Seventy-five percent of students participating in the federal direct loan program may be forced to turn to private lenders for their student loans after House and Senate leaders agreed on a loan compromise Wednesday night.

David Carle, spokesperson for Sen. Paul Simon, D-Ill., said Republicans agreed to cap direct lending at 10 percent of the total student loan volume. Simon spokesperson Christopher Ryan said the cap was a partisan item Republicans supported while Democrats fought against it.

Senate leaders proposed a few weeks ago that the program be capped at 20 percent of the loan volume while the House wanted to eliminate the program completely.

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The possible cap is a portion of the 1996 budget bill the two branches must agree on before it is presented to President Bill Clinton who may approve or veto the budget.

Proponents of direct lending contend that by cutting bank profits and paper work out of student loans, the program will save students and taxpayers money. Supporters also say students receive their money quicker and have more repayment options with the system.

Some of the program’s opponents cite a Congressional Budget Office report that claims direct lending will cost taxpayers $1.5 billion.

Simon, who helped develop direct loans, said in the Congressional Record that the proposed cap only looks out for banking interests and not in the interests of students.

If we want to have a banking assistance act, let us call it that, Simon said. If we want to have a student assistance act, then let us try and see what we can do to help students.

Clinton, who opposes the cap, has threatened to veto the budget bill because of disagreement with Republicans over several items including welfare reform, Medicare and Medicaid.

Carle said the cap could be another item Clinton tries to gain concessions for if he vetoes the budget.

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SIUC Financial Aid director Pam Britton said she hopes Clinton stands up for the program.

I’m not surprised, but I’m not happy with it, she said. We continue to hope for a Presidential veto.

Britton said there should be no cap on the program and that educational institutions should have the choice to decide if they want to participate in direct lending. Sen. Carol Moseley-Braun, D-Ill., and Simon echoed this position.

Terry Hartle, vice president of the American Council on Education, a trade group representing almost 2,000 Universities said, there is no plan to determine what institutions will be allowed to participate in the program if it is capped. He said there is speculation, however, as to how the schools would be chosen.

He said there could be a random selection from a group of schools that want to participate, or institutions who used the program since its first year could get preference for participating again.

Britton said SIUC did not offer direct loans during the program’s first year but that the first year schools only account for five percent of the total loan volume, allowing other schools to participate.

She said the vast majority of schools, even those that do not use direct lending, oppose the cap.

SIUC officials recently approved signing on to a letter drafted by the American Council on Education that calls for Congress and the president to allow schools to choose if they want to participate in the program.