WASHINGTON, D.C. — Students nationwide might say they have a friend in Chuck Grassley.

The Republican senator from lowa was instrumental in ensuring that both undergraduate and graduate students are protected in the Senate Finance Committee’s version of Congress’ revenue reconciliation bill, popularly called the “tax bill.”

The bill, scheduled for debate on the Senate floor beginning Wednesday, includes two major provisions aimed at keeping students from the clenches of the Intemal Revenue Service provisions that do not appear in the version set forth by the House Ways and Means Committee.

The first provision allows taxpayers who are paying off qualified student loans to claim a deduction of up to $2,500 for interest that has accumulated on those debts. These “above-the-line tax deduclions,” as they are called in the proposal, could be claimed for each of the first five years of repayment.

It is estimated the proposed legislation would cost the federal government $1.071 billion over five years. The provision would restore tax breaks for students that were phased out by the 1986 Tax Reform Act.

“By restoring the deduction on interest on student loans, Congress can send a signal that we value higher education and recognize the financial responsibility assumed by most students,* said Grassley, the third-most senior rnember of the Senate Finance Committee. “We must help young people prepare to compete in a very competitive global economy.”

Grassley, with Sen. Carol Moseley-Braun, D-Ill., also sponsored a proposal to permanently extend section 127 of the IRS tax code. The section, now facing expiration, excuses students from counting as income the first $5,250 they receive in employer provided educational assistance.

Conversely, the House Ways and Means Committee’s version of the tax bill would extend the section until December, at which time students would be required to pay income tax on any financial aid they receive from employers. University employees as well as students employed elsewhere would be affected.

House Ways and Means spokesman Ari Fleischer made no apologies about the tough stand the committee took toward those seeking higher education. He conceded the cost of higher education is spinning out of control, but added that many students and their families have those costs off-set by means of grants, scholarships and university tuition waivers.

He also said though graduate students — especially doctors and lawyers — may be strapped while they are in school, they will be earning high salaries once they graduate. “We thought it was appropriate that those groups who are most privileged ought to be the first to pay.”

The estimated cost to the federal government of tax breaks for employer assistance is $3.522 billion over five years.

Representatives fiom the National Associatlon of Graduate and Professional Students joined with several members of Congress Thursday to publicly rebutt the House Ways and Means argument.

“At a time when the entire country is on a crusade to improve education, [House Ways and Means Chairman Bill Archer, R-Texas] and the Republicans on the committee are saying all students are not created equal,” said Rep. David Price, D-N.C. “That just doesn’t add up.”

John Gabrosek, communications chairman of lowa State’s Graduate Student Senate said an update on the tax legislation is to be the first order of business at Tuesday night’s Senate meeting.

“It doesn’t sound as bad as it originally did,” said Gabrosek, a gradute student in statistics. “At ISU I don’t think it will be as painful as at other schools. But it will still be painful. “

Gabrosek said the typical graduate student’s stipend at lSU is about $1,000 per month. He said the House’s tax legislation would take about $40-S0 of that each month — which doesn’t seem like much, he added — but which is “still a chunk, adding up to about $500 per year.

Cabrosek said he is optimistic that the final tax blll that is comprornised in Congress’ conference committee will include tax breaks for students.

He said the Senate will discuss the NACPS’ suggestions for lobbying, such as letter-writing campaigns and ways to contact state representatives.