Washington Week . Student Voices

Bill may reduce financial aid funds
By David Kassabian
Daily Texan (U. Texas-Austin)
07/16/2004

(U-WIRE) AUSTIN, Texas — Federal money to be used for some college financial aid programs will be reduced or remain the same if a spending bill approved by the U.S. House Appropriations Committee is made into law.

The bill was approved in committee Wednesday and calls for the maximum Pell Grant award not to be changed from the previously set limit of $4,050. The proposal also has a provision reducing federal money for the Perkins Loan Program by 60 percent, $99 million in total, to $67 million.

Perkins loans are awarded primarily to undergraduate students with exceptional financial need, according to the Student Financial Services Web site. This is a campus-based loan program under which UT acts as the lender, using a limited pool of funds provided by the federal government. The Pell Grant is a federal grant awarded to all eligible students working on their first undergraduate degree who have filed a Federal Application for Student Aid and demonstrate certain levels of financial need, the Web site said.

The proposed changes to Pell Grants and Perkins loans will only have a direct impact on a small minority of students, but there could be a domino effect for other students who have financial aid should the bill become law, said Don Davis, associate director of Student Financial Services at the University.

"For those students who had Pell Grants, you need to come up with something more to make up the difference because they are the neediest students," Davis said. "If you're going to meet the need of the needy, you either take grant money from other [less-needy] students, or you award other loans."

The reduction of money for Perkins loans is less of an issue, Davis said, because for most students there are other loan programs available, such as the Stafford Loans, which are available in whatever quantity students want and have had a slightly better interest rate over the past few years. Last year, 20,000 UT students had Stafford loans, as opposed to 3,000 with Perkins loans.

Because of the way the system is structured, however, any changes made by the Appropriations Committee bill will decrease new money for the Perkins Loan Program, which last year only accounted for $950,000 of $11 million awarded by the University in Perkins loans, Davis said. The vast majority of money obtained for Perkins loans at UT is obtained through what Davis called "revolving fund collections," which is basically money made off of previous UT students who graduated and are still paying off their Perkins loans, he said.

"Where a decrease in Perkins funding could hurt is in high-need students who have Perkins loans as second loans, creating problems for probably less than 100 students who receive financial aid," Davis added.

For some lawmakers however, keeping the amount of Pell Grants awarded at the current level is a step in the wrong direction.

"It is unacceptable to freeze the maximum Pell Grant award as Republicans have done, when its buying power is at the lowest point it has been since the 1970s," said U.S. Rep. Lloyd Doggett, D-Austin.

Doggett is a sponsor of the College Opportunity for All Act, which would double the maximum Pell Grant award if passed.

Students interested in learning more about financial aid can learn more at the Student Financial Services office in the Student Services Building, which offers a variety of resources for students, ranging from individual counseling to computer databases, all detailing the different types of aid available.

Davis said students shouldn't worry about the ultimate affect of the proposed student aid changes.

"The changes will have a very modest effect on students, because they're not cutting Pell funds, and Perkins loans are a small part of student loans awarded by the University," he said.

For psychology freshman Lauren Berry, reassurances from those within the Office of Student Financial Services are not enough to put concerns regarding financial aid to bed. Berry has both Perkins and Stafford loans and would be one of the few students who would be affected the most if cuts to Perkins loans did happen.

"I think that's ridiculous, because we barely get enough as it is — the loans are pretty much for students who need financial aid," Berry said. "If I didn't have loans, I pretty much would not be able to pay for college — if anything they need to increase the funding for the loans."

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