Capital Digest: Kassebaum Files Bill To Limit Direct Loans

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Sen. Nancy Landon Kassebaum, R-Kan., has introduced legislation that would prevent the Education Department from adding more colleges and universities to the federal direct-lending program.

Under the program, the federal government makes college loans directly to students through their institutions, rather than through a system of private lenders and guarantee agencies. Direct loans must account for 60 percent of new loan volume by the 1998-99 academic year under current federal law.

Senator Kassebaum's legislation would cap direct loans at 40 percent of new loan volume. The measure is a companion bill to legislation proposed in the House by Rep. Bill Goodling, R-Pa., and Rep. Bart Gordon, D-Tenn.

Ms. Kassebaum, who chairs the Senate Labor and Human Resources Committee, questioned the Clinton Administration's claims that expanding direct lending would save $4.3 billion.

"It is unfortunate that serious policy decisions were driven by a budget process which hid the true costs of this program," she charged. "We cannot and should not continue to operate in this type of budgetary fantasy land."

Earlier this month, the University of Maryland, one of 104 institutions participating in the first year of the direct-lending program, announced that it is dropping out. Several other schools had previously left the program, but Maryland is the first major university to do so.

"We think it is a good program, but feel that it is just not the best alternative for our students at this time," said William D. Leith, the university's director of student financial aid.

Base Closings

The Defense Department announced recently that 146 military facilities would be closed or cut back as part of the latest round of base closures.

The closure of a nearby military base typically has a significant effect on local school districts that lose students and federal impact aid, and on districts that gain students when personnel are transferred.

Thirty-three large bases would be shut down in this round, and an estimated 34,200 civilian jobs would be lost over all.

The Defense Base Closure and Realignment Commission has until July 1 to accept or change the plan, which Congress must then accept or reject in its entirety.

Secretary of Defense William J. Perry said he will announce another set of closure proposals later this year.

Some of the largest bases slated for closure are Fort McClellan in Alabama; Brooks Air Force Base in Texas; the Naval Air Station in Meridian, Miss.; the Naval Air Warfare Center in Lakehurst, N.J.; and Maryland's Fort Ritchie.

Vol. 14, Issue 25

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