N.C. gears up for Pell Grant changes

Even though the federal government confirmed last week that thousands of students will lose access to a key financial aid program, state officials are working to minimize that loss’s impact on North Carolina.

A report released last month by the Government Accountability Office states that within the next year, about 81,000 students nationwide will lose their eligibility for Pell Grants.

The change stems from a revision in the formula used by the U.S. Department of Education to calculate Pell eligibility.

It determines the number of students who receive Pell Grants as well as the size of each grant, based on students’ need and their ability to pay college costs, otherwise known as the expected family contribution. The new formula has led to an increase in the expected contribution of most students.

The GAO estimates that 35 percent of students receiving grants will have their eligibility reduced, leading to a decreased contribution from the federal government.

About $250 million in existing Pell Grant expenditures will be cut nationally, the study found.

But Steve Brooks, executive director of the N.C. State Education Assistance Authority, said the blow likely will not be too serious for N.C. students.

North Carolina calculates state financial aid in order to compensate for decreases in federal contributions. If state financial aid is fully funded, Brooks said, students will not see significant changes in their overall level of assistance.

In his 2005 budget proposal, Gov. Mike Easley set aside $3.2 million to cover the projected loss in federal aid.

“Our message to these students is simple: Stay in school and study hard,” Easley said during his Feb. 21 State of the State address. “Washington may leave you on the curb, but North Carolina will not. Our budget will fund what Washington shamefully cut.”

Brooks said he is encouraged by the governor's commitment.

“He’s put extra money in to make up for the shortfall, trying to make up for the difference,” Brooks said. “I’m really proud the governor put the money into the budget.”

The state legislature has yet to finalize its budget for the year, but a draft proposal by the joint education appropriations subcommittee included full funding for Easley’s request. The legislature has given priority to funding financial aid in past years despite increasingly tight state budgets.

The GAO’s estimate of the number of students affected confirms earlier speculation, said Larry Zaglaniczny, director for congressional relations for the National Association of Student Financial Aid Administrators.

“They are right on target from other estimates,” he said.

Zaglaniczny said that at the end of last year, NASFAA President Dallas Martin wrote a letter to then-U.S. Secretary of Education Rod Paige denouncing the new formula.

“We were suggesting that they not do the new formula, that it would affect tens of thousands of students,” he said.

“A million-plus students are having some eligibility lost.”

Contact the State & National Editor at stntdesk@unc.edu.