State, federal budgets may mean fewer loans, more grants

Recently proposed budgets spell both good and bad news for University students who receive financial aid.

Tuesday, Gov. Tom Ridge proposed a 7-percent statewide increase in state funding for grants from the Pennsylvania Higher Education Assistance Agency (PHEAA), which will bring an additional $17.5 million to the grant program.

"We're pleased to hear about the increase (from the state)," said Bob Snyder, assistant director in the Office of Student Aid. "It will certainly benefit students."

However, when President Clinton released his budget Monday, the preliminary federal allocation for the Federal Perkins Loan program at the University was cut by about $85,000, Snyder said.

University students will be affected by both proposals. About 18,400 undergraduate students in the Penn State system received a PHEAA grant for the 1997-98 academic year, Snyder said. With Ridge's increase, an additional 1,700 students statewide would receive funds, according to Ridge's budget presentation to the state Congress.

Adding more students to the grant program, instead of increasing the amount of funds received by current students, is the type of increase Anna Griswold, assistant vice provost for financial aid, said she wants to see.

"I think the current students would say 'help us more,' and then there are students who say 'we need help, too,' " she said. "There is a need in both areas. We have more students that we would like to reach."

She added that even if the number of students stayed the same and the grant values increased, the change would not be significant.

Although it is not welcome or surprising, Griswold said the cut in the Federal Perkins Loan program is also not very significant. About 55 students will be affected by the cut, Snyder said.

So few students will be affected because the federal allocation is only 10 percent of the University's funding for the program. The remaining money comes from interest and loan payments that are recycled through a revolving fund.

Neither proposal is definite because the budget procedure is still in progress. Ridge's budget will be addressed by the state legislatures and Clinton's budget by the federal legislatures during the next few months.

University officials will travel to Harrisburg for state appropriations hearings on Feb. 23 in front of the state Senate and on March 3 in front of the state House of Representatives.

The increase from the state was included in Ridge's $17.8 billion budget, which included a 3.25-percent increase for basic operating costs for state-related universities, such as Penn State. The University will receive about $9.4 million in additional funds if the budget is passed.