FAFSA Form & Financial Aid Form Blog

As if there aren’t enough law changes when it comes to student loans, below is an article regarding a proposal to raise the maximum Pell Grant amount but lowering other student aid Programs. I thought this article was worthy of posting for all you college students and parents.

On the Offensive

Education Department officials are going on the offensive to defend President Bush’s proposal to raise the maximum Pell Grant in part by eliminating several other student aid programs, challenging numbers circulated by higher education groups to criticize the plan and insisting that it would most efficiently get more financial aid in the hands of more needy students.

Department officials seem clearly stung by the criticism that college leaders and others have leveled at the proposal contained in the 2008 budget plan President Bush released this week, which calls for increasing the maximum Pell Grant to $4,600 next year and to $5,400 by 2012.

College leaders embraced the idea of bolstering spending on the federal government’s primary source of need-based financial aid. But they have attacked the proposal for planning to pay for the Pell increase, in part, by ending the Supplemental Educational Opportunity Grant Program, which provides about 1.3 million students a year with grants that average $770 but can rise to as much as $4,000. In addition to ending funds for SEOG and two other smaller student-aid programs (the Leveraging Educational Assistance Partnerships and Perkins Loan Programs), the administration would pour new funds into the Pell Grant Program

Critics of the president’s proposal have widely cited numbers provided by the American Council on Education suggesting that of the 1.3 million students who receive the supplemental education grants each year, about a million of them would lose money in the program’s first year. The council’s analysis assumes that any student who received SEOG funds of $300 or more would lose out, because the administration’s Pell Grant increase would amount to $290 over and above the $260 Pell Grant increase that Congress is poised to enact in its soon-to-be-passed spending bill for 2007.

The catch phrase floating around Washington higher education circles is that the administration is “robbing Peter to pay Pell.” Terry W. Hartle, the council’s senior vice president for government and public affairs, said: “Every presidential budget, regardless of party, contains at least one bad idea. For 2008, it’s eliminating SEOG.”

In a telephone call initiated by department officials Thursday, Sara Martinez Tucker, the under secretary of education, directly challenged both the ACE numbers and the premise that the administration is strengthening Pell at the expense of other programs. She argued forcefully that the administration’s plan — which would derive significant new revenue for student aid by cutting lenders’ profits — is very much in the best interests of students from low-income families, while still being prudent for taxpayers as well.

“This budget would advantage need-based aid in a huge way,” Tucker said. “The Bush administration is adding $2 billion in need-based aid over last year, and $1.3 million over” Congress’s budget plan for 2007. Not only would the administration’s plan add significant new funds for Pell Grants, Tucker said, but it would also ratchet up spending on the Academic Competitiveness Grants Program that Congress created in 2005, which provides funds to Pell-eligible freshmen and sophomores who took a “rigorous” high school curriculum and maintain a 3.0 grade point average in college.

Tucker said that the department’s own analysis — in contrast to that of the American Council on Education — takes into account the new funds that would flow to students through the Academic Competitiveness Grants as well as through Pell. Through that prism, she said, 45 percent of students who receive Supplemental Educational Opportunity Grants would see an average increase of $310 in need-based aid in 2008 (through a combination of larger Pell and Academic Competitiveness Grants).

Despite those larger grants, 36 percent of SEOG recipients would still lose as much as $500 in 2008 (though they would gain that back through the $200-a-year Pell increases the administration has proposed for 2009-12). And the remaining 9 percent of SEOG recipients, Tucker said, would lose significantly under the Bush plan — but those, she said, are the small minority of SEOG recipients who do not qualify for Pell Grants because they are above the income threshold, and who tend to be at high-priced colleges.

The under secretary said that the latter statistic underscored the Education Department’s other major point: that the supplemental grants program is not the most effective use of federal student aid funds. Although college financial aid directors like the program because they say it gives them flexibility to craft awards that best meet the diverse financial needs of their students, the SEOG program has been criticized in the past because its funds go disproportionately to colleges that have been in the federal financial aid programs the longest, favoring private institutions and often shortchanging community colleges and other newer institutions, which Tucker described as more likely to educate needy students.

“When we looked at the numbers, we found that campuses that enroll 70 percent of low-income students only got 40 percent of the SEOG money,” Tucker said. In addition, department officials complained that the SEOG program, for every dollar awarded, costs significantly more to operate than the Pell program does, by a margin of 250 to 1.

Taken together, Tucker said, those factors — that more needy students would benefit than be hurt by the shift, and that the SEOG program is costly to run and isn’t well-targeted to the needs of needy students — make the Bush proposal a wise one. “To the extent that we’re trying to focus on increasing need-based aid for students, we’re going with the proven winner, Pell.” Instead of trying to fix SEOG to make it more fair, she said, “why shouldn’t we just go straight to advantaging students through Pell?”

