Education’s Caught in Cash Squeeze : Schools: Tight U.S. budgets have made financing a growing problem, especially for graduate students. Experts see harm to society.

WASHINGTON —  For years, Tricia Pitton has wanted to earn a doctorate and teach English at a university. Last year, with the enthusiastic support of her professors, she began applying for Ph.D. programs in literature.

But this month, as universities open their doors to a fresh batch of students, the 28-year-old Pitton will not be among them. The primary reason: She was unable to find the money, either in loans or grants for graduate education, and instead has gone back to work.

“I was ready to make the commitment to graduate school, I did everything in my power to make it happen, but I couldn’t even borrow enough,” she says. “Now I’m trying to walk away from this without a sense of failure.”

Financing has been a growing problem for many students in recent years, but some of the toughest blows have fallen on graduate students--those, such as Pitton, who want to continue their education beyond the standard four years of college.

Many educators fear that the cutbacks could hurt society over the long term, forcing bright young people to prolong--or in some cases abandon--efforts to earn their doctorates, or discouraging them from entering academia.

Recent studies show that ever since the early 1970s, there has been a steady increase in the percentage of students pursuing professional degrees in law, medicine or business, and a decline in the percentage of students seeking academic degrees.

“We’ve had a draining away of some of the ablest people into the professions and business,” says Michael I. Sovern, president of Columbia University--at the very time that many anticipate a surge in demand for university professors in the mid-1990s.

To be sure, overall statistics show that government support for graduate education actually has mushroomed in recent years, surging to $7.3 billion in 1986 from only $1.9 billion in 1974, according to figures compiled by the Department of Education.

But critics say the aggregate figures may be misleading. The Education Department statistics show that the bulk of the federal support is now in the form of guaranteed loans rather than outright grants.

In fact, only 27% of all graduate students get any help from Uncle Sam, either in grants or loans. Another 35% receive aid from their own universities. And 38% get no financial help at all.

And recent budget cuts--and changes in the tax law--have cut into what benefits they do receive. The 1986 Tax Reform Act, for example, required for the first time that students pay taxes both on their income from fellowships and on the tuition grants they receive.

“Graduate education was absolutely savaged by the (Ronald) Reagan Administration,” said John Groch, a University of Iowa graduate student who watched his fellowship dwindle during most of the 1980s.

Graduate study is a relatively new development in American education. Although many of the nation’s universities were founded in the 17th and 18th centuries, it was only a little over 100 years ago that even a few of them began formal doctoral programs.

Even until the end of World War II, graduate education was a privilege largely for the rich. The first big break for the less-privileged came with the GI Bill at the end of World War II, under which the government paid education costs for returning war veterans.

But graduate education really began to blossom in 1956 after the Soviet Union’s launching of Sputnik, the world’s first space satellite, spawned the first large-scale federal support for higher education.

Joseph Kett, a University of Virginia professor, recalls that after Sputnik, both government and private foundations began pouring money into graduate education. The number of Ph.D.s “was greatly increased,” Kett remembers, creating a Ph.D. glut in the 1970s.

In recent years, however, tight federal budgets have forced Washington to cut back sharply on support for higher education, targeting what remains of such aid primarily to undergraduates from low-income families.

Support for middle-income students--particularly graduate students--was squeezed, forcing many universities to rely on teaching assistantships under which graduate students earn tuition credits for teaching undergraduate courses. But such fellowships often burden graduate students with heavy teaching loads that cut into their own studies.

Some graduate students have rebelled, unionizing themselves just like other university employees. A two-day strike by graduate students at UC Berkeley last year forced authorities to shut down about 66% of the university’s undergraduate courses.

Graduate students number a scant 1.3 million, compared to 10.6 million undergraduates enrolled in 1988. And they are widely dispersed among universities and disciplines. Moreover, conditions--and grievances--vary sharply among different subject areas.

But many educators view them as an important link to the nation’s future productivity--those who become its doctors, scientists, policy analysts, judges, social workers and university professors.

Graduate students “are some of the most important people in the country,” asserts John Vaughn, director of federal relations at the Assn. of American Universities, the man in charge of the organization’s graduate education program.

Even the Bush Administration is unhappy with the state of the current system.

When the Higher Education Act comes up for reauthorization this winter, the Department of Education is expected to ask for drastic changes in the academic and financial structure of higher education.

“I can promise you one thing,” says Leonard L. Haynes, assistant secretary of education for post-secondary education. Any new system “will look nothing like it does now.”

But with the continuing tight budget situation, few analysts expect the government to increase its aid levels significantly.

As a result, universities increasingly are beginning to try to change the way they use existing funds. Some are granting “dissertation fellowships” to doctoral candidates that free them from teaching so they can concentrate on finishing their dissertations.

Others are experimenting with four-year fellowships for those who qualify academically, in an attempt to reduce students’ fears that their grants may be cut off before they have completed degree requirements.

Barry Bluestone, a Boston University economist, has proposed using money in the Social Security trust fund to make loans for graduate education; students later would repay the loans through payroll deductions.

But critics point out that existing student loan programs have suffered from unusually high rates of default--a factor that has dampened public enthusiasm for expanding the current program.

Few expect the Bluestone plan to catch fire, and altering the way universities distribute existing monies means that some students will be squeezed--such as Tricia Pitton was this year.

“In order to supply greater support to students, we have to reduce the (total) number of them,” Columbia University’s Sovern explains.

One technique tried at Columbia has been to ask students to take out loans on their own to cover the first year or two of their studies in the hopes that if they do well, they will qualify for university fellowships later.

“The person then has to take out loans and essentially place a bet on himself or herself,” Sovern says.

To be sure, taking on extra $50,000 in debt is not likely to be a problem for students in programs such as law and medicine, who are likely to be able to earn enough as a result of their advanced degrees to repay their loans.

But for others--particularly those who are in training for less-lucrative academic professions, the debt burden can be overwhelming, often forcing them to jettison their plans to become academics.

When David Winkelmann entered the University of Nebraska in 1981, he was planning to spend his career in American intellectual history. But he grew tired of “the fact that I was consistently broke.” He later switched to law school and practices in Iowa City, Iowa.

One impact of the cash squeeze has been to send more students from middle-income families to state universities, straining state budgets and making it all the more difficult for state-run schools to allocate money for graduate study.

“The state Legislature can be very short-sighted,” Anne MacLachlan, a graduate placement adviser at UC Berkeley, complains. Like the federal government, states are often more concerned with undergraduates.

The big battle may come next winter, when Congress considers renewing the Higher Education Act. Lobby groups already are gearing up to press lawmakers to restore money for scholarships, teaching assistantships and research assistantships for doctoral students.

But Columbia’s Sovern insists that the real solution is a matter of principle.

“The erosion of the commitment (to make higher education available to everyone) is a national tragedy,” he says. “The public has to be made aware that their own children will be disadvantaged and the nation will be disadvantaged vis-a-vis the rest of the world.”

Tricia Pitton would agree.