Low-Income Students Lose Aid

Times Staff Writer

U.S. Department of Education budget officials have estimated that 84,000 college students will lose their eligibility for federal financial aid for the 2004-2005 school year under a new formula the department is using to determine a student’s financial need.

The Congressional Research Service, the research arm of Congress, included the figure in a recent report on the initial impact of the changes the department made in May to the federal formula used to figure a student’s need.

The report also said the changes would reduce the Pell Grant program, the nation’s primary vehicle for awarding scholarships to low-income students, by $270 million for 2004-2005.


Besides those dropped from the program, hundreds of thousands of students who qualify for grants may find their awards reduced, financial aid experts said.

Democratic lawmakers, who requested the analysis, have criticized the new formula, saying it was unfair to students because it relied on outdated figures that did not reflect the nation’s slumping economy.

“This is going to exclude a lot of young people who otherwise would qualify for the opportunity to get a college education,” said Rep. George Miller of Martinez, the ranking Democrat on the House Committee on Education and the Workforce. “That’s just unfair and wrong.”

Miller, Sen. Edward M. Kennedy (D-Mass.) and other members of Congress have introduced legislation in an attempt to study the impact further or stop the changes entirely.

Most financial aid -- whether federal, state or from higher-education institutions -- relies on a single formula that calculates how much money families can contribute to their child’s education.

Adjustments occur in the formula every year, but this year the department sparked an outcry by lowering the amount families can deduct in state and local taxes, making their discretionary incomes appear larger, at least on paper. The problem, financial-aid experts said, was that the tax figures used to make the adjustment were from 2000, before many states raised their taxes, and thus did not reflect current realities.

Dan Langan, a spokesman for the Education Department, said the department was required by law to update the tax tables used in the calculation and was required to use the latest data available from the government, in this case 2000.

Langan did not dispute the report’s figures. But he also said that the government’s spending on education was continuing to rise, with $11 billion being spent on the Pell Grant program in the current year, and the Bush administration proposing $12.7 billion for 2004-2005.

Although some students under the new formula will no longer qualify because they are deemed too well-off, the department projects that will be more than offset by the growing number of low-income students applying for college.

But financial-aid experts also said the congressional report did not include the full impact of the changes in the aid formula. They said the formula used for the Pell grant often was the basis for calculating state and university aid as well.

“Even very small changes in the Pell formula can have a cascading effect through the nation’s entire financial aid system,” said Brian K. Fitzgerald, director of the Advisory Committee on Student Financial Assistance, which was created by Congress.