EDITORIAL
Let direct lending
save federal cash
For the past year, the University has served as a test
ing ground for a new federal student loan system,
designed to improve the old lending system by elimi
nating costly middle men from the process
instead of having students seek out loans from com
mercial banks and guarantee agencies, which are in turn
guaranteed by the federal government, the new system
has students borrowing money directly from the govern
ment itself.
By removing the banks from the equation, the lend
ing process is more streamlined and substantially cheap
er, both for the government — whll b no longer has to
pay banks for students' defaulted loans — and students
who now can choose from a variety of repayment
plans, none of which ( barges more than 8.25 pen ent in
annual interest. It is about as close to a win-win situation
as you’re likely for find coming out of Washington And
there ,uc still ■ ntn s
Recent congressional efforts to slow down the imple
mentation of the now landing system — President Clin
ton wants it in all colleges by 1997-68 would limit the
number of direct loans to 40 percent of nil new loans,
as measured by volume, That would leave the remaining
60 percent of loans to be issued by banks, under the
same old costly and inefficient system as before
The rationale for this 40 percent cap is shaky if the
new system is cheaper than the old system, and easier,
what possible reason could there be for blocking it?
The banking industry, obviously, can think of a whole
lot of reasons The White House predic ts a $12 billion
governmental savings through direct lending, and most
of that money will come out of banks' profit margins. It’s
little surprise, then, that banks are among the most vocal
opponents of direct lending.
But opposition to the new program has come from
some less predictable corners. Some student groups,
including tne Oregon Student bobby, have voiced con
cern that the repayment plans that accompany the new
loans actually i ost students more money in the long run
— especially if students choose some of the longer-term
arrangements that can delay full repayment as long as 25
years.
That argument is true — a 20-yuar loan will always
cost more in interest than on equally largo 10-year loan
— hut It is not enough to justify opposition to tho pro
gram. So long as students are fully informed about the
economic implications of each repayment option, then
the now system still b*ats the old one. The lobby should
concentrate its efforts on seeing that students are so
informed, rather than simply describing the program as
“robbery.”
Direct tending should be allowed to expand to all U.S.
campuses. Moneyed interests and fears aside, it's the
best way to keep college costs down, without bankrupt
ing the federal government.
Orvfion Daily
Emerald
■I.l i’ K.'J i.’.Tnrr
Th* P&ty f i» fx4>- vf'**} .1.*-.• M •- •
y-«iaf »VJ T u«»']Ay *f*5 Tbuf Hs3£y ffv» Js^rr.^us* t»y I
Qj . Inc . a* £*© lk*nrtJNf*^f d Cfcoporv f
Tfv© r«i 6*&\1 opm a!** **><>«*.>«>«’wS**’
| <t> *i4m’"■-?•• & U«*c»' A'Xl ■■’■■ 4 )< ffHI A**v>t ^(5*1
TH* f "Ufrmkj til pfiivdf* pfOptrty Tr%« »«mov# Of
tty UNr
stay th# *ictvs
OMy f'nerafcj l\te*8?v
ft* of fNKpws ift jpfQMPutfltM
Ednof W» ChMK Katy Soto
l ector
Editor mM Editor
N*w» An E ititof
Frt*i»nc« Editor
UMMfl inotn
ftoftO* tVwfrv***
Icyi ftofenoi*'.
N«w» tailor Retw* :i Mm
Sport* Editor Ohm K**rt/
Supplement* E<*tor !"V.a^
Night E &\or «r* a Me» **
AllOCiaif Idnort *’■» *'• >'*' •? u. ‘ ^ f r- M.,! P-.-rr'* t .'N*a‘ J*
GflJWWMrtiV Co*6An PoMhy. Htph0 fc'dukjWkxv
H-W $*JS« ,;ii. V. •'.*»» Cv-W, A, , i. IVrt-Vl^ **'* * * W>A
Qfrytft F-^mar Mj** Ciarnv’. >,-** Marocwl Km§ mr , T<nv,v K«xy')*y. Shames ULikJu* Adam
►:^%rfy(a Sarn&ntfta Mart-*v M*** Ml IVvj»- hLtrk Mr Ty*e Put*.* Mk ' iic« Me.***^*
>A. > ■-%/v <w> Ar---** M.-.-«*» * ■■• hh* ’rfwry N«!«v ,1 SftapNirdl Pat# var* $»>*• ‘*wr
Sm#' MaS**w* S!-f**» M.va v •■*» ■■4#txr>i V--'*<y\ ft -• Wwm 0f 4 VVcy-.aJi i <** 24C/#
Manager x?v R***
Atfwlifkin-g D»f*ct<w Mart »N Vr Production Manage* M '■«** H; -,-t
Advancing *■■■»•« Ar»*-.■».•- •• a -at Ik-'j,*#*. Ua< . O g. ?«*••, F©*,. t ♦••■•• H >>«
■i«M>'"t M.JV - S*Xfr M! #N»« It- Krw, A«mw> ■
Ci»»*;n#d GkK*) M** - *••» Ui %ay** « ... s**-«•■■•
OMklrttuUOA: A>*’" >, :•■ g f «r«W\ ft;** •■ ; *■-.»• J " '•«.? ••
ft40>*v Carton* ‘i.4Wvuv Aidy Con*,
Froduciion Oi*ft *t Me-Oobfc Pw.iiAU.vi C*v-.* .*• S* ..?*•.» Af>*»c Gaw'v-«r» fv.*i
A-.n-i M MA.ar.ta Hr»fsf«r Hq«**S Oi» *4 •-•••' Y**
NKWirVOOm
D*»fx»y Amtmtuvg
>46-3712
>464343
4
>✓
Hfc*kty
Kfa'-ki
Afr'Wfv
WE WARS
..SAYS WERE THflJ
GINGRICH
DOESN'T TminK
THE MEDIA A«
Crvinc Him ENO«0M
ATTENTION
■ OPINION
Rally against ‘Contract’ misses mark
Primp A. J. Fomas \
On March 29, a series, of
rallies was held on col*
lege campuses at ross the
country Nalurallv. the Universe
Iv took part in this activity, the
so-called "National l)ay of Cam
pus Action Against The 'Con
tract On America."'
