With the state and federal governments facing budget shortfalls, financial aid for higher education is one area that could be affected in upcoming budgets.

President Bush's recent budget proposal for the fiscal year 2003 includes a 2.8 percent increase in funding for the U.S. Department of Education — significantly less than the 6 percent requested last year — and no increase for the federal Pell Grant program.

Pell Grants are need-based federally funded financial aid, and they do not need to be repaid.

"We're tremendously disappointed that the budget for fiscal year 2003 doesn't represent any increase," said Cyndy Littlefield, president of the Committee for Education Funding, a group consisting of more than 100 education organizations.

The maximum amount available through a federal Pell Grant is $4,000. Bush's proposal would not increase the grant for the first time since 1994.

The impact such a budget would have on college students remains to be seen, Littlefield said.

Congress must approve the budget before it is adopted, and changes will likely be made in the process.

"The hope is . . . that we can still make some gains with members of Congress," she said.

Penn State students would not be immune to the effects of President Bush's proposed budget on funding for education.

"I do feel it will affect students at Penn State," said Anna Griswold, assistant vice provost for student aid.

No increase in the amount of the grant could force some students to borrow larger sums of money to finance their education, she said.

State funding for financial aid is also feeling the effects of tightening budgets.

The recent budget proposal by Gov. Mark Schweiker includes a 2 percent increase in funding for the Pennsylvania Higher Education Assistance Agency. The program has previously seen increases as high as 10 percent.

"The economic downturn has affected all state programs including PHEAA," said Rep. Lynn Herman, R-Centre and Clearfield.

The budget must pass through the state legislature, which is in recess for state appropriations hearings.

Herman said he would like to see a higher increase in funding for financial aid in the upcoming budget.

"I feel we should have education as a top priority in formulating the budget," he said.

Education lobbying groups continue to work for increases in funding for financial aid programs.

Littlefield said the Student Aid Alliance, a national organization representing students and universities, is lobbying for a $500 increase in the maximum Pell Grant.

The level of state funding for financial aid is also a topic of debate.

"I think there is great concern and alarm," Herman said.

While it is too early to determine how much tuition or financial aid will increase for 2003, Griswold said she did not expect grants, such as the Pell Grant, to compensate for the possible growth in tuition.

"I'm not terribly optimistic," she said.