College aid fails to keep pace with tuition hikes

Melvin Claxton, and Ronald J. Hansen
Detroit News
September 28, 2004

Tommy Tseng is the first in his family to attend college.

When he was accepted at the University of California at Los Angeles three years ago, his father was ecstatic but could offer little financial help. He made $8,000 a year as a factory worker.

The annual cost of Tseng's college was more than twice his father's income. Adding to Tseng's financial difficulties, tuition and fees went up at UCLA as they did in other public institutions - an average of 14 percent last year. He now pays more than $20,000 annually.

Tseng, whose family income qualified him for a federal Pell grant to help pay for college, applied for assistance. He got the maximum grant of $4,050.

It covered less than 25 percent of his costs, which meant he had to go searching for private scholarship and grant help.

It is a familiar story across the country, as Pell grants cover an ever-shrinking percentage of college expenses. In fact, Pell grants the nation's primary college financial aid program for low-income students cover less than they did in the 1970s when the program started.

In 1977, the maximum Pell grant paid for 77 percent of the cost of tuition, room and board at a public, four-year institution. Today, it covers 41 percent, on average.

And despite tuition increases of up to 40 percent at some universities, the maximum grant award has remained frozen since 2002. Neither Congress nor the president has moved to raise the maximum.

Because Pell grant funding is determined by the number of qualifying students who apply for it, overall funding has risen by $3.3 billion since 2001. The funding increase is driven by a jump in the number of low-income students applying for aid, said Jacqueline King, director of the Center for Policy Analysis at the American Council on Education. The American Council on Education is the major coordinating body for the nation's higher education institutions, and seeks to provide leadership and a unifying voice on key higher education issues.

She said the increased demand was created when adults who lost their jobs during the 2001 recession decided to return to school. The unexpected influx of low-income adults created a multibillion-dollar shortfall in the program's funding, she said.

The $12 billion-a-year Pell grant program aids 4.6 million students and is at the heart of government higher-education assistance designed to help lift the poor from poverty. But the dwindling buying power of the maximum grant has created hardships for those with few financial resources.

With college costs outstripping assistance, many low-income students are leaving college with larger and larger debt. About 90 percent of Pell grant recipients now leave school with an average debt of nearly $17,000.

UCLA student John Vu, 22, is one of them. The economics major, who graduates next year, works 10 to 15 hours a week but expects to leave school with between $25,000 and $30,000 in debt.

"It is something that concerns me," Vu said. "But that is what I had to do."

While colleges have provided backup assistance for Pell grant recipients, many poor students still have unmet needs, according to a 2003 report on the Pell grant program by the American Council on Education. These unmet needs ranged, on average, from $2,400 at public, four-year colleges to $6,969 at private universities, the report states.