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FINANCIAL AID EXPERT PRAISES STUDY BUT WARNS OF MAJOR RISKS

 WASHINGTON, Feb. 3 /PRNewswire/ -- The president of one of the nation's largest federal student loan guaranty agencies today praised a major federal study on college financial aid reforms, but warned that some of the report's recommendations carry major risks.
 Daniel S. Cheever Jr., president of the American Student Assistance (ASA), called the National Commission on Responsibilities for Financing Postsecondary Education report released this morning "a fresh and comprehensive approach to a difficult issue.
 "The commission's report forcefully and creatively tackles one of the major threats to the stability of our nation's higher education system -- the affordability crisis," said Cheever, who wrestled with complex student aid problems for eight years as president of Wheelock College in Boston.
 "The rising price tag of a college education is forcing us to slip backward to a day when family wealth determined college choice -- an unacceptable position in a democratic society.
 "College cost increases have exceeded growth in family income for the past two decades and show no signs of slowing down. Many college students today graduate with debts that exceed their family's home mortgage payments," he said.
 Cheever said, however, that two of the recommendations in the commission's report carry major risks:
 -- Direct lending provisions -- Cheever pointed out that replacing private funds with U.S. Treasury dollars in an untested direct loan program could result in an expensive and major bureaucratic nightmare for both the Department of Education and colleges. He also noted that direct lending would replace private capital with public funds. Last year, over 15 billion dollars were made available to students and families from private banks and credit unions.
 -- Cost concerns -- The proposal includes several very costly recommendations including allowing penalty-free withdrawals from IRAs, creating a national service program, full funding of Pell Grants and repealing the federal tax on certain types of student aid.
 ASA is a private, non-profit organization based in Boston that administers federal student loans for more than 15,000 colleges and banks and insures against defaults.
 The agency, formerly Massachusetts Higher Education Assistance Corporation, is the nation's oldest guarantor of student loans. Last year, ASA provided $650 million in education loans to about 200,000 students across the country.
 -0- 2/3/93
 /NOTE: Cheever will be available for telephone interviews today. Call the contact below to make arrangements.
 Cheever is also available to address the following technical issues:
 1. Why are college costs out of control?
 2. How do current student aid programs work?
 3. What happened when direct lending and income contingent
 repayment were tried before?
 4. What alternative approaches exist to simplify current federal
 student loan programs?
 5. How does national service fit into the education reform mix?
 /CONTACT: Lorrie McHugh for the American Student Assistance, 202-667-0901/


CO: American Student Assistance ST: District of Columbia IN: FIN SU:

IH -- DC008 -- 2278 02/03/93 10:00 EST
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Date:Feb 3, 1993
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