The House of Representatives' proposal to narrow the eligibility criteria for federal Pell Grants which would render the highest-income beneficiaries in the program's current form ineligible would not affect Dartmouth students, Senior Associate Director of Financial Aid Laura McClay said in an interview with The Dartmouth. To make up for such a loss in federal funds, the College would provide scholarships for those students affected by new rules, McClay said.
The Senate has proposed to eliminate government subsidies on student interest payments during the six months after their graduation, Wintersteen said. This proposal has generated consternation in the College's Financial Aid Office regarding potential impacts on middle-class students the students most likely to take out loans, McClay said.
Dartmouth's Office of Financial Aid would not likely be in a position to assist such students because they would have already graduated, McClay said.
"We get questions about the [Pell Grant] policy, but being a school committed to need-based financial aid, there is less concern to families in terms of accessibility," McClay said. "We are leery of changes in loans programs."
Twelve percent of Dartmouth students currently receive Pell Grants, according to McClay.
The financial aid community's concerns about the potential elimination of the six-month long interest-free loan benefit is particularly acute given that Congress has already cut a similar benefit for graduate students, McClay said. This trend has fed worries that federal loan programs will continue to be weakened in the future, a prospect that would heavily burden students from middle-class backgrounds, she said.
Confronted with the current reality of tight state budgets, both private and public schools are collaborating to pinpoint their advocacy efforts on keeping the Pell Grants' maximum award of $5,550 intact, according to Wintersteen.
"The maximum award goes to the largest percentage of Pell Grant recipients," Wintersteen said. "When you decrease the maximum award, you affect the largest number of students."
The Pell Grant program is fiscally unsustainable due to the ballooning federal deficit and the increasing number of students attending college, according to Sang Han, director of government and Congressional affairs at the Association of Public and Land Grant Universities. Congressional staff members have warned higher education advocates that federal financial aid programs will have to be reformed in order to leave the $5,550 maximum award untouched, he said.
"Right now everyone wants to maintain $5,550 as the primary goal, but in this budget environment and with the costs of the program continuing to go up, the question becomes, How do you maintain $5,550 when we know there isn't enough money, and with so many new people in the program?'" Han said. "The way that [Congressional] staff have couched it is, You're going to have to make some trade-offs, to make some rather hard choices.'"
The Senate plan's focus on eliminating the six-month grace period of interest-free loans is "the lesser of two evils" because it protects the lowest-income students, Mark Kantrowitz, the creator and publisher of FinAid.org, said in an interview with The Dartmouth. Although this proposal would affect middle-income students' loan cost and post-graduation debt, it would have no impact on the amount that those students can actually borrow, he said.
"The characteristics of a loan, other than the loan amount, do not affect access to post-secondary education or graduation rates," Kantrowitz said. "On the other hand, cutting grants does affect access, persistence and completion."
The proposed House bill, however, would reduce the number of Pell Grant recipients which currently totals approximately 9 million students by 447,000 people, according to Wintersteen.
The consensus among Congress, the Obama administration and the Department of Education is that Pell Grants must be reformed, which suggests that fiscal year 2012 appropriations will prove transformative for financial aid policy, according to Wintersteen.
"Financial aid, moving forward, won't look the same," Wintersteen said.
The higher education community has yet to express a particular preference for either the Senate or House plan, according to Han. Both plans are undesirable options, Han said.
Financial aid advocates are also targeting the bicameral deficit reduction supercommittee, whose plan will determine the availability of Pell Grants for the next decade, he said. The supercommittee, formed in August as part of Congress' last-minute deal to raise the debt ceiling, has until Nov. 23 to vote on a proposal to reduce the deficit by $1.5 trillion.
The Pell Grant issue is connected to the rising cost of tuition, Wintersteen said.
Wintersteen cited figures from the Project on Student Debt at The Institute for College Access and Success showing that 30 years ago, the maximum Pell Grant award covered more than half the cost of attending a four-year public college. Today, the maximum award covers only about one-third of the cost of attending a public school, and the gap between tuition and Pell Grant awards is even wider at private schools, Wintersteen said.
