Federal changes to the Pell Grant program could eliminate aid for 84,000 students nationwide and reduce it for an additional 1.2 million.
Preliminary estimates say the Pell Grant program will undergo a $270 million reduction because of recent changes in congressional bill H.R. 4818.
However, “by some estimates, the total reductions in student aid resulting from the allowance will be in the billions of dollars,” according to a news release from Sen. Jon Corzine, D-N.J. “This is a backdoor attempt to cut funding from the Pell Grant program.”
Although the bill added $1.4 billion to the Department of Education’s budget, bringing its discretionary funds to a total of $57 billion, it also froze the maximum value awarded in Pell Grants at $4,050 for the third consecutive year.
Those students receiving lesser allocations near the $400 minimum will feel the largest effects of the bill, and those receiving the bare minimum may even lose the Pell Grant completely. Students receiving the maximum grant will likely feel little to no effect.
The U.S. Department of Education uses a numerical value from a formula called the Estimated Family Contribution to help determine who is eligible for the grants. Currently, the department uses 17-year old tax information to compute the EFC, and the bill would require them to use more current data.
Since state income taxes are generally lower around the nation than in 1988, fewer students will qualify for Pell Grants.
Utah’s top rate is currently lower than it was in 1988, according to Chief Economist Doug Macdonald at the Utah State Tax Commission.
Corzine said the average student’s EFC will increase because of the bill.
“The department’s changes to the state and other tax allowance will increase EFC for nearly all American families and students,” he said. Opponents of the measure fear students will face unfair consequences as a result of the updated formula.
Corzine and many fellow Democrats have harshly criticized the action of this year’s Congress.
“With tuition on the rise and the middle class being squeezed by a sluggish economy and a misguided tax policy, I find it hard to believe these cuts are even being contemplated,” Corzine said. “We need to expand opportunity in this country, not relegate it to only those who can afford it.”
The Pell Grant program received an increase of $458 million for the 2005 fiscal year, but a boost in the overall funding will not yield additional money for each student. Instead it will compensate for the growing number of recipients.
According to federal estimates, the 2005-2006 year will likely see 463,542 additional eligible applicants.
Advocates applauded the congressional bill for implementing updated tax tables.
Rep. John Boehner, R-Ohio, chairman of the Committee on Education and the Workforce, said the change was long overdue and would be more indicative of students’ current needs.
“Continuing to use this outdated information could mean shortchanging eligible students and deepening the Pell Grant budget shortfall,” Boehner said in a news release.
The budget shortfall to which Boehner referred has been generated by inadequate congressional allocations to the Pell Grant fund in the past.
“A Pell Grant is an entitlement…so if you qualify, you get it,” said John Curl, associate vice president for financial aid at the U. “Even though the federal government may not have allotted money to the program, they still give the money out. The Pell Grant is going to be there if the student meets eligibility requirements for it.”
Boehner said updating the financial need formula will lessen the Pell Grant program’s current $4 billion deficit. Some estimates show the burden will be lightened by about $300 million and allow Congress to increase maximum awards in the future.
Last year, Corzine introduced an amendment that blocked the move to update the formula, and Pell Grants proceeded as usual.
Pell Grant Financial Need Formula Cost of Attendance(COA)-Expected Family Contribution(EFC)= Financial Need
Potential Decreases
*84,000 students may lose Pell Grants entirely*1.2 million students may lose partial funding
University of Utah Pell Grant stats
*About 20 percent of the U’s student body receives Pell Grants*5,808 U students received Pell Grants in 2002-2003*5,100 U students received Pell Grants in 2001-2002*38,557 students in the nine schools under the Utah State Board of Regents received Pell Grants in 2002-2003*$14.6 million in Pell Grants awarded in 2003-2004 school year*$13 million in Pell Grants awarded in 2002-2003 school year