Changes cost 90,000 students their Pell grants

Published: Tuesday, February 1, 2005 at 6:01 a.m.
Last Modified: Tuesday, February 1, 2005 at 12:23 a.m.
An estimated 90,000 college students nationwide will lose their federal Pell grants this fall and 1.3 million more will have their awards reduced due to changes the Bush administration has made to the program's eligibility requirements.
In addition, the eligibility changes will have far-reaching effects on students applying for other grants, loans and scholarships because the federal formula is also used to determine state and institutional aid.
Eligibility is decided by a complex formula that takes into account family income, the number of other children enrolled in post-secondary education, and a host of other factors. An estimated 90 percent of families eligible for Pell grants earn less than $35,000 a year.
Long considered the linchpin of financial aid for millions of needy students, Pell grants gave $11.6 billion to 4.7 million undergraduate students in 2002-2003. This year, Congress has approved $12.4 billion for Pell grants to flow to 5.3 million students.
Former U.S. Sen. Claiborne Pell is credited with creating the grant program in 1972; it was renamed for the longtime senator from Rhode Island in 1980.
In the 1970s, Pell grants covered about 72 percent of the cost of attending a four-year public college and 35 percent of the cost of attending a private college, according to the American Council on Education. By 2002-2003, their impact had dwindled to 41 percent of the cost of a public college education, and 16 percent for private colleges.
Nevertheless, college officials say, Pell grants still play an essential role in making higher education more affordable and accessible to students from low-income families.
''These grants have often meant the difference between going to college or not going,'' said James T. Hanbury, director of financial aid at Rhode Island College. At Rhode Island College, he said, a quarter of the students rely on the grants, which range from $400 to $4,050, depending on need. ''For students getting the maximum grant, it almost completely covers our tuition and fees of $4,340.''
The Bush administration says the changes in estimating how much families can afford to contribute to college costs were long overdue, as the old formula was based on tax data more than a decade old. Furthermore, officals note, the program is running a steep deficit - about $4 billion - due to an unexpected surge in demand. Because the program functions like an entitlement, Pell grants are distributed to all eligible students, even if insufficient funds had been set aside.
The U.S. Department of Education estimates that $300 million will be saved this year because of the changes, and that the neediest students will see their awards increase by about $100.
Critics, including Democratic lawmakers, oppose the changes, saying it will force needy students to take out more loans or drop out of college entirely.
They question the timing of the changes. By law, the tax tables used by federal programs must be updated yearly.
Yet, the tax table for the Pell grants was based on 1988 data, and was last updated in 1994. Why change the formula now, they ask? Critics also argue that the updated formula, based on 2002 tax information, does not accurately reflect the tax burdens families face today, as many states and communities have raised their income and property taxes in the past three years.
An estimated 90 percent of families eligible for Pell grants earn less than $35,000 a year.

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