1 attended our own version,
which was under the leadership
of the Student Insurgent and the
Survival Center and what I saw
was extremely disappointing
Hook burning (which 1
thought liberals were against),
obscenities blared over the loud
speaker, rabid accusations of
CIA conspiracies in South
America, mean-spirited atta< ks
on Speaker of the House New t
Gingrich in summation, a
group of students who seemed
to he protesting simply for
protesting's sake
This is worrisome due to the
fail that this issue at hand
should not be treated in such a
frivolous manner The “( mitrat t
With America'’ is dangerous
For those of us who are
opposed to it. however, we
should not allow the debate to
be extended toward the heart
strings and paranoia of the far
left Fighting the contract should
he logit al and rational
Although the supporters of
last week's rally called the con
tract a mean spirited attack on
fairness and decency." this is
not true It is a promotional gim
tnu k where main interests, con
trary to the rhetoric of the House
Republicans, li« with large cor
porations and the wealthy
The main problem with party
line liberal arguments, such as
those which 1 heard last week,
against the contract is that they
are indictments against the GOP
and conservatives as a whole.
This is wrong.
The fight should he against
the policies, not the personali
ties. of Newt Gingrich, Dit k
Armey K-Tex and the rest of the
House Republicans Also, we
must remember that not all
right-winger support the i on
tract
Many Republican senators
(and let's face it. the Senate is
the true battleground), have
fought the contract in some
capacity
Our own Mark Hatfield, ( hair
man of the Senate Appropria
tions Committee, gamed notori
ety as the sole GOP vote of dis
sension on the balanced budget
amendment, which led to its
defeat His partner. Bob Pack
wood. chairman of the Senate
Finance Committee, recently
said he would not support any
new tax cuts until the deficit is
reduced, which the House
Republicans are trying to do this
week
Many loading conservative
thinkers have also come out
against the contract Robert
Bork. who if his nomination was
not defeated would have been
the most conservative man to
ever sit on the Supreme Court,
fought the balanced budget
amendment because he felt that
it was unconstitutional.
Herbert Stein, who was
Richard Nison's chief et onom
ii advisor, eloquently discussed
the negative aspects of the con
trac t in a recent issue of The
Sew Republic
The Concord Coalition, which
is led bv the conservative's con
servative. former Sen. Warren
Rudman R N H . dismissed the
budgetary provision* of the con
tract as trickery meant to satisfv
public opinion rather than solve
the nation's problems
Unlike Bork. Stein. Rod
matin. Secretary of Labor Rolwrt
Reich and many other intellec
tuals. the arguments presented
here last week were not based
upon objective facts They were
mean, obnoxious, and the truth
was skewed for the sake of argu
ment
This should seem Strangely
reminiscent, because it was
almost exactly the type of debat
mg which the House Kepuhli
cans have used to bolster their
contract in the first place.
Those of us who are against
the i ontrnct should rise above
the bickering which we suppos
edly despise. As a contrast to the
new form of foammg-at-the
mouth political discourse, we
should hold ourselves to the
highest standards possible
There is no need for us to yell
and scream, for the facts are on
our side.
For example, the balanced
budget amendment, which Gin
grich and his colleagues have
given the catchy name, the "Fis
cal Responsibility Act," really
doesn't balance the budget at all
Page 32 of the contract states
that the amendment would
"require that total outlays for
any fiscal year do not exceed
total receipt* for that year " Sim
ply put, the government i annot
spend more than it takes in.
Then, on the same page, the cen
tral t states that "the resolution
defines receipts as all rtn eipts
except those derived from bor
rowing, and outlays as all out
lays except principal payments
on the debt."
I'll ink about it If you were
balancing your own budget, and
you had a problem borrowing
too much money (as our govern
ment does) wouldn't your task
be easier if you simply did not
include the money which you
run up on your credit cards as
income, and then excluded the
principal payments as an
expense?
This amendment is a |ok«, not
a solution
Instances sui h as this in<
widespread through the docu
ment, and this is what should be
fought No more st reaming, no
more misinterpretation. If the
American people are given the
fails which they deserve, in a
manner which is in their inter
est, Republican and Democrat,
conservative and liberal, they
will all understand the negative
implications of the "Contract
With America "
Primo A / Fontana is a colum
rust for thf Emerald.