Pilot Program Introduces College Loans for Service

PRESIDENT Clinton is easing into the national youth service plan that was a highlight of his campaign.

On the 32nd anniversary of the Peace Corps, Mr. Clinton formally proposed the program he hopes will be both a modern GI Bill and a domestic Peace Corps.

Under the plan, students would be allowed to repay education loans through community service such as teaching, police work, or health care. The concept of financing education through service gained wide support during the campaign.

"All across America we have problems that demand our common attention," Clinton said in a speech at Rutgers University on March 1. "National service is nothing less than the American way to change America."

The president announced an eight-week "Summer of Service" pilot program for about 1,000 students in up to 10 communities. Funding for the kickoff program is part of Clinton's short-term stimulus package, which has not yet been passed by Congress.

"It's going to be difficult to do this as quickly as they want to," says Frank Slobig, director of policy and programs at Youth Service America in Boston. "The worst thing that could happen would be to do something too fast and have it be qualitatively bad."

No matter what, the program will not be cheap. Clinton is asking Congress for $15 million to fund the summer program. Over the next four years, the budget proposal calls for $7.4 billion to be spent on the national service program. About 25,000 participants are expected the first year, with more than 100,000 students taking part by 1997.

Clinton said he believes every student who wants to participate in the program will have that option within four years. Students could participate before, during, or after college and would receive a small stipend along with an educational benefit. Participants would also receive health and child-care benefits, if needed.

To encourage graduates to take lower-paying public-service jobs, Clinton is proposing an income-contingent loan repayment plan. Graduates could pay back their student loans over time as a percentage of their income.

Yet many of the plan's details remain unclear. For example, it has not been decided how much students could borrow or how much of a stipend will be offered during service.

Some labor unions are opposed to the plan because of concerns that low-cost workers could steal jobs away from union members.

Others are philosophically opposed to Clinton's national service initiative. "There's a presumption behind his program that somehow public service is better than private service," says Doug Bandow, senior fellow at the Cato Institute, a libertarian think tank. "It degrades the enormous amount of good that's done by people in the private sector."

Clinton said he doesn't want to create another government bureaucracy to implement the program and plans to rely on existing community service projects. "We'll work with groups with proven track records ... giving them the support they need," he said in the speech.

But Mr. Bandow calls the implementation problems "dizzying" and rejects the notion of decentralized administration by current service groups. "All these programs are very different," he says. "They are localized, they are under charismatic leaders. They work very well because they are narrowly targeted. The broader you make the program, the more difficult it is to make it work."