Obama wants more money for Pell Grants

The Obama administration is hoping to expand and reform the Pell Grant program and in the process, change the way BVU students obtain Federal Stafford loans. According to an article from campusprogress.org, a student outreach arm of the Center for American Progress, the Pell Grant program used to cover 72% of college education costs for students attending four-year public institutions in 1976. By 2006, that percentage had declined 33%. President Obama is hoping to change that figure. Obama wants to make the Pell Grant program a mandatory program, so the program does not have to rely on allocations from the federal budget each year. The goal would be to tie the maximum grant level to one percent above inflation to make sure the Grant increases near the same way tuition does. To pay for the increase, the government would eliminate the Federal Family Education Loan Program (FFELP).

FFELP loans are one way students obtain Federal Stafford Loans. FFELP loans are obtained through banks (which are guaranteed money from the government should a student default on paying his or her loans).

The government instead wants all students to use the Federal Direct Student Loan Program (DLP). In this program, loans are obtained directly through the federal government. According to the article, the changes would save approximately $94 million.

The BVU student body saw its maximum amount offered by the Pell Grant become rather stagnant in recent years. The maximum award offered held at $4,050 from the fall of 2003 to the fall of 2007 when the amount increased to $4,310. The number increased in 2008 and is set for $5,350 this upcoming fall. One of the main issues with the Pell Grant is the need for Congress to fund the grant each fall. While certain amounts may be promised in the budget, the actual amount allocated often is less than initially planned for.

"For Pell Grant purposes, the government provides a sliding chart," Leanne Valentine, director of financial assistance, said. When a student files the FAFSA, it tells us what the expected family contribution is. That figure goes into this Pell chart to determine if the student is eligible for this Pell Grant and if they are, how much on that sliding scale."

Valentine says the contribution from the federal government to students compared to what BVU provides to students is not even close.

BVU students in Storm Lake alone received approximately $12 million dollars from the university last year compared to around $1.1 million from the Pell Grant. Because BVU students currently use the FFELP loan program to receive Stafford Loans, a change to the DLP would be required under the new law. Valentine says BVU has used the DLP in the past but eventually switched to FFELP loans.

"It was healthy for our students, because there were no fees on that program for a long number of years. And, the direct loan program has always had fees, which meant that when a student applied for a Stafford loan, they got more with the FFELP loan than they did if they had got the same loan through the Direct Loan Program," Valentine said.

The university cannot be a part of both programs at the same time. Valentine says the changes will help students with lots of need but possibly hurt many students in the process.

"There are more students getting Stafford Loans than there are getting Pell Grants. So, the switch will help the very needy students that are receiving Pell Grants, which is a good thing; because that's what the true benefit of financial aid should be. You have to kind of weigh those two for our students. And, it's not going to be a big change if we have to move into the Direct Loan Program, but it probably will cost students a little bit more," Valentine said.