College & Workforce Readiness Opinion

Pell Grants Haven’t Kept Pace With College Costs

By José Luis Santos — November 06, 2014 3 min read
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As a Mexican-American who grew up working in the fields of California’s San Joaquin Valley, I know what the War on Poverty meant. It enabled me to go to college—financed by the GI Bill, the Pell Grant program, and loans. Young adults like me, as well as countless African-Americans and low-income whites, were also able to go to college due to Pell grant financing and TRIO programs—initiatives that opened university doors and helped fulfill the dreams of our immigrant, blue-collar, and poor parents.

José Luis Santos

Over time, these programs changed the odds for millions of Americans: Between 1972 and 2012, college-going rates among low-income young people climbed from 26 percent to 51 percent. During the same time, longstanding gaps separating students of color from other young Americans narrowed.

Two significant problems undercut this otherwise heartening story. First, because Pell Grant spending has not kept pace with the rapid rise in college costs, more low-income students go to two-year colleges or low-cost institutions where they are less likely to graduate. Others are saddled with crippling debt or scared away from college altogether. Only 16 percent of low-income, high-achieving students attend highly selective four-year institutions compared to 46 percent of their wealthier peers. A whopping 22 percent of those high-achieving low-income students don’t go to college at all. What a waste of talent!

Secondly, many “historically underrepresented minorities” who do go to college don’t graduate. Sometimes it’s because of poor preparation, but mostly, it’s because their colleges spent more energy attracting students than helping them succeed.

The effects are devastating. Today, African-Americans earn bachelor’s degrees at half the rate of white students and Latinos at about one third. And the differences by income are worse: Students from the highest income families are seven times more likely to earn a bachelor’s degree by 24 than those from the lowest. Given our nation’s changing demographics, not getting enough students in and through college is bad for them and bad for the country.

So, what can be done?

We’ve got to restore Pell’s buying power. The Pell Grant program used to cover more than three-quarters of the average attendance cost at a public, four-year college; today, it covers less than one third. Even after receiving state and institutional aid, the average low-income student in a four-year college must contribute roughly 70 percent of her family’s entire income—a far greater percentage than any other economic group.

There’s good news. Restoring Pell’s purchasing power can be done without increasing federal spending, by focusing resources on students most in need.

Indeed, federal financial aid growth in recent years has not focused on needy students. Instead of continuing to fight the War on Poverty, Congress shifted its attention to a war for middle- and upper-middle-class voters with tax-based “student aid” giveaways, which quadrupled in size since their inception in the ‘90s. This form of aid is poorly targeted, ineffective in changing college attendance patterns, and provides substantial support to higher-income families who are well beyond the middle class. We can and should redirect this share of the pie.

Besides refocusing the Pell program, Congress should demand more from colleges in return for the $180 billion the federal government doles out each year. Colleges should be held accountable for three performance metrics: access, completion, and success, as outlined in our Tough Love proposal.

By prioritizing aid for students most in need and establishing minimum performance standards, the federal government could return to the ideals of the War on Poverty.

José Luis Santos is the vice president for higher education policy and practice at The Education Trust. He previously taught at Pepperdine University and the University of California, Los Angeles, and served in the U.S. Marine Corps.

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