When U.S. Secretary of Education Margaret Spellings announced last week that the presidential budget would call for the largest increase in the Federal Pell Grant Program in 30 years, higher education advocates were hesitant to heap on the praise.

Julie Mallette, director of the Office of Scholarships and Financial Aid, said she was “cautiously optimistic” about the proposal.

“Anytime the Department of Education says there’s an increase, that’s something to be happy about,” Mallette said. “The question is where that money’s going to come from.”

But the answer to that question is becoming a little more clear after analysts have begun to review the details of President George W. Bush’s 2008 budget, released Monday.

And the outlook doesn’t appear to be as good as they hoped.

In the first increase since the 2003 – 2004 school year, the president’s proposal aims to increase the maximum Pell Grant award in the 2008 – 2009 school year by $550, while gradually increasing that same figure to $5,400 by 2012 – 2013.

Doing so, however, will require that the administration abolish supplemental grant programs and Perkins loans and cut subsidies to lenders.

“It’s moving student aid money from one pot to another,” Elizabeth McDuffie, director for grants and outreach at the State Education Assistance Authority, said.

In the end, the budget for education “comes out flat,” according to Edward Kealy, executive director of the Committee for Education Funding, a Washington-based advocacy group. It also fails to account for inflation and enrollment growth.

“In real terms it’s a cut,” he said.

Facing the chopping block

Pell Grants are the most basic element of federal financial aid available to students. Like all grants, students don’t pay the money back. The funding also comes directly from the federal government to the students, based on the amount of money for which they’re eligible.

But money for the Supplemental Educational Opportunity Grants, one of the programs slated for removal under the budget proposal, is divvied up differently.

The feds give the University this money in a pool, which it in turn distributes to needy, Pell-eligible students to help cover additional costs of education. This money is limited to the total amount of funding the government awards to the University.

Taking away this money, however, takes away the ability of the University to award more personalized packages to extremely needy students.

“In a centralized administration, you can’t see all the particular intricacies of the individual students,” McDuffie said.

Spellings indicated in her speech Thursday that some of the changes in the budget were intended to cut down on some of the complications involved in the financial aid process.

“Over the years, we’ve basically invested tens of billions of dollars in taxpayer money in higher education and just hoped for the best,” Spellings said. “As a result we don’t have a very good picture of how the system works today and how it could be improved.”

An article in The Chronicle of Higher Education Tuesday referred to a comment from Under Secretary for Education Sara Martinez Tucker, who said the SEOG program costs 250 times more to administer than the Pell Grant program.

But other programs, like the Academic Competitiveness Grant, which Mallette called “incredibly complex,” would receive a 50 percent increase in the amount awarded to individual students. In fact, Mallette said this program, as well as the companion Science and Mathematics Access to Retain Talent Grant introduced this year, has posed challenges for financial aid administrators across the nation.

She said as of early November, only 10 percent of institutions had drawn down funding from the Department of Education to award ACG and SMART grants — partly due to their rigorous standards and the fact that universities are liable for any money mistakenly distributed to students.

A request from the Technician to interview personnel in the Department of Education was refused Tuesday, and communications personnel referred inquiries to recently published department press releases.

According to Mallette, N.C. State may lose big — $2.5 to $3 million annually — when it comes to federal Perkins Loans, which are also scheduled for the chopping block under the budget proposal. Add that to the almost $450,000 Mallette’s office awards very year through the SEOGs and some students may be worse off under the president’s proposal.

Where the University may come out even, however, is when the Pell increases combine with the increases to the ACG and SMART grants. NCSU offers a multitude of eligible science-, math- and foreign language-based degree programs that fit SMART requirements. In other schools even in the UNC System, however, this is not the case.

“Schools like Carolina would be hurt even more than we will,” Mallette said.

Despite all this, Mallette said she had “no idea” if University students would actually come out even under the budget proposal, due the difficulty in predicting just how many students may qualify for federal grants.

A different environment

Although analysts are weighing the implications of the budget proposal now, it still has a long way to go before students will feel its effects — good or bad.

After the budget leaves the president’s hands, it must be thoroughly reviewed by Congress before the legislative body makes appropriations. The president will then sign a final version of the budget into law.

Such a complex document rarely passes through Congress without some serious tweaking, and previous attempts by the Bush administration to pass budgets cutting programs like the Robert C. Byrd Honors Scholarship have failed even in a Republican-controlled Congress.

But the new Democrat-dominated Congress, which has already expressed its intention to strengthen funding for education, the proposal’s journey into a law may be an even rockier one.

And that’s a good thing, according to Kealy, who said a split philosophy in the process means better dialogue and a better end product.

“We can have some healthy competition,” he said. “The reality is this budget is not going to be considered very kindly by Congress.”

Mallette also expressed her doubts about the proposal’s ultimate success. Nevertheless, she said the 2008 budget will remain the topic of conversation among financial aid administrators, and she said her office would continue to analyze the impact these changes would have on future students.

“The financial aid world is never boring,” Mallette said.