President's New Student Loan Plan May Meet Congressional Opposition

Congress may oppose President Johnson's plan to end direct federal loans to college students, Rep. John Brademan `49 (D-Ind.) told an Ed School audience last night.

There are Congressmen, he said, who suspect that the President is cutting out the NDEA loans simply to help reduce the budget deficit.

In his State of the Union Message and budget address, Johnson proposed that the federal government guarantee loans that students have negotiated on their own from private or state lending agencies. Currently students can borrow directly from the federal government under the provisions of the National Defense Education Act.

The Administration would have to budget some $190 million to cover NDEA loans in fiscal 1967. If the new system is adopted this item will not appear on the budget, since the government would be insuring the loans, not handling the money directly.

Brademas, a member of the House Committee on Education and Labor, predicted that students would have difficulty securing loans under the projected system. "There is a tight money market now," he explained, "and banks will be unwilling to lend money to students when they can lend it elsewhere at higher interest."

Forcing a student to get a loan in his home town could also cause problems, Brademas noted. He cited the case of a Negro who would have to approach a banker in the South. "He would be lucky if he was able to walk in the front door," he said.

Johnson's proposal, which observers say will closely resemble a plan written into the Higher Education Act of 1965, passed last October, limits the interest on student loans to 6 per cent. Bankers claim this does not quite give them a high enough return, Brademas said.