Government may shift aid money away from Northeast colleges

A proposed revision to the 1965 Higher Education Act would produce a dramatic shift in the way the federal government doles out financial aid to colleges and universities.

College lobbyists for southern and western schools, which have grown rapidly in recent decades, are pressuring the government to reformulate how the $1.7 billion in campus-based aid is distributed.

The current formula dates to the 1970s and provides colleges the same share of funds whether or not they have more or fewer low-income students today. This formula is called the "base guarantee." All the money left over is distributed to all other campuses on what is called the "fair share basis."

The changes would affect only campus-based aid, which includes Supplemental Educational Opportunity Grants (SEOGs), Perkins Loans, and federal funding for work-study jobs.

Other forms of federal aid, such as Pell Grants, award money directly to students, while campus-based aid is given directly to institutions.

Because schools have sprung up throughout the country since the 1970s, and the financial aid needs of existing schools has changed in the past three decades, the proposal would likely drain federal aid money from the more established Northeastern schools.

The American Council on Education (ACE) calculated that if the base guarantee were eliminated entirely, every New England state would lose funds.

The Boston Globe reported last month that Massachusetts' 80 private institutions of higher learning received $80 million in campus-based aid for the 2002-03 academic year.

The same article stated that some states with predicted soaring college enrollments for the next ten years -- such as Arizona, New Mexico and Nevada -- only received $24 million, $11.5 million and $4 million, respectively, to be shared among all their colleges and universities.

Proposed legislation by the National Association of Student Financial Aid Administrators (NASFAA) would reduce the base guarantee by 20 percent each year until 2009. Congress is beginning stages of reviewing the 1965 act, which outlines the base guarantee formula.

Tufts administrators said they are in support of the change, even though it means the school might lose funds.

"I am all for approaching things in the most rational and fair way and things like these should be reviewed every so often because numbers and demographics do change over time and may therefore create inequities," Executive Administrative Dean Wayne Bouchard said.

Tufts receives $600,000 in SEOGs for undergraduates, $100,000 in Perkins Loans, and $2 million in work-study funding, according to Financial Aid Director Patricia Reilly.

These figures add up to $2.7 million in campus-based aid for Tufts, which comprise only a fraction of the total financial aid. Undergraduates alone received $55 million in aid in the 2002-03 academic year.

The amount of federal aid Tufts receives is "actually on the low side for a lot of the schools that we compare ourselves to," Reilly said.

"I guess I have to say that even if Tufts was going to lose substantial amounts of money, I would still support this move because it's the right thing to do," Bouchard said. "But I'm even happier to say that I support this and Tufts won't lose a lot of money."

Another school that supports a revision of the base guarantee policy is Rice University, located in Houston.

Rice did not charge tuition until 1968 which Rice Director of Financial Services Julia Benz said lead to school receiving "very minimal amounts of campus-based aid today."

"The pressure is on now because tuition at all institutions of higher ed. are going up," Benz said. "There probably isn't enough money in the world to keep up with the rise [in the price] of education."

Schools such as MIT, which already offer need-blind admissions and have billion-dollar endowments, will feel even less financial strain than Tufts if federal aid money is reallocated to the South and newer institutions.

According to Cynthia Stanton, a communications officer at MIT's Student Financial Services office, the $4 million MIT receives in campus-based aid "is a fraction of the money spent by the institute on financial aid."

Community colleges are also affected disproportionately by the base guarantee and favor changing the rules. Benz said that in the 1970s tuitions were so low the schools did not need federal aid. The situation has changed today.

Financial aid official Shayne Madox, who works at Wallace State Community College in Hanceville, Ala., said though tuition is much lower than at many New England schools, their students are often from "the lowest-income groups."

"In this particular area of Alabama -- and across much of the South -- we have so many low-income residents and the vicious cycle [of poverty] will just continue unless they can get an education," Madox said. "And that can't happen if we don't get more federal aid."

For other Boston-area schools such as Northeastern University, however, the redistribution of campus-based aid would have a sizeable impact on overall financial aid capacity.

The $7 million Northeastern receives in campus-based federal aid covers one-sixth of the student body and 40 percent of all students who receive some form of financial aid. Of the 24,000 students at Northeastern, more than 17,000 receive financial aid. Of this number, more than 6,650 students are granted campus-based aid.

"It would be wrong to distribute what we already have across the nation, especially with a growing college population," said Seamus Harreys, Dean of Student Financial Services at Northeastern.

"Though it would serve a broad swath of students, it would not be the best way to reassess the situation," he said. Harreys suggested Congress should increase the overall budget for campus-based aid, so no school would lose money.

Whether the Bush administration would support increases in the aid budget is unclear. The administration has a mixed record on college grant issues. Last year the President's office released a proposal that would prevent as many as 84,000 students from receiving Pell Grants, but then abandoned it December.

The White House's proposed budget for the fiscal year 2005 calls for no increase in SEOGs and work-study funds, as well as cuts in Perkins Loan program.