At least a dozen states are reducing award sizes, eliminating grants and tightening eligibility guidelines because of a lack of money. At the same time, the number of students seeking aid is rising sharply as more people seek a college education and need help paying the tuition bill because they or their parents lost jobs and savings during the recession.
Many of the affected programs are need-based grants that provide money that complements financial aid offered by schools and the federal government. Without that cash, some students may be forced to drop out, transfer to cheaper schools or simply have less money available for rent and groceries. Experts fear others will take on too much debt or spend even more time working as they pursue a degree.
"There's almost no question the folks coming in are probably going to have much more difficulty getting by year to year in college and staying enrolled as a result," said Sara Goldrick-Rab, a professor at the University of Wisconsin-Madison and an expert on financial aid. "The safety net is falling away."
State financial aid accounted for 12 percent of the grants awarded to college students in 2007-2008, according to the New York-based College Board. While that's a fraction of the financial aid provided to millions of students by schools, the federal government and private scholarships, the demand for aid is booming. Roughly 620,000 more students applied for federal aid in the first quarter compared with last year, a jump of more than 25 percent, according to the U.S. Department of Education.
University of Illinois senior Brandi Cho, 21, said her parents cannot afford to make up the $2,500 she expected to do without after her state grant runs out in the spring. She is considering two options: Find a second weekend job on top of the 15 hours a week she already works, or cram five senior-level accounting classes into the fall semester so she can graduate early.
"The best that I can do is just start saving every penny that I have," Cho said.
The cuts come as lawmakers and governors struggle to balance budgets crippled by the recession's impact on tax revenues. Lottery-funded merit aid programs in states such as Georgia, Florida and West Virginia are also pinched as revenues from the games are leveling off and in some cases declining.
In Illinois, a state scrambling to find $11 billion in budget savings, officials are telling 145,000 low-income students who receive the state's need-based Monetary Award Program grants to expect no help in the spring semester because money for the program will run out. Lawmakers and Gov. Pat Quinn cut the state's aid budget in half; an additional 40,000 students who rely on other state programs will be affected, too.
Ohio is eliminating grants of up to $2,496 for low-income community college students, and cutting them by more than 50 percent for low-income students at four-year universities. The state is axing $640 grants for 58,000 private school students and grants of up to $4,000 for 22,500 students attending two-year, for-profit schools.
"That's a lot of money to someone like me," said Maria Zimbardi, a 33-year-old mother of three in Youngstown, Ohio, who will not receive the nearly $3,300 grant she got last year. She is working part time as a waitress while learning administrative and accounting skills at National College, and is taking out more student loans - which now total $29,000 - so she can graduate next May.
The Wisconsin Higher Educational Aids Board projects that more than 20,000 low-income students will not receive grants because of a lack of money and a sharp increase in applicants. Jennifer Matamoros is among them, and the senior at the University of Wisconsin-Whitewater - where tuition has increased about 6 percent a year in each of the past four years - is worried about paying bills without the $2,600 grant she got last year.
She said she'll likely borrow more and graduate with $30,000 in student-loan debt, which is as much as she expects to make a year in her career as an elementary school teacher. "They just keep raising more costs and taking away more money," she said.
Education Sector, a Washington-based think tank, warned in a recent study that student debt was at an all-time high, with a rising share owed to riskier private student loans. The study warned that could eventually reduce access to higher education and lead to more students defaulting on their loans.
"It's going to start to impact the equation of whether college is worth it for some students," said Erin Dillon, a policy analyst for the group.
In Michigan, where state lawmakers have yet to pass a spending plan, about 96,000 students don't yet know the value of their Promise scholarships - or if they get one at all. The state's Republican-controlled Senate voted to eliminate the $140 million program that provides high school graduates with up to $4,000, but Democratic Gov. Jennifer Granholm has vowed to restore some of money.
Financial aid officials in other states are making difficult choices with the limited funds they have. In Massachusetts, where the state financial aid budget was cut 10 percent, the Office of Student Financial Assistance plans to make deep cuts to other aid programs to preserve the need-based Mass Grants program. Even so, many grants could fall by $400 to $500 compared with last year.
Wisconsin decided to slightly increase the average grant awards because students are showing much greater need, said Connie Hutchison, the executive secretary of the Wisconsin Higher Educational Aids Board. That meant university students who applied in July for aid are learning the pool of money has run out.
"We're getting a lot of questions about why students are not getting financial aid they got last year," Hutchison said. "It's so hard to explain to them."