The University Record, September 28, 1992

Federal support key element in U’s financial resources

By Laurie Fenlason
Office of University Relations

With federal funding significantly outpacing state support for the University, the direct impact of federal legislation on U-M programs and students is increasingly evident.

A critical legislative milestone was reached in July when Congress passed the Higher Education Act of 1992, a compromise House-Senate bill crafted largely under the leadership of Michigan congressman William D. Ford, D-Taylor, chair of the House Education and Labor Committee and Post-Secondary Education Subcommittee.

The Act reauthorizes funding via the Department of Education (DoE) for fiscal years 1993–98 in areas critical to the University, including student financial aid, graduate fellowships, international education, libraries and teacher education.

Federal support an integral part of resources

“While some people may think only of Pell Grants and research contracts when they think of federal support for universities, in reality federal support is interwoven in many other aspects of higher education, some less visible or centralized but often equally important,” notes Thomas A. Butts, associate vice president for government relations and director of the University’s Washington office.

In 1989–90 and 1990–91, the University received approximately $16.5 million in DoE funds, and approximately $21 million in 1991–92. Approximately $15.1 million, by far the largest single portion of the 1991–92 funds, supported financially needy undergraduates through grants, low-interest, campus-based loans and work-study jobs.

When added to the more than $35.6 million U-M students received directly in federally guaranteed educational loans distributed by private lenders, the grand total for DoE support to the University approached $56.6 million, placing the department second only to the National Institutes of Health in funding to the U-M.

Financial aid loans open to all

Albert G. Hermsen, assistant director of financial aid, expects U-M students and parents served by his office to receive an additional $30 million in new and additional loans in 1993–94, thanks to relaxed lending provisions in the Higher Education Act. The law now makes all students eligible for unsubsidized federal loans at favorable interest rates, regardless of financial need.

Students without demonstrated financial need will pay interest on these loans while enrolled; the federal government will pay interest on loans for financially needy students until they leave school.

Unfortunately, Hermsen notes, middle income students are not the only ones expected to rely more heavily on loans to finance their education. Students from low-income families, those with the greatest financial need, have long relied upon Pell Grants as the basis for their finanacial aid package.

While the Higher Education Act authorized an increase in the maximum Pell grant award from $2,400 to $3,700, the appropriations committee charged with funding the programs is widely expected to reduce the current maximum Pell award to $2,300 to recoup a $1.46 million shortfall incurred by the program last year.

Direct lending program will be tested in 1994

A highlight of the new higher education bill is a pilot direct-lending program that changes the way the federal government finances and delivers student loans.

Students at colleges and universities selected to participate in the pilot program will receive their 1994–95 federal loan funds directly from the government via their institutions, rather than through private banks, as has been the practice with Guaranteed Student Loans (or Stafford Loans).

By streamlining student loan administrative procedures, direct lending will simplify borrowing and speed delivery of funds to students. If the U-M is selected to participate, Hermsen notes that borrowers will have access to the same amount of capital as under the Stafford program. The Secretary of Education is expected to announce the participating schools in January 1994.

Although DoE funds account for “really a very modest portion of Rackham’s $13 million overall budget for graduate student aid,” according to Graduate School Dean John H. D’Arms, the DoE’s Jacob Javits Fellowships provided $419,014 in competitive awards in 1991–92. It is the only federal program supporting advanced study in the humanities, arts and social sciences.

In addition, several U-M departments receive federal funds directly through the Higher Education Act to support graduate study in areas of “national need.”

In 1991–92, these included the departments of mathematics, aerospace engineering, physics, industrial and operations engineering and civil and environmental engineering, which received a combined total of approximately $1.5 million for graduate fellowships.

Support for area studies, foreign language study significant

In addition, Director of International Academic Affairs Ruth G. Hastie notes that DoE funds supported 45 graduate fellowships in foreign languages and area studies in 1991–92.

The fellowships are administered and awarded by five U-M area study centers, which, Hastie says, are among the nation’s oldest and most comprehensive resources on international scholarship: Russian and East European Studies, Southeast Asian Studies, East Asian Studies, Middle East and North African Studies and the Center for International Business Education.

In 1991–92, those centers and the Southeast Asia Business Program, the only program of its kind in the nation, received more than $1.7 million in federal funds, including nine Fulbright-Hays dissertation awards to support research and group projects abroad. Although appropriations levels have historically provided little financial support for teacher education programs, a significant funding increase is widely expected this year, particularly for programs that recruit minority and non-traditional students to the teaching profession.

School of Education programs will qualify for funding

The bill also includes a number of pro-grams to increase university-school district collaborations to upgrade the preparation of teachers.

School of Education Dean Cecil Miskel says that both the School’s Master’s with Certification or “MaC” and Peace Corps alternative teacher preparation programs would qualify for several categories of funding in the bill.

Following authorization, Butts notes, all programs in the Higher Education Act are subject to funding by House and Senate appropriations committees and a final vote before the full Congress, a process that is expected to conclude the week of Oct. 5. A summary of the major appropriations legislation will be published in the Record.