Release date: 18-Mar-05

Federal Financial Aid Cuts Are Troubling Trend, Says Emory's Padgett

Contact:
Elaine Justice: 404-727-0643, elaine.justice@emory.edu
Deb Hammacher: 404-727-0644, deb.hammacher@emory.edu

While proposed changes to federal financial aid programs are up for debate in Congress, federal funding for several financial aid programs has already been reduced for the current fiscal year, a troubling trend affecting many colleges and universities, including Emory University, says Julia Padgett, director of financial aid.

"Although some schools experienced increases in allocations of campus-based funds, most financial aid colleagues I have spoken with noted decreases in both Federal Work-Study and Federal Supplemental Educational Opportunity Grants," says Padgett, adding that "the federal capital contribution for Perkins loans was totally eliminated."

The cuts mean a total loss for Emory of approximately $477,000 in federal financial aid funds. "Historically, these funds are targeted to the neediest students, so they will be the hardest hit," Padgett says. She estimates that more than 2,000 Emory students will be affected.

One proposal under consideration would recall all revolving Perkins Loan funds held by institutions. "I imagine Emory has participated in the Perkins program since its inception in the 1950s. We have millions of dollars in that fund," says Padgett. "If the revolving Perkins funds are recalled, whether it's all at once or gradually over time, there is a substantial amount of money that will leave every school." If the federal share of Perkins loan collections are returned over a period of 10 years, Georgia would experience a loss of approximately $88 million in funds to students, she adds.

Another proposal by the Bush administration to increase Pell Grants--a program for the nation's neediest students--by $100 annually to a maximum of $4,500 would be welcome, says Padgett, though not enough to be effective. Another problem with Pell Grant eligibility is the new state tax tables published by the U.S. Department of Education and used in the federal formula to determine eligibility for federal aid programs. "These state tax tables are outdated and not representative of the amounts families currently pay," says Padgett. "They reflect a lower estimated tax liability of families, thereby inflating the amount they are expected to have available to pay for the cost of education.

"The result is that even though Pell Grants may increase slightly, fewer students will be eligible and those who are will have lower eligibility," she says.

Also proposed by the Bush administration are increases in Stafford loan annual maximums, and raising the interest rates charged to students while decreasing some lender subsidies, which Padgett says "will likely result in lenders shifting these costs to students by charging higher fees."

Elimination of the Leveraging Education Assistance Program (LEAP) was based on perhaps the strangest rationale of any of the cuts, says Padgett. LEAP was created as a matching fund program to encourage individual states to develop need-based programs.

"The reason given for ending LEAP is that it has served its purpose, meaning that states now have sufficient need-based programs in place, but Georgia and 21 other states have no need-based aid programs," Padgett points out. Georgia's HOPE Scholarships are merit-based, available only to those with a B average.

"These programs have been the foundation of federal aid programs since their beginning," says Padgett, "and to see funding take a sudden nosedive is a real concern. As we increasingly realize the individual and social value of higher education, a reduction in the funding which supports access to such an education is the opposite of what should be happening."

Emory University is known for its demanding academics, outstanding undergraduate college of arts and sciences, highly ranked professional schools and state-of-the-art research facilities. For nearly two decades Emory has been named one of the country's top 25 national universities by U.S. News & World Report. In addition to its nine schools, the university encompasses The Carter Center, Yerkes National Primate Research Center and Emory Healthcare, the state's largest and most comprehensive health care system.

Subscribe to News@Emory RSS feeds for automatic updates of the latest news at Emory.

Back