Pell grants might drop for students

The 1992 Higher Education Act Amendments directed the U.S.
Secretary of Education to update the state tax allowance tables by
using income data from the Internal Revenue Service. But the
department did not enforce this bill until this year. Previously
information from 1988 was used to determine Pell grants. Secretary
of Education Rod Paige said new tax tables wouldn’t decrease
the Pell budget.

“President Bush and I have made funding Pell grants one of
the Administration’s highest priorities. We have proposed
higher increases in funding for Pell grants than were enacted
during the eight years of the previous administration,” Paige
said.

He said although changes will be made in funding, “the
Pell grant program is not being cut. It continues to grow, both in
funding and number of students who will receive aid.”

Margaret Rodriguez, associate director of financial aid at the
University, said the new tax tables would indirectly affect Pell
grants. “Pell grant eligibility is based primarily on the
Free Application For Student Aid. However, the Department of
Education is updating their tables that underlie need analysis,
which will yield different outcomes,” she said.

All college students who apply for financial aid must fill out a
FAFSA form for every year they attend school, where they are
required to put down their family’s incomes and tax return
information. The new tables will take taxes enacted since 1988 into
consideration, hence possibly lowering the amount Pell grants can
offer students.

According to a 2003 Congressional Research Service memo,
low-income applicants will not be affected. “Expected family
contributions of a significant number of very low-income aid
applicants will be unaffected by these revisions, and that many
relatively high-income applicants will find their eligibility for
federal aid unaffected, although their EFCs may have risen,”
the memo said.

The Department of Education estimates that postponing the
required update to the state tax percentages would increase Pell
grant expenditures for the 2004-2005 school year by $270
million.

While changes will be made to the tax tables, Rodriguez said
implications are still uncertain. “We will run analyses to
see how changes in Pell will impact funding for our students, but
this issue has been so up and down that we do not know yet how it
will affect students.”

“It is important to note that a number of family financial
and household circumstances affect a student’s eligibility
for aid each year, and therefore it is difficult to determine the
overall impact of this update nationwide,” Paige said.

Financial aid is affected by annual changes in the amount of
family income, household size, federal income taxes paid, the
number of family members enrolled in college, and values of savings
and assets.

“We intend to continue this strong support for the Pell
Grant program in order to assist students from low-income families
in their dream of obtaining a postsecondary education,” he
said.