WASHINGTON - The House approved, 397 to 28, a call for limiting President Clinton's plan for direct lending to students to 4% of the market.

The nonbinding measure, sponsored by Rep. Bart Gordon, D-Tenn., essentially instructs the House conferees who will negotiate with the Senate on a final deficit reduction package.

"It was a referendum on whether the House wants a broad direct-lending program," said Jay Harris, legislative representative for Savings and Community Bankers of America. "This shows they are not willing to just jump into it without a test."

Even if the conferences agree to limit the direct-lending program to 4%, they would almost certainly have to make other cuts in student lending that would affect banks and thrifts.

"I'll make no bones about it - with these kinds of cuts, hundreds of institutions will leave the program," Mr. Harris said.

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