Proposed cutbacks in financial aid programs may fall short of need

March 14, 2011

University Park, Pa. -- Due to the federal and state deficit, budget proposals threaten to reduce financial aid funding for some federal and state grant programs. Penn State could see a potential loss of up to $20 million in grant funding if the proposals currently being debated in Congress are passed. Of course, these same funding cuts will affect all students across the country who depend on grants to help cover educational expenses. Many Penn State undergraduate students receive grant aid -- about 32 percent from federal grants and 20 percent from state grants.

"The reductions in the grant programs will compound the impact of a reduced state appropriation,” said Rob Pangborn, vice president and dean for undergraduate education. “If the tuition increase needs to be higher than originally planned and with the prospect of less aid, students will face a rising unmet need. Smaller grants have the potential to make a Penn State education less affordable for many families, and the uncertainty around the availability of sufficient aid could negatively impact enrollments in general. The elimination of the Academic Competitiveness and National SMART (Science & Mathematics Access to Retain Talent) Grants is particularly unfortunate for Penn State, since our students have been especially well positioned for those targeted and achievement-based programs.”

Since Congress has proposed reducing the federal deficit by $60 billion in discretionary funds (which includes the student aid programs), federal grant programs, such as Pell Grants, could be reduced and some smaller programs would be eliminated under the proposed federal budgets. Pennsylvania’s state grants will probably see minimal, if any, cuts. Based on the proposed federal budget right now, Anna Griswold, Penn State’s assistant vice president for undergraduate education and executive director of the Office of Student Aid, is monitoring the figures but it is too early in the process to know for sure the exact loss of grant funds.

Griswold said federal Pell Grants and the state grants for Pennsylvania resident students are the two largest sources of grant funding for Penn State students. Griswold and her staff are monitoring the budget proposals closely. Right now, according to Griswold, it looks like the state grants will not be impacted as much as was projected earlier this year.

“Colleges and universities across the country are faced with concerns about the need to increase tuition due to state budget deficits and the possible reduction in federal grant funds due to the federal deficit -- one of those perfect storms,” Griswold said. “Some families at lower income levels will struggle the most to send their children to college.”

Griswold said nothing is definite until both the federal and state budgets are adopted. More information should be known about the federal and state budgets later this spring.

Newly admitted students with an offer to attend Penn State, or who have accepted their offer of admission, will receive an estimate of their awarded financial aid the week of March 21. Current students will be notified in June.

Families and students are reminded that the financial aid is an estimate until state and federal budgets have passed. Penn State officials are hopeful that cuts to student aid funding will not be as great as some of the proposals indicate.

Last Updated March 17, 2011