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Economic Downturn May Affect Pell Grants

This story was written by Lindsey Anderson, The Eagle

The recent economic downturns may limit future federal Pell Grants, a federal aid program, which could affect how much financial aid American University students receive.

Shirleyne McDonald, AU's Associate Director of the Financial Aid, said a small percentage of AU students receive Pell Grants. Yet the grants are awarded to the university's low-income students. Most recipients of Pell Grants come from families who make less than $40,000 a year, according to the program's Web site.

The United States Department of Education estimates that Pell Grants will be short $6 billion next year. The shortage is a result of the increasing number of applicants and the worsening economy, the American Council on Education told The New York Times. Authorities may reduce the grants to make up for the loss.

However, AU's Financial Aid Office has not received a notice from the Department of Education to suspend the grants, according to McDonald.

"We have already awarded eligible students their Pell Grants [this year]," McDonald said. "The economy hasn't affected AU's ability to award grants."

In fact, McDonald said the maximum Pell Grant award amount was increased last year so the school has been able to award more money to low-income students this year.

Students with loans may also feel the burdens of the declining economy.

Some AU students say loans are essential to funding their college education.

Julie Miller, a freshman in the College of Arts and Sciences, said she took out some loans to pay for AU but is not worried about the economy affecting her college attendance because her parents are handling her college finances.

"While loans may not always be good in the long run, they help more people to go college," she said.

Katie Horvath, a freshman in the School of Communication, also said loans were a vital part of her choice to attend AU. However, the economy's worrisome state is not stopping her from attending AU, she said.

Congress recently extended a program through 2010 that would allow students with loans to continue their education as a way of protecting students with loans from the detrimental effects of the current credit market troubles, Yahoo News reported.

If President Bush signs the bill, it will extend the Secretary of Education's authority to purchase guaranteed student loans for an additional year, according to the Library of Congress.

The legislation would ease the burden on private sector lenders feeling secure enough to lend money to students, McDonald said. By lowering the constraints on lenders, students will continue to receive help to attend college.

However, lenders may need to be more strict when they check the credit of borrowers, and there may be an increase in the criteria lenders will need to review, she said.

While students may worry that the economy will affect their ability to pay for college, McDonald said AU's budget runs on a two-year cycle, which has meant that the budget has not yet been affected.

AU President Neil Kerwin is continuing to ensure that the brightest students can attend AU, she said.

"[Kerwin] is looking to address these [financial] issues and to retain and build upon our status as a premier learning institution," McDonald said.

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