Too Little, Too Late
In the midst of the debate in Congress over whether or not to double interest rates on Federal student loans in July comes another hot-button aid issue—states are running out of aid money altogether. At the end of March, the Illinois Student Assistance Commission (ISAC) announced it would need to suspend making Monetary Award Program (MAP) awards for FAFSAs filed on or after March 14.
“The decision was based on the large early FAFSA application volume, expected claim rates, and the initial FY12 MAP appropriation level of $387 million,” according to a memo released by the Illinois Board of Higher Education (IBHE). “If MAP claims for the first term are lower than expected or the program’s FY13 appropriation is higher than the initial FY12 appropriation, ISAC will be able to release additional applications from the queue and make awards to additional students.”
The IBHE is still urging prospective students to file, as they will still be considered for federal Pell grants and Stafford loans (loan rates are expected to double from 3.4 percent to 6.8 percent).
Illinois is also eliminating its General Assembly scholarship program, effective June 1. The tuition waiver was received by 1,327 college students at a value of $13.5 million in FY2011.
Not surprisingly, it’s an overall trend that states are having to reduce their higher ed funding, shares Megan McClean, managing director of policy and federal relations for the National Association of Student Financial Aid Administrators.
A major issue at hand is whether the financial aid resources of more states will begin to dry up early.
“I don’t really foresee there being fewer loans available at the federal level, but I think the states are more volatile right now in terms of their grant programs,” McClean notes. “States deal with their own economies and on a smaller scale. All the states have different fiscal situations and have different levels of fiscal health.”