I have to hand it to Bush, when he proposes to screw people over he tends to do it in a way that pits groups against each other. The same is true in his federal budget affecting aid for higher education. Bush is proposing to eliminate the Perkins Loan program, which provides guaranteed low-interest loans to low and middle-income students. His stated rationale is to funnel more money in to the Pell Grant, which provides grants to students. His proposal would raise the maximum grant from $4,050 to $4,550 over five years.
Grants are better than loans, right? Helping the poorest students is better than helping low and middle income students, right? Well these are the arguments the Bush administration wants us to believe.
The reality is that low income students at most schools rely on both a combination of grant and loan programs to fund college. While the lowest income student may gain a grant of $500 under the Bush plan, they will loose up to $4,000 in Perkins funding. Even if you didn't go to college, you can do the math! (cont.)
This is a net loss of $3,500 for the poorest students.
Not only will the poorest students not benefit, middle income students who are not eligible for grants but who depend on the Perkins loan have absolutely no recourse. In addition, grant aid is only available to undergrad students while Perkins loans assist lower and middle income students attend grad school.
673,000 students at 1,796 colleges and universities received Perkins loans in 2004. The program is highly successful and generally pays for itself. Colleges have rotating funds granted to them when the program was established and replenished through funds paid back by students and small continuing contributions from the federal government. The Bush proposal calls for not only stopping the replenishing funds, but also requiring colleges to return the rotating funds to the federal government. For example, Georgetown University would have to return $25 million dollars that is has used for decades to fund Perkins loans for its students.
As the House and Senate Budget Committees meet to mark-up the budget, let's hope they don't try to give poor college kids like myself something that won't really help us in the end.