Student Loan Blog : Pell Grant

Students’ College Access to Improve, Vice President Pledges

Student Loan Girl — Thu, 23 Apr 2009 23:50:00 GMT

Vice President Joe Biden intends to make higher education a reality for more young people, the Associated Press reports, in part by closing the gap between families’ incomes and rising college costs (“Biden Wants to Make Higher Ed More Affordable,” USA Today, April 18, 2009).

At a town hall–style meeting he hosted in St. Louis Biden told about 300 people that he’ll be asking the Treasury Department to figure out how to make college savings plans more effective and more reliable.

“We’re going to make a series of investments, investments in our families and our students,” he said, highlighting the administration’s efforts to improve tax breaks for families and increase need-based grants for low-and middle-income families.

White House Taps Existing Programs to Increase College Affordability

Since so many families save for college using tax-deferred 529 savings plans, which allow families to set aside funds to cover future tuition expenses, fees, books, and supplies, the Obama administration is examining a program that would allow families to take out low-interest loans against their 529 plans to help them cover college costs.

Obama has already increased funding for the need-based federal Pell Grant program, which helps low-income students afford school, but Biden said the Obama administration also wants to ensure continued Pell Grant funding by setting up the program to be automatically subsidized each year.

The government is also considering extending The American Opportunity Tax Credit beyond 2010, which allows families to claim a $2,500 tax credit for college expenses for up to four years.

But by far the most sweeping proposal from the Obama administration, which has drawn fierce criticism from leaders in the student loan industry, is the suggested cancelation of the federally funded student loan program.

Lenders say that cancelling the program will eliminate families’ option to choose from a variety of private lenders and federal student loan incentives and, instead, require them to borrow federal student loans through government’s Direct Loan Program.

Biden alleges that the move to cancel the federal student loan program would result in up to $94 billion in savings to the federal government over the next 10 years, which he said, “We can take … and reinvest … in more loans, more grants and more access to college.”

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Stimulus Funds Give Oregon Pell-Grant Recipients a Boost

Student Loan Girl — Tue, 07 Apr 2009 18:54:00 GMT

Funding from President Obama’s stimulus plan will soon reach Oregon college students in the form of almost $280 million in Pell Grant funds, a 41-percent jump over the previous year, reports the Portland Business Journal (“Stimulus boosts Oregon Pell Grants to $279.4 million,” March 31, 2009).

This funding boost will translate to about a $500-award increase for Oregon Pell Grant recipients, which the students can use to offset the $18,500 in tuition it costs on average to attend one of the state’s six public institutions.

Approximately 10 percent of the nearly 180,000 students who enroll in Oregon’s public colleges and universities during the 2009–10 school year will benefit from the stimulus money; they could see their maximum Pell Grant award bumped up to as much as $5,350.

Donna Fossum, student financial aid director at Western Oregon University, says the new maximum award amount is almost enough to cover all tuition costs at her institution, at which about one-in- four students rely on Pell Grants to help pay for college.

At Portland State University, Oregon’s largest institution by enrollment, more than 45 percent of the school’s 27,000 students receive Pell Grants, the Portland Business Journal reports.

It’s “amazing” that Oregon college students are getting the extra money for school, says Mary Moller, the associate director of government relations for Portland State University.

Although the $500 increase may not seem like a deal big, says Phillip Rodgers, director of student financial aid at PSU, it matters to students. “They’re watching closely. Everything (that) helps them be able to afford going to school helps.”

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Nebraska State Colleges Extend Free Tuition Offer to Freshmen

Student Loan Girl — Tue, 10 Mar 2009 23:31:00 GMT

Beginning this fall, incoming first-year students attending any of Nebraska’s three state colleges — Wayne State College, Peru State College, or Chadron State College — may see their dreams of a college education come true with a little help from the state, the Omaha World-Herald reports (“3 Colleges to Waive Tuition for Some Freshmen,” March 8, 2009).

Nearly one-third of all students in the Nebraska State College System receive federal Pell Grant funding, but only Pell-eligible first-year students will have their first year of tuition covered under the new Nebraska State College System Advantage Program. The state college system will pick up the tab for these students’ tuition expenses where their Pell Grant funding leaves off.

“With the recent economic downturn, access to college has become more challenging and this program will assist first-time freshmen in their pursuit of earning a degree,” said Bill Roskens, NSCS board chairman (“Nebraska State Colleges Offer Free Freshman Tuition,” KCUA-TV, March 3, 2009).

