By Hailey Heinz
If President George W. Bush’s proposed federal budget for the next fiscal year is passed by Congress, Esther Assaad’s financial aid package will take a hit and receive a contribution all at once.
Assaad, a sophomore communications major, receives both a Perkins loan and a Pell Grant in her financial aid package. The Perkins loan is a need-based form of aid that she is expected to repay, while the Pell Grant is a yearly gift from the government. Bush’s budget proposal, if passed, would eliminate the Perkins Loan Program, but would increase the maximum Pell Grant amount by $500 over five years. Assaad would be affected by both changes, and said she thinks the loss of the Perkins loan would have more of an effect than the Pell Grant increase.
“I think it would hurt me, because it’s already hard enough to pay for school,” Assaad said. She added a $500 increase over five years won’t help to pay her current bills. “You need to pay your tuition now, and I’ll just end up taking out more loans.”
Seamus Harreys, dean of student financial services, said about 4,500 Northeastern students receive Perkins loans, which average about $1,800 each. Although Harreys did not know specifically how many students receive Pell Grants, he estimated they are awarded to about 15 to 20 percent of Northeastern students who receive some need-based aid. He said many students who receive Pell Grants also get Perkins Loans. Pell Grants are more limited because they can only go to extremely low-income families. On the other hand, Perkins loans can go to families with more moderate income.
“Pell students would be … just to give a quick idea … a family of four with a family [annual] income of about $30,000 or less. Moderate income would be from $30,000 to $60,000 or $70,000,” Harreys said.
Currently, the maximum Pell Grant award is $4,050, and the proposed budget would increase it by $100 each year for five years, eventually increasing the maximum to $4,550. Harreys described the increase in Pell Grants as “modest,” and said in general, the proposed budget changes would hurt Northeastern students more than help them.
“For those Pell recipients, they would be losing $1,800 and getting $500. That’s a net loss of $1,300 on a yearly basis. For the very low-income family, we’re an expensive institution, and this will be very difficult,” Harreys said. “It’s tough to come up with $1,300 each year. The choices are to come up with another loan or make some other sacrifice.”
Jane Glickman, a public information representative for the U.S. Department of Education, said unlike the Perkins loans, Pell Grants are given out to students across the nation, which is part of the reasoning behind the proposed legislation.
“Perkins loans are now only going to students in less than 1,800 schools, while Pell Grants are going to students in every school,” Glickman said. “Pell Grants will hit many more of the neediest students at more schools … only about 3 percent of students [nationwide] are getting Perkins loans.”
Even students who do not get Perkins loans and receive a Pell Grant question how useful the Pell increase would be.
“I don’t think $500 will do much for most people,” said Alejandra Miranda, a sophomore communications studies major, who receives a Pell Grant and does not receive a Perkins loan.
For Perkins loan recipients, the revised federal budget could mean more private loans, although other students said the additional loans would just be a small increase to an already weighty debt.
“I’m already going to be taking out massive loans,” said Jen Gurrette, a sophomore international business major who receives a Perkins loan, and estimates her private debt will be between $85,000 and $100,000 when she graduates. “I know the Perkins loan isn’t that large, so it probably wouldn’t affect me that much.”
Harreys said in addition to the impact on students, the elimination of the Perkins Loan Program would create other complications for Northeastern. The program, which is partially funded by Northeastern and partially by the federal government, is a circular program, meaning each year, the amount of money given out is dependent on how much former borrowers have paid back. Each year, the federal government contributes a certain amount to the fund. If the program is eliminated, former borrowers will continue to pay back their loans to the school, and Northeastern will have to give a certain portion of that money back to the federal government.
“The Perkins loan at Northeastern has been around for decades, and we’ve accumulated a lot of money,” Harreys said. “So in essence, every year whatever is paid back, through some formula, we have to decide how much of this is institutional, and we’ll have to give back the federal portion. So over the next five to seven years, we’ll go from giving out about $8 million to giving out zero.”
Although the proposed federal budget could cause major changes for Northeastern, Harreys said no one is too worried at this point.
“This is the beginning of the budget process. Many legislators have stood up and said, ‘The Perkins loan is a good program, and we’re going to find a better way to deal with this.’ This isn’t time for us to sit down as an institution and figure out how we’re going to deal with financial aid,” Harreys said.
Nothing will be decided about the federal budget until the fall, and Harreys said students will still have the same Perkins loans and Pell Grant amounts through 2005-06. However, the Perkins loans would be affected in the fall of 2006 if the federal budget passes.
