Interest rates: Majority of students receive some sort of financial aid
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The article said: “Based on
revenue and spending data through
June, the budget deficit was
$76 billion lower, or a total of $251
billion, for the first nine months of
fiscal year 2005 than the $327 bil
lion gap recorded at the same point
one year earlier.”
The article highlights that in the
first nine months of the fiscal year,
which starts Oct. 1 for the federal
government, overall tax revenues
increased by 15 percent from the
2004 levels and 40 percent for cor
porate tax revenues. But these
trends did not continue in the
months leading up to June.
This year’s 7 percent increase in
government spending was reported
in the New York Times as being tied
to the “continuing cost of the war in
Iraq, which is on track to exceed
$200 billion by the end of this year.”
Continued extensions of the admin
istration’s tax cuts will add financial
hurdles down the road, as $1.4 tril
lion is drained from government
coffers over the next 10 years.
Thirty states are projecting
deficits for Fiscal Year 2005 to total
between $39 billion and $41 billion.
“This represents between 7 percent
and 8 percent of state general fund
expenditures,” according to a report
on fiscal year 2005 budget deficits
from the Center on Budget and
Policy Priorities.
Gov. Bush said on August 30,
2000 that as President he would
“fully fund the Pell Grant for first
year students by increasing the
maximum award grant amount
from $3,300 to $5,100.” Pell Grants
are given to “needy students and
families who might not otherwise
have the opportunity to pursue
a college education,” and do not
have to be repaid, according to
the U.S. Department of Education
Committee on Education and the
Workforce. Pell Grants are given to
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over 5 million low-income students
each year.
The Office of Management and
Budget, which provides the pro
posed fiscal year 2005 budget, states
that “the Pell Grant program has a
$3.7 billion funding shortfall ... $1
billion more than the shortfall was
in 2003 and $2.3 billion more than
2002;” the college enrollment of low
and middle-income students will
likely decline as a result.
A report issued May 13, 2004 by
the Democratic Staff of the House
Appropriations Committee stated
that in 1976, Pell Grants covered
72% of the annual cost of college
for low and middle-income stu
dents. “For fiscal year 2005, (Presi
dent Bush) proposes to freeze the
regular maximum Pell Grant,” for
the third consecutive year at $4,050.
Calculating inflation and rise in tu
ition, the Pell Grants cover only
34% of the costs in 2005. Like the
proposed federal budget, Pell Grant
funding did not match the proposed
$5,100. The maximum Pell Grant is
the highest in history, but according
to these figures the amount of mon
ey does not pull the same weight.
Rep. George Miller (D-Calif.) stat
ed that because of Pell Grant budget
cuts, “the (2005) Pell Grant program
is projected to experience a $3.7 bil
lion shortfall.”
On top of this, the cumulative
amount of college loan debt has in
creased significantly over the past
11 years, according to a report is
sued by the American Council on
Education. In the 1992-93 school
year, 24.8 percent of students from
a four-year, public university gradu
ated with an average debt of $6,300.
In 2003-04, 58 percent of students
graduated with a debt of $14,671,
proving that the historically low in
terest rates for graduates in 2004
had little influence because of in
creased tuition and fees.
The House Appropriations Com
mittee report showed that tuition and
fees have increased 34.6 percent from
2000 to 2004. The report attributes
this to education budget cuts.
The College Board Trends in Col
lege Pricing 2004 report stated that
at four-year public institutions, tu
ition and fees averaged $487 more
per student in 2004-05 than the
2003-04 academic year (a 10.5 per
cent increase). The report also stat
ed that the general costs students
were expected to pay for room and
board, on average, were $327 to
$337 more than the 2003-04 aca
demic year, depending on the type
of college.
“For families with earnings in the
bottom fifth of all incomes, the an
nual cost of an education at a four
year public university equated to 71
percent of their income in 2003 — a
share of income 11 percent higher
than when President Bush entered
office,” according to the 2003
TYends in College Pricing report. In
academic year 2003-04, loans con
stituted 56 percent of aid and grants
38 percent, according to the 2004
Trends in College Pricing.
Average undergraduate tuition
and fees and room and board rates
paid by full-time students at four
year institutions was $5,964 in
1986-1987. In 2001-02 it was
$13,677, an increase of 229 percent,
according to the National Center for
Education Statistics. The report stat
ed that 63 percent of all undergradu
ates enrolled in 2003-04 received
some type of financial aid.
The real world implications for
many of these findings have already
affected potential college students
and those who have recently gradu
ated, but until fall term, the effects on
the low and middle-income student
enrollment cannot be determined.
nwilbur@dailyemerald. com