The country’s economic downturn may have spurred hiring and salary freezes, but student financial aid may avoid budget cuts in upcoming years.
President Barack Obama’s administration plans to make college more affordable and accessible by changing several aspects of financial aid programs by fall 2010, according to a statement released Thursday by U.S. Secretary of Education Arne Duncan. The economic stimulus package will increase tuition tax credits in middle-income households from $1,800 to $2,500, a 39-percent increase totaling $14 billion nationwide.
The Federal Pell Grant Program will also raise their grant ceiling to $5,550, a $500 increase from last year, said Thomas Melecki, director of UT’s Student Financial Services.
The legislation will also give a $200 million funding increase to work-study programs across the country, Melecki said.
“We think [the increase in funding] is a positive move because so many students here at UT-Austin work or want to work part-time while they’re going to school,” Melecki said.
By issuing student loans through direct lending, the federal government will cut out the middleman, saving $4 billion a year, according to Department of Education figures.
In a prepared statement, Duncan said eliminating bank subsidies will provide the department with funds to increase grant amounts.
The Federal Perkins Loan Program will increase the number of participating institutions from 1,800 to 4,400 and provide $6 billion in loans. The loan program currently has $1 billion to lend to students.
Melecki said more students applied for financial aid this year and that the amount they received appears to have increased as well.
“We expect that the number of students who qualify for financial aid, and the amount of aid for which they qualify, will continue to increase in the 2009-2010 academic year,” Melecki said. “That is why we are so pleased that the federal government has increased funding for the Pell Grant and college work-study programs for 2009-2010.”
Taylor Jesmore, a psychology junior and student assistant, has received more financial aid with additional grants. Though she has received fewer scholarships, her aid in loans has remained the same.
“If the amount [of financial aid] increases, it’s going to decrease our need for loans in the long run, especially if it’s Pell Grants we don’t have to pay back,” Jesmore said. “No student wants to graduate with $20,000 worth of student loans simply because they weren’t getting the right amount of financial aid.” (The Daily Texan)