Many students will have to dig much deeper into their pockets to pay for college next year because of a little-publicized change in formulas used for federal financial aid eligibility.
The United States Department of Education updated the formula the federal government uses to calculate estimated financial need for student aid in May.
According to Larry Zaglaniczny, director of congressional relations for the National Association of Student Financial Aid Administrators, the update allows students and their parents to count less of the money they pay in state taxes against the cost of their education.
"They calculated for the year 2000 and that was at the height of a good economy and as a consequence, a number of states reduced their tax burden," Zaglaniczny said. "What's happened in three years since is that states have increased state taxes and as a consequence, it's not reflecting those increases."
The update will affect all colleges and universities that base their financial aid awards on the Free Application for Federal Student Aid, and could cost already strapped students billions of dollars more per year, he said.
Students would "have to come up with $7 billion [collectively] or their parents would have to cumulatively come up with $7 billion to replace that money," Zaglaniczny said.
Yvonne Hubbard, University director of financial aid to students, said her office still is attempting to understand the potential impact of the update.
"We've been trying to calculate that," Hubbard said. "We need to run our numbers to see what the affect has been on our students."
Zaglaniczny said the changes will likely result in about 85,000 students losing their pell grants, government-sponsored grants targeted at America's poorest students. Also, a million or so students could lose partial eligibility for the grants. Many students likely will have to trade subsidized loans, on which the government pays interest during a student's time in college, for unsubsidized loans.
Jane Glickman, a Department of Education spokesperson, said the updated formula will have minimal impact on students.
Glickman said her department is required by law to use the state tax rates from 2000 because they are the most recent available rates.
"It's not a change in the formula -- it is only updated tax tables that are being used," Glickman said. "The rationalization is that we're required by law to use the most current tax tables that we have."
Glickman also said Bush has never cut funds from the pell grant program, but instead has annually appropriated more dollars for the grants.
"There's not going to be any reduction in the number of students getting pell grants," she said.
Although many education lobbyists have speculated that the Bush administration is using the formula update as a clandestine way to close a budget shortfall in the pell grant program, created by the rise in eligible students due to the weak economy, that is not likely the case, Zaglaniczny said.
"I don't think that's a motivating factor, but they don't mind it happening," he said. "It's a happy accident for them that it would occur."
A number of Democrats in Congress are fighting to reverse the formula change for the upcoming academic year, and the association for financial aid administrators supports the effort, Zaglaniczny said.
"When you pull billions of dollars in aid away from students collectively, you can't help but think there are going to be a number of individuals that this will severely impact," he said.
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