H.E.A. Bills Said Likely To Include Direct-Loan Proposal

By Mark Pitsch

WASHINGTON--Members of the House and Senate education committees are working on proposals that would radically reshape federal student-loan programs and convert Pell Grants into an entitlement.

Leaders of the two panels plan to produce versions of legislation reauthorizing the Higher Education Act of 1965 by the end of the month, and aides say each of the bills could contain one or both of the controversial changes.

The proposals would make the federal government a direct lender to students, thus excluding banks from their central role in the program, while the Pell Grant provisions would largely exempt such aid from the uncertainties of...