Students must meet five criteria to qualify for the NSCS Advantage Program:

They must be a Nebraska resident
They must be a recipient of a federal Pell Grant
They must be a first-time first-year student attending a NSCS school during the 2009–10 school year
They may not be a transfer student
They must be enrolled in at least 12 on-campus credit hours

Students can continue to receive this tuition assistance throughout their college career as long as they remain eligible to receive federal Pell Grant awards and as long as they continue to enroll in at least 12 credit hours.

“We are attempting to remove the financial barriers many [of our students] face,” said NSCS Chancellor Stan Carpenter, by only requiring students to pay for textbooks, supplies, and room and board.

College officials believe the Nebraska initiative also has the potential to increase enrollment and encourage more students to remain in the state.

Lois Brunnert, a first-generation college student who relies on financial aid to attend Wayne State, agrees.

“It’s going to allow [students] to have more time to save up money,” Brunnert said. “And it’s going to probably help students continue with their financial aid.”

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Minnesota College Students May Miss Out on Pell Grant Increase

Student Loan Girl — Thu, 05 Mar 2009 20:48:00 GMT

In spite of an increase to the maximum federal Pell Grant award of more than $800 — mandated by President Obama’s stimulus plan — Minnesota college students may not receive a single percent increase in funds due to the way the state distributes its Pell Grant awards, the Minnesota Daily reports (“Students Aren’t Guaranteed Pell Grant Increase,” March 2, 2009).

In Minnesota, federal Pell Grants — which are awarded to low-income students based on need — are linked to state grants. Historically, when a larger amount of Pell Grant money comes into the state than was expected, the Minnesota legislature reduces state grant awards.

This exact scenario occurred a year after Minnesota received a Pell Grant fund increase of $55 million in 2003. That year, the local legislature reduced state grants by about $18 million, resulting in almost 3,000 fewer students receiving state aid, according to the Minnesota Office of Higher Education.

“If [students] are getting both the state [grant] and the Pell [Grant], they’ll keep getting what they’ve always gotten, but I’m not sure if they will see any significant increase,” said Republican Sen. Claire Robling, the Senate Higher Education Committee’s ranking minority member.

Although MOHE, which distributes state aid, assures students that they should receive at least a portion of the increase from the stimulus funds, the Minnesota Senate’s Higher Education Committee members are concerned that the state’s $5 billion budget shortfall will force the state to redistribute excess student aid funds to programs that show a greater need than higher education.

At the same time that many students are wondering if they’ll ever see a portion of the $800 Pell Grant increase, University of Minnesota president Bob Bruininks says he has earmarked those funds for a different purpose. Faced with a $151 million budget cut, Bruininks is hoping that his institution will be able to use the stimulus money to hold the university’s tuition increase to 10 percent.

Rodrigo Zamith, a journalism senior at the university who receives Pell Grants, is worried about his bottom line. He’s afraid that students may start resenting state legislators if they redistribute the excess Pell Grant funds, intended for college students, to other programs.

“$800 for students matters a lot,” Zamith said. “For me, that’s two months worth of rent.”

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Tens of Thousands of College Work-Study Students to Benefit From Stimulus

Student Loan Girl — Tue, 24 Feb 2009 22:08:00 GMT

An additional 130,000 college work-study students may have jobs next year thanks to the economic-stimulus bill that President Obama just signed into law which allocates approximately $200 million in new funding for Federal Work-Study Programs, reports The Chronicle of Higher Education (“Economic-Stimulus Law Creates Jobs for Students, Too,” Feb. 19, 2009).

The money, which colleges should receive by April 1 of this year, will not be tied to a new community service requirement as some higher education officials had expected. Work-study funds will be distributed to undergraduate and graduate students next year based upon “existing formulas and information that colleges have already submitted.”

With the additional $200 billion in stimulus money, Federal Work- Study Programs could receive $1 billion in total funding this fiscal year — a level not seen since 2001, The Chronicle reports.

College work-study programs have widespread support in Congress, unlike Pell Grants and tax credits, notes Cynthia Littlefield, director of federal relations for the Association of Jesuit Colleges and Universities.

“Federal Work-Study continues to be highly regarded in a very bipartisan manner on Capitol Hill because everybody realizes the importance and purpose of it,” said Littlefield. “Everyone understands the concept of working your way through school.”

