Policy Forum: Experts Explore Pell Grant Sustainability

WASHINGTON, D.C. – To reduce income inequality and help the United States regain its former status as the most college-educated nation in the world, the federal government needs to develop a long-term strategy to support one of its primary means of helping the poor pay for higher education, said college access experts Wednesday at a Washington forum.  

Instead, support for the federal Pell Grant program, which is decided on a year-to-year basis, remains mired in politics and stuck on shaky ground, throwing into question the degree of federal financial assistance that low-income students and families can count on—or not—for the foreseeable future.

Such analysis became evident at the Education Sector organization’s panel discussion titled “Is the Pell Grant Program Sustainable?”

Most of the panelists took aim at the question asked within the program title itself, arguing that the real question ought to be how to sustain the Pell Grant program, not whether it is sustainable.

“We really must focus on whether or not we’re willing and capable of sustaining the program,” said Jose Cruz, vice president for higher education policy and practice at Education Trust, a D.C.-based education policy organization that focuses on closing the achievement gap.

The Pell Grant program currently relies on nearly $40 billion annually and serves some 9 million students, the vast majority of them with family incomes of $30,000 or less, according to Education Sector.

Cruz said the program must be sustained because income inequality is at an all-time high, social mobility is at an all-time low, and low-income students are going to college at rates less than they were in the early 1970s, putting today’s young people on a path that will make them the first generation of Americans to be less educated than their parents.

“If we feel that there is worth in defending the democratic ideal … of social mobility, we cannot afford to say that we cannot afford to sustain the Pell Grant program,” Cruz said.

For top-level Obama administration officials within the U.S. Department of Education, it is standard to trumpet how the administration has increased the maximum Pell Grant to its current level of $5,550 per student, up from $4,731 in 2008, with the first incremental boost to $5,350 in 2009.

However, Jason Delisle, director of the Federal Education Budget Project at the New American Foundation, noted that the increase was based originally on a one-time infusion of cash from the American Recovery and Reinvestment Act of 2009, otherwise known as the Stimulus Act.

“I think it’s important for everyone to ask themselves if we would be in this annual crisis over Pell Grant funding had the program not received a large increase in one-time funding in stimulus,” Delisle said. “I think that really what we’re dealing with is that, with the Pell Grant program, Congress is trying to maintain the maximum grant that was essentially only funded under the extra money through the stimulus.”

“Each year thereafter we have scrambled to try and figure out how to pay for it,” he added.

Two budget proposals—one from the Republican-controlled U.S. House of Representatives and one from the Obama administration—seek to continue funding the Pell Grant at its current levels, but both proposals were criticized at Wednesday’s discussion.

Delisle said the Obama plan seeks a one-time increase to keep the maximum Pell Grant at $5,550 but then “hopes” for more money to fund it in the future.

“There’s really no plan after 2014,” Delisle said.

Delisle praised the proposal put forth by U.S. Rep. Paul Ryan as being “gimmick free” but acknowledged in a recent article that his analysis was based on several assumptions that may or may not prove true.

One of those assumptions—that “savings generated by the House resolution’s proposal to end the interest-free benefits on Subsidized Stafford loans for undergraduate students would be used to fund Pell Grants”—was challenged by Cruz of the Education Trust, who cast doubt that the plan’s backers will “somehow find it in their hearts” to steer those savings to Pell Grants.

Other panelists included Jon Oberg, former higher education researcher at the U.S. Department of Education, who complained that Washington often serves as a mere “echo chamber” for Congress where people repeat the immediate annual budget worries of lawmakers as opposed to taking a broader view.

“I think it’s a bad question that is being posed by the House budget committee,” Oberg said of the question of whether the Pell Grant program can be sustained.

Panelist Sarah Flanagan, vice president for government relations at the National Association of Independent Colleges and Universities, said she found fault with several elements of the Ryan proposal, including a suggestion that there be an income cutoff for Pell eligibility, although the plan doesn’t specify what the cutoff level would be.

“If you do an automatic cutoff at $45,000, you’re not willing to consider any additional family circumstances,” Flanagan said.

However, Flanagan said the proposal’s aim to cut off Pell Grants for students who go less than half-time, was a legitimate question to have on the table.