The Reagan administration has proposed that federal financial assistance to college students be targeted more heavily toward lower income recipients, and that all students who get federal grants be required to come up with at least 40 percent of their college costs.
"We are proposing a new philosophy of student assistance, which will emphasize student self-help through loans and work," Secretary of Education Terrel H. Bell said yesterday in unveiling his department's overall $13.2 billion budget for fiscal year 1984.
Unlike the first two administration budget proposals, this year's document does not envision Draconian cuts in levels of student financial asisstance. It calls for holding funding nearly level with the current year, but also for a rearrangment of eligibility formulas that would make loans and grants less available to families with incomes of more than $15,000 a year.
Bell said that one intent of the changes is to decrease the trend toward economic segregation within higher education, with the wealthy going to private colleges and the poor to public colleges.
However, at least one critic, Rep. Paul Simon (D-Ill.), chairman of the House post-secondary education subcommittee, said yesterday that he believes the proposed changes would have the opposite effect. He said that the new formulas still would leave the high-priced, prestigious private institutions out of the reach of the very poor and would place them beyond the reach of middle-income families as well.
"They are really knocking low- and middle-income students from the opportunity to go to private school," said Simon.
Under the administration's proposal, $2.8 billion in Pell Grants, Supplemental Educational Opportunity Grants and State Student Incentive Grants would be consolidated into a new $2.7 billion "self-help" grant program for 1984.
The grants would be for up to $3,000 per year. But to qualify, a student would have to pay at least 40 percent of his or her college costs (or a minimum of $800) through a combination of work or loans.
In order to provide students with more opportunities to come up with their share of the costs, the administration is proposing a 60 percent increase to $850 million in funds for the College Work-Study Program. In that program, the government pays up to 80 percent of the salaries of students working in part-time, minimum wage jobs.
Students could use those wages, along with whatever loans they qualified for, to satisfy the 40 percent contribution requirement.
The eligibility formula for the new grants will be written so that 80 percent of the aid (up from the current level of 74 percent) will go to students from families earning less than $12,000 a year.
In addition, families with incomes of more than $26,000 a year would not be eligible for any self-help grants under the administration proposal. Currently, families with incomes above that level can qualify for some of the supplemental grant programs.
In the guaranteed student loan program, which currently offers subsidized 9 percent loans to 2.8 million students, the administration has proposed that a means test be applied for the first time to all applicants. Currently, only students from families earning more than $30,000 a year must show need. The means test is based on family income, number of family members enrolled in colleges, and college costs.
The budget proposal also calls for an increase to 10 percent from 5 percent in the loan origination fee that graduate students would have to pay in order to receive a guaranteed student loan. The undergraduate fee would remain at 5 percent.