Although the $200 million in stimulus funding for colleges is targeted at providing more work-study jobs, it may not be so easy for schools to get the money that will create the new jobs for their students, The Chronicle suggests.

Since colleges match the Federal Work-Study money on a 25-percent to 75-percent basis, schools can only qualify for the additional funds if they have the extra institutional funds on hand to match the federal money.

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Colleges and Students Could Benefit From Pending Federal Bailout

Student Loan Girl — Wed, 21 Jan 2009 23:37:00 GMT

It seems that everyone is getting a piece of the government’s “bailout pie,” including banks, automakers, and perhaps even the nation’s colleges and universities, although exactly how much schools will get and when they will get it has not yet been established, reports Inside Higher Ed (“Manna From Heaven (er, Washington),” Jan. 16, 2009).

While provisions of an $825 billion stimulus package bill drafted by House Democrats earlier this week could change significantly before the bill is ratified by both houses of Congress — the Senate is reportedly in the process of writing its own version of the bill — a rough estimate by Inside Higher Education suggests that colleges and their students could end up benefiting to the tune of tens of billions of dollars in several areas:

Student Aid: $30 billion Nearly $15.6 billion would be used to increase Pell Grant awards by $500 per recipient to $5,350, a move that would help about 800,000 students in the 2009–10 school year and would wipe out the $1.4 billion shortfall projected for next year’s Pell Grant program budget. Some $12.5 billion of the bill would be used to increase the limit on federal unsubsidized student loans by $2,000 and to replace the HOPE Tax Credit with a restructured tax credit worth up to $2,500 to benefit low-income families.
College Grants: $4 billion Community colleges and for-profit schools could receive as much as $4 billion in the form of grants for adult education programs, so that these students may be able to receive career-related or job-education training. Some funds could also be allocated to states in the form of bonds that local governments could use to create “recovery zones” to help those individuals who reside in areas suffering from high unemployment or foreclosure rates.
College Infrastructure: $8.7 billion About $6 billion would be used for “higher education modernization, renovation and repair” and would be distributed to states based on the number of full-time undergraduates attending state institutions. Some $2.7 billion would be allocated to renovate, update, and modernize biomedical research facilities and upgrade equipment, with funding priority given to colleges that “serve high numbers of minority students” or “institutions impacted by a major disaster.”
State Aid: $39 billion A portion of this estimated $39 billion would be given to state governments “to help restore cuts to critical education programs,” including those in higher education. Some of these funds may be used to “restore state support for postsecondary education to the fiscal year 2008 level.”
Academic Research: $8 billion Some $2 billion would be allocated for research on energy efficiency and renewable energy along with $1.9 billion allocated for basic energy studies. An additional $2 billion would go to the National Science Foundation, $1.5 billion would be used by the National Institutes of Health for biomedical research, and $400 million to be used by NASA for climate-change research.

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Students Brace for Largest Tuition Jump in Years

Student Loan Girl — Tue, 20 Jan 2009 23:18:00 GMT

Tuition increases at the nation’s colleges are inevitable.

However, in the current economic climate — where states are slashing budgets to the bone — public colleges are being forced to raise tuition at rates that haven’t been seen in years, reports The Associated Press (“Families Await Sharpest Tuition Increases in Years,” Jan. 15, 2009).

Public, state-supported institutions have hiked tuition fees by 8 to 10 percent during economic recessions of the past in order to make up for reductions in government contributions, according to Nick Johnson of the Center on Budget and Policy Priorities in Washington.

“This recession is worse. This state fiscal crisis is worse than last time, so we would expect state tuition increases to be larger than in past years,” Johnson said.

With severe budget cutbacks in the governor of California’s new budget proposal, for example, university fees are expected to rise by at least 10 percent at California state schools. And the New York state government’s recent announcement of an unusual midyear increase to state public college tuition made it clear that the state’s budget crisis was so severe it couldn’t afford to wait until fall to impose a 14-percent tuition hike.

John Hayek, interim vice president of finance for the Kentucky Council on Postsecondary Education, says although the state announced it will hold tuition increases below last year’s, which ranged from 6 to 10 percent for in-state students, the state still plans to raise tuition by about 5 percent at community colleges and between 7 and 10 percent at public universities.

Families Uncertain How to Cover Extra Costs

For the four out of five American college students who attend public schools, these tuition increases have become a cause for concern, particularly in regard to their families’ ability to afford their college education.

