Despite praise received from SIUC officials about the federal direct lending loan program, congressional budget battles are putting direct lending in jeopardy of being cut back or eliminated all together.

Federal student loan interest subsidies are also on the budget chopping block, meaning students might have to start paying the interest on federal student loans while in school.

These GOP-led proposals are drawing fire from Democrats on Capitol Hill who say they understand the need to cut the budget, but don’t understand why student aid should suffer.

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Congressman Jerry Costello, D-Belleville, said under the GOP plan college students will have less money while in school and have to pay back more when they leave school.

This doesn’t make sense when the Republicans are proposing a $9 billion increase in defense spending, Costello said.

The increase in defense spending and a proposed $245 billion tax cut are two examples of what Costello calls a blatant attempt to take money away from the people who need it the most and give it to those who need it the least.

But Bruce Cuthbertson, a spokesman for House Budget Committee Chairman John R. Kasich, R-Ohio, said the cuts are necessary and Democrats are trying to scare people into thinking the cuts are worse than they really are.

We have a $4.7 trillion debt, Cuthbertson said. That’s a lot of zeros. If we don’t start to pay off that debt then the dream we want to pass on to our children will become a nightmare.

(Republicans) don’t see anything wrong in asking students to pay a little more in order to pay off their loans, because they have a higher earning potential when they leave school.

Derek Lick, a spokesman for Democratic HBC member Martin Sabo, D-Minn., said he understands the need to cut back, but said the priorities of the Republican proposals are mixed up.

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Education is important to the future of this country, Lick said. The argument that students can afford to pay the interest after they graduate has some merit, but (Republicans) are going to extremes.

Lick said a loss of interest subsidies might cause prospective students to view higher education as too expensive and forego college completely.

The House Economic and Educational Opportunity Committee will decide the fate of the subsidies and the direct lending program.

In a press release issued three weeks ago by the EEOC, Chairman Bill Gooding, R-Pa., said the direct lending program does not save money as President Bill Clinton said it would, but will actually cost taxpayers over $1.5 billion over the next seven years.

Gooding criticized the president’s direct lending plan in the press release, saying it turned the Department of Education into one of the nation’s largest banks.

But White House Spokesman Josh Silverman said just the opposite, that the direct loan system saves taxpayers millions of dollars by eliminating bureaucracy.

The president disagrees whole-heartedly with the Republican statement that this is a money-losing program, Silverman said. Until the president sees something that goes along with his views on educational aid funding, he will veto the budget resolution as it stands.

Financial Aid Director Pam Britton, said from her vantage point, she cannot see how the direct lending program is losing money.

Direct loans are so much more streamlined and efficient than anything we’ve ever done before, Britton said. Also removed are the lenders and guarantee agencies, eliminating the partners in the students loan process who collect large agency fees.

Lick said he suspects Republicans may be influenced by the banking industry and are being pushed toward eliminating the direct lending program.

If I were a bank, I would be fighting very hard against direct lending because student loans are a winner for banks. They are guaranteed, so the banks know they will always get their money back, Lick said.