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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International
affairs dean
resigns post
From Staff Reports
Jean Aigner, executive dean of
international affairs at the Univer
sity of Nebraska-Lincoln, an
nounced Thursday she would re
sign from her position effective July
1.
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.
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