Federal, state aid changes reduce student grant monies

FBy Jens Manuel Krogstad For Ny Cao, the changes to how student grants for higher education are distributed might mean more hours at Dairy Queen, where she makes $6.50 per hour to help pay for school.

“I think it’s ridiculous that they’re cutting funding for us,” said the third-year elementary education student, who lives at home to cut her expenses. “My parents barely make enough to send me to college.”

Cao and other University students can expect to receive fewer grant dollars this fall due to several state and federal policy changes.

Last week, the Minnesota Higher Education Services Office announced that the U.S. Department of Education will reduce state grants for the 2004-05 school year for more than 50,000 Minnesota students who receive them. Approximately 6,300 University students received more than $16 million in state grants for 2002-03.

Additionally, a congressional report released earlier this month stated that the nation’s largest federal grant program, the Pell Grant, will give an estimated $270 million less to students and will prevent approximately 84,000 students who would have received money under previous formulas from receiving any money.

The U.S. Department of Education adjusted the Federal Needs Analysis Methodology in June, which uses a formula to determine how much financial aid families receive from the federal, state and local levels.

Though the department reviews the formula annually, this is the first time it has changed the formula in 10 years. Changes to the federal grants are effective for the 2004-05 academic year.

Under the new formula, Cao’s mom – who supports the household by working full time for $15 per hour – will contribute more money toward her daughter’s education than under the previous system.

Another change is that next fall, fifth-year students will no longer be eligible for state grants.

Approximately 27 percent of University students graduate in four years. The institution is annually ranked near the bottom in Big Ten graduation rates.

Also new this fall is a Sept. 15 deadline for state grant applications. In past years, students could apply in November and still get money for fall semester.

But now is the time for students to fight the changes on the federal level, said Deb Pusari, associate director for University graduate and undergraduate services in the Office of Scholarships and Financial Aid.

“Students might want to contact their legislators and ask them to delay implementation,” she said.

When changes to the formula were announced last month, a group of Democratic U.S. senators publicly questioned the changes and ordered an evaluation of the change by the General Accounting Office – the investigative arm of Congress.

In the last few years, tuition increases at the University and a faltering economy have coincided with increases in loans, state grants and Pell Grants at the University.

Over the last three years, undergraduate tuition at the University has increased an average of 15 percent each year and, according to the University’s Financial Aid Office, Pell Grants have increased by an average of $1.5 million a year for University students. State grant money has increased an average of over $2 million the last three years, according to the University Financial Aid Office.

The number of loans has also increased over the last few years.

From 2001-02 to 2002-03, the amount taken out in the two most common types of loans at the University increased by $30 million, said University loan officer M.E.G. Paez. In addition, the number of University students opting for private bank loans doubled in 2002-03.

But for students such as Cao, who said she is having trouble paying off loans she took out two years ago, taking out more loans is an undesirable option.

Jens Manuel Krogstad covers student life and welcomes comments at [email protected]