RE: Revision of Pell Grant Formula

Dear Representative Baldwin:

I write to express the Wisconsin Education Association Council’s deep concern over the U.S. Department of Education’s recent revision of the formula used to determine Pell Grant eligibility.

As you are aware, the Department of Education has updated the state tax tables used to establish Pell Grant eligibility and calculate award amounts. The net effect of these new data: families from many states – including Wisconsin – will be able to deduct less state and local tax when applying for financial aid. Applicants’ Expected Family Contributions (which is used to determine Pell Grant awards) will appear higher thus decreasing award amounts.

The impact of this rule change on Wisconsin’s students and families will be significant.
The American Council on Education (ACE) includes Wisconsin in its list of 21 states that will be most impacted by this change. The Government Accounting Office agrees, listing Wisconsin as a “high impact state”. Higher education officials in Wisconsin are estimating that 5,500 students in the Wisconsin Technical College System, the University of Wisconsin System and in Wisconsin’s independent colleges could loose Pell Grants eligibility. Thousands more will have their Pell Grant award reduced (approximately 58,600 Wisconsin students received Pell Grants in 2001-02.)

ACE estimates that nationwide, the rule change will result in 89,000 college students loosing Pell Grant eligibility. Another 1.3 million will have their Pell Grant award reduced.

In addition affecting Pell Grant eligibility and award amounts, the recent formula change will impact the amount of other types of financial aid awards. The federal financial aid formula is used by many states (including Wisconsin) to determine the award amounts from various state-controlled financial aid programs. Many higher education institutions also use the formula when distributing institutional aid. The federal rule change will therefore have an important – and, as of yet, undetermined – “trickle down” affect on Wisconsin’s students.

To remedy this important problem, WEAC proposes:

1. The Department of Education’s tax tables should be reevaluated to ensure they accurately reflect families’ actual tax obligations. Several analysts question whether the new tax tables actually understate families’ tax burdens, making it appear as though they have more money to pay for college than is actually the case.
   
   
2. Changes that result from use of the new tax tables should be phased in. Students and families from across the nation are facing double-digit tuition increases. A simultaneous decrease in financial aid is simply a poor idea. Phasing in such changes could ease the additional burden felt by those struggling to pay for a college education.
   
   
3. The Department of Education’s tax tables should be updated on a regular basis. Regular updates to the tax tables will minimize drastic adjustments in the tax tables. Such regular updates should avoid a reoccurrence of the current problem.
   
   
4. The Department of Education should take a more comprehensive approach to updating the Pell Grant program. As a part of the reauthorization of the Higher Education Act, increase the maximum Pell Grant award amount – which has been frozen for the past three years – and consider the appropriateness of other factors used to determine students’ Pell Grants.

The Pell Grant, our nation’s single largest source of need-based financial aid grants, plays a unique role in opening the doors of our nation’s colleges and universities to those in need. The program makes the dream of a college education – and all that follows from it – a reality for millions of low-income students (the median income of Pell Grant recipients is around $16,000.)

As we in the education field know, a postsecondary degree has become an important commodity in today’s labor market. Reducing access to postsecondary opportunities means threatening the ability of millions of families to subsist at levels above the poverty level. We simply cannot afford to leave any students behind.

Thank you for your consideration.

Sincerely,

Stan Johnson
President

Cc: Elizabeth Burmaster, Wisconsin Department of Public Instruction
Dan Clancy, Wisconsin Technical College System
Kevin Reilley, University of Wisconsin
Rolf Wegenke, Wisconsin Association of Independent Colleges and Universities