The Daily Tar Heel

Issue date: 2/11/08 Section: State & National

Bush's 2009 budget proposal would cut some federal student loan programs in order to channel funds toward an expansion of Pell Grants, while recently passed congressional legislation excludes such cuts.

Bush's proposal would eliminate the Federal Perkins Loan Program, the oldest federal need-based program, as well as the Supplemental Educational Opportunity Grant program, aimed at students with exceptional financial need.

Those cuts would fund a $2.7 billion expansion of annual Pell Grant appropriations. According to the proposal, the maximum award for the need-based Pell Grant would increase by $69 to $4,800.

Shirley Ort, director of UNC Scholarships and Student Aid, praised Bush's proposal to increase the Pell Grant, but said eliminating the Perkins Loan program and scaling back the Supplemental Educational Opportunity Grant might hurt the very students the president is trying to help.

Last year 270 UNC undergraduate students received about $2,500 each from Supplemental Educational Opportunity Grants, she said.

"We would have to scramble to come up with that kind of money to fill the gap," Ort said.

The impact of eliminating Perkins Loans would vary from campus to campus, said Steve Brooks, executive director of the N.C. State Education Assistance Authority, the state financial aid agency.

"In general, some students would be able to borrow from more expensive sources with high interest loans, but others would be left short," he said, adding that availability of loans offered through College Foundation of North Carolina, a state nonprofit, would not decrease.

Kimrey Rhinehardt, UNC-system vice president for federal relations, said Bush's budget is not a blueprint for Congress, adding that the legislature has its own ideas for the future of higher education.

"Congress is very concerned about the rising cost of tuition," she said. "They're trying to put controls in place so that people have more transparent information about costs of college."

The College Cost Reduction and Access Act, signed into law on Sept. 27, extended Pell Grant funding by $11.4 billion over the next five years.

On Thursday, the U.S. House of Representatives overwhelmingly passed the College Opportunity and Affordability Act, a reauthorization of the Higher Education Act, the federal law focused on increasing college access for low-income students.

A final version of the act will be sent to Bush for his signature after a meeting between members of both houses.

Perkins loans have a fixed interest rate of 5 percent, which is paid by the federal government while the student is enrolled, and the program includes forgiveness provisions for students entering certain teaching and public service careers.

"Many students who major in certain high-need fields, such as teaching and nursing, rely on the forgiveness provision of the Perkins Loan program to reduce the burden of their loan repayment after graduation," Ort said. "That would be gone."



Contact the State & National Editor at stntdesk@unc.edu.

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