Changes loom for Pell Grant program

By Jeremy Pelzer

Pell Grant recipients could see a larger check from the government in the next few years. But at the same time, thousands of students at the University and around the nation will lose their Pell Grant eligibility next year.

In a speech at a community college in Jacksonville, Fla., on Jan. 14, President Bush said he wants to increase the maximum Pell Grant award by $500 – $100 per year for the next five years. Currently, the maximum grant is $4,050, a figure widely seen by both Republicans and Democrats as inadequate given the cost of a college education today.

The increases will be included in President Bush’s federal budget proposal, which will be presented to Congress next week, said Tom Kiley, spokesman for Rep. George Miller, D-Calif. Daniel Mann, director of financial aid at the University, said the increases would take effect for the 2006-2007 school year if approved.

In the 2003-2004 school year, 4,924 University students received a Pell Grant, Mann said. More than 5 million students participate in the Pell Grant program nationwide.

While the Bush administration has not said exactly where the funding for the increases would come from, the President said much of the money is likely to come from cuts in federal student loan programs, such as the Stafford Loan program.

“I’m going to reform the student loan program to make it more – or ask Congress to reform it – to make it more effective and efficient, and thereby saving money,” Bush said in the Jan. 14 speech. “That saved money from the administration of the student loan program will be plowed into the Pell Grant program.”

Mann said he was excited that there was talk of raising the maximum Pell Grant award.

“Effects (of the increase) on students should be nothing but positive,” he said. “It’s free money to poor students.”

However, Mann added that his office was waiting for more information on how the proposal would be funded.

“We need to make sure that there’s no negative repercussions from cuts in other aid programs,” Mann said.

Democrats called Bush’s proposal a good start, but said much more needs to be done to give low-income students access to a higher education.

Patrick Eddington, spokesman for Rep. Rush Holt, D-N.J., said the proposed $500 increase “is really just a drop in the bucket” in terms of what is needed to pay for college today.

The figure is even less considering inflation, Eddington said.

“By the time you get to five years, it (the $500) will be 80 bucks in terms of real dollars,” he said.

Calls to several Republican congressmen seeking comment were not returned Monday.

Bush’s proposal came almost a month after the Department of Education announced a revision to the Pell Grant formula that will reduce the number of eligible students.

The change to the formula, which determines how much Pell Grant money a student is eligible to receive, involves calculating how much a family is able to pay for educational expenses. The more money a family is able to pay, the less Pell Grant money the student receives.

The revision, which will take effect next fall, will declare that a greater percentage of what a family in Illinois pays in state and local taxes can be put towards college. The government will assume that the family can pay more in tuition and thus won’t need as much Pell Grant money.

The change was required by the 1992 Higher Education Act in order to reflect updated tax codes, said Alexa Marreo, a spokeswoman for the Republican majority on the U.S. House Committee on Education and the Workforce. Before last month’s announcement, the Pell Grant formula used 1988 tax codes. The new formula will use tax data from 2002, she said.

About 1,300 Pell Grant recipients at the Urbana-Champaign campus will lose money because of the change, Mann said.

Most of the affected University students will lose $100, Mann said. However, 70 University students will lose their Pell Grant money altogether, he said.

Nationwide, nearly 1.3 million Pell Grant recipients will be affected. 90,000 of them will lose their entire Pell Grant award.

Mann said the change would not have much of an effect on the poorest students. However, students whose families make between $28,000 and $40,000 per year will be affected the most, he said.

Marreo also said the revision was needed before the $4,050 maximum award could be increased.

“If we continue to use these outdated numbers, it could decrease the maximum award change,” she said.

Mann said the revisions came as a surprise. He said the government discussed making the change last year, but backed off after causing an uproar from colleges and students.

“No one really assumed that it was going to happen this year,” he said.

The revisions will save the Pell Grant program $300 million a year at a time when the program faces a $4.3 billion shortfall. Economic problems during the past couple years and cuts in many college budgets – including at the University – have led to a recent increase in the number of Pell Grant applicants.

Illinois students will not be hit as hard as students in other states because the 2002 Illinois tax code is similar to the 1988 tax code.

“For University of Illinois students and really students in Illinois, it is kind of a ‘$100-here’ thing,” Mann said.

Students from Delaware, Michigan, Hawaii and North Dakota will be among the hardest hit because their tax codes have changed significantly since 1988. However, the revision will benefit students from Connecticut. New Jersey Pell Grant applicants will not see a change at all.