Dartmouth College will pay more than $50,000 to bail out students who will lose portions of their Pell Grants in 2005-2006 because of changes in the way the federal government calculates need for its largest financial-aid program, which offers up to about $4,000 to five million students each year.
Allowances for state taxes were lowered in the formula for determining grant eligibility, resulting in students losing an average of about $100 of grant funds. Dartmouth officials, however, said the College would make up the difference for affected students.
"Dartmouth money will replace the lost Pell Grant money," Director of Financial Aid Virginia Hazen said, adding that the lost funds are "more important to the College than to the students."
Hazen said the Pell cuts will not affect students because the financial aid budget will increase to compensate for the loss of federal funding. Where the additional funding will come from without affecting other College programs is not immediately clear.
"It's incredible to come to a school that is willing to do all it can for its students. I am really glad that the school is making up for the mistakes that the government is making," Leonardo Ospina '08 said.
About 530 students at Dartmouth receive Pell Grants, Hazen said. Because of the money they receive from the federal government, Dartmouth has to spend less money to meet each student's demonstrated need. Each year, the grants save the College between $1.3 and $1.4 million in awarding financial aid packages, which total about $42 million each year.
Eligibility for Pell Grants is based on estimated family contribution figure, calculated by adding up a family's income and subtracting from that number to account for various mitigating factors, including taxes and multiple college students in a single family.
Pell Grants are awarded when EFC drops below $3,850. Award values range from $400 to $4,050. Because of the modifications to the state tax allowance, families will now subtract less from their total income, leaving many students receiving less money from the government for college.
While the cuts will cost Dartmouth over $50,000, Hazen said the College was not hit as hard as some institutions because its students comes from many different states, which are affected differently by the new formulae.
"This is another instance in which our geographically diverse student body is a benefit," said Hazen.
While Dartmouth was hurt by the average drop in Pell Grant allowances, many institutions that draw more strongly from certain states were hit hard. Michigan, for example, had its state tax allowance slashed four percent, leaving the University of Michigan facing much more significant losses in federal financial aid funds.
Although Dartmouth will have to come up with a significant chunk of cash to make up for the loss of Pell Grant money, the additional College funds will benefit more than a quarter of students.
