Bill could shrink Pell Grant funds

As many as 100,000 students could lose access to Pell Grants under a new spending bill Congress passed Saturday.

Approximately 1 million more could see a reduction in the amount of their grants as a result of the legislation, said Kristine Wright, director of the University Office of Student Finance.

“Anything that provides fewer students with support is, in my mind, a very bad thing,” Wright said.

The U.S. government issues Pell Grants to the most financially needy students. The grants do not have to be repaid. They are generally awarded to undergraduate students, and the maximum amount issued for the 2003-04 school year was $4,050.

Despite the cut’s possible impact, Pell Grant reductions totaled less than 1 percent of the program’s total funding.

The cut in funding for students who receive the grants is caused by a change in the federal need-analysis formula. The formula determines the amount of money students’ families are able to put toward their educations.

The new formula is based on tax information from 2000. Before Saturday’s meeting, the tax chart used information from 1988, said Patricia Grimes, legislative assistant for the Minnesota Higher Education Services Office.

“The (change in the formula) assumes that families are paying less in taxes, which means that it would appear that they would have more to pay for school,” Grimes said.

Last year, an amendment by Sen. John Corzine, D-N.J., prevented the change in the need-analysis formula.

The $388 billion spending bill that passed this weekend is an enormous piece of legislation, totaling approximately 3,000 pages and covering a broad variety of spending areas.

“There is a lot of confusion, because a lot of stuff got jammed in there,” said John Engelen, director of University Relations. “It’s pretty safe to assume very few people have read all of it.”

Congress is required to pass 13 appropriations bills each year. This year, most likely because of the presidential election, Congress had only passed four appropriations before the newest spending bill was passed.

The omnibus bill, as it is known, clumped all nine leftover bills into one piece of legislation.

The Pell Grant program currently has a budget shortfall of $3.7 billion. By making these changes to the program, the administration estimates it can save $300 million, said Brian K. Fitzgerald, director of the Advisory Committee on Student Financial Assistance, said.

Students whose parents earn between $35,000 and $40,000 a year would be most likely to lose their Pell Grants, Fitzgerald said.

Although the bill has been passed by the Senate and the House of Representatives, it has yet to be sent to President George W. Bush for his signature. The delay is being caused by legislators’ disagreement over a provision of the bill regarding government access to private taxpayer records.

Pell Grant problems

In the 2002-03 academic year, 76,500 Minnesota students received $167 million in Pell Grants, Grimes said.

“The net effect of this is that fewer people are going to be eligible for Pell Grants,” Grimes said. “Two percent of the students would not be eligible for a Pell Grant, and one in five would be eligible for a smaller award.”

Grimes said the smaller grants could equal anywhere from $200 to $800 for each student.

“Congress appropriated $12.4 billion (and) the president had asked for $12.9 billion for the Pell Grant program,” Grimes said.

After the appropriations bill passed, Congress had given out more money than it had, so funding for many programs was cut.

Grimes said the problem with cutting funds to Pell Grants is that the program already runs on a shortfall or it borrows from future years to pay for the current year’s grants. Grimes said this will not affect Pell Grants next year, but it could down the road.

“The Pell Grant fund is $3.7 billion in the hole,” Grimes said. “The importance of not reducing the deficit is the amount available for the next year.”

A program spearheaded by Bush, the Pell Grant Plus Act, did not pass Congress, Grimes said. The program would have given $1,000 to each high school senior who takes “rigorous” courses.

In Saturday’s session, Congress also voted to extend the Higher Education Act for another year.

The act, which was originally passed in 1966, controls many aspects of higher education but is mainly known for setting student-aid funding.

Although the act has not yet been passed, Congress will hopefully get it done by Easter, Grimes said.

Congress also cut funding for federal work-study by 1 percent Saturday.

Grimes said there will be a 10 percent reduction in the number of students who are eligible for Perkins Loans, but Congress added loan forgiveness to teachers who teach in low-income schools.

Programs to help low-income families prepare for college, such as Gaining Early Awareness and Readiness for Undergraduate Programs, received an additional 4 percent in funding, and TRIO received 1 percent more money.