An amendment introduced by Sen. Jon S. Corzine, D-New Jersey, has prohibited the Department of Education from carrying out recent updates to the financial aid equation that would force students to pay millions more for their college educations.
The blocked changes, which were issued by the Department of Education May 30, focused on changing the way state and local taxes figure into the financial aid families need to fund their children’s college educations. The new updates would change the formula that determines the amount that a family pays toward a college education after financial aid is issued, otherwise known as the expected family contribution.
“In calculating the expected contribution, the income is reduced by an allowance, or deduction, for state and local taxes paid by that family,” Corzine said in a written statement. “The larger the allowance or deduction, the smaller the expected contribution, the more aid the family is eligible to receive.”
The updates made by the Department of Education this May cut the amount of credit families could receive for the taxes they paid in 25 states by 50 percent. Wisconsin’s tax credit would be slashed by 44 percent, meaning the current allowance of five percent state and local taxes paid will now only be recognized on financial aid forms as two percent under the updates.
The May updates would target financial aid issued to middle class families.
“Wealthy families don’t need financial aid, and the eligibility of the very poorest families won’t be affected,” Corzine said in a written statement. “The families hurt the most by the administration’s cuts are those in (the) heart of America’s middle class.”
According to the New York Times, the Department of Education defended the updates as a legal necessity, but Congress labeled the changes as a way of cutting education aid without facing the public.
Corzine’s amendment prevented a reduction of $270 million in the Pell Grant program, which would mean a loss of Pell grants to 84,000 students.
Darius Goore, press secretary for Corzine, feels that the detrimental effects of the updates would not be limited to Pell grants.
“What we have here is a ripple effect,” Goore said. “The [expected contribution] is used to determine how much aid a family gets and is factored into all different kinds of aid, not just Pell grants, in both state and private institutions.”
Goore said that the updates not only affect the financial status of families, but also affect the future of higher education.
“[The May updates] mean less opportunities for kids to go to school, less opportunities for people to educate themselves,” he said. “Higher education is really the key to participating in the promise of America, and limited opportunities for education only hurt that.”
The May updates will not be implemented for at least another year and could be deferred to an even later date.
With the higher education reauthorization act due next year and Corzine’s amendment, Goore said that it is possible that the May updates will not have a chance to do any damage to the pocketbooks of families in affected states.
“The changes were blocked for a year, and our amendment was coupled with a study to look at the impact of the rule changes. The suspension period gives us time to find a permanent solution,” Goore said. “But in the meantime, we are going to keep pushing to see that we don’t have cuts that damage families trying to send their kids to school.”
