The Bush Budget Proposal: College Grants and Loans Get $4.4 Billion Boost

For Immediate Release:

February 3, 2004

Contact:June Kronholz

The Wall Street Journal

WASHINGTON-- The Bush administration wants American kids to go to college and it is proposing big increases in its student-aid budget to help them.

But most students won't get any more help than they receive now. The best that many of them can look forward to is being allowed to borrow more money to pay their own way through school.

The budget proposes expanding federal grants and loans available to students by $4.4 billion to $73 billion -- a 6% increase -- and includes an $856 million increase for the popular Pell Grants to low-income students. Pell Grants now have a maximum value of $4,050 a year and are available to students meeting certain income requirements.

The administration's budget asks for enough money to pay grants to all the students eligible for them next year, but not enough to increase the value of the grants. The value of the Pell Grant has tripled since 1976 when it covered about half of the cost of tuition, room and board at a public college. But tuition has gone up even more in the past 25 years and a Pell Grant now covers only about one-fifth of average public-college costs, and even less of private-college expenses.

Between the weak economy and record college enrollment, so many students qualified for Pell Grants this year that the Education Department is predicting a $3.7 billion shortfall, which also isn't covered in the budget request. About 5.1 million students received the grants this school year, an increase of about 800,000 in two years, and the department predicts that figure will jump to 5.3 million students next school year.

In place of an overall grant increase, Mr. Bush is proposing an additional $1,000-a-year grant to low-income students who take a "rigorous" high-school program of at least three years of math and science and four years of English and social studies. But the administration is asking for only $33 million, which is enough for just 33,000 of the current 15.8 million college students.

To help students cope with record-high tuition, Mr. Bush also is asking Congress to let students borrow as much as $3,000 a year in federal loans. The loan maximum now is $2,625 for a first-year student, unchanged since the 1970s. With a year at public college now costing about $10,636, the American Council on Education says students are working longer hours -- an average of 27 hours a week -- or are turning to private lenders to make up the difference.

"Increasing the loan limit will give students some cushion so they can work less," says Becky Timmons, the council's director of government relations. But students already graduate with an average debt of $15,400 -- $17,250 if they attend a private college -- and lifting the loan limit is certain to increase that load, she adds.

Mr. Bush also is proposing $250 million for community colleges to help them retrain workers for what the administration calls "high-growth jobs" in fields such as health care. Community colleges already are full as laid-off workers and immigrants line up for classes to improve their job skills. But Mr. Bush's new money is aimed at developing programs and hiring teachers, not at building classrooms, and won't go far among the country's 1,200 community colleges in any event.

Moreover, Mr. Bush is proposing to cut $316 million in other jobs-training programs and to redirect an additional $1 billion in federal vocational-education spending more toward high-schools. Currently, high schools and community colleges share the money, and the colleges could expect far less under the administration's new plan.