Pa. budget impasse may cut college grants

For the first time since the 1970s, the state may fail to pay out need-based grants for students to attend Pennsylvania colleges and universities for the fall semester.

While some colleges have agreed to front the grant money for students for the first semester, it's unclear if all will do the same or if some students will be unable to shoulder the increased costs.

The money crunch developed last week, when Gov. Rendell put the brakes on $386 million in grants for 172,000 students across the commonwealth - about a quarter of them in the Philadelphia area.

It was part of $12.9 billion in spending that Rendell has held up because the state has yet to adopt a budget.

The impasse comes during a difficult economy, as more students are turning to the Pennsylvania Higher Education Assistance Agency (PHEAA) - the administrator of the grant program - for help. The number of students expected to receive grants is up by 17,000, or 11 percent, from the 155,000 recipients in 2008-09.

"We are seeing an increase in applications, likely due to the downturn in the economy," said PHEAA spokesman Keith New.

State Rep. William Adolph Jr. (R., Delaware) and several other Republican legislators blasted Rendell yesterday for "manufacturing" a crisis and accused him of holding college students as hostages to try to break the budget impasse.

"In my opinion, you do more damage than good," said Adolph, who chairs the PHEAA board.

Adolph announced during a news conference at Delaware County Community College that he had introduced legislation that would override Rendell's decision to hold up the PHEAA money.

Rendell's office yesterday took exception to Adolph's characterization.

"The blue-line budget was only intended to be a means of paying state employees," said spokesman Michael Smith. "As for all this rhetoric around switching one hostage for another, the time for that kind of talk has long since passed. It's time for everyone to sit down at the table and act like adults, and concentrate their efforts on reaching a budget agreement."

Smith also noted that Rendell wants $21 million in PHEAA grant funding restored to the budget and was "shocked" that Adolph would advocate for a lesser expenditure. Rendell proposed $407 million in PHEAA grants.

Adolph countered that he also wants the higher appropriation, but believes that the $386 million should be released now.

"I'd rather get started," Adolph said. "If we're able to negotiate a higher amount during this budget impasse, then we can make an adjustment for the spring semester."

PHEAA grants are paid directly to the schools on behalf of students. They go to community colleges, state schools, and private schools. Statewide, for 2008-09, the maximum grant was $4,120 and the average $2,738.

Pennsylvania State University expects to front more than $25 million to students on their fall tuition bills to cover the PHEAA grants. About 18,000 students received the grants last school year, with the average award at $2,900.

"It is imperative that the university do whatever is possible to help our students," said Anna Griswold, executive director of student aid. "The logical option is to credit their bills while Penn State waits to receive the disbursements so that no action is required on the students' part."

Temple University is evaluating the situation.

About 7,000 Temple students shared $20 million in PHEAA grants last school year.

"We're all scrambling now . . . trying to figure out how we're going to make sure our students can come and start class when the PHEAA funding from the state is being held up," said Temple president Ann Weaver Hart.

Temple also is locked in a separate battle with lawmakers over $175 million that has been held up in a dispute over Temple University Health System's closing of Northeastern Hospital.

The university has warned that not getting the money could result in a $5,000 tuition increase.

The Pennsylvania State System of Higher Education said its 14 universities could start the school year without the grants.

"We may have to do other planning in the spring," said Karen Ball, vice chancellor for external relations.

Anticipated PHEAA grants will be noted on tuition bills, she said.

"We are telling [families], what's reflected on their bills could be revised depending on the final budget," she said.

The system includes West Chester and Cheyney Universities locally.

Delaware County Community College also is crediting students with about $500,000 in PHEAA grants, said president Jerry Parker, who joined Adolph for the news conference. More than 1,000 students receive the grants.

"If it goes beyond this semester, I'm not sure we could do it again," Parker said.

Also joining Adolph at the news conference were House Appropriations Committee Chairman Mario J. Civera Jr. (R., Upper Darby), and Reps. Chris Ross (R., Chester) and Tom Killion (R., Delaware).

PHEAA grants were held up for the first semester in the 1970s during a budget impasse, said New.