What was going on when I was born?

Educators, financial-aid officers and students expressed optimism and relief yesterday following reports that Congress was unlikely to make any cuts in the Government-guaranteed student loan program. They said they were gratified by the action taken earlier this week by the House Appropriations Committee in approving an extra $1.3 billion in emergency funds for the current fiscal year - more than $300 million over the amount requested by the Reagan Administration. But they still voiced concern over what the specific terms of the loans would be and what kind of compromise Congress would eventually reach on the President's proposals for additional reductions in the program, which has already been cut severely. ''I'm ecstatic about it,'' said Howard Shapiro, a 20-year-old junior at Yale who is editor of The Yale Daily News, referring to his relief over reports that the current aid program would be essentially retained.

The nation's new military ruler announced today that special courts would be set up to punish all guilty of corruption, with the power to impose heavy prison terms or even the death penalty. Lieut. Gen. Hussain Mohammed Ershad, the army chief of staff, who seized power Wednesday to ''end corruption in public life,'' issued martial-law regulations that said those facing prosecution could include former presidents, former Government ministers and members of the defense and police forces. There were reports of many arrests, and several former Cabinet members were said to have been imprisoned for trial, but apparently none from the Government that was ousted in the coup. The deposed President, 75-year-old Abdus Sattar, was said to be at his home here in Dacca, with police guards posted outside. Some reports said they were there for his protection; others said he was under house arrest.

Cuba is ready to discuss all aspects of the situation in the Caribbean basin with the Reagan Administration, diplomatic sources said today, but it will not withdraw support for Salvadoran rebels as a condition for such negotiations. The sources said that was the essence of the message delivered last weekend by President Fidel Castro through Mexico's Foreign Minister, Jorge Castaneda de la Rosa, to a special State Department envoy, Gen. Vernon A. Walters, who had held a secret four-hour meeting with the Cuban leader early this month in Havana. The sources added that Mr. Castro was pleased by his meeting with General Walters, who is a former Deputy Director of Central Intelligence, and was hopeful that it would be followed by further negotiations with the Reagan Administration. Cuba Prefers Wide Talks ''The Cubans say that no arms have gone from Cuba to El Salvador for the past 14 months, but they can't assume an obligation to stop aiding the guerrillas if this problem is seen in isolation,'' a knowledgeable Western diplomat said. ''They argue that the situation would be different if the United States stopped arming the Salvadoran junta or peace talks began in El Salvador.''

The Chicago Board Options Exchange suffered a legal blow today in its bid to become the pioneer exchange in the trading of options on debt instruments. In a 100-page decision, the United States Court of Appeals for the Seventh Circuit ruled, 2 to 1, that the Securities and Exchange Commission overstepped its statutory authority last year when it granted the C.B.O.E. permission to trade options on the debt certificates of the Government National Mortgage Association, or Ginnie Mae. The options have not yet been traded on the exchange. ''We hold that pending further action by the Commodity Futures Trading Commission, all trading of options on Ginnie Maes is prohibited,'' said the majority opinion, written by Judge Walter J. Cummings.

An Israeli Army sergeant was killed and three other soldiers were wounded today when a hand grenade was thrown into their jeep in occupied Gaza. It was the first Israeli death in a week of rioting that has taken the lives of six Palestinian Arabs. In today's incident, a second grenade missed the jeep and wounded three Arabs in a car behind. The Palestine Liberation Organization said it was responsible for the grenade attack but retracted the claim a short time later. (Page A4.)

HOW do you run a general museum barely 10 miles from the overwhelming competition in Manhattan? You simply rise above it. You buy the best art you can, mount intelligent and attractive shows, and establish special collections not so easily seen at, say, the Metropolitan Museum of Art. That, more or less, is how the relatively small but stimulating Newark Museum has functioned since its founding in 1909, and in the process it has developed a strong identity of its own, becoming not only a Newark cultural treasure, but a national one as well. Among the museum's attractions are a superb collection of American (including folk) art, particularly of the 19th and early 20th centuries; holdings in Tibetan art and artifacts that are among the finest in the West; decorative objects, especially American glass; African art; Japanese prints and netsuke; a comprehensive coin collection, and the Ballantine House, a turn-of-the-century mansion resplendently furnished with late Victoriana - all decidedly worth a cultural safari from the New York side of the Hudson. ''We've developed from a small, local type of museum to one of national importance,'' says Samuel C. Miller, Newark's director since 1968. ''The once-modest collections we bought initially because we could afford them are now world famous. But we are still the museum of service and community involvement that our first director, John Cotton Dana, saw us as, and our heart remains in Newark, as did his.''

