Who exactly does Sen. Nancy L. Kassebaum think she is? The Kansas Republican who is leading the Senate Labor and Human Resources Committee's crusade to cut financial aid could soon become the Wicked Witch of the West to many students. We'd like to throw a little dirty dish water on this latest attack on government funding for education.

The Republican Congress's budget resolution for 1996 requires $10 billion in cuts to student aid. We've already declared this move one of the most ridiculous fiscal decisions in history, since it slashes into one of the most productive economic inputs--human capital. Despite an entire book written on the subject by Nobel laureate Gary Becker and dozens of other economists' faith in education as an instrument of growth, the Republicans have not exempted student aid programs from the budget ax.

Kassebaum has undertaken the task of cutting $10 billion in federal loans and grants with repulsive gusto. The most ludicrous part of her plan calls for colleges to pay a two percent fee on all federal loans. Perhaps the senator needs another lesson in basic economics, this time on efficient taxes.

When the exchange of a good (such as cigarettes or alcohol) has negative side effects, it is efficient to tax that good to compensate society for the side effects. But in the case of education, those effects are over-whelmingly positive, and thus society should subsidize the procurement of education rather than taxing it. Kassebaum's plan proposes the equivalent of a sin tax on a college education--could anything be more idiotic?

The Republicans also want to raise the minimum Pell Grant amount from $400 to $600. Since the total amount of money allotted to the program will not increase, this move will probably take grants away from students with small or moderate need.

This change, combined with a 0.9 percent raise in interest rates on PLUS loans and a $1.15 billion decline in overall lending, will negatively affect thousands of students around the country.

Harvard is better equipped to deal with government cuts than almost all other universities. We are fortunate that enough resources can be gathered to pick up this Republican-induced slack. But many other schools with smaller endowments will have to turn students away. Some that have been considering the abandonment of their need-blind admissions policies--even in the Ivy League--might not be able to resist any longer.

We have to wonder why education is getting such short shrift in our society today. As an investment, its potential for economic growth is unmatched. A college education has become an absolute necessity in the job market; why would the Congress try to lower the competence level of working Americans?

Even when budget cutting is so fashionable and arguably necessary, there have to be some exceptions. We hope the Congress will collectively realize the importance of student loans and reconsider its decision.