Since many families lost savings in the stock market or can no longer tap home equity loans due to the real estate crash, says Jim Boyle, president of advocacy group College Parents of America, paying for college next year may be a particularly painful process with fewer means of financing college available.

“We’re probably going to have to take some options off the table (for the other children) unless things change,” said Donna Kopec, whose daughter’s college mutual fund lost a third of its value.

Kopec says that the drop in the market has created a funding challenge for all three of her college-bound daughters. She hopes President Barack Obama will follow through on campaign promises that include increasing Pell Grant amounts and implementing programs that award college grants in exchange for community service.

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Colleges Want Piece of Federal Government’s “Bailout Pie”

Student Loan Girl — Thu, 20 Nov 2008 23:17:00 GMT

With 39 states anticipating budget shortfalls next year totaling more than $100 billion, colleges are urging Congress to include them in a second economic stimulus bill currently being drafted, The Chronicle of Higher Education reports (“As the Economic Crisis Hits Home, Colleges Seek Help From Congress,” Nov. 13, 2008).

Hard hit by the deteriorating economy and financial markets, many schools are dealing with declining endowments, reduced support from the state, and higher numbers of financially needy students. To help schools overcome these challenges, college lobbyists are asking Congress to include funds for financial aid, research, and infrastructure as part of the new economic-stimulus bill.

The Association of American Universities and the American Association of Medical Colleges are specifically lobbying Congress for more money for research, emphasizing the ways colleges support the economy by creating new jobs, graduating work-ready students, and promoting business development.

In a recent letter from the AAMC quantifying its claims, the organization stated that medical colleges were responsible for about 3 million jobs, $20 billion in state tax revenue and injected $451 billion into the economy last year.

Billions Requested by College Associations

Many college associations representing a wide array of interests have petitioned Congress for several billion dollars, each for distinct purposes:

The AAMC is requesting $1.9 billion for the National Institutes of Health.
The American Association of State Colleges and Universities and the Student Aid Alliance are asking for more than $5 billion to make up for a projected shortfall in Pell Grant funding and for Congress to provide enough funding to meet a recently passed $500 increase to the maximum Pell Grant award.
The Association of American Universities wants bailout money set aside for campus construction projects that have halted across the nation.

In their pursuit of funds, schools are competing with state governments, as well as the ailing airline and auto industries. And with the transfer of power on January 20, 2009 from the current Bush administration to the Obama administration, schools may have to wait until February or later to see if they get the capital infusion they seek.

With so many urgent needs confronting Congress — including the possible collapse of Ford, Chrysler and GM, and the loss of millions of jobs if the automakers don’t receive $25 billion in emergency government loans — colleges realize that they aren’t likely a top priority to receive government aid, the Chronicle suggests.

Cynthia Littlefield, director of federal relations at the Association of Jesuit Colleges and Universities said, “There are so many people going to the trough who have legitimate needs that it’s going to be hard.”

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Education Department at Fault for Low Participation in Grant Programs, Audit Shows

Student Loan Girl — Tue, 05 Aug 2008 00:58:00 GMT

In an audit of the Department of Education, the department’s own inspector general blames the lack of participation in the government’s Academic Competitiveness and National Smart Grant programs on his department’s failure to effectively promote the programs, according to an article in The Chronicle of Higher Education (“Education Dept. Blamed for Not Doing Enough to Promote Grants,” August 4, 2008).

Low-income students who completed their state’s rigorous coursework requirements in high school are eligible for Academic Competitive Grants, otherwise known as ACG, during their freshmen and sophomore years of college. Smart Grants are awarded to low-income college juniors and seniors who are taking classes toward the completion of specific majors, including math, engineering, or technology, and maintain a 3.0 GPA.

The audit, released Friday, suggests that the Education Department hasn’t done enough to “follow-up with nonparticipating schools to ensure those [schools] required to participate” in the two programs were doing so, the inspector general said.

Although Congress approved $790 million in grants for the two programs during the 2006–07 academic year and up to $4.5 billion through 2010, the Education Department only awarded $242 million in Academic Competitiveness Grants to 310,000 students, and only $206 million in Smart Grants to 64,000 students.

Secretary Spellings Justifies Programs’ Shortcomings

Last month, Education Secretary Margaret Spellings suggested that the low participation in the grant programs was due to the fact that not enough high schools were teaching courses that meet the academic standards of the program.

While Spellings lays the blame on high schools, the inspector general’s report showed that the department had a list of 640 nonparticipating colleges and universities that were potentially eligible for the ACG program.

