The University Record, June 19, 1995

Regents warned of cuts in federal funds for research, financial aid

By Rebecca A. Doyle

The University can expect federal funding for research and student financial aid programs to level off or decrease for the 1996-97 fiscal year. That was the message Regents heard from University administrators at the June Regents' meeting last Thursday.

"The scene in Washington is one of great uncertainty," Vice President for University Relations Walter L. Harrison told the Regents. Harrison and Vice President for Research Homer A. Neal said that programs for student financial aid and funding for research initiatives are endangered by federal budget cutting, and that universities have formed new and stronger alliances to assess the impact of those cuts and search for solutions to the problems decreased funding would cause for institutions of higher education.

Student financial aid

The elimination, reduction or freezes of funding for student aid programs such as Pell grants, Perkins loans and direct or guaranteed student loans would affect some 12,400 students who currently receive some need-based financial aid, said Judith Harper, associate director of financial aid. The U-M was one of the first universities to participate in the direct loan program, which was touted as an extremely successful method of distributing financial aid to students, decreasing processing time and eliminating paperwork.

"Students will bear the brunt of the loss of the direct loan interest subsidy," she said. "The loan capital that generates the $3.3 million interest will still be available, but the cost of the loan will be substantially increased."

In a worst-case scenario, Harper told the Regents, U-M students could lose financial aid totaling $7.2 million from cuts to loan and grant programs.

Research funding

"When we look at research funding at the federal level, we are looking at a shifting target," Neal said in characterizing the legislative approach to funding research at the university level. President Clinton's message to the nation last week targeted different areas for reductions in federal spending.

"We are living in a new environment," Neal said. "Big changes are taking place. The end of the Cold War is raising questions as to the extent to which university research in certain areas is any longer relevant to national goals, national security."

The U-M is arguing for research in higher education because it is in the "best interest of the nation," he said, and research affects the University in areas of faculty support, undergraduate research programs, equipment, travel and the culture of excitement that attracts top students to the U-M.

"You can't just shave away 25 percent of it and go about our business without there being some impacts."

Although federal budget reductions in research are not yet decided, Neal said he expects that there will be a 25 percent decline in research activity by 2000.

Neal said it is important for the University to position itself to be ready for major changes in federal research funding, that how we manage the changes "will make a difference as to whether or not we come out as a vibrant research university."

Regent Philip Power said the University should expect that "we will have a hard time over the next several years." But, he said, it will be important for the University to find funding to enable qualified students to attend the University.

"This will lead to some pretty tough decisions over the next few years," he predicted.