A late Republican amendment to the bill appropriating Education Department funds mandates that the law covering college student loans be obeyed. That alone may provoke President Clinton's veto of the huge Labor-HHS bill in the war he is waging with Congress over controlling the government.

The 1993 law creating Clinton's direct government loans to students requires that the loans offer the same terms as private bank loans guaranteed by the government and adds: "The Secretary [of Education] shall charge the borrower . . . an origination fee of 4.0 percent of the principal amount of the loan."

But Secretary Richard Riley and his cohorts make the Clintonesque response that it all depends on what "shall" means. Not much, they indicate. The department, this summer, unilaterally lowered the rate to 3 percent, effective Aug. 15.

More than billions of additional government spending is at stake. Clinton's grand design for the federal government to compete with the private sector is flourishing. No skirmish in this war between the president and Congress gets less attention and deserves more scrutiny than this one about college loans.

The direct loan program, a favorite Clinton expansion of government promised in his 1992 campaign, is less efficient than what private competitors offer. Consequently, Riley bombarded Congress in 1998 with calls to lower the government loan rate to 3 percent, one point below that of private lenders. But when Congress would not agree, the Clinton administration ignored Congress and lowered the rate anyway.

The House Education and Workforce Committee sought expert, nonpartisan opinion and got it May 13 from Kimberly Jones of the Congressional Research Service. "Congress was clear and explicit" in setting the fee at 4 percent, she wrote, adding: "The `shall' is interpreted to be mandatory and not permissive . . . The Secretary has been given express and unambiguous direction from Congress." Thus, "shall" means "shall."

A month later on June 16, Education Department General Counsel Judith A. Winston sent Riley a memo: "A decision to treat the word `shall' . . . as mandatory would frustrate the statutory purpose" of the direct loan program passed by the last Democratic Congress. Thus, "shall" does not mean "shall."

That same day, the Education Department announced the new 3 percent rate, predicting that "more than 2 million students will be eligible to save an average of $631 on their student loans." An outraged Rep. Bill Goodling, the moderate Pennsylvania Republican who heads the Education Committee, was never consulted.

In the new math of Clinton's Office of Management and Budget (OMB), this won't cost the taxpayer a dime. Using the reasoning of candidate Clinton in unveiling the program in 1992, OMB calculated that costs would be wiped away by fewer private loans guaranteed by the government. In contrast, the Congressional Budget Office forecasts additional costs to the government of $35 million in 1999 and $590 million in 1999-2004.

In fact, the elephantine growth of the student loan program is a Washington wonder passing under the media's radar. From $3 billion of outstanding debt in 1995, to $47 billion in 1999, the number will hit $108 billion in 2004. Direct student loans now comprise 68 percent of all federal loans (compared with 3 percent in farm outlays). This figures to chew up 10 percent of the budget surplus.

Not surprisingly, the government program is much less efficient than its private counterparts. According to the Education Department's inspector general, the government spends 31 percent more to service loans than the private sector does. While direct loans to students have increased 28 percent since the program's inception, administrative costs have soared 212 percent.

How do hard-pressed members of Congress cope with one runaway escapade among many, managed by White House-backed bureaucrats? House Majority Whip Tom DeLay, the Republican "hammer," has offered language in the appropriations bill asserting that "shall" still means "shall." Whether it survives the session-ending mess of vetoes, maneuvers and threats is another matter.

(C)1999, Creators Syndicate Inc.