Federal funding for higher education will largely be spared from the Congressional budget-cutting axe in the latest incarnation of the 1996 budget, according to compromises likely to pass both the House and the Senate.

Even though the levels of funding will likely stay the same, regulatory changes may make loan funds more difficult for Harvard to distribute, according to James S. Miller, Harvard director of financial aid.

Because it was unable to compromise on a year-long budget for 1996, the federal government has been operating on a series of continuing resolutions, the latest of which is set to expire in the middle of this month. Despite massive threats to funding last fall, spending on most higher education programs has been immune to cuts in the last two continuting resolutions.

Both houses have committed to increasing maximum Pell Grant awards from $2,340 to $2,440, raising student loan funding overall in the next several years and maintaining funding for work-study and Supplemental Educational Opportunity Grants.

The most contentious issue for higher education in the latest continuing resolution has been the Direct Student Loan program, advocated by President Clinton, which allows the Department of Education (DOE) to coordinate private sector loans to college students.

The size of financial aid packages for Harvard students will not be affected regardless of the fate of the direct lending program, Miller said.

Without the program, however, the process of awarding and collecting loans will be more difficult, he said.

"We like the direct lending program," Miller said. "Administratively it's much simpler, and it allows us to get aid to students much easier and faster."

If the program is cut, Harvard will still have access to the same amount of federal funds, Miller said. It will just have to go through less-direct channels to get them.

Congressional Republicans have labeled the program a wasteful, "big-government" initiative and attempted earlier this year to cap direct lending to 10 percent of total student loan volume.

Democrats, on the other hand, laud the measure as cutting red tape and giving students easier and less-costly access to funds for higher education, advocating a cap at 40 percent of loan volume.

According to the General Accounting Office, direct lending now makes up 31 percent of total student loans.

Republicans, interested in scrapping the program altogether, have taken the offensive, attacking the DOE's ability to manage such a program effectively. The GOP points to what it sees as a recent failure by the DOE in distributing and processing the Free Application for Federal Student Aid (FAFSA).

The Republican-controlled House Economic and Educational Opportunities Committee (EEOC) claims that the DOE botched the distribution of FAFSAs this year by printing them a month later than it did last year, failing to distribute them quickly and then lying about the reasons for the delay.

The DOE says that these allegations are misleading and bely a misunderstanding of the process by which aid is processed and delivered.

Regardless of the political squabble, Harvard will be able to make all of its aid awards on time, Miller said, because the College relies heavily on the College Scholarship Service's Financial Aid Form and not as much on the FAFSA.

The same is not true for many colleges across the country, he said, where many students will have to wait to find out how much aid they will receive