The gargoyles atop the Chrysler Building were modeled after the radiator cap of a 1929 car; someone else is buried in Grant's tomb (Mrs. Grant); the windowless New York Telephone Company building was designed for protection against nuclear fallout. These are some of the tidbits that commentators will elaborate on today as Circle Line sightseeing boats begin their 38th consecutive season of cruising around Manhattan. The price of the three-hour, 35-mile excursion is $8.50 for adults, $4 for children under 12. Refreshments are available. Boats leave from Pier 83 at the foot of West 42d Street. The schedule starts with daily cruises at 10:30 A.M. and 2:30 P.M., increasing with the season to 12 trips a day. Information: 563-3200.

The Interstate Commerce Commission announced today that it had approved the merger of the Norfolk & Western Railway and the Southern Railway, setting the stage for what the agency's vice chairman said would be ''a battle of giants.'' The other giant that Reginald E. Gilliam Jr., the vice chairman, alluded to in an interview was created by the I.C.C. in November 1980 when it approved the merger of the Chessie System and Seaboard Coast Line Industries. That created the CSX Corporation, a railroad with 26,452 miles of road serving nearly every state east of the Mississippi except those in New England. Now, after 15 months of deliberation, the I.C.C. has given birth to another huge Eastern carrier with 17,860 miles of road serving substantially the same states as the CSX.

New York City will not appeal a Federal court ruling that its method of electing two at-large City Council members from each borough is unconstitutional, Mayor Koch announced yesterday. He said the city would try instead to win court approval for a temporary method of electing at-large members, probably involving weighted voting based on the boroughs' populations, so that Council elections could be held next November. The election would involve contests for 45 Council seats, including the 35 for defined districts and the two at-large seats for each borough. Mr. Koch said he would also appoint a commission to propose amendments to the City Charter for a new, permanent way of electing the at-large members. He said those amendments would appear on the ballot in November 1983, to be approved or rejected by the public.

State and local governments, traditionally reliant on long-term bonds to finance long-lived public projects such as sewers and schools, are turning increasingly to new kinds of short-term securities despite the increased financial risks. The lure of interest rates of around 8 percent for borrowings due in less than a year compared with rates of 12 percent or more for bonds due in 20 or 30 years has overpowered officials' worry that if the short-term rates should rise, their budgets would be badly strained by the higher interest payments needed to renew the loans. ''The increasing use of short-term borrowing is understandable, but it can very quickly turn into an abuse,'' said Freda Ackerman, director of municipal bond rating at Moody's Investors Service. New York's Crisis Recalled The tax-exempt bond market still bears the scars of the 1975-76 New York City financial crisis. That was precipitated by the city's inability to continue renewing its short-term notes, which totaled $4.5 billion by mid-1975. In the 1960's and early 1970's, short-term borrowing grew rapidly, but contracted sharply after the city's crisis.

One of the nation's leading college basketball coaches, Richard (Digger) Phelps of the University of Notre Dame, said today that a number of schools across the country were paying a standard rate of $10,000 a year to outstanding basketball players, in violation of intercollegiate rules. Mr. Phelps said in an interview that he knew of such activity by at least seven schools and that he believed the practice was far more widespread. He also said that he had recently reported two of the schools to the National Collegiate Athletic Association, the major governing body of intercollegiate sports, for making such payments to freshman players this season from funds provided by athletic boosters. Mr. Phelps, who was in New Orleans for a convention of coaches, would not identify any of the schools. And, in keeping with the association's policy of silence in matters relating to investigations that might be pending, David Berst, its director of enforcement, refused to confirm or deny that Mr. Phelps had made such a report or that the enforcement staff had undertaken an inquiry.

Amid mounting frustration in Congress, Democratic and Republican leaders in the House called upon the White House today to join in three-way negotiations to break the budget deadlock. The proposal appeared to be part of an orchestrated effort by Congressional leaders to get the Reagan Administration involved in budget negotiations. The Republican leaders of the House and Senate, along with the Democratic leader of the House, issued both pleas and warnings to the White House. President Reagan has so far been unwilling to discuss proposals offered in Congress for reducing the projected $91.5 billion deficit in his budget for the fiscal year 1983, a figure many legislators consider unacceptably high. He has said he would wait for Congress to present a comprehensive alternative budget before deciding.