U.S. weighs college aid for middle class

Thousands of middle- income families who painfully balancecheckbooks against college plans for their children worry whethertheir youngsters will have the same educational opportunities theyhad.

As a result, a debate is brewing in Washington that focuses onhelping the middle class by changing the rules for financial aid.

Congress soon will take up the matter, and there are proposalsto open up government grant and loan programs to the middle class aswell as the poor, experts say.

"It's the middle-income people who vote and form moreinfluential opinions," said Tim Christensen, associate director ofthe Washington-based National Association of Student Financial AidAdministrators. "But nobody should allow the problems middle-incomepeople are having to overshadow those of lower-income people."

According to the College Board organization, the cost ofattending and living at a university rose in the 1980s by 40 percentat public institutions and 59 percent at private ones.

However, per-capita disposable income, adjusted for inflation,rose only 18 percent, and over-all aid from government and privatesources rose 10 percent, putting middle-class families in a squeeze.

Nearly $28 billion in grants, loans and campus employmentprograms was available last year from fed eral, state and school programs. About half was in loans.

A family's income, the number and age of children, number andage of parents, real estate, savings and college costs are consideredin the formulas to award grants and loans. Not surprisingly,counselors argue the boundaries of middle income, with the spreadanywhere from $20,000 to over $80,000.

Major areas where Congress is considering changes to helpmiddle-class families are:

The family home: When the value of the family home is includedin determining ability to pay for college, many students areeliminated from consideration.

The issue especially effects homeowners in expensive areas,including many areas of Chicago, who bought their houses long ago. The value ofthe houses has gone up dramatically, and people say the message tothem is to borrow against their house equity.

But their reply is that they can't afford to pay for such secondmortgages. Recognizing that, some schools make adjustments, but thegovernment does not.

But Thomas G. Mortenson, a financial aid expert who recentlyworked for Washington state Higher Education Coordinating Board,contends that eliminating home equity would be unfair to lower-incomerenters. He says such plans are being considered because politiciansfear a middle-class backlash.

Who's eligible: Congressional proposals would make all students,regardless of income, eligible for government-subsidized StaffordLoans that have very favorable repayment terms. Students with familyincomes over $50,000 now generally are ineligible, although they canobtain other loans with less favorable terms.

However, experts say there is no clear evidence thatmiddle-income students are being shut out of college in largenumbers. Rather, there is a trend for middle-income studentsincreasingly to choose less expensive alternatives.

Michael Farrell, acting assistant secretary of education forpostsecondary programs, said the Bush administration's goal is toprovide access to college, not necessarily an expensive college.

Funding level: A plan offered by Sen. Bill Bradley (D-N.J.)would tax millionaires to greatly expand loan programs for the middleclass and give students up to 25 years to repay.

The plan would start with a 10 percent tax surcharge on incomesexceeding $1 million a year. There would be a lifetime borrowinglimit of $33,000 per student, regardless of family wealth. Repaymentwould be based on a percentage of a person's income.

"I think there should be an increase in (grants to poorstudents), but I also think we need to reduce the financial pressureon middle-income families," Bradley said. "I don't think the way youdo that is to pit the have-nots against the have-not-enoughs."