Nethercutt, Olson Tackle Complicated College Loans In Final Debate, Education Topic Not So Easy To Explain

George Nethercutt and Judy Olson spent their sixth and last debate Thursday much like their first one - arguing over what was a cut and what wasn’t in the recently completed Congress.

But when it came to the issue of education, one of the topics in the forum before the Spokane Downtown Rotary Club, nothing is as simple or quick as the candidates’ 30-second commercials or their two-minute debate responses.

When the pair were asked about the appropriate role for the federal government in education, the discussion quickly turned to college loans.

In speeches, at press conferences and again at the debate, Olson has accused Nethercutt of cutting student loans. As he does at all of his appearances, Nethercutt vehemently denied the charge.

“We’ve increased the volume of student loans,” Nethercutt told the 400-plus Rotarians gathered at the Ridpath Hotel. “That’s not a cut, that’s an increase.”

“Come on Congressman,” retorted Olson. “You voted to cut education by the biggest percentage ever in history.”

A check of the record shows that Republican Nethercutt is right that the volume of student loans are increasing.

But Democrat Olson is also right that Nethercutt and other House Republicans tried to make revisions in the federal student loan programs that many believe would have cost college students and their families more money.

Understanding how two seemingly contradictory statements can co-exist this election year requires some background on the federal student loan programs and the two-year fight over federal student aid.

Taxpayers subsidize two kinds of guaranteed student loans. Most are made by banks, but backed by the federal government. Others are made with federal money, loaned directly to students by certain approved colleges.

David Merkowitz, a spokesman for the American Council on Education, said House Republicans proposed a series of changes to student loan programs in 1995. Their budget resolution would have reduced program costs by about $10 billion over seven years. They initially wanted to abolish direct loans handled by colleges, and later proposed caps on the percentage of those government loans.

The changes could have made it difficult for students from families with poor credit ratings to get loans from banks, Merkowitz said.

Republicans also proposed eliminating a rule that allows students to avoid interest charges from the time they take out their guaranteed loan until six months after they leave school.

That would have increased the overall cost to students, and could have discouraged some from applying for college loans, Merkowitz said.

House Republicans later changed their proposal, by increasing some of the fees that lenders would pay and allowing students to keep the exemption from interest until six months after they graduate.

That package eventually was vetoed by President Clinton, who considered direct loans one of his key accomplishments in 1993.

Nethercutt, who voted for both proposals, has released a letter from the Congressional Budget Office to back up his contention that loans would not have been cut under either plan.

“Neither version of the bill would have changed the projected volume of student loans in any significant way,” June O’Neill, CBO director, wrote.

That’s true, but only half of the story, said Merkowitz, whose Washington, D.C., organization lobbied against the changes.

Guaranteed student loans are an entitlement. That is, they are distributed based on the need of the applicants. The volume of loans - the total amount of money borrowed - is increasing as more students apply and college costs go up, he said.

This year, there was no attempt to change the terms of student loans. In the closing weeks of the session, Congress and Clinton settled on a package that increased student aid. Nethercutt voted for that, too.

“It all goes back to the votes … what vote do you want to take credit for?” Merkowitz said.

, DataTimes