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February 17, 2005

Federal Eligibility Changes Affect Pell Grants

As a national debate ensues over the fate of financial aid programs, one thing is certain: Some Pitt students will lose Pell grant money this fall.
Pell grants are the cornerstone of the federal education grant program. According to national estimates, about 84,000 students or 1.5 percent of awardees could lose their Pell grants this fall and 1.3 million students could receive less money. The funding shift resulted from the Department of Education changing its eligibility formula for the grants.
Here at Pitt’s Oakland campus, of the estimated 3,300 students who receive Pell grants (almost 22 percent of all full-time students), about 125 students could lose their eligibility for the grant this fall, according to Betsy Porter, director of Admissions and Financial Aid. Another 2,200 students who currently qualify for Pell grants most likely would receive $100 less this fall. Pell grant recipients at the University received about $8.6 million in fall 2004.
“For students and families who are eliminated at varying levels for the Pell grant, they will need to replace it. And for some families, that will be hard to do,” Porter said. “They should come to our Financial Aid office and we’ll find resources. To replace the grant, people will most likely have to borrow money and/or take advantage of the work-study program.”
On the bright side, the Pennsylvania Higher Education Assistance Agency (PHEAA) will offer an additional $55 million, a 12.5 percent increase over last year, in grants for college students for fiscal year 2006. PHEAA is another source of grant assistance to students who live in Pennsylvania. Porter said she was unsure of how much of the PHEAA increase would go to Pitt students. Currently, about 5,000 Pitt students receive PHEAA grants.
For the following year, the financial aid changes are even more difficult to predict, according to Porter.
Some dramatic changes in financial aid, particularly the gutting of the low-interest Perkins loan program for low-income students, were proposed in the Bush federal budget for fiscal year 2006. Porter predicts a fierce fight on the national front over the proposed cuts.
“There’s already a groundswell of interest,” said Porter of educational groups. For example, officials from organizations such as the National Association of Student Financial Aid Administrators (NASFAA) will examine then articulate how students will be affected by the cuts.
And unlike other funding issues, the proposed education cuts will impact a large number of institutions, she said. “There could be a dramatic, negative impact for all institutions and I think you will see a strong and consistent effort to try to maintain the programs that we have.”
NASFAA recently highlighted some criticism of the cuts by members of the U.S. House education committee’s minority staff. According to the NASFAA web site, the Bush budget was characterized as “making cuts to education funding for the first time in years, for eliminating the current low-fixed-rate consolidation benefit for student loans, and for terminating critical education programs such as low-interest Perkins loans for low-income students.”
The Bush FY06 budget seeks to increase the maximum Pell award from $4,050 to $4,500 over the next five years, which means Pell recipients would receive about $100 more a year. However, that increase might not offset the proposed elimination of the Perkins loan program, Porter said.
Currently, nearly 2,000 Pitt students receive about $1,900 each in Perkins loans annually. If subsidies are reduced on other loan programs such as Stafford loans, the difference might cost students and families more over the long run.
“We’re just going to have to see how the current budget proposal works its way through the negotiating stage before we can access the impact on our students,” Porter said. “You’re not going to see a quick answer” on Perkins loans and other proposed cuts, she predicted.
The bottom line is how much low-income families will be affected by the changes, Porter said. Will the changes impact a student’s access to and choice of schools?
According to Porter, profound changes in financial aid could limit future possibilities for students. If there isn’t enough loan money to cover the tuition costs of preferred schools, students will have to look elsewhere, she said.
To apply for financial aid at Pitt, the preferred filing date is March 1 for freshmen and April 1 for upper-classmen. To find out more about financial aid at Pitt, visit
—Mary Ann Thomas

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