President Carter, seeking to head off congressional enactment of a college tuition tax credit, yesterday proposed a $1.5 billion expansion of existing scholarship and loan programs that would make 60 per cent of the nation's college students eligibile for federal aid.
The recommendation was announced with fanfare at the White House by Carter himself, accompanied by an assortment of key congressional figures. Sympathetic House and Senate education committees will begin unusual joint hearings this morning to move the bill along.
Carter made no effort to hide that his proposal was designed to thwart passage of the tax credit, which the administration regards as too costly and wasteful. At one point, he threatened to veto a tax credit bill, warning that he would "not accept" both federal student loans and tax breaks.
His action had no visible effect on sponsors of the tax credit proposal. Sen. William V. Roth (R-Del.), the leader of this group, dismissed Carter's action as "just an effort . . . to derail" the credit legislation, and vowed to continue pressing for a tax writeoff.
However, key education groups quickly rallied behind the administration's alternative, which would be a setback for the Roth bill. Jack W. Peltason, president of the American Council on Education, said his group now was "pledged to work for" enactment of the Carter plan.
The new Carter proposal would increase to $5.25 billion the government's present $3.8 billion outlay for student grants, work-study subsidies and loan guarantees - boosting the total number of students receiving federal aid to 5 million, up from 3 million now.
More important, the bulk of the new money would be earmarked for "middle-income" families in the $16,000-to-$25,000-a-year brackets, who previously had been ineligible for many of these programs - and who would be beneficiaries of a tuition tax credit. Loan guarantees would be available a families earning up to $45,000 a year, compared with $30,000 now.
The proposals had one hitch: the maximum grants or interest-subsidies for students from families in the higher-income brackets would be only $250 - the same as the maximum tax break in the Roth bill, but still modest by comparison to those offered lower-income students.
However, Sen. Claiborne Pell (D-R.I.), chief Senate sponsor of the educational grants program, hinted his committee may revamp the proposal slightly to provide bigger benefits for middle-income students. Both House and Senate leaders promised quick passage of the bill.
Carter's proposal contains three major elements:
The present $2.1 billion "basis educational opportunity grants" program, which provides tuition scholarships, would be expanded by another $1 billion to serve an extra 3.1 million students. Families earning up to $25,000 a year would be eligible, up from a $15,000-a-year ceiling now.
The existing college work-study program which subsidizes 80 per cent of wages for part-time jobs for students, would grow by $165 million from the present $435 million - covering an estimated 280,000 new students. About 720,000 students now take part in the program.
The guaranteed student loan program, which underwrites loans and subsidizes interest costs for students, would be beefed up by $327 million, from $540 million now - providing for an estimated 260,000 new loans. The number of l oans to middle-income students would be almost doubled.
The changes affecting the basic grants program also would increase the maximum grants for low-and moderate-income students. The maximum for those in families earning less than $8,000 a year would to $1,800, from $1,600 now. Those for the $8,000-$16,000 group would also rise $200.
In making the proposal Carter asserted it "will provide more real help than any tuition tax credit," which he said would waste money by squandering benefits on upper-income groups. An accompanying Treasury chart showed a fourth of the Roth bill's breaks would go to families earning $30,000 a year or more.