Although some experts and lawmakers worry that a change in a federal formula could mean less financial aid for students, Northwestern officials said as a private university, NU will not be greatly affected.
The Department of Education imposed a slight change to the formula used to determine federal financial aid in late May, a move that did not require congressional approval or public comment. Starting in fall 2004, the change will decrease the number of students who can qualify for financial aid, saving the department hundreds of millions of dollars.
The federal needs analysis is used to calculate aid for families and allows them to deduct money they pay toward state and local taxes. Federal law requires the Department of Education to update tax information periodically, but the most recent data is from three years ago, when state taxes were lower than they are now. The altered formula will reduce the amount a family can deduct for taxes, though rates have increased.
“The problem was the information had holes in it,” said Brian Zucker, president of the Illinois-based consulting firm Human Capital Research, which analyzed data for the Department of Education. “For example, they didn’t take into consideration sales tax. They were using ’99 data.”
But the federal financial aid formula is not the only way colleges and universities can assign aid, and a supplementary method many private institutions use is calculated so that students might not notice harsh backlash from the federal formula change.
NU relies on the College Board’s “Profile” to calculate financial aid. Unlike the federal analysis, the Profile draws on updated state tax tables. Because the Profile uses different tax tables, students who go to private institutions that use the Profile to determine family eligibility will not see as large a difference when the federal formula change takes effect.
According to Rebecca Dixon, NU associate provost for university enrollment, NU is “among a very small percentage of institutions who have enough resources to meet the full financial need of their students.”
“While we also use aid provided by federal and state governments, we are not solely dependent on such public funds in comprising financial aid packages for our students,” Dixon wrote.
Zucker also talked about how public and private institutions deal differently with financial aid.
Public institution students rely primarily on financial aid while students at private institutions receive institutional dollars, he said, which explains why the federal formula change could affect students differently.
“It will be very hard to predict for private universities what will happen on an enrollment level and an aid level,” Zucker said.
But Linda Peckham, a financial aid spokesperson in College Board’s higher education services office, agreed with Dixon that students at private institutions will not feel much of an impact from the federal change.
“I just don’t think it’s going to be that big,” Peckham said. “The private institutions have the leeway to give add grant funds to make up for any lost in federal funds for this change to the federal formula.”
Students at smaller schools that rely on federal aid might not be lucky, said Ken Redd, research director for the National Association of Student Financial Aid Administrators.
“Some schools are well endowed and can provide more institutional grants,” Redd said. “However, the smaller colleges won’t be able to change and students will have to work a few more hours every week.”
The Summer Northwestern’s Crystal Nicholson and Payal Uttam contributed to this report.
