Education Gets Big Boost Under Budget Deal

WASHINGTON —  Middle-class college students and their families are among the winners under the budget deal between President Clinton and congressional Republicans, receiving billions of dollars in tax cuts over the next five years to reduce the cost of higher education.

The nation’s neediest students would also benefit, with moderate increases in both the amount of aid and the number of students receiving it.

The agreement, pledging $35 billion in tax cuts for higher education over five years, would be particularly beneficial to California and other states with large numbers of people enrolled in colleges and universities, analysts say.

There is even a significant increase in funding for elementary- and secondary-school programs, including money to begin training 1 million tutors whose goal will be to teach every child in the country to read by the end of the third grade.

Unless the deal unravels or the economy plunges into unforeseen difficulties, the package not only will provide what appears to be the largest-ever increase in federal spending on education but also will offer substantial help on what millions of families now see as a terrifying problem: paying for the advanced education their children will need to help them to prosperous lives in the 21st century.

“Bill Clinton has never said he wants to be the education president, but he is going to be the education president. He will lay claim to having done more to advance support for elementary and secondary and higher education than any president in the nation’s history,” Terry W. Hartle, vice president of the American Council on Education, said Saturday. “The fact is, this Congress will probably turn out to be the education Congress if this deal holds up.”

Yet the agreement’s provisions on higher education are expected also to set off a major political struggle because of the heavy tilt in the direction of middle- and upper-income families.

Advocacy groups representing the poor, as well as many university officials, are already preparing to lobby to shift more money to the neediest students and away from middle- and upper-income families.

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“When you look at who would benefit, you’re talking about middle-income families, those who possibly would be sending students off to college anyway,” said David D. Mohning, financial aid director for Vanderbilt University. “If our neediest students were being helped to the maximum extent, then this would be a very positive step.” But inflation has eroded aid for poor students over the last 25 years, and it needs to be raised more than the agreement calls for, Mohning said.

Others want to make interest on student loans tax-deductible again, which would require curbing other tax benefits. “This would be a wonderful benefit for the next generation going out into the 21st century,” said Alan G. McIvor, vice president for enrollment services at Beloit College in Wisconsin. He noted that student indebtedness has skyrocketed, while salaries for entry-level jobs for college graduates have not.

Still others hope to convert some of the proposed tax cuts into special tax-sheltered savings accounts for education.

What opens the door to a struggle over such competing ideas is the fact that the budget deal lays down basic principles, but it leaves decisions on critical details to be determined through the normal process of legislative give and take.

In the coming months, as details of the fiscal 1998 budget are hammered out in congressional committees, on the floor of the House and Senate and in negotiations with the White House, advocates of the various proposals--as well as representatives of public and private institutions and other interest groups--will lobby to influence the final package.

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The starting point will be the basic educational elements of last week’s agreement, which administration officials and other sources say include the following:

* Over the next five years, $35 billion is to be provided for individual and family tax cuts designed to offset the cost of higher education. Some of these “revenue expenditures” would take the form of tax credits; some would be deductions. How much money would go to each, what eligibility rules would apply and what other ideas might be adopted remain to be decided.

Clinton has proposed giving a $1,500 tax credit for each of the first two years of college, provided the student maintains a B average. He has also proposed giving families up to $10,000 per year in tax deductions for higher education tuition and fees. In both cases, income eligibility caps are set relatively high, and critics want to lower them to finance other benefits, noting that tax breaks are more likely to benefit middle- and upper-income families than the poor.

* Maximum individual Pell grants, the federal cash awards for the most financially needy students, would be increased to $3,000, from the present maximum of $2,700. Because most students get less than the maximum and total spending for Pell grants would rise by $1.7 billion, almost 350,000 more needy students would receive help, officials say, which would push the total to 4 million.

Critics note that while this would be the largest increase in 20 years, the value of Pell grants has eroded so much that the maximum award would have to be raised to $4,000 just to get back to where it was when the program began in the 1970s.

* The education budget for fiscal 1998 would grow by $3.2 billion, a 12% increase. That would include the entire $2.9 billion Clinton requested, plus $260 million to launch “America Reads,” the program to train tutors and parents to help young children master reading.

The deal also embraces expansion of the Head Start program, with a goal of reaching 1 million children by 2002, and would boost federal aid to help schools pay for innovative technology.

* SENIORS RELIEVED

Budget deal would avoid huge cuts to Medicare, Social Security. A23

* RELATED STORIES: A22,A25