WASHINGTON - When the legislative fight over student loans heats up this fall, veteran lobbyist John E. Dean will be leading banks into battle.

As special counsel for the Consumer Bankers Association, Mr. Dean's primary job this year is to save the industry from being knocked out of the $20 billion student loan market.

The Clinton administration wants the government to lend directly to students - replacing 7,000 private lenders.

Although there is growing opposition to direct lending in the House, Mr. Dean admits that banks still have more work to persuade the Senate to stick with the current system of government guarantees.

To win, Mr. Dean said, banks have to abandon past lobbying techniques and be willing to offer some reforms of their own.

"Instead of telling legislators what can't be done, we have to be willing to be a constructive part of the process," Mr. Dean said. "We're not asking any member of Congress to support the status quo, because we know that representatives have serious concerns about the program as it runs now."

Chief among the criticisms of the guarantee program, is that banks bear none of the risk for the student loans. If a student defaults, the government pays the bank the full amount of the loan and then begins its own collection process.

Taking on risk would mean banks would not recoup the entire amount of a defaulted loan from the government. But, with their own money at stake, they could gain more control over the system.

"Banks tend to be very unpopular because the assumption is that they are out to line their own pockets," Mr. Dean explained. "With risk sharing comes political credibility and more power to negotiate."

As the son of the dean at Georgetown University's law school, Mr. Dean's knack for negotiation was cultivated at a young age. He went on to get his undergraduate and law school degrees from Georgetown and spent 12 years as a congressional staffer. From 1973 to 1985, he worked his way up from a low-level aide to a senior policy adviser on the House Education Committee.

Even those who oppose him agree that Mr. Dean has effectively communicated the banking industry's position in Congress.

Thomas Wolanin, Department of Education deputy assistant secretary, said Mr. Dean is primarily responsible for turning House Republicans against the direct loan program.

"He's certainly been effective in throwing sand in the fan of direct loans," Mr. Wolanin said. "The House has really changed its position over the last few months."

More than anyone else, he said, Mr. Dean has persuaded Congress to reexamine the budget savings the Clinton administration has claimed would result from direct loans. Mr. Dean pointed out that none of the loan servicing costs had been accounted for when the costs of the program were originally projected. When the Congressional Budget Office reevaluated direct loans in July, it found that direct loans would save billions of dollars less than expected, making them much less attractive.

Mr. Wolanin is skeptical whether banks will really agree to take on more risk. Institutions, he said, will simply be more selective in making loans. Congress is unlikely to favor any move that would reduce students' access to education, he noted.

"If all students would be assured of getting loans, it would be a good idea," Mr. Wolanin said. "If banks are willing to take more risk but not willing to give loans to the riskiest students, that's a different story."

But Mr. Dean insisted that access to college will not be affected.

"We would never support any move that would shut the doors on educational opportunity," he said.

Mr. Dean works out of his Washington law firm Dean Blakey and Moskowitz, which he founded in 1985. The firm specializes in education policy and finance.

The student loan debate will heat up when Congress returns from recess Sept. 5.

A tough public relations campaign is already being waged to gain support for direct lending, and President Clinton has made the program a key part of his domestic policy. But support for banks in the House and growing opposition to direct lending in the Senate makes him hopeful.

"The momentum has shifted away from direct loans and I don't think that movement is going to change," he said.

Mr. Lumetta writes for the Medill News Service.

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