Colleges Angry About Financial-Aid Rules

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Higher education officials are angry over new regulations that will change the way colleges and universities structure financial-aid packages for needy students in the $200 million federal Gear Up program.

The Gaining Early Awareness and Readiness for Undergraduate Programs, created two years ago, are designed to create partnerships between the federal government, states, institutions of higher education, school districts, community organizations, and businesses to help poor students prepare for and do well in college. The focus of the programs is on providing mentoring and scholarships, among other activities, to between 650,000 and 700,000 students, beginning in the middle school years.

According to the new regulations, published in the April 27th edition of the Federal Register, Gear Up scholarships can be used by colleges and universities only if the funds are the final component, or the so-called "last dollars," added to students' financial-aid packages. All other scholarships or grants will have to be tapped first. The rules also demand that states and partnerships that receive Gear Up money enforce this policy.

The problem, higher education officials say, is that many private donors already stipulate that their money should be used for the "last dollars." If the federal government usurps that role, they argue, it could render the private offers useless.

"Private charities have a right to give funds out by whatever standards they set," said Sarah A. Flanagan, the vice president for government relations at the National Association of Independent Colleges and Universities, a membership organization based in Washington that represents 910 institutions.

Targeting the Money

"This is a huge change in student-aid policy," added Terry W. Hartle, the senior vice president for the American Council on Education, a Washington-based organization that represents 1,500 colleges and universities. "The agreements we've entered into with private donors can't simply be tossed aside by the [Education Department]."

Department officials, however, see the regulations as a way to make sure colleges and universities award the scholarships to students who participate in Gear Up.

Without the policy, institutions and donors might decide to allocate the money to other students, said Maureen McLaughlin, the department's deputy secretary for postsecondary education. Gear Up scholarships are worth a maximum of $3,300—not nearly enough to pay for college by themselves, she said. That would mean that many Gear Up participants would be forced to take out loans.

Higher education lobbyists have other complaints about the regulations.

They say they are worried that the rules will be interpreted broadly and extended to all of the nation's 3,500 colleges and universities, not just the 260 or so that participate in Gear Up. Such a change could complicate the financial-aid packages of millions of students, critics say.

The preamble to the regulations specifies that the rules apply only to Gear Up institutions, but language in the actual regulations is unclear, Mr. Hartle said.

Ms. McLaughlin said the Education Department intends the regulations to apply only to Gear Up institutions. A letter will be mailed to all participating colleges and universities to clarify the matter, and a notice will be published in the Federal Register, she said.

The regulations cannot be amended this year and institutions must comply with them, Ms. McLaughlin said. Discussions about the regulations will continue, however, and negotiations could be reopened next year, she added.

Department officials said they could not specify how much of the $200 million allocated to the program this fiscal year was spent on scholarships, because states and partnerships that receive Gear Up money have some discretion over how to distribute the funding.

Some 670 partnership and state proposals representing all 50 states applied for grants this school year, according to the Education Department. One in every five colleges in the nation and more than 4,500 organizations applied for funding.

Vol. 19, Issue 37, Page 32

Published in Print: May 24, 2000, as Colleges Angry About Financial-Aid Rules
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