As part of the 2008 budget created by the Bush Administration this month, several important changes were proposed to subsidized federal college loans and college savings plans. Staff Writer Matt Hoover reviewed the changes and spoke with Larry Chambers, director of financial aid at the college, on how the budget would affect students.
Financial Aid Eligibility
Under the Bush proposal, federal need-based aid programs would no longer take into account college savings accounts, like the 529 plan offered in each state and set up by parents for their children, when determining eligibility for aid.
“The college has no official policy if this proposal came to pass. … We haven’t seen a significant use of these accounts at [the college], so we don’t expect this to have a large immediate impact. … You could be a family with a great deal of money set aside and not be penalized financially in other financial aid programs. … However, this only affects federal aid programs, and the college would be able to set its own policies regarding financial aid. But our strategy is not to unduly penalize parents for doing what they should be doing, which is saving for college.”
Increase in pell grant
On Feb. 15, Bush signed legislation that raised the maximum Pell Grant by $260 to $4,310. The Pell Grant is a federal postsecondary education aid program awarded on a need basis.
“Our concern is that the president is funding the increase in the Pell Grant by slashing funding for other financial aid programs. … [Ithaca] students would lose $1.8 million in federal Perkins loans, and $680,000 in supplemental education funds. [These are] the same students who benefit from the increase in Pell Grants.”
Increase in Graduate Loan Limits
For graduate students, the loan limits will increase to $73,000 in subsidized loans, and $156,000 in total loans.
Increase in undergraduate Loan limits
The budget includes the first increase in
15 years in the total amount college undergraduate students can borrow. The amount increased by $7,500, from $23,000 to $30,500, in federally subsidized Stafford loans, and from $46,000 to $53,500 for students taking out independent loans.
“Again, the concern here is we are funding these increases by reducing or eliminating other programs.”