University of Virginia Library

Shannon Expresses Opposition
To Education Opportunity Bank

By Anson Franklin
Cavalier Daily Staff Writer

A recent proposal put forth
by the Panel on Educational Innovation
of the President's Science
Advisory Committee that
would establish a bank to make
long-term loans to college students
has brought sharp opposition
from college officials around
the nation, including University
President Edgar F. Shannon.

Shortly after the panel released
the proposal last month,
the National Association of State
Universities and Land-Grant Colleges
and the Association of
State Colleges and Universities
issued a joint statement in sharp
opposition to the plan.

Chairman

Mr. Shannon is chairman of
the executive committee of the
State Universities and Land-Grant
Colleges Association.

If the plan is put into effect—
it was not officially proposed for
implementation, but for "serious
consideration"—a bank would
make loans to cover the cost of
a student's education.

The loan would be repaid by
withholding the borrower's income
tax at the rate of about
one per cent of his gross income
per year, over a period of about
30 years.

Self-Sustaining

This, the panel said, would
make the bank self-sustaining.

A borrower would also have
the option of withdrawing from
the plan at any time by paying,
in lump sum, the amount borrowed,
plus interest compounded
at six per cent, with credit for
payments made earlier.

Such an Educational Opportunity
Bank, the panel said,
would "increase the extent to
which students can take responsibility
for their own education,
instead of depending on a 'free
ride' from either their parents
or the government."

The panel said the bank would
also:

—increase the number of college
students from low-income
families;

—help public and private institutions
to improve the quality
of education by charging tuition
closer to the full cost;

—enable every student to go
to an institution suited to his
need and ability regardless of his
financial situation; and

—provide relief to middle-income
families, many of whom
find they cannot, in the face of
rising costs, give their children
freedom to attend whatever college
for which they can qualify.

Shift Responsibility

The Collegiate Press Service
reported that Mr. Shannon said
"Our Fundamental concern is that
this proposal would shift the responsibility
for financing higher
education to the student. Education
is essential for society's own
self-interest and should be the
responsibility of society."

Mr. Shannon was out of town
yesterday and could not be
reached for further co.

According to Paul Saunier Jr.,
assistant to President Shannon
for University relations, however,
the main opposition to the plan
arises from the belief that society
should help educate its students,
since society benefits from it.

Mr. Saunier said that the plan
is vague in describing how the
bank would be financed. In one
part of the proposal, the panel
said the bank would be self-sustaining,
but in another section
the panel suggested that it might
be subsidized by the government.

Present System

As it stands now, higher education
is subsidized by the state
governments, a plan which is
favored by those who oppose
the proposal. The panel indicated,
however, that one purpose of the
bank would be to slow the growth
of state support of education.

The rapid rise of tuition that
would be borne by the student,
then, would force most middle
and lower income families to
borrow from the bank. This
would force them to enter into
"life-indenture," say the opponents.

The opponents argue that repayment
of the loan would be
based on the borrower's subsequent
income, so lower earners
would end up paying only
part of their loan, while higher
earners would conceivably pay
back more over the 30 year span
than they borrowed.

Mr. Saunier said this would
discourage students from more
affluent families from using the
bank, while low earners such as
ministers and teachers would feel
a sense of lost honor or pride
since they would not be able to
repay the entire loan. He thus
questioned whether the bank
could be self-sustaining.

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