Federal Financial Aid Changes in the Works

President Clinton's proposed budget for the 1999 fiscal year would curtail the rise in the amount of federal financial aid given to college students.

The proposed increases, which raise gross federal financial aid by 4.4 percent, follow a year in which total federal funding rose more than 10 percent.

The federal government will allocate $51 billion to financial aid this year.

Clinton's plan calls for a modest $100 increase in the maximum amount of money available in a Pell grant.

This comes after an average increase of $220 per year for the last three years.

In addition, the President proposed cuts in some aid programs. He called for a reduction in more than half of the Federal contribution to the Perkins Loan Program, a loan program for low-income students.

The amount of money available through Perkins loans would fall to $90 million from $165 million this year.

The proposed budget would also eliminate the State Student Incentive Grant Program, a program that urges states to give students financial aid.

Yet Clinton's plan does include some new benefits for college students.

His plan would reduce an administrative fee students pay on their federal loans from 4 percent to 3 percent. The cut will cost the federal government $360 million dollars per year.

The proposal also increases funding for the federal work-study program by 8 percent, and provides for a $15 million publicity campaign to publicize the availability of federal student aid to low-income students.

The reductions in aid for college students reflect a change in priorities for the Clinton administration this year. The administration is pushing to shift more funds into improving primary and secondary education, Secretary of Education Richard W. Riley indicated in a statement.

"We have, undeniably, a higher education system that is the envy of the world. Our increasing commitment to elementary and secondary education reaches record levels this year," Riley said in the statement.

In another federal plan for financial aid, an administration proposal for the renewal of the Higher Education Act argues for a change in the way in which the government obtains information used to calculate financial aid eligibility.

The administration will recommend using two-year-old tax information taken from IRS tax returns for calculating financial aid eligibility instead of asking families to estimate their income in the past year.

The change is designed to increase the accuracy of data used in financial aid calculations, as estimated data is likely to be inaccurate.

Yet whether this proposal will be realized in actual law is unclear. The proposal has many critics, including many Congressional Republicans, who say that the so-called "prior, prior year data" underestimates income, and will cause aid to be redistributed to less-needy families.

The administration's proposal is absent from the bill that a subcommittee of the House Committee on Education and the Workforce is considering.

The Higher Education Act, originally introduced in 1965, is up again for renewal in September.