Study: Purchasing Power Of Pell Grant Declines

The purchasing power of Pell Grant awards has been declining since 2003 and will continue to be largely ineffective in the face of rising financial strain over the next five years, according to a study released last week.

The study, released by the Center for American Progress, said President Bush's plan to gradually increase the maximum Pell Grant amount by $500, making the highest award $4,550, over the next five years will cover slightly more than 25 percent of the cost of attending a four-year public university by 2010-11 if costs keep climbing.

In 2001-02, Pell Grants, need-based federal aid awards for low-income students, covered 41.5 percent of average college expenses. But in 2004-05, the grants provided for 35.7 percent, according to the study.

With the continued decline of resources for students, the financial aid department has been burdened with trying to make ends meet for UC Berkeley students.

Financial aid for students is determined with a "self-help" component, meaning that students of all incomes will have to actively contribute to the payment of their costs, said Cheryl Resh, director of the UC Berkeley financial aid office.

"What is problematic is that in the last five years, the self-help necessity has gone up 48 percent, from approximately $5,400 in 1999 to $8,000 this year," Resh said. "This increase will likely continue, and it could be as high as a $13,000 burden on students."

The increased reliance on self-help options forces college students to accumulate large amounts of debt before they graduate.

"A student who enters school in the fall of 2007 could expect to face at least a $25,000 debt upon graduation, even if he or she is able to complete all degree requirements in eight semesters while maintaining a heavy workload," the report said.

The study also said the proposed elimination of the Perkins loan program, a federal loan program that handed out an average of $1,875 to 673,000 middle- to low-income students this year, could make paying for college even harder.

Under Bush's proposal, the money loaned to students under the Perkins loan will instead be funnelled into increasing the maximum Pell Grant award.

But Resh said nixing the Perkins loans, which provide $4 million to some 2,000 UC Berkeley students annually, would not be an effective solution to help students cover costs.

"If we eliminate Perkins, covering the self-help expectation will be even more difficult. This places more emphasis on work study, and an extra hundred dollars on a Pell Grant really won't do much to help students overall," Resh said.

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