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Clinton Plans for National Service; Direct Loans May Hit Bumps

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WASHINGTON--President Clinton's proposals for a national-service program and direct student loans will run into some bumpy stretches of road on their journeys through Congress, observers predicted last week as the legislation was introduced in the House and Senate.

The as-yet unnumbered bills, the "student-loan reform act'' and the "national-service trust act,'' would make significant and immediate changes in the way high school graduates receive and pay back federal loans for collegiate education and postsecondary training.

The national-service initiative, in particular, is seen by Mr. Clinton as an example of how citizens receiving federal benefits can be required to shoulder responsibilities in return.

"With national service we can literally open a new world to a new generation of Americans, where higher learning goes hand-in-hand with the higher purpose of addressing our unmet needs,'' Mr. Clinton told an audience at the University of New Orleans on April 30.

The President used the occasion to herald his plans to reform the student-aid system and to release more details on how he hopes to do it.

Some details that had already been made public were changed at the last minute. (See Education Week, May 5 and April 28, 1993.)

Pressure From Veterans

After hearing protests from lobby groups for military veterans and consulting with Congressional leaders, the Administration reduced the post-service benefit from $6,500 to $5,000 for one year of service.

Veterans' groups had complained that the proposed benefit would exceed benefits available to those who go into the armed services.

The final benefit figure is half the amount Mr. Clinton and his advisers were discussing during the Presidential campaign last year.

At the request of governors, the Administration also changed the percentage of federal grant dollars for service programs that would be distributed by the states.

A new federal agency that is to run the service program would keep no more than a third of grant funds to give to individual programs on a competitive basis, rather than half, as originally proposed. A third would go to states on a population-formula basis for distribution by state commissions--up from 20 percent--and at least a third would go to state commissions on a competitive basis, rather than 30 percent.

The White House also raised the minimum number of yearly hours needed for participation in the program from 1,500 to 1,700.

The legislation makes clear that federal grants are intended to pay for only 75 percent of program costs, except in extreme circumstances. Federal funds would pay 80 percent of state commissions' costs in their first year, falling to no more than 50 percent within five years.

Volatile Legislation

Lobbyists said the 11th-hour changes illustrate the hurdles the national-service bill must clear as it moves through Congress.

"You're very likely going to see this work on two or three tracks, and as a result, the ultimate package may look different than that proposed by the President,'' said Michael Edwards, the manager of Congressional relations for the National Education Association. "This is a good example of how high expectations run headlong into political and economic realities and the Administration has a tough job of keeping the enthusiasm of a program like this alive.''

Moreover, Mr. Edwards said, the concession last week by Mr. Clinton and other top officials that the Administration needs to be more focused could affect consideration of national-service legislation, especially as lawmakers' agenda also includes health-care and campaign-finance reform and the budget.

"The Administration is now cognizant that the Congress has a very large agenda and very little time, and they'll have to see where national service fits in there in a meaningful way,'' he said.

While the national-service bill is intended to move separately, the direct-loan legislation--which contains a provision to allow students to repay their loans based on their income or to pay greater portions as they get older--is to be included in the budget-reconciliation bill now being considered by the House Ways and Means Committee.

That bill is a required companion to spending bills for fiscal 1994, and is thus on a fast track. The House Education and Labor Committee is expected to take up the direct-loan measure this week.

While some members of Congress are questioning the wisdom of proposing the service program at a time when the President is also proposing to cut funding for some existing aid programs, opposition to the direct-loan legislation may be stronger.

For example, an aide to Sen. Nancy Landon Kassebaum of Kansas, the ranking Republican on the Senate Labor and Human Resources Committee, said, "I do not see any circumstances under which Senator Kassebaum and other Republicans would support direct lending.''

Concern Among Lobbyists

Higher-education lobbyists generally expressed support for national service and direct lending, but they said certain provisions need revision.

Stacey Leyton, the president of the United States Student Association, said that while the service program would allow grantees to select individuals for participation, the Administration should insure that selection will not be based solely on academic performance and that students attending schools with limited counseling efforts are aware of the program.

She is also concerned about the Administration's plan to involve the Internal Revenue Service in collecting loan payments from college graduates paying on an income-contingent basis--and to study the possibility of collecting all loans through the I.R.S. in the future. Ms. Leyton said the agency may lack the flexibility to "address individual student problems.''

Finally, she said, because the Administration is proposing more loan-repayment options, it must insure that students are counseled on them.

"We don't want students to get something in the mail and check a box,'' Ms. Leyton said.

Summer of Service

Meanwhile, the White House Office of National Service and the Commission on National and Community Service last week announced the winners of their "Summer of Service'' competition.

Sixteen service programs in 11 cities will receive awards to provide 1,500 17- to 25-year-olds an opportunity to assist at-risk youths. The summer program will include a week of leadership training in June and a summit at the end of the summer.

The program winners range from Teach for America in New York City to the Red Lake Band of Chippewa Indians in Red Lake, Minn. They were chosen based on their track record and experience, said Catherine Milton, the executive director of the commission.

The commission also decided to divert $10 million of its fiscal 1993 funding from other projects to the Summer of Service. President Clinton had included $15 million for the summer program in his now-defunct economic-stimulus bill.

The summer program is intended to inspire young people, who will receive a minimum-wage stipend and a post-service education or training benefit of $1,000, toward service, and also to demonstrate how service programs work.

"We're building upon the infrastructure and partnerships that are out there and that will expand as national service develops,'' said Jennifer Eplett Reilly, who will direct the summer program. "And we're building [service] leaders.''

Ms. Milton said more than 430 organizations applied for grants, and some 6,000 individuals wrote to the President about their willingness to participate after he requested such letters in a March speech.

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