The Senate rejected, 45 to 43, as too costly and potentially too big a benefit for the rich, a bill fashioned by a House-Senate conference authorizing $50 billion in aid to higher education during the next five years.
Leaders of the Senate Budget Committee blasted the supposed compromise, saying Senate conferees had virtually accepted a House bill which has much higher than the administration wanted, than the Senate had voted or than the first budget resolution had approved. "Outrageously expensive," bellowed Budget Committee Chairman Ernest Hollings (D-S.C.). The Senate conferees "threw away all fiscal judgment," he said.
Senate opponents were especially steamed up about a possible benefit to the rich which business columnist Jane Bryant Quinn recently pointed out in a television broadcast.
The Senate had voted to require students obtaining federal direct or guaranteed loans to pay interest on the loans covering the period of their school years instead of, as now, only during the period of repayment. Senate conferees agreed to drop this provision.
Coupling that with the fact that there is no income ceiling on recipients of guaranteed loans, Quinn noted that a rich man's child could get an 8 percent federally guaranteed loan, invest it in a certificate of deposit paying 12 percent and at the end of four years of college repay the loan with father's money and pocket the interest paid on the CD.
"Take, for example, the child of your average millionaire," Hollings said as he launched into this horror story during Thursday's debate.
The higher education conference report first lost on a tie of 44 to 44. The bill's manager, Sen. Claiborne Pell (D-R.I.), changed his vote to no so he could, as one on the prevailing side, move to reconsider and hope to round up a stray vote to pass it.