As part of President George W. Bush's proposed federal budget, Penn could potentially lose $17 million in financial aid funding.
Last week, Bush proposed that the Federal Perkins Loan Program be eliminated. Experts, though, say the likelihood of that happening is very small.
Since 1959, the University has received funding for the program to give subsidized loans to students. The school acts as the lender, and the loans are paid for directly by the federal government. The loans are repaid to the University's "revolving fund" to supply loans to a new wave of students.
Though Penn received less than $700,000 through the program for the current fiscal year, over time the University has built up the ability to give out about $17 million in Perkins loans.
Penn Director of Student Financial Aid William Schilling said that the elimination of any additional funding "was not unexpected." The current proposal, however, was something of a surprise.
"What President Bush is recommending is that the program be completely eliminated by requiring schools to return their revolving fund to the Department of Education," Schilling said. "We would lose essentially $17 million worth of low-interest subsidized loans."
In total, undergraduates at Penn receive about $113 million in aid packages. Graduate and professional students receive about $320 million -- a figure which includes tuition remission, stipends and health insurance.
Despite any possible changes, Penn's policies on admissions and aid will remain the same.
"Regardless of what happens at a national level, Penn has need-blind admissions, and so we find ways" to provide aid for students, said University Vice President for Government, Community and Public Affairs Carol Scheman.
Schilling emphasized that it is too early in the budget process to determine whether the proposal will actually go through, though it is unlikely it will be approved as it now stands.
"I have a feeling that this proposal is not going to have easy sailing," Schilling said. "But you can't predict now what can happen."
University Executive Vice President Craig Carnaroli said it is too soon to know the extent of any potential effects.
"We're not at a response point yet because we're still analyzing the impact," Carnaroli said. "Clearly we have to do [an analysis] in the next 30 to 60 days because we have to give people notice of their awards for aid -- so we'll have to move relatively quickly," he added.
While it cuts the Perkins program, Bush's budget does propose small increases in other loan programs.
"The President did recommend some fairly modest increases in levels of Stafford borrowing," Schilling said.
Still, the increases -- $2,000 of unsubsidized loans for undergraduates and graduates -- fall far short of the $6,000 worth of subsidized loans that graduate students now receive and $4,000 to which undergraduates now have access.
If the proposal were to be enacted in the budget, "students will have to resort more to private loans, which are somewhat higher interest and are not subsidized," Schilling said. "There is a significant amount of private loan money out there for education, but it's generally not [as] attractive as the federal programs."
In addition, the Perkins program provided for loan relief for certain students -- for example, those who teach in areas where there are shortages. Third-party loans do not provide such relief.
Currently, Penn uses third-party loans to help cover financial aid for some students.
"We use it sparingly to meet need, and we may have to rely on it a little bit more to meet need should this go through," Schilling said.
Though Bush has proposed other cuts that will affect Penn -- including reductions in federal research funding -- Carnaroli said that financial aid "is probably the most significant impact."
The University hopes to prevent the loss of as much funding as possible, in part by appealing to elected officials.
"We've got to work hard to ensure that people understand the impact of these budgets and work hard to be sure that they don't pass in their current form," Carnaroli said.
To do so, Penn will work with its peers and delegates.
"We will be watching the developments in Washington very closely," Schilling said. "We'll be working with our colleagues in higher education to make the case that this would have a severe impact on students across the country."Comments powered by Disqus
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