The changes will take effect next fall. Even with the revisions, the government estimates there will be about 25,000 more Pell Grant recipients than this year, simply because so many more students are applying. But some 90,000 students who would qualify under the current formula - mostly from families earning between $25,000 and $40,000 a year, according to ACE - may no longer get any money, and many more students will see their grants reduced by $100 or $300.
"It's what most of us would agree is a relatively inconsequential amount of money," says Brian Fitzgerald, staff director of the Advisory Committee on Student Financial Assistance. "But it's on top of an existing gap, and the effect in cumulative terms is much greater."
He and others worry about the "trickle-down" effect. Because many state-grant programs rely on the same tax formulas, the net change for some students can quickly become $1,000, instead of just $200 or $300. And even a few hundred dollars can mean a lot to some students, requiring them to work more hours, cut their number of classes, or enroll in a different type of college.
"Think about the student who is going somewhere like Aims Community College in Greeley Colo., where tuition is very minimal - $400 can be a lot to them," says Chris Simmons, assistant director of government relations at ACE. "I wish there had been more discussion or public debate about this, but in the end, the Department of Education was following the law. You can't blame them for that."
Mr. Fitzgerald, too, acknowledges the need for updating the Pell formulas, but preferred other solutions to the one chosen. His committee suggested phasing in the change over two years, which would have cost $150 million, or doing a more sweeping, one-time adjustment to eliminate some of the inequities in the way the grant program weighs state taxes.
Currently, it takes into account the amount of income tax and property taxes families pay in each state, but not other burdens, like sales tax or fees. Congress, Fitzgerald says, decided both options were too expensive.