More than half of the schools did not respond to the department when it attempted to contact them. In a random sample of 75, or 23 percent, of these 330 nonparticipating schools, however, the report found that more than 83 percent were considered eligible.

And among the 310 schools that did respond to the department’s outreach, administrators at 23 percent of these schools said they didn’t know their schools were eligible. The inspector general found that more than 73 percent of these school were, in fact, eligible for the programs.

To improve participation in the programs, the inspector general recommends that the Education Department do a better job of reaching out to colleges and universities with eligible students. The department should also consider fining schools or taking away their eligibility to participate in the federal Pell Grant program if they have qualified students enrolled but don’t participate in the ACG or the National SMART Grant programs.

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For-Profit Colleges Face Expulsion from Federal Student Aid Program for Awarding Too Much Aid

Student Loan Girl — Fri, 25 Jul 2008 18:50:00 GMT

Under new federal legislation, many students at for-profit institutions have seen the amount of their Pell and federal student loan awards increase and a larger number these students have been able to cover all their college costs with just these two types of federal financial aid, according to an article in The Chronicle of Higher Education (“For-Profit Colleges Seek Fix for Student-Loan Problem,” July 25, 2008).

However, school administrators fear that with the growing number of students able to take out larger amounts of federal student aid, these for-profit institutions may run afoul of the federal requirement that at least 10 percent of a school’s revenue come from non-federal sources.

If more than 90 percent of a for-profit institution’s revenue comes from federal sources, these colleges may become ineligible to participate in federal student-aid programs, and students may be required to pay for college with more costly funding sources like private student loans or credit cards.

Lobbyists for these for-profit institutions are working with Congressional leaders to alter and renew the Higher Education Act to resolve this issue so that students may still be able to receive greater amounts of federal aid without jeopardizing the federal student-aid programs in place at for-profit schools.

Though Congress is preparing to break before the 2008 elections, lobbyists are hopeful that their addendum will be added to the final version of the bill, which may be voted on before the end of the current legislative session.

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Low-Income Students May Get Free Tuition at Houston Community College

Student Loan Girl — Mon, 14 Jul 2008 22:07:00 GMT

Students who are eligible for a new scholarship program at Houston Community College could have up to two years of their college education paid for.

To qualify for the scholarship program, students must be eligible to receive a Pell Grant, a form of federal financial aid that is offered to some of the nation’s most financially-needy students.

HCC’s scholarship fund, known as Opportunity 14, is designed to help low-income students who qualify for some financial aid, but who do not receive enough to completely cover the total cost of their education, according to an article in the Houston Chronicle (“HCC Program Makes College Free,” July 13, 2008).

Opportunity 14, which is sponsored by the Houston Community College Foundation, will pay for eligible students’ college expenses that are not covered by federal aid, like grants and subsidized Stafford student loans, and state grants.

Students could receive up to $6,000 over a period of two years with a maximum of $1,500 during fall and spring semesters and $1,000 for summer semesters. In most cases, the college says, the combination of financial aid and Opportunity 14 scholarship funds will cover all costs of students’ tuition, fees, and textbooks.

As many as 1,500 students may be eligible for the program this year.

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Lowest-Income Students Need More Pell Aid, Authors of New Report Find

Student Loan Girl — Mon, 05 May 2008 23:35:00 GMT

To help low-income students attend college, larger Pell Grants should be awarded to the most “financially needy” college students, according to a new report (“Window of Opportunity: Targeting Federal Grant Aid to Students With the Lowest Incomes”).

In the report, researchers from the Institute For Higher Education Policy urged lawmakers to increase Pell Grant aid by up to $750 for students who have an expected family contribution (or EFC) that is a negative number. Currently, such students are awarded the same Pell amount as students whose EFC is zero.

The report’s authors concluded that raising the minimum and maximum Pell Grant awards could provide additional aid to the neediest students while ensuring that students with family incomes bordering the eligibility cutoff do not lose their awards.

The proposal to raise Pell Grant awards is gaining traction in the U.S. Senate, according to an article in The Chronicle of Higher Education (“Report Calls for Directing Federal Aid to Neediest Students,” April 28, 2008).

Sen. Edward Kennedy, D-Mass., is backing a proposed measure to boost Pell aid to the lowest-income students as part of a broader bill aimed at dealing with the effects of the credit crunch on the student loan industry.

