Education Assistance

Hundreds of students, ringed by soldiers, staged a noisy but peaceful demonstration today across from the Presidential Palace in the third day of protests aimed at President B. J. Habibie and his Cabinet.

''Habibie must step down and be replaced by a transitional government,'' said Indra Tarindrianto, an organizer for the Communication Forum of the Jakarta Student Senate, a umbrella group of students from 24 universities. Students have vowed to press their cause before a special parliamentary session planned for November to pass new electoral laws.

With summer vacation coming to an end, the students who played a key role in bringing down President Suharto last May after his 32 years in power are making their way back onto campuses and hoping to again change the course of history.

''If Habibie is not serious and consistent in dealing with allegations of human rights violations and the skyrocketing prices of essential goods, the students will come back and could be even bigger,'' said Muridan Widjoyo, from the Indonesian Institute of Sciences.

A major focus of the unrest is inflation, which has climbed past 70 percent a year.