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About The daily Nebraskan. ([Lincoln, Neb.) 1901-current | View Entire Issue (Jan. 31, 1997)
Responsibility for providing financial aid could be increased in private sector By Erin Gibson Senior Reporter The push to re.duce federal spending could change the direc tion students look for financial aid, a U.S. Congressman said Wednesday. Rep. Bill Barrett said education reforms could encourage the private sector to replace federal loan programs and send U.S. Department of Educa tion duties to the states. “We’re in a gearing-down mode to reduce spending, balance the budget and return power to the states,” Barrett said. As Congress tries to reduce spend ing, it will give less money for expand ing education and bureaucracy, he said. But some members of Congress are thinking about giving some funding duties to states and private businesses, Barrett said. This shift could reduce the burden of education bureaucracy and increase spending efficiency, he said. states pnvate oanKs wouia ao a better job oflending money to college students than the federal government, he said. For example, community and state banks make loans more personal through interviews and could better gauge students’ needs than the federal government, Barrett said. Barrett also said turning to private lenders could prevent more students from defaulting on their loan pay ments and keep money circulating on the local level. Flip side of the coin But John Beacon, director of schol arships and financial aid at the Uni ,, versity of Nebraska-Lincoln, said the level of default is high because it is easier for students to get federally guaranteed loans. Private-sector banks would be re luctant to lend money to students if : the loans were not guaranteed through the federal Stafford program, he said. “Not every 18-year-old or 20-year old could walk into a bank and take out a loan,” Beacon said, “because the bank would not let them take out the loan unless there was some guaran tee.” Many young college students do not have material means of guaran teeing a loan, he said. Now, banks prefer handling fed eral Stafford student loans, which now carry an interest-rate cap of 8.25 per cent, Beacon said. “They can hardly lose,” he said, Banks no longer handle Stafford loans for UNL, Beacon said. At most universities the size of UNL, students receive Stafford loans through a di rect-lending program between the university and federal government. About 40 percent of all federal stu dent loans are direct loans, he said. “When only banks made student loans, there were all kinds of prob lems,” Beacon said. Banks once had a monopoly on handling federal student loans, he said. The lack of competition did little to encourage banks to handle problems that existed, Beacon said. Now, the competition of direct lending has made banks responsive and could be a good choice for some schools; but not UNL, he said. The lean years? Barrett’s suggestion to encourage private-sector lending on student loans would work well to subsidize federal loan programs, Beacon said. “The limit a student can borrow is not keeping pace with the cost of edu cation,” Beacon said. Setting up a partnership between the university and a private bank could help fill the financial needs of students not met, he said. Beacon said he worried students could be made more dependent on loans to finish college. Instead, he fa vors giving more federal Pell Grants to students. Rep. Barrett said the Clinton Ad ministration has suggested raising the amount of federal Pell Grants from $2,700 to $3,000—an unprecedented high. The grant was recently increased from $2,470, and the Republican House majority may not be support ive, of another increase, he.said, “It’s ridiculous to think we’re go ing to expand any programs,” Barrett said. “It’s a matter of running a leaner, more efficient government.” A more efficient government could also include elimination of the Depart ment of Education on a national level, he said. The idea was brought up dur ing the 104th Congress in 1996, and should arise again this spaing, he said. The department’s major functions would be returned to the states’ de partments of education, Barrett said. “We can do a better job with edu cation dollars than the federal govern ment,” he said. But Beacon said the federal gov ernment today is still a necessary part of student loans nationwide, and would not be easy to replace. “It’s a massive program,” he said. Clinton honors Nebraska with small-business award By Erin Gibson Senior Reporter Nebraska’s work to encourage small business received kudos from President Clinton Thursday, Gov. Ben Nelson said. The state received (me of the first Presidential Awards for Excel lence in Microenterprise Develop ment during an afternoon White House ceremony, Nelson said. A microenterprise includes busi nesses with four or fewer employ ees. The Nebraska Microenterprisc Partnership Fund won in the cat egory of “Excellence in Public and Private Support for Microenterprise Development.” The fund makes loans to vari ous community development orga nizations, who in turn make loans to Nebraska microbusiness entre preneurs, said Donald Wright, pub lic information officer with the Nebraska Department of Economic Development. Loans are later re paid into a revolving fund, he said. And U.S. Rep. Bill Barrett said the success of Nebraska’s small business program is the key to keeping more university graduates in the state. -V Nelson has pointed out the is sue as one of major importance to Nebraska, he said. According to the U.S. Small Business Administration, 91 per cent of all businesses in Nebraska are microbusinesses. These busi nesses employ 25 percent of all working Nebraskans. Barrett said these businesses keep both college and vocational school graduates in the state by pro viding quality job opportunities. Now Nebraska should work to encourage the expansion of high tech and high-profile businesses in the state, which would entice bright students to live in Nebraska after graduation, he said. Educational partnerships be tween business and institutes of higher education also could be cre ated to provide students with real world experience in internships before graduation, he said. Barrett said such partnerships would help students move more easily from graduation to the job market. _ And, he said, the state’s busi ness climate would continue to improve with the help of Nebraska’s higher-education graduates. ! 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Aigner will leave to accept a po sition at another university, said Irv Omtvedt, UNL interim senior vice chancellor for academic affairs. Aigner came to UNL in 1990 after 13 years at the University of Alaska-Fairbanks, where she served as director of international programs and chairman of the an thropology department. nrnri . • ’ HP,T1 U The Royal Grove t> - -1 340 W. Comhusker j % £ i Lincoln, NE • 474-2332 j® proudly presents j ^ 1 The I fj Skeletones IT :{♦ Sunday Feb. 2| } * It ^^ 1» - with special guest: -4], HI Spinning Jenny Doors Open 6 pm JP £ 4* Showtime 7 pm H ■» t i 19+ admitted—bring 1 .D | p5 FREE Admission