Magazine article American Banker

Consumer Bankers Blast Reagan Plan to Cut Student Aid

Magazine article American Banker

Consumer Bankers Blast Reagan Plan to Cut Student Aid

Article excerpt

PHILADELPHIA -- The Consumer Bankers Association has strongly criticized the Reagan administration's proposal to trim the guaranteed student loan program.

The association recommended instead its own four-point package to reduce the program's costs to the federal government without dramatically cutting the aid.

The plan is the group's first statement on student aid. It was adopted by the association's student lending committee at a two-day student loan workshop here, sponsored by the organization.

The guaranteed student loan program "will virtually cease to exist," the committee said, if the administration's proposal goes through.

"Don't kill the program before we have a chance to fix it," John M Tully, a member of the committee and a vice president of Bank of America, said in an interview.

While the association's package won't work "overnight," the committee said, "It promises a sustained viability for federal postsecondary education programs, provided that those progams are not gutted in the interim by measures aimed at short-term budgetary goals."

Association members -- banks and thrifts -- account for more than 80% of the total student guaranteed loans outstanding, amounting to about $35 billion.

The administration proposals call for cutting $2.3 billion from all financial aid programs by eliminating guaranteed student loans to students whose families' gross income tops $32,500; by chopping grants, work-study jobs, and other forms of assistance to those with gross incomes over $25,000, and putting a $4,000 lid on total federal aid to any student. …

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