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Pell change could ease high costs Pell change could ease high costs

Steve Kerins | Wednesday, February 14, 2007

President Bush’s administration recently announced his 2008 budget will include a proposal to increase the maximum value of Pell Grants by $550 to $4,600. For low-income students who want to attend Notre Dame but cannot afford the high tuition, these grants could help bridge the payment gap, said Director of Financial Aid Joe Russo.

Russo is optimistic about the implications for Notre Dame and its peers should Bush’s proposed budget be approved by Congress.

“The good news of possibly improved Pell Grant funding should serve as an encouraging signal to many applicants and result in increases in applications nationally,” he said.

Pell Grants, which do not need to be repaid, are designed to help low-income students pay for college. Students who receive these grants can use them at Notre Dame to lower the total cost of their tuition.

“Any improvement in maximum awards would result in increases in the amount of such aid to our Pell-eligible students and thus result in increases in need-based assistance for our undergraduates,” Russo said.

But many questions remain.

While educators and policy analysts have lauded the proposed increase, many are concerned about how it will be funded, including professor Jennifer Warlick, the chair of Notre Dame’s Department of Economics and Policy Studies. The Bush administration plans to draw federal funds away from other student aid programs, including Federal Supplemental Educational Opportunity Grants (SEOG).

“The [proposed] increase in the Pell Grant may not offset the supplemental grant in all cases,” Warlick said. “It’s going to redirect monies they have allocated for low-income students, so there are going to be some winners and some losers.”

And relatively expensive schools like Notre Dame would likely see less of a benefit from any funding increase compared to less costly state universities.

“I think we’ll be less likely to see the effects because it’s such a small drop in the bucket [relative to total tuition costs],” she said.

With more of the burden placed on lenders, legislation to raise the Pell Grant maximum may also harm higher-income students who take out loans to pay for college.

“This is really reallocating from one set of people to another set of people rather than increasing the budget,” Warlick said. “They’re going to shift the burden from the low-income families onto the middle-class families, and the price of borrowing is going to rise.”

But Warlick said an increase in funding for Pell Grants could still attract more high-quality, low-income applicants to Notre Dame, holding other variables constant.

“A [funding] increase would actually reduce the net price [of attending Notre Dame] if the amount of other aid isn’t altered,” she said. “But you have to ask, is the increase in Pell Grants equal to or greater than the increase in tuition?”

Warlick said the number of low-income students who apply to Notre Dame could increase as a result of an increase in the value of the Pell Grant, but only if their financial aid policies compare favorably to other universities.

“It’s not only what the internal action is at Notre Dame, but also how other universities respond to the Pell Grant,” Warlick said.

But these changes are contingent on the Pell Grant proposal passing through Congress. Policy watchdogs and educators agree that Bush’s budget may fail to pass in its current form. It could be months or years before the fate of the Pell Grant, along with other federal government student aid programs, will be known.

“What remains a matter of contention and uncertainty,” Russo said, “is how the resources necessary to support these proposed awards would actually be funded.”

Warlick agreed, citing the recent impasse between President Bush and the Democratic Congress.

“This President has an extremely low public approval rating, and I don’t think [the Pell Grant proposal] is any less controversial than anything else he’s proposed,” Warlick said. “I don’t think [the budget] is going to pass like this.”