklin D. Roosevelt's "fireside chats"--to the financial-aid issue took both his critics and supporters by surprise. He had been expected to concentrate on Administration initiatives in Central and South America during the broadcast.

Higher-education lobbyists and Congressional assistants agree that the President's proposals to cut student-aid appropriations, excluding the gsl program, for fiscal 1983 by approximately 46 percent from their current levels, set under the 1982 continuing resolution, stand little chance of passage in the current legislative session.

Dallas Martin, executive director of the National Association of Student Financial Aid Officers, speculated that Mr. Reagan's speech may have been delivered for the benefit of his conservative supporters, who have been highly critical of his Administration's handling of education matters in recent weeks.

"What would he have to lose by taking a hard stance on the issue now that he knows he's lost the battle?" Mr. Martin said.

"He very well could have been trying to convince his political backers that he still wants to win this one," he added.

Mr. Reagan, taking time off from his Easter vacation, asserted in his five-minute radio address that "there's obviously a great misconception on the part of many young people" regarding the Administration's plans for college grants and loans under his fiscal 1983 budget proposal.

'Draconian Cuts'

"On many campuses, students are being told that they may not be able to return to school next year," an idea inciting them "to stage protest demonstrations against what have been called draconian cuts in student aid," the President said. "Well, a lot of people have simply been misled."

According to the President, funding for the gsl program would decrease from $2.7 billion in fiscal 1982 to $2.4 billion in fiscal 1983. He added, however, that "not one thin dime of the money being cut has ever gone directly for loans to students."

(Federal monies are used to provide special interest subsidies to lending institutions, which then make loans to student borrowers at below-market rates. Current interest rates for such loans are 9 percent, and the difference between that and market rates comes from the gsl appropriation.)

"We haven't cut loans," Mr. Reagan said. "We've cut the cost to taxpayers of making these loans available. Surely, no one can quarrel with the reduction in administra-tive costs that results in more money for needy students."

Mr. Phillips of the naicu said, however, that the "hocus-pocus reduction in administrative costs" the President spoke of would be accomplished by doubling the gsl "loan origination fee" from 5 percent of the amount of the loan to 10 percent and by requiring borrowers to begin paying market interest rates two years after the loans first come due.

"That's like saying cuts in the food-stamp program will make more money available for feeding the poor, or reductions in immunization programs will create savings to pour into health clinics," Mr. Phillips said.

Mr. Reagan also said during his speech that needy undergraduate students would be eligible for "a veritable laundry list" of aid under his proposals. According to the President, those students conceivably could receive a $1,600 Pell Grant, a $2,500 guaranteed loan, and work-study support averaging $700 per year.

But those figures, according to Mr. Martin, "totally mislead parents and students."

"There are limits to the funds available for those programs and the President has proposed to cut some of them way back and to eliminate others," he said. "We do not have enough college work-study or grant dollars to meet the documented needs of all students who now qualify.''

Mr. Martin also contested the President's comments regarding the recently created Auxiliary Loans for All Students (alas) program for parents and graduate students. In his speech, Mr. Reagan said that under alas parents could borrow up to $3,000 per year and graduate students up to $8,000 per year.

"The President failed to mention that banks in only three states are making loans to graduate students, and banks in 14 states are making loans to parents, under that program," Mr. Martin said. "Furthermore, graduate students would be required to begin repaying those loans 60 days after taking them out."

"It is unfortunate that the President's advisers failed to provide him with accurate information, because the Congressional analysis of the present student-aid budget clearly shows that the total dollars now available will be cut in half," said Mr. Peltason of the American Council on Education. "You can't cut the funds in half without either eliminating students from the programs, giving everybody less, or some combination thereof."

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