The Bush administration's proposed federal budget would slash the Federal Perkins Loan program, used by 1,325 undergraduates, potentially forcing the College to adjust its financial aid program.
Budget squeezes at the National Institutes of Health and National Science Foundation, meanwhile, will likely result in less government money available for science research.
The Department of Education, which has argued that Perkins Loans duplicate other programs and are only available at a limited number of institutions, would rather earmark money for Pell Grants, which are targeted to low-income students regardless of the institution they attend.
If approved by Congress, which has the power to strike or modify any part of the budget during the approval process, the end of Perkins Loans would lead Dartmouth to look to other programs -- especially Stafford Loans -- to try to meet the needs of students and their families, according to Virginia Hazen, the College's director of financial aid.
The College lent out $5.7 million in Perkins Loans last year but usually disburses around $3 million, Hazen said. It typically draws on Stafford Loans for about $4 million.
Although also federally administered, Stafford Loans differ from Perkins Loans in that they have a flexible interest rate rather than a fixed one. A shift toward Stafford Loans would mean more reliance on the whims of the market.
Perkins Loans currently have a fixed 5-percent interest rate, while the interest rate on Stafford Loans -- though lower than the Perkins Loans rate -- can rise as high as 8.75 percent.
The Bush plan would stop new government contributions into college Perkins funds, including an upcoming $400,000 input for Dartmouth's revolving fund, Hazen said.
Another provision would take back previous contributions to the fund as students repay money into the system each year.
"I think it's a real hard blow, because I think this program is extremely important to very low-income students," Hazen said.
While the budget does include a five-year $500 increase in the maximum annual award for Pell Grants, Hazen doubts that would make up the difference.
"If all our students were to get the $100 increase, that's not going to offset $3 million," Hazen said, noting that most of the approximately 540 Dartmouth students who received Pell Grants this year would not get the benefit because they take out less than the maximum.
Hazen also noted differences in cancellation eligibility under the two programs. For example, teachers and the disabled can have their loans forgiven under both the Stafford and Perkins programs, whereas Perkins Loans are additionally voided for both nurses and Peace Corps volunteers.
The shift toward Stafford loans would also be mirrored for graduate students, 279 of whom took out Perkins Loans this year. Pell Grants, on the other hand, do not have to be paid back and are only available to undergraduates.
The Perkins cut is part of an overall attempt by the Bush administration to lower discretionary spending in the new budget, which includes the elimination of a number of social welfare programs.
The budget could also make it harder for scientists to get research grants.
"It's a very serious state of affairs for academic research," said chemistry department chair John Winn, noting the contrast of government budget run-ups for funding a few years ago with today's harsher grant picture.
He said large contributions from private donors are harder to obtain than government grants, and specialized technology and rising wages are also contributing to the pinch.
Winn said trends include more funding in biomedical fields and also giving money only to more experienced researchers, making it harder to find money for more "fundamental" and experimental ideas.
"The general funding is already pretty tight, so it's certainly going to impact [us]," said earth science department chair Xiahong Feng, adding that the type of environmental research done in her department is "certainly not a priority for this administration."
In the end, the big effect may just be more competition for the funds that are left to award and more worry about whether the money will come.
"Everybody ... holds their breath maybe a little bit harder and a little bit longer than they used to," Winn said.
