President Clinton proposed a $1.84 trillion federal budget for the 2001 fiscal year Monday that could have a dramatic impact on higher education.
Under the new proposal, federal student-aid programs, financing for university-based research and funding for arts and humanities would be increased.
Clinton’s plan would provide the neediest students with significant increases in federal student-aid programs. It would also broaden tax breaks aimed at helping middle-income families pay for college.
“Any increase that will help students finance their education is great,” said Nancy Sinsabaugh, interim director for the University’s Office of Scholarships and Financial Aid.
Sinsabaugh said the biggest student benefit is increased funding for grant programs because students do not have to pay the money back later.
Pell Grants, a primary source of college funding for low-income students, would increase by $200 per student under Clinton’s plan.
All federal student grant and loan programs would have an increase in funds allowing 217,000 more students access to grants, loans and work-study programs.
“I think Clinton’s proposal shows a real commitment to the importance of higher education in our future by making it the cornerstone of his final budget proposal,” said Phil Lewenstein, director of communications and legislative service for the Minnesota Higher Education Services Office.
Additionally, Clinton’s proposal includes a 10-year, $30 billion College Opportunity Tax Cut.
The tax cut would give students and their families the option of a tax deduction of up to $5,000 per year in 2001 and up to $10,000 per year in 2002.
Clinton said caps on federal spending should be removed to help finance an expansion of 8 percent for university-based research, bringing the total to $17.8 billion.
The expansion would include large increases for physical science and computer research, the National Institutes of Health, and the National Aeronautics and Space Administration.
The National Science Foundations would receive its largest increase ever and funding for information technology would increase 35 percent.
Clinton also proposed a spending increase for the National Endowment for the Arts and the National Endowment for the Humanities.
The proposal includes $150 million for each endowment.
Mark Gleason, vice president of the Minnesota Humanities Commission, said the increase is much needed.
“It will get us back to the $176 million budget the National Endowment for the Humanities had before it was cut in 1994,” said Gleason.
He said the increase for arts and humanities is very symbolic to both Democrats, Republicans and their priorities.
Benefitting the most from Clinton’s proposal, state culture and history programs would gain a 31 percent increase.
Lastly, Clinton proposed a funding increase for AmeriCorps, which would allow the program to fund 62,000 participants.
AmeriCorps gives each participant a voucher to help pay for college expenses or student loans in exchange for a year of full-time community service in the United States.
Although students stand to benefit from Clinton’s proposal, banks and other lenders would suffer a reduction in profit.
The interest rate that lenders earn on student loans in repayment would drop from 7.9 percent to about 7.6 percent. In addition, the profit margin earned on loans would be reduced by three-tenths of a point.

— The Chronicle of Higher Education contributed to this report.
Liz Bogut covers faculty and welcomes comments at [email protected]. She can also be reached at (612) 627-4070 x3217.