President George W. Bush's plan to phase out Perkins loans will disadvantage many college students, particularly first-year students, Robert Zellers, director of Ball State University's scholarships and financial aid, said. While Bush also proposes to increase the Pell Grant gradually throughout the next five years, the increase will be insufficient, Zellers said. "A lot of people are already saying this proposal is not meaningful," Zellers said. "We'll see what Congress chooses to do with it."
Bush plans to send his roughly $2.5 trillion spending plan for 2006 to lawmakers Monday, according to The Associated Press.
Cecil Bohanon, professor of economics, said the planned decrease in federal student aid is a response to the nation's record federal budget deficit.
"The rubber's hit the road, and we've got to do something with the federal budget deficit," Bohanon said. "There are only two things you can do -- increase taxes or restrain spending. Obviously, Bush is trying to restrain spending."
Zellers said the Federal Perkins Loan benefits students significantly, and doing away with it would be unfortunate. The Federal Perkins Loan is a 5 percent interest loan for undergraduate and graduate students who have financial need. The loan uses government funds, with a share contributed by the school, according to its Web site. About 673,000 Perkins loans were given to graduate and undergraduate students last year, according to the Associated Press.
"Here is an excellent campus-based program, an important meaningful program, and I would certainly hate to see them do away with that," Zellers said. "I think most financial aid administrators, people like me who work with students on a day-to-day basis, are going to be strongly opposed to any attempt to do away with the Perkins loan, even if it means a marginal increase in the Pell Grant."
Students who typically use the Perkins loan might have to rely more on alternate forms of financing, Bohanon said.
"Clearly students who are dependent on this type of financial aid will feel a strain," he said. "I think typical students will have to substitute loans and might have to use higher-interest loans, which will create more burden for them."
Bush proposes raising the maximum Pell Grant to $4,550 from $4,050 over five years, amounting to $100 per year. A Federal Pell Grant, unlike a loan, does not have to be repaid. Generally, Pell Grants are awarded only to undergraduate students who have not earned a bachelor's or professional degree. Zellers said he is pleased Bush has given thought to increasing the Pell Grant program but said the increase is not sufficient.
"At least to some extent he's addressing shortfalls in the Pell Grant program. The program has been underfunded for the past 25 years," Zellers said. "But I don't think this increase is nearly enough, and it's spread over far too long a period of time. Increasing it by $500 over five years isn't even going to let students keep up with the cost of inflation."
Zellers said the plan to decrease the Perkins loan and to increase the Pell Grant represents a basic shift in federal resources. While the plan will pose some advantages overall, it is not going to do nearly enough to help students, he said.
"It's important to fund grant programs rather than allowing students to leave college with more debt from loans, but I don't think this plan will be very sufficient," Zellers said.
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