Rule update reduces state’s Pell Grant awards

    In response to the passage of an omnibus spending bill by Congress in November, the federal Department of Education has announced updated tax tables to be used in determining Pell Grant awards for college students.

    Educators believe that the revisions, which will take effect in the 2005-06 academic year, will cause some currently eligible students to have their Pell Grants significantly reduced or lost entirely, despite an approved overall $400 million increase in funding for the program.

    While the Department of Education attempted to update tax tables in recent years, various congressional delays and “rider” provisions attached to legislation have prevented change, mandating the use of outdated 1988 tables in financial aid judgments since 1994.

    The implementation of the new system means that 48 states will see a decrease in their current Pell Grant eligibility; New Jersey will see no change in income that parents can exclude from financial-need calculations and Connecticut exclusions will increase by 1 percent. California allowances will decline by 1 percent.

    The reduction in eligibility is the result of lower state taxes, which make it appear that a student’s family has more dispensable income that can be applied toward higher education than under the old formulas.

    The new tables, based on 2002 tax data, have become the subject of intense partisan debate. Both supporters of the change and opponents have claimed that their policies are in the best interest of students.

    Chairman of the House Education and Workforce Committee Rep. John Boehner (R-Ohio) defended the use of more recent tax information in financial aid calculations.

    “Updating the tax tables ensures that Pell Grants are going to the neediest students attending college — the very students Pell Grants were created to assist in the first place,” Boehner stated in a press release issued by the committee’s Republicans. “Keeping the 1988 tables intact means preserving the status quo, including budget shortfalls as far as the eye can see. Low-income students deserve to know that the federal government is doing everything it can to keep the Pell Grant program on stable financial footing.”

    However, Representative George Miller (D-Calif.), a senior Democrat on the House Education and Workforce Committee, criticized the changes made by the Department of Education in a Dec. 22 statement.

    “This holiday season, the Bush administration is leaving lumps of coal in the stockings of hardworking college students and their families,” Miller said. “For over a million college students already struggling to afford the skyrocketing cost of tuition, the Bush administration’s Grinch-like priorities will put higher education, and the opportunities that come with it, even further out of reach. … The administration and Congress should do everything they can to make college more affordable. But by making this change, they are raising the price of college.”

    Approximately 89,000 applicants eligible for a Pell Grant under current tax tables will lose their Pell Grants using the new tables, and an additional 1.3 million students could see a Pell Grant reduction anywhere from $100 to $300, according to the American Council on Education. The total number of Pell Grant recipients is expected to increase slightly in the coming year because more students will be eligible for aid.

    ACE estimates that the revisions will save the government approximately $300 million. Boehner said the savings were necessary to balance the growing shortfall in Pell Grant funding that exceeds $3 billion. The deficit has resulted from an unexpectedly higher number of qualified students applying for aid than Congress has budgeted for over the past several years.

    Higher education advocates have criticized the cuts to Pell Grant rolls. National Association of Student Financial Aid Administrators President Dallas Martin condemned the decision to update the tables.

    “The Education Department’s decision to proceed with the outdated and methodologically flawed revisions to their federal need analysis [and to] state and other tax tables means that many needy students will be forced to go deeper into debt to pursue their postsecondary education plans in the next academic year,” Martin stated in a Dec. 23 issue of NASFAA’s Today’s News publication.

    Martin also questioned the legality of changes made by the Education Department. In a letter to outgoing Education Secretary Rod Paige, he wrote that the government would be violating provisions of federal law by making table adjustments after June 1.

    “Not meeting the date in the law, we believe, precludes the issuance of updated tables for academic year 2005-06 and that fact, we believe, would be upheld in a lawsuit,” Martin said.

    Martin reiterated this point in a statement issued by the organization after the updated tables were announced, one month after the passage of the omnibus bill.

    “Despite objections from NASFAA and many others about how these changes are being made, it appears that there is little likelihood of sufficient congressional support to stop this implementation,” Martin said. “The only scenario I can envision to forestall these changes would be for a person or persons with standing — who are negatively impacted by the change — to take legal action against the department for not publishing these [tables] by the required June 1 deadline.”

    However, a major anti-tax nonprofit interest group expressed support for the changes, saying that keeping outdated tax information would only add to the problem of rising college costs.

    “[The National Taxpayer Union] is concerned that the outdated tax tables may be leading to a misallocation of budget resources, which in turn, only puts pressure on the budget for more Pell Grant funding increases from political advocates of the program,” NTU Vice President for Communications Peter J. Sepp stated in an e-mail. “Many students and their families who are trying to pay for college are also chipping in federal taxes that help fund Pell Grants and other aid programs. At the very least, they deserve a competently managed program for the money they and the rest of the nation’s taxpayers contribute to the treasury.”

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