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The Obama Administration’s recently passed American Recovery and Reinvestment Act includes revisions to the financial aid options available to American students of higher education, and University of Maine community members are greeting the new plan with enthusiasm.
Better known as the stimulus bill, the American Recovery and Reinvestment Act revises the federal Pell Grants program, which provides funding to needy undergraduate college students. These grants can be used for housing and living expenses as well as tuition. The plan increases the maximum allowed Pell Grant amount by $500 per student. When combined with a previously scheduled increase this will put the maximum allowed grant at $5,350 for 2009-2010 and $5,550 for 2010-2011. The stimulus bill will also allow approximately 800,000 more students nationwide to receive the grants, tie its increases to inflation rates and make Pell Grant funding mandatory, rather than partially at the discretion of Congress.
“In 2008-2009, over 2,500 [UMaine] students received federal Pell Grants . totaling $8 million, so it’s a substantial amount,” said Gianna Marrs, associate director of Financial Aid. “They’re the best kind of aid you can get.”
Marrs said she could not predict what the new funding will translate to in terms of dollars – partially because the grants are federal awards. The Campaign for America’s Future, a progressive political group that issued a report on the new higher education funding, estimates 954 more Maine students may be eligible to receive funding.
“I’m really glad that we have a president and, so far, Congress that supports higher education,” said Maine House Rep. Emily Cain, D-Orono. “I know the challenges that students are facing. Hopefully the Pell Grants will help people . that otherwise would have to take out more loans . to stay in school.”
The proposed federal budget also calls for revisions to federal financial aid programs. It would terminate the Federal Family Education Loan (FFEL), which furnishes federally guaranteed loans provided by banks and other lenders. The termination of the FFEL would end subsidies to private banks, potentially saving $4 billion a year in overhead costs. These funds would then be diverted to the Department of Education’s Direct Loan program, which gives financial aid to students without a private middleman.
The revisions have not gone without opposition.
Bill Norbert, the governmental affairs manager of the Finance Authority of Maine (FAME) expressed his reservations about the new plan.
“FAME receives revenue as the guarantor for federal student loans through the FFEL program,” Norbert said in an e-mail. “The funds that we receive are used to help cover the administrative costs for the State of Maine Financial Aid Programs. . We fear the thousands of Maine students FAME reaches annually through outreach will be negatively affected by the . proposed discontinuation of the [FFEL]. [With] our role as a guaranty agency and the specialized service and education we offer, it is highly unlikely the [Department of Education] will fill the void.”
Bangor Daily News