A major provision in this bill is the extension of temporary authority of the Student Loan Marketing Association to consolidate various outstanding student loans into new Guaranteed Student Loans with longer repayment periods. This authority has been used in the past year on an experimental basis to see how it could address concerns about student debt burden and capability to repay loans.

Any lengthy extension and expansion of loan consolidation authority must be carefully studied and the costs fully understood before any final action is taken in legislation. Such a change in the current law would affect significantly how college costs would be financed, and under several options it could add hundreds of millions of dollars annually to the Federal budget. The Congress has been considering a variety of approaches to loan consolidation in recent months, but because of the uncertainty about long-term costs has wisely chosen to provide in H.R. 3394 only an interim extension of the current consolidation authority to November 1, 1983. This will provide an opportunity for the Congress and the administration to review loan consolidation options and costs over the coming weeks, so that the future of the consolidation approach can be carefully and fairly assessed.

It is primarily because of the responsible manner in which the loan consolidation issue has been handled that I am signing H.R. 3394. I find certain other provisions of this bill troublesome.

The Congress continues to reject our efforts to ensure that Federal spending on student aid, especially in the Pell Grants and subsidized Guaranteed Student Loan programs, is better targeted on those who need it most. Recent regulations published by the Secretary of Education relating to family contributions to the cost of education, to the amounts allowed for certain commuting students, and to the definition of independent student are all overridden by this bill.

The cost of education is primarily the responsibility of the family. The Federal Government has a role to play in helping needy students get a chance to receive a college education. This year we are spending over $6 billion on student aid, and the administration has sought to assure that these funds are used most effectively. The relatively modest rule changes promulgated by the Secretary and nullified by the bill would have helped concentrate available funds more on those who most need them to secure higher education.

I want to make clear that my approval of H.R. 3394 does not indicate endorsement of the provisions that would benefit the least needy participants in the student aid programs. Our Federal student assistance dollars are not unlimited, and we will continue to seek legislative and regulatory changes aimed at ensuring that they are spent where they are most needed.

Note: As enacted, H.R. 3394 is Public Law 98 - 79, approved August 15.