Swing toward defense seen in '82 budget plans; Student loans top list of proposed trims by cost-cutters snipping at Education Department

If you want a preview of one way the Reagan administration may cut federal spending, look at the Department of Education's proposed 1982 budget. The budget doesn't ask for less money than its 1981 allocation. In fact, spending would go up 11 percent, to $17.1 billion. But the cost of student loans is held down by a method Republicans may apply with more force to other assistance programs.

When it began in 1977, the federal cost of the subsidized Guarantee Student Loan program cost $367 million. The program is so popular that, unchanged, it would cost the federal government $3.2 billion by 1985.

President Carter's farewell budget would cut the rising cost by making it more difficult for students to qualify for the loans, and by forcing students to shoulder some interest burden while they're still in school.

President-elect Reagan has said he wants to trim "entitlement" programs at the outset of his administration. "Entitlement" programs, such as student loans , hand over money directly to citizens. Such programs mentioned for particular scrutiny include unemployment benefits, food stamps, and retirement pay for federal employees.

The Reagan team believes that tightening eligibility standards is a good way to cut the cost of such programs. Many federal activities may undergo the same transformation as Guaranteed Student Loans.

The Department of Education itself may undergo an even greater transformation -- and disappear.

"Frankly, I am appalled that anyone would seriously propose to undo this work of transition and administrative reform," said Secretary of Education Shirley Hufstedler at a going-way press conference.

Even though the total student population is going down, the Department of Education's budget is going up. This is so because "a significant percentage of eligible and needy populations are currently not being served," according to the Carter budget.

One major legislative proposal included is a youth employment and training act, designed to make underprivileged youth more employable by teaching them basic literacy and mathematical skills.

This legislation, if enacted by Congress, would cost $900 million. Other major expenditures for needy students would include $154 million for education of the handicapped, up 9 percent; and $316 million for Title 1 grants for the disadvantaged in local school systems.

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