The Pell Grant program is under the microscope these days, as higher education policy makers ponder the program’s expanded costs and basically the size of it all.
There is a new report out from the Congressional Budget Office (CBO), which by the way as a nonpartisan entity does not take any particular side, and simply tells it as it is concerning facts about the Pell Grant program. The report doesn’t play into the potential debates on whether the program now is too big or too ineffective, or if or how it might be reworked, but rather provides facts on why Pell Grant program spending has significantly increased, and the potential effects of some proposals to alter the program. The report also gives some alternative approaches to help low-income students afford to go to college.
The proportion of postsecondary students who received Pell Grants jumped from 24 percent in 2006-7 to 36 percent in 2010-11.
According to the CBO report there are two main reasons for the dramatic increase in Pell Grant recipients: the sheer number of students enrolling in higher education programs, and the proportion of these newly enrolled students who qualify for Pell Grants. Reasons for increased student enrollment include a poor economy, the expansion of distance learning, and increased financial aid availability which includes both grant aid itself and loan funds.
The pump up in distance education, which allows more students to take classes yet not actually be in the classroom, was likely augmented by a 2005 federal policy change which allowed colleges already eligible for federal aid to enroll over half of their student population in online programs.
Another student group that became eligible for Pell Grants did so because their own or their families’ financial situations deteriorated in the downturn economy.
Separate from the increase in student numbers eligible for the grants, another large driver of Pell Gant costs simply was the increase in grant amounts, mainly due to legislative decisions. With a roughly 30 percent increase in the size of maximum grants, the Pell Grant program increased its cost by about $11billion the CBO report estimated, which accounted for approximately one-third of the 2010-11 Pell program.
Change May Happen
The CBO report, which lists twelve possible changes that may be considered for the Pell program, includes some that would increase the program plus a majority that would tighten it in some way.
The CBO report also cites and examines potential policies that would limit the number of grant recipients plus estimates the number of recipients that would be excluded. Some policies examined include tightening financial means testing (a variable depending on ways it was enforced), implementing academic requisites for initial eligibility, or implementing a requirement that current recipients meet academic standards in order to continue receiving their grants.
Other policies the CBO examined include a few that could expand Pell (such as increasing the maximum grant to $6,400, which would increase the program cost even further by $5.3 billion), or making changes to the expected family contribution formula to require less information (this could increase Pell recipients by an estimated 2 percent).
The final section of the report explores additional methods -- as options or Pell supplements – that the government could use to expand college access for low-income Americans. Examples could be to restructure Pell Grants to be forgivable loans (which may act as incentives for academic performance), or making grant assurances to middle and high school students, or offering federal grants to boost grants that state programs offer.
View the CBO report for fuller information on: Options for Changing the Pell Grant Program, and Alternatives to the Program.
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