Making college possible.

• Author: Cohn, Jonathan
• Position: New student aid program proposed by Bill Clinton

One of Bill Clinton's most consistent crowd-pleasers on the 1992 campaign trail was his promise to make college more accessible to young Americans. To his credit, when Clinton got to Washington, he remembered the applause and proposed reforms that were historic in scope. This is the story of that landmark Clinton initiative--and a very damaging compromise the administration made that could potentially wreck it.

"You know and I know," Clinton has told audiences of educators and students, "that there are too many young people who go to college and drop out or defer going to college because they think they can't afford it." It was not ever thus. After World War H, the GI Bill put higher education within reach of millions of working class people who, before the war, had not even dreamed of going to college. Then postwar prosperity and the relatively low cost of college quickly made what was available to veterans available to everyone else. It was possible through the sixties, for example, to pay for tuition, room, and board with a little help from home and a job in the campus cafeteria. But by the seventies, inflation and academic extravagance were driving costs back up, and by the end of the eighties, we were clearly getting back to a situation not unlike the thirties. A recent UCLA national study found the median parental income of incoming college freshmen increased more than twice as fast as the median income of all families with children in the eighties, a clear sign that students from less affluent families were again getting shut out of higher education.

Because costs were going up so fast--tuitions rose at twice the rate of annual inflation in the last decade--the federal college loan program became critically important since students could no longer make it with help from their parents and working around campus. So students had to borrow more and more from banks and other lending institutions. Because students were graduating owing an average $10,000 for an undergraduate education and a staggering $35,000 for graduate degrees, they frequently defaulted, in part because the size of their monthly payments was fixed without regard to their incomes. And for those students (frequently from poor backgrounds) who borrowed to attend shoddy two-year trade and beautician schools that offered dismal job prospects despite grandiose advertising, the default rate reached as high as 50 percent.

Because the government guaranteed repayment, lenders had no incentive to vigorously collect student loans. The result? From 1988 to 1993, the federal government lost $14 billion to student loan defaults--a sum that has clearly given...