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Dropouts Told To Repay Pell Grants

November 2, 1999

Beginning next year, college students who win Pell grants but later drop out must repay money they don’t use. Critics say the new rule from the Education Department may discourage needy students from tackling higher education.

The rule, published in Monday’s Federal Register, takes effect July 1. Congress approved the idea last year.

Pell grants, intended for the poor, are based on need and school costs. The current maximum grants are $3,125 for an academic year. Until now, they came without strings.

The pay-back rule applies to students who withdraw from school before 60 percent of the term is over. They will have to repay half of what they didn’t use for their education.

For instance, a student with a $1,600 Pell grant pays $1,000 in tuition and fees then drops out a quarter way through the semester. With $600 of the grant left, the ex-student would owe the government half of the 75 percent that went unused, or $225.

Once notified by the school they owe money, ex-students will have 45 days to repay or devise a repayment plan. If not, they’ll be ineligible for future grants or federal student loans.

How many students might be affected is unclear. About 4 million students got Pell grants last year, sharing $7.3 billion. D. Jean Veta, a lawyer for the Education Department, said Tuesday the new provision will apply mainly to students whose grant is more than their tuition.

``This isn’t just going to affect kids who might drop out, but kids who want to enroll,″ said Becky Timmons, a lobbyist for the American Council on Education, an umbrella group in Washington that represents higher education and has objected to the rule.

Pell grants were meant to encourage the bright and impoverished, not turn into a loan, Timmons said. ``The public policy rationale for student aid has been: `Come take a chance. If you have ambition and ability, income shouldn’t be a barrier.′ It has never guaranteed success.″

When Chocka Guiden enrolled in college she shied from the burden of loans for herself or her parents, both retirees. So she obtained a Pell grant her freshman year. Now a 22-year-old senior at Portland State University in Oregon, she says the new rule could hurt the worst off.

``People that receive the Pell grant are the people in the most need,″ Miss Guiden said. ``That money you get from a Pell grant can go to your dorm and your meal plan or your books.″

If a Pell recipient left school and needed to repay those fees, she said, ``in a sense you’re paying more money out of your pocket.″