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In Defense of a Higher Budget for Higher Ed

Student Loan Girl — Wed, 21 Mar 2007 15:26:00 GMT

I do not know if this always holds true, but my observation has been that when politicians clash, at least when it comes to debating budget issues in higher education, students benefit. “The U.S. under secretary of education appeared before the House of Representatives subcommittee that oversees spending on education programs Wednesday to present the Education Department’s 2008 budget for higher education,” according to a March 15, 2007 article by Doug Lederman titled “Defending Bush’s Higher Ed Budget” that appeared in Inside Higher Ed.

Most believed that undersecretary Sara Martinez Tucker would be raked over the coals, grilled with questions, and face criticism and resistance, as the subcommittee she appeared before was controlled by the opposite political party. Though much of this did occur, it was not as bad as it could have been as the Appropriations Committee chairman, Rep. David Obey, D-WI, who adamantly opposed the budget, was absent, the article reported.

Criticism Pointed, But ‘Gentle’

Tucker fielded many difficult questions from committee members and responded to a myriad of criticisms as stated in the article, including “its plan to pay for its proposed increase in the maximum Pell Grant in part by cutting funds for other need-based aid and loan programs; its recent settlement that allowed a lender to keep $278 million in profits earned through an improper loophole; and its proposal to explore the creation of a possible national database of student academic records.” Many students are not aware of this last point of criticism, that a college student cannot receive financial aid if he or she has been convicted of a drug-related crime, as mentioned in the article: “Lawmakers also grilled the officials on the department’s stance toward a federal law that restricts students with drug convictions from receiving federal student aid.”

Tucker summarized her outlook on Bush’s budget as quoted in the article: “‘I believe the proposals in our 2008 budget, by broadening access for our neediest students, encouraging better preparation in high school, and targeting investments on the most effective programs, point the way forward to success,’ Tucker said.”

Democratic Budget Proposal More Generous

Earlier I mentioned that oftentimes it is a good thing when both parties clash, when both Democrats and Republicans compete for popular favor, intent on implementing legislation that sways their constituents. According to the article, after Tucker’s subcommittee appearance, the “Democrats signaled their opposition to the Bush budget in a more formal way. Leaders of the Senate Budget Committee unveiled their own spending blueprint for 2008 that would provide $6 billion more funds for the U.S. Education Department than President Bush proposed in his budget plan.” My thoughts are great, more money for education. I wonder about the specifics, though, such as: What is the extra money going for and how are they going to fund the increase?

Talk to the education financial advisors at NextStudent. They have all the information and advice you need on student loans. Check out www.nextstudent.com.

Be sure to tune in next Tuesday for my next blog about this week in student loans.

Student Loan Girl

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Perkins Program Cuts: Hint of More to Come?

Student Loan Girl — Thu, 08 Feb 2007 20:46:00 GMT

This past week I have reported on what is happening with the FY08 budget, a big part of which is the increase in the Pell Grant from $4,600 this year up to $5,400 by 2012. The question on everyone’s mind is: Where is all that extra money going to come from? Many have speculated that the $2 billion-plus required to cover the increase would come from cutting other federal programs or grants that favor low-income students and their families.

According to a Feb. 6, 2007 article by Karin Fischer titled, “Perkins Career and Technical Education Program Survives but Would Be Cut in Half” that appeared in The Chronicle of Higher Education, there may be a partial answer. Apparently, President Bush is slashing funding for the Carl D. Perkins Career and Technical Education program that serves low-income families. My guess is that this action is the beginning of several cuts yet to come that likely will cover the $2 billion Pell Grant shortfall.

Funds Slashed, But Program Retained

Fischer wrote, “Under the president’s budget plan for 2008, which was released on Monday, the vocational-education program would receive $617.4-million, down 52.6 percent from the 2006 fiscal year, the most recent year in which a federal budget was signed into law.”

Earlier, Bush commented that the program was “ineffective,” the article said, intending to eliminate it altogether. In fact, according to the article, “In his 2007 budget proposal, President Bush had called for the elimination of all federal technical-educational spending, saying that the Perkins program had ‘produced little or no evidence of improved outcomes for students despite decades of federal investment.’ ”

The article continued, “But administration officials were persuaded not to press again to scrap Perkins after changes were made during the program’s reauthorization last summer (The Chronicle, August 4, 2006).”

Either way you look at it, the money has to come from somewhere, and that means cuts to valuable programs of debatable value, depending upon with whom you talk. This implies growing pains for those who see their funding disappear, pains that likely will be isolated to the low-income college student camp.

