Some of the parents reading this column will soon be eligible for more free college aid from the government thanks to changes in the Basic Educational Opportunty Grant program just passed by Congress.
Others of you will be eligible for less.
In general, most of the money in the basic-grant program goes to people making $15,000 or less. However, some families who make as much as $25,000 or even $30,000 may qualify.
In a particular twist of logic, larger grants may now go to some of the wealthier among you, while some people of lesser wealth may be given less.
It's hard to predict how the new rules will affect a particular family. Anyone who thinks that he or she may beeligible for student aid should apply and see what happens. At the moment, it appears that 1981 student grants will be given under the old rules, while the Education Department works out new regulations. By 1982, however, the new system of basic grants (renamed Pell grants) will be firmly in place. In brief, here are the important changes:
(1) Under the forthcoming rules, the wealth represented by your home will no longer be counted in figuring how much you can afford to pay for college. This change will be a great help to divorced or widowed persons with valuable homes but low incomes. Many other families will find that eliminating home equities from the wealth they're already getting. Again, this change will probably not be phased in unitl 1982.
(2) Currently, any savings you have over $25,000 (including the equity value of your home) are considered available to help pay for college. When home equities are dropped from the wealth calculation, this savings allowance will be reduced to $10,000 (plus $40,000, if you own a business or farm).
This change will favor homeowners over renters, even though renters, on average, have smaller incomes.
For example, consider the situation of a renter who has managed to save $25,000 toward retirement. Under current rules, none of that money is counted in calculating what he or she can afford to pay for college. Under the new rules, only $10,000 will be exempt. The rest will be used to reduce the size of the child's basic grant.
Now consider the homeowner, with $10,000 in the bank and $15,000 worth of equity in his or her house. The homeowner has the same net worth as the renter. But none of the homeowner's assets will be counted when calculating the size of the child's basic grant. The homeowner may get more government aid than the renter.
In a similar vein, a family with a $20,000 income and $15,000 worth of home equities may, under the new rules, get the same amount of aid as a family with a $20,000 income and $80,000 in home equities -- even though the latter family in much wealthier.
The winners and losers under the new program are pretty easy to name. You lose if you have been living modestly in order to save money for your child's education. You win if you spent all your money on your house and put very little in the bank. The prudent saver will be punished. The plunger is rewarded with extra government aid -- and lives in a more expensive home, besides.
(3) Under the new rules, families will be expected to contribute at least 14 percent of their discretionary income toward paying for college. That's up from 10.5 percent under current rules. The government defines discretionary income as your total income less certain allowances.
Here are the winners and losers under this particular change: If you're a middle-income renter with some money in the bank, you will have to spend more of your income on college as well as more of your savings. If you're a middle-income homeowner, you will also have to spend more of your income -- but you'll have the consolation of knowing that your home equities have been left alone to appreciate intact. You will not be expected to take a second mortgage to help pay the college bill.
Complete information on the basic-grant program will be available after the first of the year, from your high-school guidance office or college financial-aid office. Grants for the 1981 school year range from $150 to $1,750 with the largest grants still going to the lowest-income families.