Student loan bill might be passed

By Mark McGowan

U.S. Sen. Paul Simon wants to make money for the government while making things easier for college students who need loans.

The Illinois Democrat, along with Sen. Dave Durenburger, R-Minn., is introducing a bill in subcommittee today that would make college loan payments contingent on family income.

Simon said he expects no opposition to the bill from his colleagues but is planning on considerable protest from the nation’s leading banks, which collect $1 billion annually on student loan defaults.

“We have a choice of subsidizing banks or subsidizing students,” Simon said by telephone from Washington, D.C., Wednesday. “My choice is to subsidize students. Student aid programs ought to help students.”

The drop in income for banks really won’t hurt them, Simon said.

Colleges and universities should see an estimated 13.7 percent climb in students because of the Simon bill, the senator said. Although NIU wants to cut its enrollment, Simon said there are plenty of schools which would take on more students.

Student loan defaulters cost the United States about $3.8 billion a year, Simon said. With the bill, the government should be able to save about $2.7 billion, the Congressional Budget Office estimates.

Even if interest rates scale up to 9 percent, Simon said the plan still would be a moneymaker. And, if interest rates jump to 11 percent, less money would be generated but taxes garnered by more college graduates working in higher-paid positions would increase income tax revenues, Simon said.

Simon said the bill is not unlike the G.I. Bill which stimulated the economy after World War II by sending veterans to college. “This is a tremendous investment in our future prosperity,” he said.

If passed, the plan won’t take effect until the 1994-95 school year, although Simon said he wouldn’t be opposed to starting a year earlier if Congress wanted.