Paying for college just got harder
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"Think about the student who is going somewhere like Aims Community College in Greeley Colo., where tuition is very minimal - $400 can be a lot to them," says Chris Simmons, assistant director of government relations at ACE. "I wish there had been more discussion or public debate about this, but in the end, the Department of Education was following the law. You can't blame them for that."Skip to next paragraph
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Mr. Fitzgerald, too, acknowledges the need for updating the Pell formulas, but preferred other solutions to the one chosen. His committee suggested phasing in the change over two years, which would have cost $150 million, or doing a more sweeping, one-time adjustment to eliminate some of the inequities in the way the grant program weighs state taxes.
Currently, it takes into account the amount of income tax and property taxes families pay in each state, but not other burdens, like sales tax or fees. Congress, Fitzgerald says, decided both options were too expensive.
In defense of the Pell decision, the House Education and Workforce Committee issued a statement underlining the fact that Pell grant funding is at an all-time high, and noting that without the changes, it would be impossible to increase the maximum grant to the neediest students, since the Pell budget shortfall has continued to grow.
The bigger question for students goes beyond just one grant. College affordability has hit what some call a "perfect storm" involving rising tuition, decreasing state funding, fewer student-aid options, and changing demographics.
"This decade, we'll see the largest generation in the history of the nation enrolling in college," says Fitzgerald. By 2010, some 32 million will attend college, and increasing numbers are minority students, often with more financial needs. His committee found that the average low-income student faces a $4,000 gap between their student aid and the cost of college. As they struggle to work more - occasionally seeing aid reduced as they report job earnings - "it turns into a death spiral for a lot of students," he says.
With so many sources of grants and loans either frozen or diminished, many are turning to private loan companies, which often charge higher interest rates and are exploding with business.
Last week, Sallie Mae - the largest student-loan company, created by Congress in 1972 - completed its privatization four years ahead of schedule. The company manages more than $98 billion in loans, and recently made an offer to buy Pennsylvania's state-run loan business for $1 billion, but was turned down.
Some experts worry, though, about students' growing reliance on loans and the repayment burden they shoulder when they graduate.
"There seems to be an effort to make the loan program the program to provide access to college, but that's not going to work for some low-income students, who have difficulty taking out a loan, or where it's anathema to families to borrow," says Sheila Pruden, an independent student financial-aid policy consultant in Illinois. "Education is the great equalizer, the way people get into the middle class. It's in the federal interest."