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Loan Program Changes Rules Harvard Students May Benefit

By Susan F. Kinsley

More students than in the past at Harvard but fewer from UMass Boston may qualify for Federal interest subsidies on their guaranteed loans this Fall.

The Higher Education Bill enacted in June changes the basis of eligibility for the federal payments from family income to financial need. Under the new orders from the Office of Education, more students from expensive private schools such as Harvard and fewer from lower cost public institutions will meet the financial need qualifications.

Until now, the Federal government paid the seven per cent interest on loans for college for any student whose adjusted family income totaled $15,000 or less. Students received the same amount of money, up to $1500, regardless of the expense of the school he attended.

Based on Cost

Under the new regulations the college must show that a student has financial need based on school cost as well as family income. The financial statement also determines the size of the loan.

"Obviously more students at Harvard qualify now than under the old $15,000 category," Seamus P. Malin '62, director of the financial aid office said yesterday. "This extends the loans to a slightly higher family income bracket."

Harvard this year placed most of its separate loan money under the guaranteed loan program. Rather than approach a bank for money, Harvard students will automatically get the loan from the University, which will act as the bank.

Although this move may make it easier for students to find a backer, the new system also closes several loopholes Harvard students previously used to get more money.

Under the new formula, expected family contribution and other aid is subtracted from tuition, room and board costs to determine the size of the loan.

"Before lots of families used loan programs as a way to meet part of the expected family contribution they didn't want to come up with," Malin said.

'Eliminates Possibility'

But the new formula eliminates that possibility, Malin said. If a student gets extra loan money elsewhere, it is deducted from the amount of his guaranteed loan. And if his total loan and aid money exceeds the figure set in the federal formula, the government will no longer pay the interest on the student's loan. A student borrowing $1000 a year for four years at seven per cent interest would lose $280.

The new bill also requires students to swear they are using the loan money for their educational expenses.

Malin said that many legislators applauded the new distribution of loan money: "They felt many students were getting loans in excess of their need."

But according to Malin, Clairborne Pell, the mastermind of the Senate version of the Education Bill had not realized the legislation would cut back on funds to students at low-cost institutions.

"He (Pell) didn't intend to make it tough for kids at low-cost schools," Malin said. "The idea was not to squeeze people out at the lower echelons, but to squeeze in more middle-income people."

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