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Bird's EyeView
Monday, September 9, 1996
Educational programs lose funding as deficit is reduced
by Ashleigh Roberts Kansan staff writer
The national debt has risen to $5.2 trillion. Each U.S. citizen now owes $18,572. Students, saddled with the responsibility of paying it off, have watched the rising statistics for years.
By the time you finish this sentence, the national debt will have increased by $40,000. Who, now it has gone up by $53,000, so read fast. At that rate, the deficit increases by about $13,000 a second and $47 million an hour.
The Congressional Budget Office reported last year that nearly 40 cents of every income tax dollar the federal government collected went to pay interest on the national debt. That is more than 15 percent of all federal spending.
spending.
Although students can't see the effects of the deficit on their daily lives, Norman Clifford, director of research at the University of Kansas Institute of Public Policy and Business Research, said it would have long-term consequences.
The things that happen today affect the lives of college students tomar-
row," Clifford said. "If you wait to get involved, the damage is already done."
After nearly 18 months of congressional gridlock, the deficit will fall to $117 billion in the 1996 fiscal year, said Scott A. Hodge, Grover M. Hermann fellow in federal budgetary affairs. That estimate is $29 billion less than the Office of Management and Budget's March estimate. It is the lowest dollar level since 1981. Congress also cut discretionary spending during the 1996 fiscal year for the first time since 1969, with many of those being educational ones.
Lea Chediak, Lawrence senior, said that he supported the programs.
"We already pay enough taxes. It couldn't be that much more," he said.
don't be that mad, that matters."
"One of the things that the Republican Congress has demonstrated is that you can make cuts and lower the deficit," said Burdett Loomis, professor of political science. "Politicians also know that Medicaid and Medicare are going to start running fairly large deficits fairly quickly."
Clifford said unemployment was almost as low as possible, and that it
would remain so unless the country experienced a structural change.
Because the country is basically at full employment, there is a tendency for the government to cut taxes, which increases the deficit, he said.
"The real issue comes if we add to the deficit during full employment because it could cause inflation," Clifford said. "A high rate of inflation tends to have a life of its own."
Brad Burke, president of the College Republicans, said he supported a balanced budget because it would lower interest rates. Lower interest rates would benefit those with student loans, car and home mortgages and those dreaming of starting businesses.
Rob Putman, Longmont, Colo., senator disagreed.
senior usagreen.
"It is just another political promise," Putman said. "The whole thing is just so silly. Our whole economy is based on the deficit. Without it, our economy wouldn't function."
MONEY TALK
Lea Chediak said that he was not worried about the deficit.
"Every year it's an issue, and every year it doesn't get solved."
Educational programs cut to reduce deficit:
All special research grants within the Cooperative State Research, Education and Extension Service (CSREES)
- Technical assistance for Indian programs and the Indian Guaranteed Loan Program
- Funding for the National Endowment for the Arts after fiscal year 1997
Funding for the National Endowment for the Humanities after fiscal year 1998
Funding for the National Capital Arts and Cultural Affairs
National and community service programs such as Americorps
- Innovative Education Program Strategies State Grants
Dropout prevention demonstrations
National Working Project
■ Combine more than 25 educational programs into a single block grant to governers
- Federal funding for bilingual education, freeing local school districts to promote English proficiency
Funding for the State Incentive Grant program
Popular student loans can be financial burden
By Neal Shulenburger Kansan staff writer
Student loans are an increasingly popular way to finance a college education,but students who use them need to watch out for a few things.
need to watch out for a Stafford Loan, the most common type of federal student loan, can have many negative consequences.
quencies. The most obvious effect of defaulting on a loan is a black mark on a student's credit history.
Credit history is one of the factors that help determine eligibility for credit cards or future loans.
Steve Benz, vice president of Capitol Federal Savings and Loan, 1025 Iowa St., said credit problems were not the only penalties for a student who defaults on a loan.
details on our loans.
"Since most of the loans are done through the federal government, the government can go in and seize tax returns," he said. "And if the student is employed by someone like the postal service, they can garnish his wages."
According to the Office of Student Financial Aid, only about 5 percent of student loans are defaulted on.
student loans are dedicated "That's normal for a university of our size," said Diane Del Buono, director of the Office of Student Financial Aid. "Right now, nobody knows all of the reasons why students default on loans. We are an experimental site with the Department of Education, and we're working on a five-year study that will look at that data."
The University of Kansas is a directlending institution, meaning nearly all student loans are applied for directly through the federal government, Del Buono said.
"I raised my GPA by 0.4 points, my mom made less money than she did last semester and they dropped my loans by $2,000," Negretti said. "I got a scholarship this semester but it is only $250. They didn't give me any advance
Such an arrangement makes it easier for students, but also had its problems. Aura Negretti, Kansas City, Kan. unlabor, can testify to that.
"Right now, nobody knows all of the reasons why students default on loans."
Diane Del Buono
director, Office of Student Financial Aid
notice and they didn't give me any reason for the drop off."
son for the drop班
Additional problems can occur when
students take time off from school or
have extended illnesses.
have extended interns.
"There is a grace period that the government gives students, when they are out of school, before they have to start repaying their loan," Del Buono said.
Under the conditions of some loans, when a student takes time off from
school, their grace period is reduced, she said. Those students have less time to pay off their loans when they graduate.
graduate.
Carol Wirthman, senior vice president at Mercantile Bank, 900 Massachusetts St., said there were ways for students to solve grace period problems.
"There are deferments available for unemployment: going back to school, illness," Wirthman said. "Different repayment plans can also be set up for students who are having problems. And if both of these fall, I would tell a person who is having problems paying back loans to call consumer credit counseling."
Benz said the most important way students could avoid problems was by keeping in touch with their lenders.
"It's one of the only ways to get access to deferments and other aid," Benz said. "It's especially important to keep in touch after graduation when you are repaying the loan. If you keep in touch, then paying it back can be as painless as possible."