THE REAGAN administration spent eight years caricaturing and denouncing federal aid to higher education as in large part a giveaway and unintended middle-class entitlement that deserved to be cut. Congress and the higher education lobby dug in and fought the administration to a draw which did neither side great credit and in which no one's interests were well served.

Now a very different pattern is emerging, in which the Bush administration and a Congress and lobby which its predecessor may have softened up all are pointing toward reform. The programs are up for extension in this Congress; the president's proposals, which were outlined in his budget, are similar to ideas being tried out by leading Democrats. The deal is not done by any means, but the makings exist. No federal programs do more for equal opportunity than these. The higher education act may become the most important social legislation of this Congress.

The federal aid, now more than $11 billion a year, is mostly given through students; it helps maintain a buyer's market in education. There are two main programs -- grants for the poorest students supplemented by partially subsidized guaranteed loans that go up to the middle class. About half of all college students now receive some kind of federal aid. A basic problem is that aid has not kept pace with costs (though that may say more about how fast costs have risen than about how fast the aid has). The mix of aid has shifted accordingly from grants toward cheaper loans; that has led to too much student debt and too many defaults. The problem is how to juice up grants, which becomes, where to find the funds?

The answer, insofar as extra money can't be found, seems to be two-fold: concentrate the grants to make them larger, and add to grants with money that can be saved in the large loan program. Rep. William Ford (D-Mich.), new chairman of both the relevant committee and the subcommittee in the House, has proposed "front-loading" grants -- giving them to students only in the first two years, which would permit nearly doubling them. The students once established (and less in danger of defaulting) could then turn to loans. The president (in part to challenge the Democrats on the fairness issue) proposed instead increasing grants to poorer students by denying them to others not so poor, a similar idea but with a different set of winners and losers. They ought to be able to settle that.

The administration also proposed or is considering such measures as cutting off the grants of students in the lowest 10 percent of their classes; making government loans directly instead of paying costly premiums to banks to make them; taking further steps to control defaults, which now absorb about a fifth of the aid budget, by increasing state responsibility both for costs and for the quality of the receiving schools; and imposing the next best thing to price controls on the trade school industry, which now accounts for about a fourth of all aid and an even higher proportion of default costs.

All these ideas have arguments against as well as for them, and not all deserve to be adopted. But all do deserve to be taken seriously. The administration and Congress both are in the game this time; it augurs a good result.