The University Record, February 11, 1997

Clinton's 1998 higher ed budget would benefit students, parents

By Jared Blank


President Clinton unveiled his $1.6 trillion FY 98 budget proposal last week that he said displays an "unprecedented commitment to higher education" through a $51 billion package of increased funding for financial aid and tax breaks.

"The education community is excited about the priority being assigned to higher education by the president," says Thomas A. Butts, associate vice president for university relations. "These welcome initiatives would provide needed financial assistance to students andtheir families."

On the financial aid side, Clinton proposed increasing the maximum Pell Grant award, from $2,700 in 1997-98 to $3,000 in 1998-99, and changing eligibility rules to include more single independent students. Last year, 3,206 U-M-Ann Arbor students received Pell Grants. This proposal offers the largest Pell Grant increase in 20 years.

Student loan origination fees for students receiving Stafford subsidized loans would be reduced under the president's plan. Currently, students pay a 4 percent fee for these loans. The president's proposal would cut the fee in half, to 2 percent of the loan, for those schools (like the U-M) that participate in the Direct Lending program.

Other proposals include increasing funding for the Work-Study program so it reaches one million students, a $132 million Honors Scholarship program for the top 5 percent of high school students, and the elimination of the State Student Incentive Grant (SSIG) program. Funds from the SSIG program help to support the Michigan Competitive Scholarship. Last year, 3,906 Ann Arbor campus students received $350,830 in funds from the SSIG program.

At the center of the tax portion of the proposal is a deduction of up to $10,000 a year for post-secondary tuition, a $1,500 two-year tax credit for students who maintain a B average or better, and the elimination of penalties for IRA withdrawals (for those making up to $100,000 a year) to pay for education.

In addition, the president proposed extending through 2000 part ofthe tax code that would allow undergraduate and graduate students to deduct up to $5,520 a year of their educational expenses that are paid for by an employer. Currently, graduate students are not eligible for this tax break.

"Students and their families should be very encouraged with the president's proposals to provide more student financial assistance through increased grant funding and tax programs," says Judith Harper, interim director of the Office of Financial Aid. "We are particularly pleased with the proposed $300 increase in the maximum Pell Grant, which assists those students who have the most financial need." Harper estimates that this increase would provide an additional $1.3 million for students on the Ann Arbor campus.

Research budget proposal is "predictable, with a couple of disappointments," Samors says

The president's budget request for federal support for university-based research is "predictable but with a couple of disappointments," according to Robert Samors, assistant vice president for research.

Overall, federal support for research and development would increase by 2 percent over last year's levels. Within that increase, basic research funding is up 3 percent, applied research increases 4 percent and university-based research would gain 2 percent over last year.

In specific areas, NASA's research programs would receive a 5 percent increase, the National Science Foundation research activities budget would grow 3 percent, the Department of Defense basic research account would receive a 5 percent boost, and the National Institutes of Health (NIH) would receive a 2.6 percent increase. Samors says that the NIH request is a "disappointment."

Total federal support for research and development would decline in real terms by about 8 percent during the 5 year period ending in 2002, when the budget is expected to be balanced. To achieve a balanced budget by 2002 and give agencies an idea of funding scenarios over the next five years, programs were placed into four groups: those that are being cut this year and then will receive constant funding through 2002, "favored" programs that will be frozen at FY97 levels, "priority" programs that will receive inflation increases, and "selected" programs that will receive increases in excess of inflation.

"For the past several years there has been a significant divergence of priorities," Samors adds. "Congress has supported what it defines as `basic' research more than the `applied' programs that the president is particularly excited about."

The Record will update the University community throughout the budget and appropriations process. For more information, contact the U-M Washington, D.C., office at (202) 554-0578.