Final Federal Spending Bill Produces Lean Result for Student Aid

A $388-billion fiscal-2005 federal spending bill approved by the U.S. Congress will mean reduced funding for several key federal student-aid programs. Moreover, the measure clears the way for updates to the federal need-analysis formula that could dramatically affect student eligibility for federal financial aid.

The omnibus appropriations bill contains the following provisions, which reflect across-the-board funding cuts of 0.83 percent that were mandated for all non-defense and non-homeland-security spending:

• Funding for Pell grants would increase by $358 million over 2004 levels to nearly $12.4 billion, but the maximum Pell grant will remain at $4,050 for a third consecutive year. In addition, the measure includes no funding for a Bush-administration request for enhanced Pell grants for students who have successfully completed a rigorous high-school curriculum.
• Funding for Perkins loans would be reduced by the elimination of new federal capital contributions and a slight reduction in funding for Perkins-loan cancellations.
• Federal Supplemental Educational Opportunity Grant funding will increase by more than $8 million to $779 million.
• Funding for the Federal Work/Study Program decreases by more than $8 million to $990 million.
• Funding for TRIO programs is $837 million, an increase of $4 million over fiscal year 2004.
• GEAR UP is funded at $307 million, an increase of $8 million over fiscal year 2004.

The most-controversial student-aid aspect of the appropriations measure may be what it does not contain. The funding measure does not include language that would block revisions to the formula used to determine eligibility for federal student aid, thus clearing the way for the government to change the formula in a way that could affect thousands of students' eligibility for federal grants.