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A classic conservative tenet holds that one way government can serve the public better is by breaking government's monopolistic hold on public services and privatizing them.

This argument has been made repeatedly by proponents of voucher payments for education.

Under this system, instead of directly supporting public schools, government gives pupils and their families direct grants, which they can apply to a school of their choice.

It is thus surprising that in seeking to fulfill the Contract With America, Rep. John Kasich, chairman of the House Budget Committee, wants to end the interest subsidy for college tuition loans.

This subsidy, which reduces borrowers' interest rate and extends their payment schedule, makes borrowing for an education affordable. Eliminating the subsidy would destroy the only successful educational voucher plan: the loan program for college students.

As if that's not bad enough, Gov. George Pataki also wants to cut tuition assistance, which reaches nearly 300,000 students -- fortunately, some legislators are beginning to disagree -- and to eliminate all the equal opportunity programs in higher education, which benefit 30,000 poor college students, many of them African-Americans.

His targets are the Higher Education Opportunity Program, the Education Opportunity Program and the Search for Education, Elevation and Knowledge program.

Every college student who gets a federal or state loan or grant needs further scholarship aid from any source that is willing to help.

In New York, private colleges and universities educate more than 300,000 residents each year. Less than one-fifth of the cost of educating students at these institutions is borne by the taxpayers.

Of $41 million typically spent each year by Bard College, only $780,000 comes from Albany and only $1.06 million from Washington. But three-quarters of Bard's students benefit, because these funds help them borrow to pay for college. Without this support, many could not attend Bard.

If they enrolled at state universities, it would cost taxpayers more, because the public directly foots the whole bill for the state university system.

Nearly one-third of the students at New York's 136 independent colleges and universities come from out of state. These students bring dollars into local communities -- dollars that help pay more than 100,000 people employed at these institutions.

Federal and state dollars are crucial to these institutions. If, regrettably, the state budget must be cut and taxes reduced, then, alas, tuition at the state university should be raised moderately before aid to private institutions is cut.

Except for the City University of New York, most students in the state university system are middle class and could afford tuition fees that are closer to those charged at private institutions. The state universities need to experience the financial discipline that private colleges and universities live by.

Cutting programs that encourage youth, especially the disadvantaged, to get skills and training beyond high school is economic and social madness.

The Congress and Pataki ought to invest more money, not less, in supporting higher education, particularly private colleges and universities.

LEON BOTSTEIN is president of Bard College.

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