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What’s the Best Way to Pay for Pell Grants?

Pell grants have long been considered a lifeline for cash-strapped families and adults who might not be able to afford college otherwise, but the program’s sustainability is in trouble as the federal government looks to trim the deficit. At a panel discussion this week in Washington, D.C., hosted by the think-tank Education Sector, the presenters agreed on the importance of the program but sparred occasionally on the best funding strategy to maintain the $36 billion federal grant program.

Jason Delisle, director of the Federal Education Budget Project at the New America Foundation and a former Republican congressional staffer, said the potential Pell grant funding crisis results from the regular appropriations process’s failure to ever fund the program fully. He said the grant program might be sustainable but faults the Obama administration for trying to keep Pell awards funded at levels that were put in place through the 2009 stimulus act. Between 2005 and 2008, total federal government commitments for Pell ranged from $13.869 billion to $17.34 billion. Also during those years, eligibility rules and the size of the awards package per student increased steadily. When the recession hit, more people went to college but lacked the funds to pay their way through because family assets and incomes dipped, increasing the demand for Pell grants.

Delisle cited Republican Rep. Paul Ryan’s budget plan, which would keep the individual grant awards at current levels—$5,550—with what he called “tough choices:” introducing hard family income caps, requiring students who are enrolled less than half-time to pay a greater share of their college costs, and eliminating the automatic inflation growth triggers that exist today. These changes could save the program over $2 billion a year annually, Delisle said. 

Sarah Flanagan, vice president for government relations at the National Association of Independent Colleges and Universities (NAICU), criticized those recommendations. Family income caps undermine “special circumstances” that households face, such as sudden layoffs, she said. And making it more expensive for students who are enrolled less than half-time is unfair to working adults and single parents.

More broadly, she voiced frustration that “We don’t have a way of separating investments from spending,” adding that the cost-benefit analysis of increasing education, particularly for the poor, would show an expanded Pell program would likely pay for itself (a reference to how the Congressional Budget Office evaluates the cost of legislation proposals).

José Cruz, vice president for higher education policy and practice at Education Trust, quipped, “If it’s a program under attack on the Ryan budget, I probably benefited from it.” He cited Education Trust research that found young adults from wealthier families are ten times more likely to have earned a bachelor’s degree by the age of 24 than those from low-income families (82 percent versus 8 percent). “If you keep [the grant awards] flat, it’s not sustainable for students, I’m sorry,” he said.

Both Delisle and Jon Oberg—another panelist and former analyst at the U.S. Dept. of Education—warned against introducing a cost-benefit scheme into the way in CBO scores bills. That move might lead to evaluations that find some big-ticket government spending efforts offer better returns than Pell, which in turn could risk undercutting the services the Education Department provides.



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