System faces crunch in wake of Pell changes

Annual changes in Pell Grants are expected to place great strain on North Carolina’s need-based student aid program.

The changes, which limit the distribution of the federal grant, might cost UNC-system students as much as $3.2 million, and many will look to the state to make up the difference.

“Students will have a safety net under them in case of a loss of Pell Grants, but we need the state to put more money into the system,” said Steven Brooks, executive director of the N.C. State Education Assistance Authority.

The added stress comes in an already difficult financial year for the N.C. General Assembly.

“My question is, since we have a $1.2 billion deficit, where do we get (the money)?” said Sen. Jerry Tillman, R-Montgomery.

“You’ve only got two places that you can get money: You can cut spending or you can raise taxes. … You just don’t have many options.”

Sen. John Garwood, R-Wilkes, had a similar perspective, saying the choice of whether to provide the money will be another tough decision to make this session.

The process can’t move forward until Gov. Mike Easley submits his budget proposal. “These decisions need to be made on down the line toward the end of the session, not now,” Garwood said.

The problem, Brooks said, doesn’t come from federal budget cuts, but from changes in the tax tables that determine who receives Pell Grants.

The tables are used to determine how much individuals pay in taxes and their ability to pay for a college education. This year’s tables indicate that people are paying less in taxes, so many students are going to be receiving reductions in their Pell Grants, Brooks said.

North Carolina’s case is special in that it has a constitutional duty to provide an education as close to free as possible, said Mary Shuping, counsel to House Speaker Pro Tem Richard Morgan, R-Moore.

The state tries to fulfill that promise by using a formula that relies in part on Pell Grants.

The state automatically expects $4,500 from a student. To that sum, the state adds a family’s expected contribution — determined from a table created by the College Board — and any federal grant money.

If the cost of education is more than this total, the state’s need-based aid program attempts to cover the difference.

The bottom line is that less money in Pell Grants means that more is required from the state program.

Brooks said the tables used to determine who gets Pell Grants are outdated, but this year’s changes are based on the small section of the population that itemized its tax returns in 2000.

“The truth is, the table wasn’t accurate last year and won’t be accurate next year,” Brooks said.

As bad as the problem is for public institutions, it could be worse for private-school students.

Tim McDowell, vice president for government relations and public information for N.C. Independent Colleges and Universities, said that at some schools, as many as 95 percent of students receive Pell Grants.

McDowell said that about 90,000 students will be affected nationwide but that education, while expensive, is worth the cost.

“People should look at education as an investment in the future of our state and country.”

 

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