Reagan Cracks Down

President Reagan will brief Education Department officials today on proposals he will present to Congress Monday to further cut financial aid and to convert the department into a "foundation for educational assistance." For most officials, the announcements will only confirm their worst fears.

The rumors and leaks that have abounded in Washington over the past week predict Reagan will ask for cuts of 50 per cent, on the average, to all college financial aid programs--grants, guaranteed student loans, and work-study--over and above the steep decreases already approved in October, John W. Peltason, president of the American Council on Education, said yesterday.

Reagan is expected to ask to cut the allocation for Pell grants--direct gifts to needy students--from $2.3 billion to $1.4 billion next year, and to tighten eligibility rules so that the maximum qualifying family income is $14,000, rather than the current $27,000.

The change would cut about a million students from the direct-aid program altogether, Peltason estimated, while shrinking the size of the grants even those eligible could receive. Two subsidiary programs, the State Student Incentive Grants and the Supplementary Educational Opportunity Grants, would reportedly be eliminated entirely, and work-study would be slashed by 30 per cent.

These and other projected cuts continue the pattern begun by the fall cuts, a pattern which has already forced Harvard and most other private institutions to tighten their belts and begin looking around urgently for alternative ways of stretching their dwindling aid resources. The Ivy League Committee on Financial Aid resolved at a meeting this fall to scrutinize the mechanisms by which their admissions offices determine a family's contribution to tuition; they acted as much to help strapped families that might be unable to pay their evaluated fees under the new federal strictures, as to make sure the colleges are receiving as large a tuition contribution as they can reasonably ask. "With money as tight as this," said L. Fred Jewett, dean of admissions and financial aid and a committee member who is studying the problem, "we can't afford not to get it right."

But such measures, even if successful, can only delay the crunch the College faces if federal cuts take a significant bite out of the $2.3 million in Pell grants Harvard undergraduates currently receive, or the heavy Guaranteed Student Loan (GSL) program subsidy. The Social Security payments for which students with special needs had been eligible ended with the October cuts; incoming students cannot receive any such aid, and students currently on the program will be phased out of it over the next few years.

Faced with tighter and tighter restrictions on the amount of aid a student can apply for from the government, Harvard, along with other schools, has considered supplementing it by setting up its own work-study and/or loan programs. But even if the University could afford the immense outlay of cash to start such a program--and generating anything like the yearly $2.3 million in federal direct aid; for example, would require an endowment increase something above $30 million--doubts remain. Officials are far from certain that students should be asked to take on the "double mortgage" situation of paying off two debts after college, or committing themselves to enough work-study time to make up the difference left by the shrinking grants.

The same dilemma, even more severe, faces graduate students, many of whom are already financially independent of their parents. Under the proposed cuts, graduate and professional GSLs--which help support about 650,000 students nationwide and 5100 at Harvard--would be eliminated entirely. Officials say providing in-college loan programs to replace GSLs, as the Business School already does, would not only require enornmous investment's but also impose such heavy debt burdens that students might feel unable to pursue any but high-paying careers after graduation.

A more drastic solution, and one the College may eventually be forced into, would be to discontinue the policy of guaranteeing all accepted applicants as much aid as they need. Though administrators remain "firmly committed" to promising all students enough money to attend, they say they must consider the possibility that aid obeys a law of diminishing returns. If the burden of loans and work-study becomes too heavy, Jewett says, "It may just not be worth while to come here."