Education Budget Could Bring More Money to College Students

The floodgates could open soon when it comes to student financial aid, based on budget proposals for the U.S. Department of Education.

But students and parents might not notice the subtle changes that greet them during the application process.

Secretary of Education Arne Duncan outlined last week how the proposed budget will affect the nation’s Pell Grant program, college loans and the Federal Perkins Loan Program.

Duncan said that under the proposed budget, the Pell Grant program would move from discretionary to mandatory, something that would ensure every qualified student receives a grant.

"In practice, no one who qualifies is ever denied a Pell Grant – which is why the program has had a deficit – but by guaranteeing the program, we are no longer debating the issue," Duncan said, according to a text-version of his re-marks.

The government also would make sure that the grant amounts grow annually in line with inflation, plus a point, so that it keeps up with rising costs, Duncan said.

So next year’s maximum amount of $5,350 would increase to $5,550 in 2010.

As far as college loans go, the proposed budget would call for the federal government to lend directly to students and/or parents through the same electronic system that colleges use for Pell Grants, according to the Department of Education.

This would mean that rather than having a choice in lenders as students have now, there would just be one lender.

Brent Williford, associate director of Lamar University’s Student Financial Aid office, said this would create a more uniform process in that loans would be handled similarly at all colleges and universities.

But, he said, it also removes the competition and would likely limit the payments incentives that lenders used to pro-vide for students and parents.

For example, several years ago, students who regularly met their payment deadlines might have seen a decrease in their interest rate or a small payback into their account.

Lenders don’t typically offer incentives like this anymore, but it’s even less likely with one lender in the game, Williford said.

Finally, the proposed budget would call for a $5 billion increase in funding for the Federal Perkins Loan Program.

Fewer than one percent of students at Lamar use this program because it has seen no funding increases in recent years, Williford said.

Increased resources are expected to add more than 2 million students, according to the Department of Education.

Williford said that despite the credit crunch there has never been a lack of funding for students.  (Beaumont Enterprise)

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