Officials at the American Council on Education said they stood by their numbers, which were drawn from the department’s own data, and questioned whether department officials really needed to kill the supplemental grants program to reach their goal of bolstering Pell.

“The administration is basically asking two questions: First, is SEOG effectively targeted and efficiently administered, and second, can you eliminate SEOG without hurting low-income students?,” said Hartle of ACE. “They’ve answered first question ‘No,’ and the second question ‘Yes.’ They might be right on the first question, but they’re dead wrong on the second.”

Hartle cited numbers in the department’s own budget documents showing that the number of financial aid awards to students would shrink from about 6.5 million in 2006 (for Pell and SEOG, or 7 million including the other two programs the administration would kill, LEAP and Perkins) to 5.5 million (just for Pell) in 2008. If one includes the Academic Competitiveness Grants in that calculation, the total would shrink from 7.5 million to 6.1 million. (The number of Pell recipients, department officials counter, would grow by about 300,000.)

“I just don’t see how you can take away 1.3 million SEOG awards, the vast majority of which go to low-income students, and claim that somehow that only 10 percent will be affected — it just fails any kind of face validity,” Hartle said. “The idea that the answer to the problem of SEOG is to kill it is a little like junking a perfectly good car because it needs good tires.”

Although college lobbyists and many student-aid officials are lining up against the administration’s proposal, at least one prominent financial aid expert thinks the Education Department may be on to something. Mark Kantrowitz, publisher of FinAid.org and director of advanced projects at FastWeb.com, said that both sides can legitimately cite numbers to back up their views, but that to the extent the administration hopes to eliminate duplication, the proposal makes sense, since the Pell and SEOG programs serve roughly the same income bands.

“If this were a business,” he said, the supplemental grant program “would have been consolidated a long time ago.”

— Doug Lederman

Other Informative Links:
# Stafford Federal Student Loan Information
# Ms. Stafford!
# Student Loan Consolidation
# Alternative Student Loans

There has been a lot of buzz lately about President Bush’s proposal to increase the annual Pell Grant awards, while simultaneously eliminating the FSEOG (Federal Supplemental Educational Opportunity Grant)…His proposal is to:

1. Increase the current annual limit of $4050 to $4310 per student for the upcoming school year
2. For Fall 2008 school year, increase the Pell Grant to $4600 per student
3. Over the following 5 years, increase the Pell Grant to $5400

So, lets back up a bit…for those of you who are not familiar with the Pell Grant…it is a Federal Grant that was created in 1973 by a then Rhode Island Senator, Claiborne Pell…It was created to provide funds to U.S. College students who needed financial aid in order to attend college. The Pell Grant is basically “free money”. It does not need to be paid back…UNLESS..you are awarded the grant at the beginning of a semester…then you decide to drop your classes, or drop below halftime. This changes your eligibility for the grant, and it must be either be returned or paid back.

Back to the controversy….it is a pretty common pattern that when you get more of something, there is usually something else that suffers from it. So to get more in the Pell Grant, the Bush administration must cut other grant programs to pay for it…although not as well known as the Pell Grant, these other grants still help out many financially needy students.

So this is what it comes down to: an increase in the Pell Grant is good news, but financial aid administrators and students do not want the other Federal Grant programs to be eliminated…here is what I was thinking: perhaps over the next 7 year increase of the Pell, it will make up the difference of money lost from the elimination of smaller federal grant programs? Opinions…comments?

Other Student Related Links

• Stafford Federal Student Loan Information
• Ms. Stafford!
• Student Loan Consolidation - Manage your loans
• Alternative Student Loans
• Graduate Loans

I have received some inquiries about my previous blog: 5 Bizarre things you did not know about the FAFSA.

What qualifies you as an Independent Student?

If one or any of the following apply to you, then you will be considered an Independent Student:

1. You are enrolled in a Masters program, Doctorate Degree, or graduate Certification program
   • age does not matter, if you are enrolled in any of these types of programs you are considered and independent student
2. You have a child or children that are your legal dependent(s)
   • you may have a family member etc. that is considered your dependent…he/she does not necessarily have to be a child
3. You are married
4. You are under the age of 24 and both of your parents are deceased
5. You were a ward of your state until you were 18 years of age
6. You are 24 years of age or older
7. You are a Veteran of the United States Armed Force

The most important aspect of this is to remember that your school has the right to reassess certain circumstances, a process called professional judgement.

Some students have no contact with their parents, and therefore cannot use their tax information for filing the FAFSA. If you find yourself in this situation, you’ll need to go to your school’s financial aid office and ask them for help. Chances are, you’ll also need to bring plentiful documentation (rent, utilities, etc.) to prove that your situation is as you say it is. You’ll be asking for a professional judgement override on dependency status.

If anyone has specific questions about any of these qualifications, post a comment! I will be sure to get back to you :)