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Feds reduce Pell grant eligibility, but impact here is probably “minimal”
By Brian Fitzgerald
Because of a change in federal rules affecting financial aid, nearly a quarter of college students who receive Pell grants will get a smaller award this year, according to an estimate by the American Council on Education (ACE).
BU is adopting a wait-and-see approach on the issue before determining a course of action, says Christine McGuire, director of financial assistance. But she doesn’t anticipate that the change will have a drastic effect on students.
“Our early evaluation reveals that the impact on the BU population will be minimal,” says McGuire. “But we will be working with students on a case-by-case basis to make sure that they’re not adversely affected by this development.”
Passed last fall, Congress’ new spending bill gave the U.S. Department of Education approval to make a change in the federal needs-analysis formula used to determine how much discretionary income families have to pay for college. According to the ACE, about 1.3 million students and their families will see their eligibility for financial aid reduced because the new formula will show that they are paying less in state and local taxes, and thus have more money available for tuition than before.
Congress, which is seeking ways to reduce the $413 billion federal deficit, says that the change will help reduce a $4 billion shortfall in the Pell grant program’s budget. Still, higher education officials and college lobbyists say the cuts in Pell grants are hardly worth the hardship they will inflict because the savings amount to only $300 million.
Pell grants are the government’s primary college aid for low- and moderate-income students. The new formula, intended to reflect a reduction in income taxes in states such as Massachusetts, will take effect for students starting or returning to classes next summer or fall. It will be based on 2002 tax data, replacing the tax data currently used, which derives from 1988 tax information.
The change was proposed in 2003 by the Department of Education, but the Senate version of the bill, passed in July, blocked the department from implementing it. Last fall, however, when hammering out the final version, the Republican leaders allowed the change.
The new formula will probably not lead students to abandon their college education, according to Terry Hartle, ACE senior vice president. But “it will cause these students to work more hours, borrow more money, or reduce their course loads,” he says.
The ACE predicts that Pell grant recipients negatively affected by the change will be concentrated in 21 states, including Massachusetts and New York, the top two states from which BU draws students. Students in two states that send a good number of undergraduates to the University — Connecticut and New Jersey, number three and number six on BU’s registrant list, respectively — will see their grants increase because income taxes have gone up there.
21
January 2005
Boston University
Office of University Relations