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Furthermore, the current $100 increase for those students who would receive it amounts to an increase of 2.5 percent over last year, according to the office - a rate that barely keeps pace with inflation.

Though the proposed increase is small and falls short of Bush’s 2000 campaign promise of $5,100 for college freshmen, any increase is an improvement, said Lynette Wahl, Hamline’s director of financial aid.

“It’s been flat for the last three years, so we’re happy [the administration] is increasing it,” she said.

At Hamline, 541 undergraduate students (nearly one-third of total enrollment) are currently eligible for Pell grants. Nationwide, 10 million students are eligible for the Pell program.

Proposed changes in the Perkins loan program are more dramatic and potentially devastating for 14,000 Minnesota students, including 818 Hamline undergraduates who rely on them to pay for college tuition.

This year, Hamline was allowed a $4,000 cap on individual Perkins loans. This program would be eliminated altogether. Also eliminated would be low-interest fixed-rate loan consolidation and loan forgiveness options for graduates who enter the teaching force, the military, or law enforcement.

“The Perkins elimination will hit students very hard,” said Wahl.

Almost all students with Pell grants also rely on Perkins loans, which extends to middle-need students.
The Perkins loan is interest-free for nine months following graduation, after which it sits at a fixed rate of five percent.

This year the amount was capped at $4,000, an amount based on loan collections and other contributions. Without Perkins loans, students must borrow from nonąfederally funded or subsidized lenders, who will likely require a credit check and would not have a capped interest rate.

Lender companies can offer low rates on student loans in exchange for government backing through subsidized loans. This is good for long-term business and indebted students. However, Wahl said alternatives to the Perkins loans are less desirable, particularly because of the high interest rates students would pay after graduation.

Bush’s proposal to decrease federal government funding and increase lender power is geared to more effectively operate grant programs. Federal spending saved by eliminating the Perkins loans would go toward funding other financial aid programs and would contribute to the proposed $10.1 billion deficit reduction for higher education, which includes a $4.3 billion Pell shortfall.

One possible outcome, if the distribution of loans rests solely on lenders, would be no extra costs for regulating loans between the federal government and lenders, via subsidies, and in loan consolidation and other additional fees. More money would then go directly to students.

As Steve Messick, a Hamline alumni and former member of the Minnesota Association of Private College Students, explained, “The less administrative costs from the government, the more money for students.”

Hamline students may have to seek more expensive loans in the years to come, and there is seemingly little increase in federal financing. The pending fate of Bush’s budget proposal for Pell and Perkins is now in the hands of Congress.