Clinton's service plan

June 01, 1993

As with so many other Clinton proposals, the national service program is a case of inflated expectations (fueled by campaign rhetoric) meeting financial and political reality.

Candidate Clinton said, "We will say to hard-working middle class Americans and those who aspire to the middle class, we're going to guarantee you and your children access to a college education -- every one of you -- but if you take the help, you have to give something back to your country."

The actual administration proposal, released last month, has been criticized for its scope. That's understandable given the campaign promises, but the criticism is better directed at the program's uncertain financing mechanism.

As proposed, the national service plan falls well short of a "guarantee" of access to "every one of you" worried about meeting the cost of college. National service would start with about 1,000 participants in a pilot summer program this year and 25,000 participants next year, growing to 150,000 by 1997. But there are nearly 15 million college students in the country (more than 12 million undergraduates, the rest in graduate and professional schools). And the Clinton plan would provide $10,000 to be applied toward college after two years of minimum-wage service: enough to be a substantial help to students, but less than four years' worth of tuition even at most public colleges (never mind $100,000 or so for four years at a selective private institution).

So what we are left with is not a program to solve the problems of financing higher education. Maybe that's just as well. The federal government is in no position to create an open-ended entitlement program in which millions of students, regardless of income, could earn money for college.

The more modest program now offered by the administration still makes sense as a service program. It's good to get young people working, in the words of the administration proposal, to "address unmet educational, environmental, human or public safety needs."

What is questionable is the Clinton plan for financing the service program -- from a projected $4.3 billion in savings from making college loans directly rather than having the government guarantee student loans made by banks (for which the banks collect a fee). While there are studies showing that direct loans will save money, there are also studies showing direct loans will cost more money. The federal government is beginning a pilot direct-loan program, but doesn't yet have the results.

Direct loans are worth trying on a small scale, but it's foolish to spend $4.3 billion in "savings" before having a better idea that such savings are really possible.

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