Maine's colleges and universities would lose 52 percent of their federal funding from three student-aid programs under a Bush administration proposal to reallocate the money more evenly across the country.

If approved by Congress, the $8.2 million annual loss would represent a major setback for state officials who are trying to boost enrollment in higher education. Maine ranks 33rd in the nation in the percentage of high school seniors who enroll in college, despite the state's having one of the country's lowest high school dropout rates.

Nationally, private institutions would suffer most from the reallocation of funds. But here the greatest impact would be felt inside the state university system.

The university's seven campuses would see a 66 percent drop in federal funding - phased in over five years - for work-study jobs, Perkins loans and Supplemental Educational Opportunity Grants.

The flagship campus in Orono would lose 61 percent of the $3.5 million it currently receives. On a percentage basis, the cuts would be even larger at the system's campuses in Fort Kent, Machias and Presque Isle.

At the University of Southern Maine, funding for the three affected programs would tumble from $2.9 million to about $700,000, for a 76 percent loss.

"It would be devastating to our institution and our students," said Keith DuBois, director of financial aid at USM. "I don't know how we'd even come close to making that up."

"Suffice it to say that these cuts would be significant," added John Beacon, dean of enrollment management at the University of Maine. "Some students at the low end of the scale are going to determine for themselves that they cannot attend the university."

Maine and other New England states would be hit hard by the reallocation because the region's colleges and universities now receive more aid per pupil than institutions in other parts of the country.

The current system works against newer colleges, many of them in the South and West. For example, USM currently receives about four times as much funding per undergraduate as California State University-Monterey Bay.

The process of revising the formula - part of the reauthorization of the 1965 Higher Education Act - is shaping up as a textbook battle between vying regional interests. The prize is the largest possible share of a $1.8 billion pool known as campus-based aid.

The House seems more likely to approve a significant reallocation than the Senate. Just one of the relevant House committee's 49 members hails from New England, whereas the key Senate committee includes four members from this region, including its chairman, New Hampshire Sen. Judd Gregg.

The regional bias in how funds are allocated has been around for decades. That's at least partly because senators from New England have long wielded heavy influence over spending on higher education.

But there are now signs of change.

The National Association of Student Financial Aid Administrators, which represents nearly 3,000 colleges and universities nationwide, is for the first time endorsing a proposal that by 2009 would distribute the funds based on each institution's number of eligible low-income students. Guarantees that provide disproportionately large shares to some schools by locking in their historical allocations would be phased out over the next five years.

The U.S. Department of Education is also behind the proposal.

Sally Stroup, the department's assistant secretary for postsecondary education, called the phase-out a reasonable way to move toward equity.

"Everybody's always going to argue for more money," she said. "I don't think we should live under a formula that's 20 years old."

Maine may have benefited from the formula more than any other state. A state-by-state analysis by the American Council on Education, which looked only at Supplemental Educational Opportunity Grants, found that Maine would lose the highest percentage of funds under the proposed redistribution.

And the impact would go well beyond the University of Maine system. The state's private colleges and universities would lose 31 percent of their campus-based aid allocations. Husson College in Bangor would suffer most, losing 65 percent of its current funding.

The proposal would also reduce aid to Maine's community colleges by 23 percent. John Fitzsimmons, president of the state's community college system, said financial aid cuts in the University of Maine system would also have a damaging effect on the community colleges.

Efforts have been under way since the early 1990s, Fitzsimmons said, to increase transfers to four-year universities. Cuts in financial aid to the state university system could diminish those strides, he said.

"Loss of funds at the university is as harmful for us as it is for the university," Fitzsimmons said. "Those are staggering losses."

With the legislation's reauthorization expected this year, Maine's financial aid administrators are taking their concerns about reallocation to members of the state's congressional delegation.

"This has come up periodically in the past. This is the first time it's had the blessing of the administration and the blessing of NASFAA. And that's a huge concern to us," said Peggy Crawford, the University of Maine's director of financial aid.

Crawford acknowledged the current formula is unfair. But reslicing the same pie, she said, is not the solution.

"They need to put money into it," Crawford said. "It's kind of like having a big family. You just keep having more kids, so everybody just gets half a bowl of cereal now."

William Hiss, vice president for external affairs at Bates College, said financial aid programs are getting flat funding at a time when more teenagers are enrolling in college and the cost of an education is rising.

"The country is going to have to decide whether it is willing to pay some attention to access to higher education," Hiss said. "There is no viable economic growth plan that doesn't involve getting more kids through better educations."

Gov. John Baldacci's economic development plan calls for increasing the number of Maine's high school seniors who go on to college, but his budget would cut the state university system's budget by about $7 million.

On Thursday the university system presented a plan to state legislators under which USM would absorb the Augusta campus, and a new University of Northern Maine would incorporate the campuses in Fort Kent, Machias and Presque Isle.

University officials estimate the proposed consolidation would save $15.5 million annually, with millions to be reinvested in student aid.

But the plan's prospects are uncertain. And given the state's tight budget situation, financial aid administrators fear it would be hard to replace the lost federal dollars.

"I don't believe the state of Maine would be able to add those funds," Crawford said. "I don't believe we want to raise tuition to the level we'd have to."

Amy Bickford, a USM senior who is enrolled in two of the three federal aid programs, said she would not be deterred if the school lost a major portion of its funding.

"I would definitely still be here because I value my education," said the 22-year-old from Nobleboro. "I would have to take out much more in loans."

Joy Lemore, a junior at the University of Maine, doesn't think she could pay for school without the assistance. She is covering the cost of her own education with only the assistance of financial aid.

"A lot of the people that attend the University of Maine are coming here because they can't afford Bates, Bowdoin, Colby, and they can't afford out-of-state tuition," said Lemore, who grew up in Fairfield. "Without the assistance from the government initially, they can't do it."