For people of moderate income, college is about to get even harder to afford. The $388 billion omnibus bill passed by Congress in November consisted of more than 3,000 pages, encompassing budgets for everything from defense to agriculture and housing. But next spring, when many college students are trying to figure out how to pay for their education, one part of the mega-bill will matter more than the rest.
The omnibus bill changes the formula that the U.S. Department of Education uses to determine a student's estimated family contribution (EFC) for tuition — a key component in determining eligibility for financial aid. The EFC is based on family income and other factors.
Currently, if a student's household income is more than $40,000, he or she doesn't qualify for federal aid. But with the increased EFC mandated, some families earning less than that amount will be expected to pay more for college.
The changes will affect Pell grants, work-study programs and Subsidized Stafford Loans. More than need-based federal financial aid is involved, however. The EFC is also used to determine if students receive state and local grants.
The impact could mean more hours spent away from the books during college — and increased debt later. Jayanath Nettem, a first-year pre-med student at the University of Cincinnati, could have his funding affected in three ways. Not only does he receive Pell Grant funds, he is also employed part time through the Federal Work-Study program and has a subsidized Stafford Loan.
"The advantage of work-study is that you can work at the university and work between classes," Nettem says. "If I didn't have it, I would have to work outside UC, and it would make it a bit tougher. But the loan would be worse."
Unlike regular loans that accumulate interest and have payments due immediately, the subsidized Perkins loan requires no payments until six months after a student graduates or leaves school, and during that time there's also no interest.
"I can't find a subsidized loan other than this one, so if I take another loan I have to make payments right away," Nettem says.
Another UC student, Rachel Strasinger, worked around the system, like many young Americans might have to do with the new cuts. After spending some time working, she decided she wanted to go to college. Her mother was also going back to school for her master's degree.
"I knew my parents wanted to help me, but it was impossible for my dad to put both of us through school," Strasinger says.
A third-year student in women's studies, she receives a cornucopia of federal aid: Pell grants, a federal Supplemental Educational Opportunity grant, Perkins Loans both subsidized and unsubsidized, Stafford Loans and state grants.
"I decided to wait until I was 24 (to start college) in order to get the aid," Strasinger says.
Legally considered independent, her parents' incomes had no bearing on her EFC, which improved her changes of getting financial aid.
"I usually work 30 hours a week, but without the federal aid that I get, there is no way I would be able to put myself through school, especially since tuition has increased almost every year I've been there," Strasinger says.
Her income, which isn't related to a work-study program, is probably low enough to be safe from the proposed cuts. Assets, the number of family members in college and family income all factor into the EFC.
At present, 6,800 students at UC receive Pell grants. That number could increase to 7,500 by the end of the year, as more students need financial assistance.
"Some students apply late or are not aware that aid is available, so the number usually increases," says UC spokesman Greg Hand.
At Xavier University, the situation is similar, if on a smaller scale: Xavier has an estimated 560 students receiving Pell grants. In addition, both universities use the EFC formula to determine their own grants — the UC Need grant, UC Pride grant and XU grants.
There are no estimates on how the funding cuts could affect students.
"We might only have a dozen students who don't get any grant, and a number who have reduced grant amounts," Hand says. "It is difficult to estimate. Once the dollar amounts are down, we can get a clearer picture."
Perhaps contrary to expectations, U.S. Rep. Steve Chabot (R-Westwood) didn't vote for the Republican-backed bill. He couldn't be reached for comment.
"He has always been very supportive of Pell grants and wants to see that students who may not have the financial resources to attend college have the ability to earn a college degree," says Todd Lindgren, Chabot's press secretary. ©