Feds Should Put Brakes on Pell Grants

In the long debate over the debt ceiling, lawmakers found Pell Grants a contentious matter. The federal program provides college tuition grants to qualifying low-income students. It serves an important purpose, but the program has expanded too much. Congress should cut back on the grants.

Republicans in the House proposed slashing the program’s funding. As Congress sought a solution to the country’s growing deficit, it looked closely at all programs in need of trimming. And Pell Grants should be cut back, although they were spared in this budget battle. Around 30 percent of undergraduates — 10 million students — in the U.S. receive the grants, with higher percentages of African-American and Hispanic students benefiting from the awards. The current maximum award is $5,500.

Full grants cover around a third of the tuition cost at a four-year public institution. But they can also be used at private and for-profit colleges.

Democrats, including the president, believe it’s unfair to target the low-income and minority students who benefit from Pell Grants. That includes many students in this state. House Democrats on the Education Committee estimate that in the 2012-13 school year, more than 350,000 students in Michigan will receive the grants with an average award of $3,600. If the original Republican-supported budget had passed, 52,000 students in the state would have lost their grants and the average award would have dropped to $1,703.

But what the opponents to cutting Pell money often leave out is how quickly the federal program has grown the past few years. The program grew from $14 billion in available aid in 2007 to $32 billion in 2010. That’s an increase of 128 percent. The costs of the program more than doubled.

Amy Wilkins, vice president for government affairs at the Education Trust, argues that Congress should preserve full funding for Pell Grants, as they are the best chance to move low-income students out of poverty. Cutting individuals out of the program is "self-defeating," she says. And Pell Grants do not give students a free ride; they still often graduate with significant debt.

The Education Trust estimates that in 30 years, tuition rates have risen at four times the rate of inflation. Consequently, low-income families have to pay or borrow around 75 percent of their income to send one child to a four-year college. Wilkins says Pell Grants have increased to keep up with college costs.

Yet other experts on the issue believe that federal subsidies such as Pell Grants have contributed to high college costs. In a paper for the Cato Institute, Vance Fried, a professor of entrepreneurship at Oklahoma State University, found that federal programs intended to make college more affordable are feeding tuition inflation. This is bad news for all students who face deep debt in return for their education.

Fried estimates that the government could save $50 to $60 billion a year through restructuring its college loan program and tightening eligibility for Pell Grants.

That’s the right course to take. Congress was correct to preserve the Pell grant program, but the government must start spending less. Pell Grants should only go to the students most in need.


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