New student-aid rules lack funding


July 19, 1992|By JANE BRYANT QUINN | JANE BRYANT QUINN,Washington Post Writers Group

New York -- An astonishing student-aid bill passed the Congress this month and will be signed by President Bush. Astonishing because -- on paper, at least -- it showers free money on middle-income and upper-middle-income families while taking aid away from many Americans of lesser wealth.

But no well-off family should count the money until it's actually in hand. Congress has made you eligible for government and college grants that, in many cases, will not exist.

To understand the new rules, you need a general grasp of how student aid is awarded. It's based on federal calculation of "need," which all schools apply in about the same way. You add up your family income and assets, then subtract certain allowances for your daily bills and retirement savings. The remaining money is considered your "parental" or "student" contribution to the cost of higher education.

You then look up the total cost of the college you want and deduct the parental and student contributions. If your contributions don't cover the cost, student aid is supposed to fill the gap.

So the struggle for aid is based on what Congress defines as "need." Anarrow definition rules you out, a broad one rules you in -- and Congress has written the broadest definition ever. Under the new rules, scheduled to take effect in January for the 1993-94 school year:

* You no longer have to count the value of your house when reporting on your assets. In this respect, a family with a paid-up $500,000 home is considered no richer than the family that rents an apartment. This will channel more aid toward homeowners.

* You also don't have to count the value of a family farm, no matter how big and prosperous it is. "I can hardly wait to see the instructions on how to determine whether you have a 'family' farm or a 'commercial' farm," says Kathleen Payea of the College Scholarship Service. No other type of family business is exempt.

* If you make less than $50,000 and file a short tax return (1040A or 1040EZ), you don't have to report any assets at all, even savings accounts, when computing "need."

* Students will no longer be expected to supply a minimum of $700 a year (for freshmen and sophomores) or $900 a year (for juniors and seniors) out of loans or earnings. And if they work, a much smaller portion of their income will be counted toward their "student contribution." This will greatly increase eligibility for aid.

* Pell Grants, for the neediest students, will gradually rise to a maximum of $4,500 a year from a maximum of $3,100 today.

So what's wrong with this picture? "It's all an illusion," says Lawrence Gladieux, executive director of the Washington office of the College Board. On paper, you may qualify for more aid. But in practice, there's no money to fund it.

Take the federal Pell Grants. This year's maximum is officially $3,100, but, because the government is broke, qualified students are getting only $2,400. Next year's maximum may fall to $2,300.

Under the new law, an estimated 1 million middle-income students are newly eligible for Pells, which could shrink the per capita award even more. The poorest students get hurt the most.

And take scholarships awarded by colleges. There aren't any new pots of money there, either. With more people eligible, the available dollars will have to be spread even more thinly. Some colleges still meet the full financial need of every student they accept; that largess may have to stop.

Ironically, while homeowners and farm families are now entitled to much more aid, other changes in the law have made people who rent entitled to less. It's yet another case of "them that has gets," especially in an election year. For this bill, the Democrats brought the smoke and the Republicans brought the mirrors, so the middle class could claim more aid. Now let me see you try to collect.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.