The Higher Ed Shift Podcast, Episode 5: The Risks and Rewards of Doubling Pell

In a recent episode of The Higher Ed Shift podcast, Carlo, Chris and I decided to take a deeper look at the proposal to double the federal Pell Grant. Since its inception in 1972, Pell has served as the foundation for the need-based aid program to support low-income students. While advocacy groups are in full swing lobbying for the doubling of the Pell grant, there are increasing fears about shrinking college enrollment and the link to affordability. 

What would the implications of doubling Pell be for students, schools and society? How could this initiative backfire? You can watch the full episode here.

The proposal to double Pell has received bipartisan support, and, in theory, appears to be a straightforward solution to increase access to college for low-income students. However, governance or accountability measures to ensure that good intentions match good outcomes is key.  

The buying power of Pell has decreased

The federal Pell program came into existence in 1972, as a way to assist students from low-income households. At its peak in 1975-76, the maximum Pell award covered more than three-fourths of the average cost of attendance – tuition, fees and living expenses – for a four-year public university. Fast forward to today, and the Pell Grant is the largest federal grant program offered to undergraduates.  The maximum Pell grant today is $6,495 – less than one-third of what it costs to attend a typical four-year school. 

Increasing Pell could improve college enrollment

This fall, national advocacy groups and colleges have begun their campaign to encourage Congress to double the maximum Pell Grant available to undergraduate students. The proposal would make the maximum grant just north of $13,000 per year.

While college enrollment rates dropped across the board in fall 2020, enrollment for graduates of low-income high schools fell by 10.7 percent, compared to 4.6 percent for graduates of high-income high schools. Research has also shown only 25% of public, four-year institutions and less than 50% of public two-year institutions are affordable to the average Pell Grant recipient.

If the Pell Grant is doubled, more than 80% of both types of institutions would become affordable for the average Pell Grant recipient. If well-targeted policy is implemented to double Pell, it will close the affordability gap for lower-income students, leading more of them to enroll. 

Pell improves the college search process 

In addition to making college more affordable, Pell offers benefits to low-income students and their families prior to enrolling. Unlike other aid programs, Pell is one of the few grants where students don’t have to wait until they’ve been accepted to learn if they can afford to attend.: 

 “The net price calculator is the primary and most forward-facing tool [institutions] have. And one of its main purposes is to estimate the Pell dollars a student will receive. Because of the transparency and the straightforwardness of the formula, it can be eye-opening for a student to understand that there is need-based aid out there to help offset the cost of college and help them to chart that personal financial path they have towards access of higher education.” -Amy Glynn 

The accessibility of the Pell Grant program is what makes it unique and helps students budget and plan for the cost of their education rather than just react to it.  

What are the risks of doubling Pell? 

On the flip side, there is skepticism that doubling Pell would help make post-secondary education more affordable. If the proposal does not implement cost controls, Pell purchasing power will get diluted, again making the policy counterproductive. The reason for concern is because of the current adjustments we often see with sticker price and aid, for example, scholarship displacement and tuition increases. How can we ensure doubling Pell won’t create massive inflation in tuition and education costs? 

“Nobody wants to have cost controls imposed on them, but I think when we're talking about public monies that are being dispersed as a subsidy, there has to be some stewardship. There must be some controls on the cost side so that that game won't happen.” - Chris Chumley 

Without controls in place to prevent colleges from offsetting a grant with a higher cost, doubling Pell would only benefit those who are going to college right when the policy is implemented. In a few years, we could be back in the same situation we find ourselves in today. 

Student Financial Success depends on Pell 

One thing we can all agree on is that Pell has played a critical role in getting millions of students through college over the past 40 years. Pell has served as a foundation of the national need-based aid programs to support low- and middle-income students. In terms of federal policy, Pell has been one of the greatest social movers that has happened in our lifetimes. 

Despite any pros and cons, making college more affordable for the people who need help most is good policy; and putting controls in place to ensure goals are met so this taxpayer investment doesn’t get diluted would make this great policy. 

To listen to this full episode and many more like it, you can subscribe to The Higher Ed Shift

 

 

About the Author

Amy Glynn, VP Student Financial Success

Amy Glynn joined CampusLogic in 2013, focused on helping colleges and universities deliver student financial success through automation, advising, and analytics. Ever-focused on improving staff efficiency and the student experience, Amy has spent more than a decade optimizing the financial aid process while ensuring institutions maintained compliance with Federal Title IV regulations. A sought-after national-stage speaker, Amy champions ideas that can help turn the tide for the nearly 3 million students who drop out of higher education every year for reasons related to finances. Student financial success has become a strategic imperative for all higher education institutions and Amy often lends her voice to policy discussions focused on improving accessibility, driving informed borrowing, and increasing completion. Amy earned her Master of Science in Higher Education from Walden University.

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