The national service act slated for implementation in the fall is well-intentioned but flawed, several Harvard officials said yesterday.

The national service act, a version of which was passed on Friday by the House of Representatives, is expected to be passed by the Senate in the fall and signed into law by President Clinton, according to Ellen Guiney, chief education advisor to the Senate.

She said that no obstacles were expected to delay passage, as the bill was proposed by Clinton and passed in a previous form by the Senate.

Participants are required to complete 1,700 hours of service work a year in return for $4,725 to be used to meet tuition costs. Students can participate for one or two years and will receive stipends between $7,400 to $14,800 provided by both the government and the service program.

Another bill affecting financial aid, the direct lending bill, was passed as part of Clinton's economic package last Friday. The direct lending bill will mandate direct loans at wholesale rates from the government to students, instead of giving the money to intermediates who charge students retail rates, as is done under the current system.

While the direct lending bill will save students money, the cuts in federal financial aid funds made in order to compensate for the cost of the bill could hurt Harvard students, said Jane H. Corlette, acting vice president for government and community affairs, said yesterday.

"How [they will] pay for the program is a concern for us--we believe it will affect existing aid programs," Corlette said. "I think it just means that we'll have to come up with more of our own money for the students."

Corlette added that the money provided would be a great deal less than Harvard undergraduate tuition, which currently hovers around $20,000 per year. "It will certainly help--but how much help it will be for Harvard kids I don't know."

Gary A. Johnson, executive director of Phillip Brooks House (PBH), said he supported the spirit of the program but criticized it for not taking advantage of current volunteer service systems at colleges and universities such at PBH.

Corlette said she did not think that volunteer service during undergraduate years would count toward the program.

But Johnson said that Eli Segal, head of Clinton's national service committee, will very likely visit Harvard tomorrow to look at PBH.

"I think the piece that's missing is that it does not take advantage of the resources of higher education of all," he said. "It's a large omission from a bill that's small in scope."

The national service program will be limited to 20,000 people and $300 million in the first year, 33,000 people and $500 million in the second year and 47,000 people and $700 in the third year.

Johnson expressed concern that reducing the funding for work-study programs that support some students' involvement in PBH would penalize undergraduates.

He suggested putting PBH-like structures in smaller universities and community colleges. "Do it within institutions rather than adding extra cost," he said. "This is a wondrous and important vision, but it seems to me important that it's done comprehensively and in a quality of fashion so as not to discourage itself."

Other aspects of the new higher education financial aid bills were met with a more positive response at Harvard, though. Changes made by direct lending will save undergraduates money even if Harvard is not accepted right away to implement direct lending, said Elizabeth M. Hicks, assistant dean of admissions and financial aid for federal and special programs.

For example, interest rates of federal loans to undergraduates will now be capped at 8.25 percent instead of at the previous level of 9 percent, Hicks said. Interest rates on payments made by parents will be capped at 9 percent, down from 10 percent.

Corlette said between five and 10 percent of all loans will be made directly during the first year of the program, 30 percent the second year and eventually reaching 50 percent the fifth year of the program.

Hicks said direct lending will begin in the summer of 1994. The bill is expected to save $2 billion over 5 years.

"If Harvard applied, which we plan on doing, and if the application is accepted, 100 percent of loans would be under direct lending," she said. "[But] a likely option is that we" will keep people who have borrowed previously in that program.