Taseen Peterson is a portrait of the recession. A single father who worked as a loan officer in the mortgage industry, Peterson decided to go back to school as the real estate market dried up, figuring he’d ride out the downturn in college and come out the other end with a credential that would get him a higher paying job.
A resident of Newark, N.J., 26-year-old Peterson chose to attend Berkeley College, a for-profit institution just up the street from his house. While he’s had to juggle being a dad and a student, Peterson has taken enough online and evening classes to potentially graduate in fewer than four years. There’s a new wrinkle in the plan, however, given a proposal in Gov. Jon Corzine’s budget that would cut financial aid for students at proprietary institutions.
“Now I’m in school; I mean to stay here. I love it. It’s like I was built for this,” said Peterson, who is student president of the college’s New Jersey campuses. “And my education, I guess, is being jeopardized with the governor’s proposal. And it’s kind of scary because now I’ve built up some debt while I’m here. I have this debt, and there’s no turning back now.”
Stories like Peterson's are likely to play out across the country, as state legislatures look in every nook and cranny for areas to cut. While few states have made outright declarations that they may end major aid programs altogether – California  being a notable exception – several are tweaking eligibility requirements or changing the scope of aid programs to reduce costs.
In New Jersey, proposed changes to the state’s largest aid program would reduce assistance for students attending for-profit colleges. According to the governor’s budget proposal, students attending proprietary schools will not be able to receive Tuition Assistance Grant [TAG] awards that exceed the average amount awarded to students attending state colleges. Since many proprietary colleges charge higher tuition than public institutions, the change will inevitably leave students at for-profit colleges with a larger gap between their tuition obligations and the aid they receive.
The neediest students at Berkeley College, as defined by the New Jersey eligibility index, would receive about $6,400 under the governor’s plan – a decrease of about $4,300 or 40 percent, according to the Higher Education Student Assistance Authority. As for students with less demonstrated need, some of whom receive $3,700 under the current arrangement, TAG payouts would be reduced to zero.
The proposed changes to the TAG program come as New Jersey lawmakers attempt to fill a $7 billion budget shortfall. By adopting this strategy, however, the state is punishing some of its neediest students, according to Teri Duda, senior vice president of external affairs for Berkeley. The average annual income of Berkeley students is $30,000, and more than half of them receive aid through TAG, she said. The college serves a largely nontraditional student body, many of whom are working adults with children, she said.
“It’s not like they can go to their parents or someone else and say make up the difference,” Duda said.
For-profit institutions, however, may be easy targets in a budget cutting year. The proprietary colleges in New Jersey are more expensive and, rightly or wrongly, some perceive them as more focused on profit than on sound educational programs. That stigma, however, is undeserved, and the end result of the governor’s proposal will be to make education less accessible to a select group of students in the state, Duda said.
“This is about the students,” she said. “This is about giving the students the opportunity to attend the college of their choice and to not be discriminated against.”
More Cuts in Ohio, Florida, California
As states tweak financial aid programs, it’s not uncommon for different sectors of higher education to be treated differently – or even pitted against one another. Take Ohio, where a proposal endorsed by Chancellor Eric Fingerhut would boost financial aid for university students while reducing awards for those at community colleges. While Fingerhut argues that the plan represents a more fair distribution of dollars, critics charge that community college students are being blindsided midway through their academic careers.
Fingerhut, who as chancellor represents both community colleges and universities, concedes the plan isn’t ideal. Given the dire budget projections in Ohio, however, he says it makes sense to change the formula for the need-based Ohio College Opportunity Grant [OCOG] program.
“If we could, we would just continue it as it is,” Fingerhut said.
In Ohio, Pell Grants cover the full cost of tuition and a portion of living expenses for most eligible community college students. Those students, however, have come to rely upon Pell in addition to the money they receive from OCOG, using the more flexible federal dollars for expenses as diverse as childcare and entertainment. Under Fingerhut’s proposed “Pell first” strategy, students would lose OCOG if their cost of attendance – books and transportation – was already covered by Pell. In this way, more state dollars would be freed up for needy university students for whom Pell does not cover the cost of attendance.
“When you say we have limited dollars available for financial aid, and should we apply them to help as many low-income students as possible to cover tuition and fees before we apply them additionally to cover expenses, I think most of the taxpayers would say we should help as many students as possible with the cost of tuition and fees first,” Fingerhut said.
The amount of savings derived from changing OCOG will depend on the number of eligible students, but Fingerhut says it’s a “safe guess” that $40 million will be cut from the program.
Under the plan, the average community college student’s OCOG awards would fall by about $1,500, while the average university student’s payments would increase by $821, according to data provided by the Board of Regents.
At Central Ohio Technical College, OCOG payouts would fall from $1,678 on average to $109, a 94 percent reduction. Those stark figures have prompted students to write letters to lawmakers, suggesting they’ll have to drop out if the changes become reality. Some students even went before the Ohio Senate Finance Committee recently, pleading for the state to keep the program untouched. Among those testifying was Cheryl White, a 48-year-old Utica, Ohio resident who enrolled at Central Ohio after she was laid off in 2007, the Newark Advocate  reported.
“I had no advance warning at all,” she told the committee. “I was tired of living in low-income housing … [I wanted to] finish what I started 30 years ago.” Such stories are heart-wrenching for Faith Phillips, director of financial aid at Central Ohio.
“Our students are basically saying we might not be able to continue in college with the loss of this grant,” Phillips said.
Fingerhut has justified the changes to OCOG in part based on the fact that Pell grant awards were recently increased by Congress. “The federal government is much better positioned to deal with financial aid,” he said. “The state has the responsibility to keep tuition down.” Given a projected deficit of at least $600 million , however, would Ohio adopt a different strategy if Pell awards hadn’t been increased? Donald Heller, director of the Center for the Study of Higher Education, doesn’t think so.
“The fact of the matter is that even if the Pell Grant hadn’t increased, you would have seen states making the same kind of cuts,” said Heller, a professor of education and senior scientist at Pennsylvania State University. “They are responding to the fact that states have less money to spend, and this is a very easy way for them to cut expenditures.”
Lawmakers in Florida are also chipping away at the state’s primary financial aid program. The merit-based Bright Futures program, which has historically covered 75 percent or 100 percent of tuition for qualifying students, will not cover  tuition increases of up to 15 percent at state universities next year. The decision is expected to save $34 million for the cash-strapped state.
In California, talk has turned from trimming the Cal Grant to eliminating it altogether. Smarting from voters’ rejection of recent ballot initiatives designed to lessen the state’s $21.3 billion budget shortfall, Gov. Arnold Schwarzenegger has proposed eliminating all new Cal Grants while slowly dismantling the program for good.
When states launch major aid programs, officials are reluctant to tell the hard truth: The promise of aid is easily broken, Heller said. Would it be more honest to say so? Probably. Would it be the right thing to do? Not necessarily.
“Perhaps states could be more up front … but they don’t want to discourage students [from going to college],” Heller said. “They don’t want to put the fear of God in them that there might not be any money there next year.”