U.S. House proposal could decrease U. funding

Republicans in the United States House of Representatives have recently proposed sending legislation to the floor that would overhaul the financial aid system that distributes federal funds to universities.

The overhaul is meant to correct a system that Republicans say sends a large amount of federal education funding to well-endowed universities that have smaller numbers of low-income students, such as Ivy League universities.

Currently there are three federal financial aid programs that would be affected if the proposed legislation is introduced: Federal Supplemental Educational Opportunity Grants, the Federal Work-Study Program and federal Perkins loans.

"Unlike programs where students establish financial aid eligibility and then use it, these grants are awarded not to the student but to the school," said Bill Schilling, director of financial aid at Penn. "The school then determines who is aided from their pool," he added.

Originally, federal funds were allocated on the basis of an application that universities submitted annually. These applications specified how many students needed financial aid at each university and what amount of aid had been provided during the prior year.

However, the federal government began to distribute more funding than it had allocated for the programs, and the system went through an overhaul in the 1980s, during which time the concept of "fair share" came into use.

The fair share policy would have rapidly decreased the amount of money that many schools received, so the change was designed to be phased into practice over time.

"Basically what happened was that your percentage share of the overall need in the country represented your fair share of the funds appropriated," Schilling said.

"However, this could not be applied abruptly, or many schools could lose a significant amount of funds overnight -- so a conditional base guarantee was instituted as a transition method."

The "base guarantee" says that schools would not receive any less funding than they currently received, and government officials hoped that, as appropriations increased over time, most of that money would go to more needy schools.

It is this base guarantee that congressional Republicans are considering overhauling.

According to a study conducted by The New York Times, Ivy League schools receive five to 12 times the median amount of federal funding per financial aid applicant given to the nation's colleges in 2000-2001.

However, administration officials say that this data may be misleading.

"In these articles, they compare the Ivies with other schools in terms of what they are getting on a per capita basis," Schilling said.

"But these comparisons are not accurately portraying the effect of the base guarantee, because the needs are higher at schools with higher prices."

While the proposal has not yet been sent to the floor, the amount of attention and discussion this issue has produced makes it fairly certain that it will eventually be proposed.

"It's something the Republicans have been talking about and it's fairly likely that it will be introduced," said Lloyd Horwich, director of federal relations for Penn.

"But one of the hardest things to change are formulas for how money is distributed. It is not a simple thing to do politically," he added.

If the legislation is eventually proposed and passed, it will not significantly affect the University, though some repercussions could be felt.

"Worst-case scenario, we would feel it, but it would not require drastic measures or any huge changes," Schilling said.

"If worse comes to worse, we might have to increase student loans to make up for the loss in grant funding, but the increase would probably be between $200 and $500 a year, on average."

The University has been following the issue and continues to monitor its progress and the effect it could have on the student body.

"It's something that we will monitor very closely if it is introduced," Horwich said. "We will work to protect the interests of the students at the University."

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