State changes education grants formula

EUGENE — College students applying for the state's main financial aid program will get far more rejection letters this spring than in the past as the state changes how it awards grants.

The changes are driven by a surge in enrollment over the past two years caused by more people seeking refuge from hard economic times by going to college. That threw a wrench into the old formula for how many grants to award and caused the state to promise students $10 million more in aid than was in the budget for the current school year.

That in turn forced the Oregon Student Assistance Commission to cut the aid it had promised thousands of full-time students by $120 each. The commission is now asking the state Legislature for an extra $19.7 million to meet demand next year and to restore this year's cuts.

To prevent another situation in which the state promises more aid than it has available, the commission is changing the way it runs the Oregon Opportunity Grant, the need-based financial aid program that provides money to tens of thousands of students annually. The result will be earlier deadlines, more initial denials and more students left on a waiting list for money that might not be available until after winter term begins.

"We will be making far fewer award commitments this spring than ever before, for a smaller percentage of the applicant pool than ever before," said Dennis Johnson, executive director of the commission. "But we will be making some late awards."

Also, the commission for the first time will divide grant funding into separate pools for four-year university students and two-year community college students. It hopes that will help fix a persistent inequity that hurts late-enrolling community college students.

The commission made the changes because it can no longer accurately predict how many students who qualify for grants will use them. Every year, some students apply and qualify, but when it comes time to start school, they change their minds and don't enroll.

In the past, the commission used historical averages to predict how many would opt out. That allowed it to award more money than it had because it knew a certain amount would go unclaimed.

But the enrollment surge has changed that. A higher percentage of students are claiming their grants and breaking the old formula.

The change will cut off further grant awards as soon as the agency has enough qualified applicants to use up the amount of money it has available, even though it knows some of those students won't claim their grants. The remaining qualified applicants will go on a waiting list, and when the agency knows how much money is not claimed it will make additional awards.

That has drawbacks, but the change is needed to avoid having to reduce individual grants in the middle of the school year, Johnson said.

"This is to safeguard against any overcommitment," he said.

The grants help tens of thousands of students.

Almost 161,000 people met the basic qualifications for an opportunity grant this academic year. Of those, just over 92,000 applications came in before the Aug. 15 deadline. The student assistance commission awarded just over 43,000 grants, which means almost 50,000 people either decided not to claim a grant or waited too long and missed the disbursement deadline.

Grants top out this year at $2,675 for four-year students and $2,600 for two-year students; next year the maximum grants will be $1,950 and $1,800, respectively. This year, 4,533 students at Lane Community College and 2,592 students at the University of Oregon are receiving state grants.

Tamara Henderson, executive director of the Oregon Student Association, said the group hasn't taken a position on the changes but understands the jam the commission is in. Henderson, who serves on a steering committee that helped revise the grant program, said the changes are fair given that not enough money is available to help all the students who qualify.

The changes are "a more equitable way of distributing the limited funds, since the program is underfunded and over capacity," she said.

Grants for next year will be awarded in the order they are received, so Johnson said it's important for anyone considering college this fall to apply as soon as possible. The first step is to fill out the Free Application for Federal Student Aid, or FAFSA. Visit the Web site for information.

All of Oregon's four-year public universities have a March 1 deadline for priority financial aid consideration. Students can apply later, but they may miss out on some programs because funds will be committed.

Johnson said it's likely that all of the available state grant funds for the 2009-10 school year will be committed by early spring. Application numbers remain at all-time-high levels, so students who apply later almost certainly will go on the waiting list.

That will have the greatest effect on community college students, many of whom don't begin the admission and enrollment process until later in the year. It is particularly difficult for workers who are laid off later in the year and turn to community colleges to upgrade their skills.

"It just leaves that many more students who are eligible or could be eligible, not receiving that assistance," said Bert Logan, LCC financial aid director. "It's going to be difficult for students who are relying on that grant, and somewhat bitter for students who got it this year and may not get it next year."

Johnson acknowledges that the new system favors four-year students, who are more likely to apply earlier. The agency is trying to address that by reserving some of grant aid for community college students.

Under the new formula, 48 percent of grant funding will be reserved for community college students, 41 percent for public university students and 11 percent for private university students. Those shares reflect the three-year average grant distribution pattern.

Even so, Johnson said it's almost certain that the full share of grant funding for community colleges will be committed by early spring, leaving late applicants on the waiting list.

"It most affects people with the least resources, the people who are most in need of assistance," he said. "And that is just an undesirable effect of having to redesign this distribution system."

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