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Printer-Friendly ModeCuts will affect 2,200 students
Government reduces Pell Grants
January 17, 2005 —
Saginaw Valley State University awards approximately $22 million in Stafford Loans and $5.5 million in Pell Grants per year.
But even with such high figures, students struggle to pay for tuition, books, room and board, and other expenses.
In December, the U.S. Congress approved President Bush's new budget, which reduces the amount of money available for Pell Grants and other need-based financial aid.
According to Robert Lemuel, director of Scholarships and Financial Aid at SVSU, 85 percent of the 2,200 SVSU students currently receiving Pell Grants will be affected by the new budget. While the cut may not force students to drop out of college, it puts many of them in a bind.
"When funds are cut, students must take out more loans," Lemuel says.
The average Stafford Loan debt for SVSU graduates is $17,800.
Alternative loans are harder to acquire because they require one to have good credit or a co-signer. A student with little or no assistance from Pell Grants may be left without enough money to pay for higher education because Stafford Loans are often not enough to cover expenses.
"We believe that the amount of the Stafford Loan a student can receive is too low," Lemuel says.
Most likely, the cut would affect the total amount students receive, but not eligibility. Lemuel suggests that planning is the best way to overcome low financial assistance. Once students receive award letters, they should immediately visit the Financial Aid Office in Wickes 141 to determine additional steps they must take.
Students and parents are wondering why the federal funding of Pell Grants is being cut. According to Lemuel, the federal government recently updated state and local tax tables, which determine how much money is allocated to federal assistance programs.
"Federal laws state that they must update it yearly, but they haven't been updating it," Lemuel says.
In fact, the current update is 15 years overdue. The last update occurred in 1994, but it used tax data from 1988.
Proponents say that people have been paying lower taxes, thus students have actually been receiving more assistance than they needed. Opponents, like the National Association of Student and Financial Aid Administrators, say, "The tax tables are not reflective of current tax rates."
According to the law, changes to the current program were supposed to be published before July 1, 2004, but it was actually published in December - almost 5 months too late.
Students may be surprised when they receive their award letters in April.
Lemuel expects to receive a lot of telephone calls from parents and visits from students wondering why their federal assistance was decreased. The only thing he can do is explain to them how financial aid is determined, why it was reduced, and help them find alternative sources for assistance.
There is simply a lack of funding for the program.
"The state is in a deficit," Lemuel says. "They have to make cuts somewhere."
Financial assistance or student need is determined by subtracting Expected Family Contribution (EFC) from the total cost of attendance.
Students who make less than $15,000 per year should have an EFC equal to 0, which means they will receive assistance. However, EFC also considers total assets and parental income. Because EFC is calculated using these factors, any student receiving financial assistance could be affected.
"Earlier in summer 2004 they were talking about it," Lemuel says. "But we were not sure how it would affect our students."
Students can pick up the 2005 FAFSA at the Financial Aid Office or update it online at www.fafsa.ed.gov.