STUDENT AID FACES CHANGES; LEGISLATION MIGHT MODIFY PROGRAMS

Student financial-aid programs could undergo sweeping changes under legislation Congress will consider this year.

Such legislation could have a major impact on funding of a college education at Southeast Missouri State University and nationwide.

"This is the year that Congress will deal with reauthorization of higher-education amendments, which fund student financial-aid programs," said Gene Buck, director of financial aid at Southeast.

The impact of such changes won't be felt until 1992 or 1993, she said.

House Democrats have proposed major changes in federal financing of a college education, which, House leaders say, would allow more middle-income students to receive financial aid.

The plan would make all students eligible for guaranteed student loans, remove the family home or family farm from the formula used to determine need for federal Pell Grants and campus-based assistance, and guarantee that the Pell Grant program will be fully funded.

House Democrats have estimated the cost of their plan at $1 billion to $1.5 billion a year. Under the plan, if the federal government did not have enough money each year to finance Pell Grants, it would have to borrow money to provide the full amount for each eligible student rather than cut the grant.

Buck said the plan is "probably just one of the first of many proposals that will be coming out."

The financial-aid director said another proposal being considered is one that involves "front loading," giving federal grants to freshmen and sophomores, and issuing federally backed loans for juniors and seniors.

On the other hand, she said, there's an argument to be made for rewarding students "for making it through the first two years (of college) by letting them have some grant money."

A student currently has to meet a "needs test" to qualify for federally backed student loans. Under the Democratic proposal, students would no longer have to go through such needs tests.

Buck said that under the Democratic plan the family's home or farm equity would not be considered as part of a family's assets in determining financial aid for students.

With a public-college education now costing a student an average of $5,000 a year nationwide, and a private-college education costing $11,000 annually, middle-income families are finding it increasingly difficult to pay for a college education, Democratic congressional leaders have said.

Buck said that more and more middle-income students are finding they don't qualify for federal loans or grants.

"One of the things that we have continued to see in financial aid over the last 11 years is the widening gap" with middle-income students not qualifying for aid, said Buck.

"The students who have high financial needs have continued to be funded," she said. "Those students who have been ineligible for grants have had to get loans."

The recent hike in tuition and room and board fees has been felt in Southeast's financial-aid office. "We are seeing an increase in financial-aid recipients this year because the cost went up at Southeast," said Buck.

Currently, about 50 percent of Southeast's students receive financial aid of some kind. Buck said that includes everything from federal aid and scholarships to student work programs.

Next school year as many as 60 percent of Southeast's students may receive financial aid, said Buck.

In the 1989-90 fiscal year, Southeast students received $13 million in financial aid. About $10 to $11 million came in the form of federal-aid programs, she said. Federal Pell Grants totaled $3.9 million and federal student loans totaled another $5.5 million.

Buck said the student loans are actually issued through banks, with the federal government paying the interest on the loan while the student is in school. After leaving school, the student is expected to repay the loan. If the student defaults on the loan, the federal government must reimburse the bank.

Naturally, said Buck, students prefer grants to loans. "We would rather that the student have the grant than the loan, too. We would like our default rate to be lower."

Currently, she said, the default rate for Southeast students is about 10 percent. "I think we are in line with other institutions."

In 1989-90, an eligible student could receive a maximum of $2,200 in the form of a Pell Grant. For the 1991-92 year, the maximum amount will be $2,400.

President Bush has proposed increasing the grant to $3,700. But to pay for it, the president has proposed limiting such grants to students in families earning less than $10,000 a year.

Although acknowledging the need for increased student financial aid, Buck stopped short of endorsing any specific legislation. "This discussion is really very preliminary," she said. "There are so many ifs that are included in this."

From a practical standpoint, she said, the federal government can't provide unlimited funding for financial-aid programs.

Buck said one thing that is needed is a change in procedures for applying for federal aid.

The application form, she said, needs to be shortened. "The shortest application for federal funds (currently) is eight pages long and it comes with an instruction booklet that is about 30 pages long. That is absurd; that is ridiculous."

Buck said her office must stringently review financial records.

"It's annoying to be asking for people's tax returns. We deal with people who all they are trying to do is go to college and have money to get a better education. The whole application system needs to be reviewed, needs to be simplified," she said.