The Pell Grant and College Costs: An Impossible Scenario

By Watson Scott Swail, President & CEO, Educational Policy Institute/EPI International

There has been recent consternation on the proposed cuts to the Pell Grant program in the United States. For the uninformed, the Pell Grant is a means-tested grant program which targets low-income students. It is, to be sure, the foundation of the US student financial aid system. All other aid is applied after the Pell is in place.

Over the last few years, the maximum Pell grant a student can receive has risen to $5,550 (2011-12). Critics argue that these recent increases only start to make up for the inability of Congress and past Presidents to keep Pell up with the inflationary pressures at colleges and universities. According to The College Board, the average tuition and fee charges at a four-year public university in 2010-11 was $7,605, with an average total cost of attendance (COA) of $20,339 (Trends in College Pricing, 2010). Thus, $5,550 may sound like a lot, and with community college in mind, it is. But it only covers one-quarter of the average COA of a state college. If you live in Virginia, Ohio, or Massachusetts, for instance, expect to pay more.

Now the President and Congress both want to cut Pell because it has gotten too costly. This is for several reasons. First, Congress authorized allowing students to get up to two grants in a single year to accelerate their learning. Made sense, but too costly. So they want to shut that down. And second, with a down economy comes increased enrollment in higher education, with more students qualifying for the Pell Grant. Thus, the cost of the Pell Grant program is expected to skyrocket to $36 billion each year from a more modest $13 billion four years ago. Even in federal terms, $36B is a big number.

The problem with Pell is simple: it has not, and will not, keep up to the basic needs of low-income students interested in attending a four-year institution. As well, it does nothing for middle-income students, who also are facing gargantuan costs to attend college. There is no program for that increasingly large constituency. But the biggest problem with Pell is that we still have done nothing about controlling the costs of higher education. In fact, we have done the opposite: we have allowed, in many cases, states to ratchet up tuition fees to make way for cuts in state higher education budgets. This does only one thing: it makes college more expensive for students.

I believe we should keep supporting Pell. I think it still needs to be higher. But at some point, one must tackle the issue of tuition spiraling at the state level, and even at private, non- and for-profit institutions, both of whom benefit greatly from the Pell Grant program. We have talked, ad nauseum, about the importance of controlling the “cost” of higher education. But we never get there. We never do anything about. Colleges have absolutely no incentive to do so. They keep building. Keep adding. And arguably, the quality of education is not higher. It is likely lesser than it was 10 or 20 years ago.

I think it’s time Congress played some strong trump cards on states. Yes, I know. Education is a state matter. However, since the states are unable or unwilling to do anything about college costs, perhaps the Pell Grant and other Title IV programs should be tied to some metric of cost AND quality control. Republican Representative Buck McKeon suggested doing this back in the late 1990s. I thought he was off his rocker. Not so much anymore.

Until we do something significant, increasing Pell will only incentivize state institutions to raise their tuition. Why? Because they can. And they have. And they will.

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