Almost a third of MSU Pell Grant recipients could see their financial aid reduced or cut for the 2005-06 academic year, because of changes in the U.S. Department of Education's formula for calculating aid.
The Bush administration spearheaded changes to update a 15-year-old formula used to calculate each student's expected family contribution - or the amount the government thinks the family can afford to set aside for college tuition.
The old formula, based on 1990 tax data, made it appear as though some students were needier than they actually were.
When the new formula is used for the 2005-06 school year, MSU Financial Aid Director Rick Shipman estimates that 2,150 students could be affected. That translates to about $650,000 that could be lost in Pell Grant aid, which students might have to make up by taking out additional loans and putting in more time at jobs.
Nationwide, $300 million will be lost in funding for the Pell Grant. About 1.3 million students will lose a portion of their Pell Grants, and about 80,000 students will lose it completely.
Pell Grants are a form of financial aid funded by the federal government that do not have to be paid back.
Because MSU students tend to come from more financially stable families, Shipman said they will not be as affected by the changes as students from other schools.
Nevertheless, nearly a third of the 6,700 MSU students who qualify for the Pell grant each year might notice a difference in their aid. About 150 students could lose their Pell Grants entirely, and as many as 2,000 students could have a $300-average grant reduction, Shipman said.
"A majority of our students will not have a huge financial jolt," he said. "For those that feel it, there will be other aid programs to minimize the impact."
Although Shipman agreed it was necessary to update the tax tables and use current data, he said it shouldn't be done during the current economy's troubled state.
"Doing it now doesn't make sense," Shipman said. "It would be best to wait until the economy got better and then there would be an increase in the Pell Grant anyway."
The prospect that many low-income students will see their grant money cut during a time of economic uncertainty has Michigan's U.S. senators Carl Levin and Debbie Stabenow among the Democrats in Congress supporting legislation that blocks implementation of the new formulas.
Levin called the department's new formulas for determining student aid "penny-wise and pound-foolish," and Stabenow agreed.
"The Pell Grant program is a proven program that makes it possible for tens of thousands of students to attend college," Stabenow said in a statement. "Changing the formulas for grants results in a cut in assistance for many students who face financial burdens."
Computer science junior Simon Ng said it was an empty promise when President Bush said he would expand Pell Grants last October.
Ng said he relies on Pell Grants for a large portion of his MSU financial aid, and said if the proposed changes to the grants go through, it would affect a lot of students he knows.
"That would disappoint me," Ng said. "Bush said that he would increase Pell Grants, but if this is the way to counteract, it's a lose-lose situation."
Amy Davis can be reached at davisam8@msu.edu.
