Federal financial aid formula readjusted

    A readjustment of the U.S. Department of Education’s financial aid formula that would change some student’s eligibility for federal aid is now under review by Congress.

    According to experts, however, Congress is likely to stop these changes from being applied to the 2004-05 school year.

    A report released by the Congressional Research Service showed that the adjustment would prevent 84,000 students in California from receiving Pell Grants, which would also effectively make them ineligible for other forms of aid. The Department of Education’s changes ultimately would lower the amount of deductions that a family can make, which in turn would make it appear that some families have larger incomes and could make greater contributions.

    Financial aid is usually determined by how much a family can contribute to a student’s education. Families are allowed to deduct how much they spend depending on state taxes.

    ³Because of the adjustment to state taxes, the contributions go up relatively small amounts, so about 1 million students get slightly lower Pell Grants by 200 to 300 dollars,”” said director of the Advisory Committee for Higher Education Brian Fitzgerald.

    However, Fitzgerald said that since the minimum award of the Pell Grant is 400 dollars, the proposed changes could mean that students could drop below that minimum and lose the entire grant.

    According to Fitzgerald, there would also be effects in state grants since other forms of aid make up part of an award package. Because those funds have to go to Pell recipients, some students could stand to lose a substantial amount of money.

    ³The effects of the changes are not huge in terms of the Pell grant, but for some individuals, there can be cumulative losses,”” Fitzgerald said.

    According to UCSD Financial Aid Director Vince De Anda, there are currently 5,900 students on campus who receive the Pell Grant. UCSD awarded over $144 million dollars in financial aid for the 2003-2004 school year.

    ³It would affect just about all the aid that the university gives,”” De Anda said. ³In fact, it would affect all my need-based financial aid, which is 90 percent of the financial aid here.””

    The changes were first announced in May when the Department of Education cited obligations under federal law to re-adjust the value of family and student contributions according to data on state taxes from the year 2000.

    ³The Department of Education is required by law to update the tax tables used to compute financial aid,”” said Department of Education spokesperson Jane Glickman. ³But Congress has taken steps to postpone the implementation of the newer tax tables.””

    However, the current data reflected the economic circumstances of the 1990s when state taxes were decreasing. The department had changed its family living allowance based on state taxes that are only periodically updated. According to the D.O.E.’s data, state taxes have been on the rise since the mid-’90s, but the department was required to readjust its formula even with the economic decline toward end of 1990s and the rise of state taxes.

    ³The fundamental question is whether or not these state tax tables really reflect what families are paying now,”” Fitzgerald said. ³Many have questioned whether it was wise to implement a table that reflects lower tax burdens when we know it has risen.””

    The changes would come into Jan. 1, pending Congress approval. Experts have predicted that the Congress is likely to put limitations on the bill that would prohibit the department from using the old tax tables.

    The House is slated to vote on the measure on Dec. 8, while the Senate is not expected to vote until January.

    aI think that it was a good move that they stopped the adjustment until they had a chance to look at it,”” De Anda said. “”At least Congress is looking at it and I suppose that they’ll tweak it a little bit.””

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