Nobody who has to pay Harvard term bills was happy when Harvard recently announced a $500 increase in tuition, room and board costs for next year. However Harvard will cushion the annual blow by also increasing its financial aid awards so students on the bottom of the income scale will be able to cope with the increase. Those in upper income levels will probably just dip a little further into their bank accounts for fair Harvard without having to skimp much on spending elsewhere.

But students in the middle income range who do not qualify for any of the various financial aid programs are feeling the pinch of bigger term bills. This applies particularly to families with several children to put through college. As college costs around the country continue to rise, fewer middle income students are going to college, and even fewer are coming to higher-cost schools like Harvard.

Harvard has been concerned about the decline in the percentage of middle income students who actually come to Harvard once they are accepted.

Harvard recently implemented the Parent Loan Plan (PLP) which enables parents whose incomes range from $15,000 to $50,000 to pay tuition in monthly installments over eight years. First offered to the Class of '80, the program has helped to increase the percentage of middle income students who come to Harvard after being accepted.

The yield among accepted students in this middle income range was about ten percentage points lower than the yield for other income levels, and the PLP has helped raise the yield a few points closer to the average yield of about 73 per cent.

R. Jerrold Gibson '51, director of the Office of Fiscal Services, says the success of the PLP shows that "education is important enough to middle-income parents that they are willing to pay if we can figure out some way to help them."

In an effort to find ways to help those hard-pressed parents, Congress is currently considering two different financial aid packages that would give families in the $15,000 to $25,000 income range the first long-awaited break in financing tuition costs. One proposed bill would ease the financial burden through a $250 tax credit, while the other would increase funding for existing financial aid programs and earmark some of that money specifically for middle income families.

The question at this point is not whether Congress will pass an aid package for middle income students, but which plan it will pass. Gibson says educators are debating whether or not middle income families really are worse off than they used to be. He points to figures showing income after taxes rising faster than college costs as an indication that parents may not be as badly off as they think they are. But families have new expenses, like skyrocketing energy costs, while at the same time the tight job market makes college seem a necessity these days rather than a desirable option, so a comparison of parents' relative ability to pay is difficult.

But the debate does not seem to interest Congressmen who, in an election year, don't want to anger voters who think they need aid. Congressmen are finding the increase in the Social Security tax that passed in December to be immensely unpopular, and they would like to return some cash to the pockets they recently picked.

The decision about which package--the tuition tax credit or the student aid bill--to invest in is turning into a power struggle on Capitol Hill as both sides race to gather supporters and maneuver into position for the decisive votes. Either option means asking for the largest one-time increase in federal aid to education since 1956. Both packages call for about $1.5 billion in additional aid by 1980, which is almost half of what the federal government currently spends on higher education. Supporters of the student-aid bill say they have an advantage here, however, because they are not asking for any more money after 1980, while the tax credit would cost $5.29 billion by 1983.

While many versions of the tax credit bill have been introduced, the one sponsored by Sen. William V. Roth (R-Del.) is getting the most attention. Under this bill, financially independent students and parents of dependent students in undergraduate or post-secondary vocational programs would be eligible for up to a $250 tax credit each year the student is in school. The credit, which would go up to $500 in several years, would apply to tuition and instructional costs, but not to room and board expenses. Another bill sponsored by Sen. Robert Packwood (R-Ore.) and Sen. Daniel P. Moynihan (D-N.Y.) would apply to tuition costs at private elementary and secondary schools as well.

The student aid package was originally proposed by President Carter. Sen. Clairborne Pell (D-R.I.) and Sen. Harrison Williams (D-N.J.) are leading the fight for a somewhat modified version of the bill in Congress. The bill as it stands now would increase the maximum award under the Basic Educational Opportunity Grant program (BEOG) and would extend eligibility for those grants to the $15,000 to $25,000 income range for the first time.

The bill also adds money to the Supplementary Education Opportunity Grant program (SEOG) funds that individual schools would allocate mostly to middle income students. The College Work-Study Program would get an extra $50-70 million and the Guaranteed Student Loan Program would be increased so that all students would be eligible for federally subsidized low-interest loans no matter what their income level.

Most of the debate over the two packages centers around which will most efficiently help those who are most in need. Both sides claim to have the winner. The virtue of the tax credit is the ease with which taxpayers can claim the benefit simply by answering another question or two on their tax forms. The benefits from the student-aid bill would only go to those who knew about the different federal programs and took the time to apply.

But opponents of the tax credit say the credit isn't as simple as it looks because the Internal Revenue Service (IRS) would have to develop a complex monitoring sector to keep track of essentially the same data that the Office of Education is already collecting to administer its financial aid programs. Administrative costs would be great, and unless the program was watched very closely, it would be open to a large amount of abuse and inaccuracy in granting the credit.