Lieberman Requests Immediate Re-Evaluation of Department of Education Revisions

WASHINGTON – Governmental Affairs Committee Ranking Member Joe Lieberman, D-Conn., in a letter to Education Secretary Roderick Page, expressed concern Friday about changes the Administration has made to the methodology used for calculating student contributions for a Pell Grant for the 2004-2005 school year. The changes are expected to potentially raise costs for millions of students. Following is a copy of the letter:

June 13, 2003

The Honorable Roderick Paige Secretary Department of Education 400 Maryland Avenue SW Washington, D.C. 20202

Dear Secretary Paige:

I am writing to express my concern about the notice published by the Department of Education in the Federal Register on May 30, 2003, regarding revisions to the federal needs analysis methodology for the 2004-2005 school year. I am concerned because these revisions will be used to determine a student’s expected family contribution (EFC) under the Pell Grant program, and may aversely affect millions of college students across the country. I believe that the Department should consider modifications to the notice, and that such modification would be consistent with Title IV of the Higher Education Act. Specifically, the Department of Education has revised the allowance for state and other taxes; a figure used to assess the amount of discretionary income available to a grant recipient, which, in turn, affects the amount of the family contribution a grant recipient must pay. Because the state and local tax deduction has been lowered for many states, potentially millions of students may have to contribute significantly more to meet their tuition expenses. The Department has taken the position that it was required to make these revisions under federal law. As you know, Section 478 of the Higher Education Act does state that on an annual basis “the Secretary shall publish in the Federal Register a revised table of State and other tax allowances….” and that “The Secretary shall develop such revised table after review of the Department of the Treasury’s Statistics of Income file….” Nonetheless, several questions come to mind regarding the Secretary’s determination in this regard. First, despite the federal statute, the tables in question have not been updated since 1994-1995. This begs the question as to why this was undertaken at this time with such a potentially devastating impact for college students across the country. Secondly, it is my understanding that the IRS figures were based on the 2000 tax year. You must be aware that the 2000 tax year was a peak year for incomes, and that state and local taxes have gone up in recent years, making the 2000 tax year inconsistent with present-day realities. Finally, the statute states that the Secretary shall develop its tables after a review of the IRS statistics. It does not require the Secretary to adopt the IRS calculations. In view of the fact that the IRS statistics are based on the 2000 tax year, it would appear that the Secretary could use some discretion in this matter, in light of changing economic circumstances. Furthermore, it is my understanding that the IRS bases its numbers on the returns of individuals who itemize, thus excluding the returns of many lower income families most in need of federal student aid. In view of the potential impact on students across the nation, I would appreciate your immediate re-evaluation of this issue based on the concerns I have raised. Thank you for your attention to this matter. Sincerely, Senator Joseph I. Lieberman Ranking Member