Legislature seeks compromise on Pell grants

by Coralie Carlson

Grants paid for all of Felicia Ring’s college costs at community college, but grants don’t cover her University tuition.
Without financial help from her parents, the College of Liberal Arts junior applied for loans and picked up part-time work as a janitor to make ends meet.
Ring is not alone in her struggle to finance an education. University students received 5,419 Pell grants and 5,237 State grants in fiscal year 1996-97. Although Congress recognized students’ struggles and increased Pell grants by $300 per student — totalling $13.5 million for Minnesota — students will not receive the $300 without additional state legislation this session.
But the Senate and House don’t agree on how to distribute the $13.5 million and they will need to make a compromise as early as next week.
The Pell grant and State grant programs are linked in Minnesota to protect students from stagnant cash flow from the federal government. When Pell grant funds from Washington fall short, as in the past several decades, the State grant caps off the difference.
Under current guidelines, eligible students, like Ring, pay at least 50 percent of total college costs and Pell grants make up the difference. The Senate plan reduces the student share to 47 percent.
“We think that 47 percent is a more reasonable expectation of students than the 50 percent,” said Phil Lewinstein, director of communications for Minnesota Higher Education Services Office.
But Lewinstein admits students at more expensive schools benefit more from this bill. Because a private school is typically more expensive, 3 percent of its costs amount to more cash for students than for those at a technical school. Minnesota State Colleges and Universities officials oppose the bill, saying Congress intended the money to help lower-income students.
“They’re spreading it over a different group of students” than the system does now, accused Rep. Lyndon Carlson, DFL-Crystal.
Peter Zetterberg, director of the Office of Planning and Analysis, said the University is caught in the middle of the grant issue, because it lies between private institutions and Minnesota State Colleges and Universities in price range.
“Whatever your planning to do with the State grant system will usually favor either private schools or MnSCU,” he said.
Because the two grants are still linked, students who receive both grants will see their State grant go down as the Pell grant increases.
Under the House proposal, State grants won’t decrease when Pell grants rise. This bill also reinvests the $13.5 million, but targets Pell grant money to lower-income students and creates a $500 tax credit to assist middle-income students.
“We’re trying to be sensible to students from all income ranges,” said Carlson.
First-year students entering college directly after high school would be eligible for the tax credit, termed “Grade 13.” Legislators crafted Grade 13 to piggyback the HOPE scholarship, a new $1,500 federal tax credit.
Lewinstein said the House bill prematurely opens the door to decoupling Pell and state grants. But he added that Congress is reauthorizing the Higher Education Act, which outlines financial aid programs, and could alter the grant situation.
The House bill goes before the floor today. A conference committee will begin to align the plans as early as next week.