No matter how she parses it, Roberta Proctor cannot make sense of her son's college bill. Her income and her assets have not changed. If anything, she says, her family's finances have deteriorated somewhat.
So, she wonders, how could she possibly owe an extra $6,000 for the coming school year, when tuition has not increased anywhere near that amount?
But she does. Like the Proctors, Californians whose son just finished his freshman year at the University of Nevada, Las Vegas, thousands of American families might find it harder to qualify for financial aid this year and might be asked to contribute more money toward the cost of college because of changes to a complicated federal formula they barely know about, much less understand.
Taken together, these changes, some based on overly optimistic predictions of inflation, have required families to count a greater share of their incomes and assets toward college expenses before becoming eligible for financial aid. As a consequence, tens of thousands of low-income students will no longer be eligible for federal grants; middle-class families are digging deeper into their savings; and some colleges are putting up their own money to make up the difference.
"This is not what we intended," said Joe Paul Case, the financial aid director at Amherst College, in Massachusetts, who helped develop the formula that the government now uses for the bulk of the nation's students. "There is certainly more duress than we had in mind."
The New York Times did an analysis of the formula on middle-class incomes in more than a dozen states to see whether families would have to spend a greater part of their income and assets before qualifying for financial aid than they did five years ago. Though the effects of the formula changes vary from state to state, The Times found that families with the same earnings and assets as in 2000 would typically have to pay an extra $1,749 before clearing the eligibility bar for financial aid in 2005, after adjusting for inflation.
Though the formula will change in the future, sometimes to a family's advantage, the impact on campuses now is obvious, many university officials say, and often cuts across class lines. The University of California, Berkeley, for example, says that 1,000 of its middle- to upper-middle-class students will probably lose eligibility for federal subsidies on their student loans in the coming year, a change that typically means higher debts because of accrued interest. On the other side of the economic spectrum, Northeastern University, in Boston, says that 300 of its low-income students will not receive the federal grants they would have been eligible for last year.
"For some of those students, it's the difference between enrolling and not enrolling," said Seamus Harreys, dean of student financial services at Northeastern. "We're trying to figure how to get them through to graduation."
For millions of students, financial aid arrives in a mixture of grants and low-interest loans from the federal government, the states and the colleges themselves. The amount students receive is mostly based on an intricate formula, administered by the Department of Education, that looks at many aspects of a family's circumstances, including its income, its tax bill, its investments, its size and even the parents' ages.
The Department of Education says that any changes to the formula are driven by a legal obligation to keep it current, reflecting what families can truly afford to pay. For example, the administration determined that more of a parent's assets must be counted toward college expenses this year because it predicted better economic circumstances, including substantially lower inflation. Under that scenario, the administration argues, families need to save less money for retirement.
"This is all statutory," said Sally Stroup, assistant secretary for postsecondary education for the department.
Some economists consider the administration's economic assumptions deeply flawed. The department's estimates for inflation were, in fact, far enough off that it has now revised the formula it will use for the 2006-2007 school year, much to the benefit of families with assets. But the latest round of changes will not help parents in the coming school year.
Politics have also come into play. In 2003, Congress blocked the department from changing how the financial aid formula treats state taxes. That move would have rendered 92,000 students ineligible for Pell Grants, the nation's largest scholarship program at more than $12 billion a year, and reduced government spending for the program by $290 million, according to the Government Accountability Office. Last year, the administration found support among Congressional leaders seeking to constrain the growing cost of Pell Grants, and the changes have now taken effect.
Much as with federal income tax, the federal financial aid formula allows families to deduct some of what they pay in state taxes to determine how much they have left over for college. With the consent of Congress, that amount was cut significantly in almost all states this year, in some cases by half. On paper, at least, that leaves families with more money to pay tuition and other expenses.
In The Times's analysis of the current formula, the increase in what families must pay before clearing the eligibility bar for financial aid was larger for families in New York, Iowa and Colorado, where the consideration of a family's state tax burden has changed significantly under the formula in an effort to make it reflect typical tax payments. The increase was smaller in states like New Jersey and Connecticut, where the treatment of state taxes did not change or became more favorable for students.
Even so, the formula dictates that more of a family's assets can be tapped this year to cover college expenses than in 2000, in many cases almost twice as much. So, assuming the average savings, stocks and other financial investments of middle-class families with assets, as reported by the Federal Reserve Board, all families in the analysis ended up owing more money before qualifying for financial aid, regardless of where they lived.
The analysis looked at the changing requirements under the formula for families earning from $65,000 in 2000 to about $85,000 in 2005. That is the middle of the income range and slightly above it for parents from 45 to 54, peak ages for sending children to college.
Finally, the analysis also took into account whether there was one parent or two. Without exception, single parents experienced larger increases - typically $549 larger - in the amount they would have to pay before reaching the eligibility mark for financial aid. The reason is that the rules shield less of their savings from college expenses, on the theory that they will need less for retirement. Families have vastly different financial circumstances, so the analysis cannot be used as a predictor of what any individual will owe.
Nonetheless, many colleges say they have witnessed the effects of previous changes, some in the last year alone. At Washington & Jefferson College, in Pennsylvania, parents will typically have to contribute an additional $1,947 compared with last school year before qualifying for financial aid next year - an extra 17 percent - even though their incomes have risen only 4 percent. At DePaul University, in Chicago, the bar for financial aid will typically go up by $4,215, or 39 percent, though incomes have increased by only 12 percent.
Emory University, in Atlanta, says the incomes of its students' families have generally not increased, yet they would typically have to pay an extra $4,000 before becoming eligible for financial aid under the government's rules.
"If there had been a $1,000 difference, that would be one thing. But when we saw these $6,000 and $7,000 differences routinely, we got really concerned," said Julia Padgett, director of financial aid at Emory.
The difference was drastic enough that Emory, like a few of its well-endowed counterparts, abandoned the government's rules for many of its families, a decision that required it to surrender federal money for those students and substitute it with its own.
"We just felt as if we had no ethical choice," Mrs. Padgett said.
Most colleges, however, say they are not wealthy enough to forsake federal aid, which includes money to pay students in work-study jobs. In fact, passing up federal money might only worsen a student's financial outlook, they say.
"It's really hard to explain to the family that although the federal formula may not make sense, and I may not agree with it, I have to go along with it," said Michelle Vettorel, director of financial aid at Washington & Jefferson.
When the bar for financial aid goes up, students may also lose the state grants, sometimes worth thousands of dollars a year, that are often tied to the federal formula. "That's a huge concern," said Gerard Cebrzynski, director of financial aid at Lake Forest College, outside of Chicago. "We've seen several students who have lost their entire awards this year."
Still, some college officials say the hand-wringing is unwarranted. Whatever the changes to financial aid, they say, students as a whole have rarely stopped pursuing degrees and college attendance rates remain high nationally.
"I would not deny that this has impacted some people seriously," said Joe Russo, director of student financial services at the University of Notre Dame. "But nationally, has this caused enrollment to drop? It doesn't appear to have."
What the changes will probably do, many university officials and parents contend, is have a disproportionate impact on middle-class families, especially when it comes to tapping their assets.
"For the middle class, it means greater pressure put upon them to cobble together college funding at schools that are becoming increasingly expensive," said James Boyle, president of College Parents of America, an advocacy group. "It's another middle-class squeeze."