E.D. Selects 10 Colleges To Participate in Pilot Loan Program
WASHINGTON--Education Department officials last week announced the selection of 10 colleges and universities to participate in a pilot income-contingent student-loan program that the department hopes will serve, in an expanded version, as the future centerpiece of federal student aid.
Under the program, the institutions will receive a total of $5 million for the 1987-88 school year for unsubsidized loans that students are to repay in amounts pegged to a percentage of their annual post-graduation incomes. Among the six private and four public institutions are a two-year college and a historically black college.
"These schools have shown that they know how to run financial-aid programs,'' Secretary of Education William J. Bennett said. "They have experience, and they have students in need of loans.''
"The programs established at these schools,'' he added, "will become the model for income-contingent loan programs nationwide.''
In its fiscal 1988 budget, the Reagan Administration has requested $600 million to expand the program, while seeking to raise from $17,500 to $50,000 the total amount that a student could borrow under the program. The proposal is part of an Administration effort to shift federal student aid from grants and subsidized loans to unsubsidized loans.
Many higher-education officials oppose the Administration's initiatives, arguing that the Congress should await the results of the pilot project before expanding the program.
Only 31 Applicants
Only 30 colleges and universities, as well as one consortium of institutions, applied to participate in the demonstration project. Although department officials said they were disappointed that so few institutions applied, they added that they received enough applicants from which to choose qualified participants.
Under the pilot program, each participating school must match every nine federal dollars it receives for student loans with one dollar of its own.
Students can borrow up to $2,500 in each of their first two undergraduate years, $3,500 in their third year, and $4,500 in subsequent years of undergraduate study, up to a total of $17,500. Interest rates will be adjusted annually, based on the average 91-day Treasury-bill rate of the previous year, plus 3 percent.
Repayments are to begin nine months after graduation, and the annual total for payments cannot exceed 15 percent of a student's income.
The participating institutions are Abraham Baldwin Agricultural College, Tifton, Ga.; Brown University, Providence, R.I.; Hampton University, Hampton, Va.; Loyola University of Chicago, Chicago; Marquette University, Milwaukee; Metropolitan State College, Denver; University of Missouri at Rollo; Rochester Institute of Technology, Rochester, N.Y.; Rutgers University, New Brunswick, N.J.; and Wheeling College, Wheeling, W.Va.