Financial Aid Program Ups Payouts

President Bush proposed increasing the maximum Pell Grant amount by $500 over the next five years for the 4.6 million recipients of the federal financial aid. The Pell Grant, which 600 students at Harvard currently receive, is an annual grant of up to $4,050 for low income college student.

Students reapply each year for the grant, said director of Financial Aid Sally C. Donahue, so those currently receiving Pell Grants may still qualify for them when Bush’s increase takes effect a few years from now.The College guarantees to meet its students’ demonstrated financial need and does not require any parental contribution for families with incomes of less than $40,000, but still asks that students receiving assistance pay a “self-help” amount of $3,500 through work-study programs or outside grant or scholarship assistance, including Pell Grants, Donahue said.

Pell Grants are not merit-based and are meant particularly for needy students attending less selective colleges, such as community colleges or four year public universities, said Professor of Economics Caroline M. Hoxby ’88.

“If you are a needy student who also has very high merit, there are other sources of aid in addition to the Pell Grant,” Hoxby said.

The Pell Grant program currently operates with a $4.3 billion deficit due to an increase in demand for the grants, and according to a White House fact sheet, “the current student loan programs do not make loans available to students in a cost-effective manner,” and benefits are often provided too much to those not attending school and not enough to those students enrolled.

Congress recently altered the formula used to calculate the federal financial aid required for each student, a change which will likely take 80,000 to 90,000 students off the Pell Grant list.

Though the system provides funds to students in need even when it is running a deficit, Bush’s plan seeks to balance the budget of the program through an increase in funding more than $15 billion over the next 10 years.

If the president’s latest idea is approved, the Pell Grant program will operate as an entitlement program, like Medicare or Social Security, where the maximum amount each year per person will be increased by $100 automatically, and will not be dictated by Congressional appropriators.

Herbert C. “Clay” Pell ‘05, the grandson of former Senator Claiborne A. Pell, whose sub-committee enacted Pell Grant program in 1972, characterized the proposed changes as “a beginning and not an end.”

“My grandfather basically believed that all Americans with the drive and ability should have access to higher education, whatever their family’s income,” he said.

Pell added, however, that the rising cost of education necessitates increasing funding and more political attention to fulfill his grandfather’s vision.

“We’ve seen a widening gap in the earnings of those people with and without a college education. For me, that means that making sure everyone can go to college is more important than ever.”