For Whom the Pell Tolls

May 1, 2005 | CUNY Matters Columns

For many students, the ability to seek and complete a college degree depends greatly on the availability of financial aid. CUNY students know this better than most. Last year, more than 194,000 of our students received some form of financial aid.

That’s why I am particularly concerned about recent news concerning Pell Grant funding, a form of federal financial aid for higher education determined by family income. In 2003-04, more than 90,000 CUNY students received Pell Grant funding. But a change to the Pell Grant eligibility formula makes funding available to far fewer students. The result is that thousands of CUNY students will lose all or part of their critical Pell funding.

In December, the U.S. Department of Education announced a change to federal financial aid formulas. That formula, which determines eligibility for Pell Grants, is based on family income. It allows families to deduct some of their state and local tax payments to determine how much income is available to pay for college. The new formula, made possible when Congress approved a sweeping budget bill in December, significantly reduces the amount that can be deducted. This inflates the level of available family income- thereby decreasing the number of eligible students and the amount of individual grants.

According to an analysis by the American Council on Education, about 1.3 million students and their families will see a drop in financial aid eligibility. Almost 90,000 students could be disqualified from receiving grants altogether. At CUNY, we estimate that about 2,200 students will lose their entire Pell Grant, and another 44,000 will lose part of it. The change will cost our students $8.4 million in Pell funding for 2005-06.

Students in New York and 20 other states will be most affected, because the reduction in the allowance rate for state taxes is greatest there. New York’s sharper reduction in allowances (three percent) is mostly attributable to a relatively high sales tax not accurately reflected in IRS data from tax returns.

In short, the change in the eligibility formula hurts the people Pell Grants are supposed to help: lower- and middle income students making progress toward college degrees.

Currently, eligible students can receive a minimum of $400 and a maximum of $4,050 a year in Pell funding. Recently, President Bush announced he wants to raise the amount of the maximum grant and close the financial aid program’s deficit. The president’s proposal-countered by proposals in both houses of Congress-would raise the maximum amount by $100 in each of the next five years, to reach $4,550. That’s good news for those students who remain eligible for full Pell funding. For others, the grant amounts still fall short of actual college costs at most institutions. To make up the difference, many students also work and/or borrow money for their education. Next year’s grant reductions will necessitate working even more hours, taking fewer credits, and borrowing more money. This increased burden hardly encourages working students to finish college-and I believe that enabling students to complete their degrees ought to be a priority.

The reduction in financial aid is particularly ill timed, as the last several years have seen dwindling public support-and, as a consequence, record tuition increases-for public higher education. According to the National Center for Education Statistics, during the 1990s, increases in tuition outpaced both inflation and growth in median family income. Grant aid also grew, but not enough to offset tuition increases. The Center for American Progress estimates that even if the maximum Pell Grant is increased by $500 over the next five years, the gap between college costs and the maximum grant will still have grown wider. This puts the best vehicle to personal advancement and economic development – a college education – further out of reach.

While the idea of increasing the maximum Pell Grant and reducing the deficit is laudable, doing so at the cost of existing grants is shortsighted. The CUNY community can help by letting legislators know the importance of the grants to its students. In the House of Representatives, a bill that would forestall the formula change has been introduced, and in the Senate, Sen. John Corzine of New Jersey has offered legislation ensuring no student sees a reduction in, or loses, Pell assistance as a result of the revised tax table.With the adoption of these or other alternatives, Congress could take action that makes access to college a priority. Our hard-working students deserve nothing less.