Low-Income Students, Community Colleges Most Affected

The intended cut has received much criticism. The article quoted David S. Baime, vice president for government relations at the American Association of Community Colleges, who said, “Our colleges cannot comprehend that an administration that is so laudatory of their work would slash a program that is so essential to their quality. It is just totally bewildering to us.”

This community college segment of the student population is the one that may be hardest hit. “About 40 percent of Perkins funds go annually to community colleges to prepare students from low-income families for the workplace,” the article stated.

Here is the rundown from the article on the specifics of the cuts: “The budget plan would cut the amount of money awarded in state grants through the Perkins program by nearly 50 percent from the 2006 fiscal year allocation, to $600-million. And it would eliminate federal support for the Tech-Prep program, which gives students a technical education spread across two years of high school and two years of community college. About $104.8-million in Tech-Prep grants were awarded in 2006.”

We Got Our Wish—Or Did We?

So, as college students, we got what we asked for: increased Pell Grants. For that I am encouraged and thankful. However, I wonder the real long-term effects and how they will “shake out.” Will we really be reaping the benefits, as the government says, or are we simply witnessing a shifting of funds from one program to another, due to popular demand? Only time will tell.

The student loan advisors at NextStudent are helpful and knowledgeable about student loans. They are a trusted source in getting you the appropriate information about your student loan consolidation, student loan options, and helping students get the college financing they need. Go to www.nextstudent.com for more information.

Be sure to tune in next Thursday for my next blog on student loan advice.

Student Loan Girl

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Budget Picture FY08

Student Loan Girl — Wed, 07 Feb 2007 20:43:00 GMT

As I reported earlier this week, President Bush released his FY08 Budget on Monday, Feb. 5, 2007. And although it promises to increase the maximum Pell Grant to $4,600 this year up to $5,400 by 2012, he will use funds from other grants for low-income students to support the increase. However, how much value do presidential budget requests really hold, and what do lenders thing about Bush’s budget?

According to a Feb. 6, 2007 article by Doug Lederman titled “The Bush Budget, 2008” that appeared in Inside Higher Ed, “Even in the best years, presidential budget requests are of uncertain value, because they mark only the starting point for a long and often tortured process of deliberation, negotiation and, sometimes, outright war. The value of the White House’s 2008 budget is diminished further because Congress has yet to finish its work on the final budget for the 2007 fiscal year. That reality renders the numbers in the Bush budget for 2008, if not meaningless, at least hazier and fuzzier than usual.”

Changing the Budget Could Mean Complications for Legislators

By earmarking funds that would go to other low-income grants to help solve the Pell Grant initiative, Bush seems to complicate the college funding crisis even further. Lederman reported, “The budget picture is complicated even further by the fact that the administration would seek to pay for some of its new initiatives with changes in mandatory spending programs that would require the kinds of major alterations in federal student aid law that legislators are loathe to make in the budget-setting process.

“The more than $2 billion that the department would try to squeeze from lender profits to pay for the 2008 Pell Grant increase, for instance, would be possible only if Congress were to include such changes in legislation to renew the Higher Education Act, or pass a complicated budget reconciliation measure, in conjunction with the annual appropriations bills. Those prospects are dicey, casting further doubt on the likelihood that the Bush budget numbers will come to pass.”

What the Lenders Say

The new budget also proposes to “cut the interest rate subsidiary” that private lenders receive for funding federal student loans “by 0.5 percentage points” in a bid to raise the additional 12.4 billion needed to increase the Pell Grant to $5,400 by 2012, the article said.

In the article, Lederman quoted Joe Belew, president of the Consumer Bankers Association, as saying “Student lenders cannot sustain cuts of this magnitude, which would cut margins by about 20 percent. Driving away banks from this program will leave students with either a government monopoly or an oligopoly of loan providers and few if any of the benefits currently provided by competition. These include lender-paid origination fees, financial literacy and default prevention counseling, rate reductions for timely repayments, and quality customer service. Without banks in the student loan program, graduates can look forward to IRS-style quality of service.”

It is important to keep up to date on the effects of legislation and news on student loans and education. What goes on in government and in your state can have a great impact on your student loans and your college education.

For all the information you need about student loans, go to www.nextstudent.com.

Be sure to tune in next Wednesday for my next blog on student loan legislation in the news.

Student Loan Girl

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