The Real Story

To the Editors of the Crimson:

I fear your editorial of Tuesday, January 24 ("Monitor the Cutbacks") relies too much on the rhetoric of the Reagan economic message and too little on the actual proposals. The proposals include:

1. A revised Guaranteed Student Loan Program in which the student pays the 9% in school interest, rather than the Federal Government and

2. Loans which can be made only to students who show financial need after grants are subrtacted from costs; (present loans may replace parents contribution).

The proposed Guaranteed Loan Program will save money, but only because lenders will not make the loans under these conditions. Lenders find billing for in school interest too expensive. If the banks defer payment of interest until graduation they are denied an income flow on their capital while the student is in school. Students would find their monthly payments unacceptably high when payment did begin.

Harvard students borrow Guaranteed loans from home town lenders and the University. The University will continue to lend to its students under some program. Home town lenders, which make virtually all loans at other institutions, will withdraw, probably abruptly, from the program.

In short, the current Reagan proposal will not just eliminate loans of convenience, which as you correctly point out, have been abused. It will eliminate the program and seriously curtail the ability of the middle class to afford the "excellent schooling for anyone who wants it" which indeed should be a choice.

As an alternative we can return to the program as it was before November 1978 in which the interest subsidy was available only to families earning under given income levels, unless need could be documented. Such a program would serve more of the middle class and curtail the increase in Guaranteed Student Loan costs.

Harvard students and their parents should let their congressional representatives know of the impact of the proposed change now. Otherwise, next year many may be paying a 9% interest surcharge on new loans to attend Harvard while siblings and friends may simply be out of school. Richard Black   Coordinator for Financial Aid