Just another sign or our recessionary times:

More individuals who qualified for state grants based on financial need are now being denied those grants as funds become limited.

The strains on the economy are now being felt in the state run financial aid programs for students. In Washington, for instance, the state’s Need Grant is their largest educational funding program for needy students, according to the state Higher Education Coordinating Board or HECB. But in 2009, more than 15,000 students who would have qualified didn’t get them, based on figures released last week from the HECB. That is triple the number of needy students being turned away compared with the previous academic year. About 74,000 students did still receive State Need Grants this year.

Here in Michigan, the Promise Scholarship was canceled for budget reasons, a program which had planned to give $4,000 over four years to qualifying kids.

It is not that states are not commited to college funding programs, but rather the burgeoning growth in the number of students that are qualifying. The increase in unemployment means more families are struggling to make ends meet with more limited funds. In addition, many savings funds, including 529 plans, were hurt by the downturn in the stock market.  

The Legislature added about $18 million to aid students with State Need Grants in the coming school year. But HECB predicts demand will outstrip funding. Students with significant reductions will be those in middle class families. For the state universitites in Michigan, we have seen less grants and more proposals coming back with more of the funding coming from student loans.

Remember, State Need Grants are awarded to financially eligible students on a first-come, first-served basis. Eligibility is based on family income and size, with funding usually available to families earning up to 70 percent of the state median income. As an example, a student with a family of four with an income of $54,500 could qualify for a partial grant within the rules. However, the boost in the numbers of students who qualify will drive the cutoff point lower.  Families who submit their applications late in the year are almost certain to be left out.

“There’s plenty of demand, but not enough money to serve for everybody,” Washington’s HECB spokesman, Bob Burdick, said. Colleges across every state have an overabundance of students completing Free Application for Federal Student Aid. The FAFSA is used by colleges nationally to determine which students receive school funding. Between June 2009 and May of this year, the number of federal applications at Washington higher education institutions rose 22 percent, the HECB reported. The largest increase increase was at the state’s two-year community and technical colleges, where applications were up 41 percent. By comparison, the amount of federal applications in the state stayed relatively flat between 2003 and 2007.

It is more important than ever to start planning early. If you wait too long, then you risk losing out both on funding assistance and school choice as many schools are now increasing their admission standards. Even if your student does not qualify for federal or state funds, there may additional opportunities such as Federal Pell Grants, monies from the college or federally subsidized student loans, but only if the FAFSA has been submitted.  These can be based on financial need or merit or both.

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