Aids experts discuss Pell reforms

Pell Grants must change to remain viable, concluded financial-aid experts at the The State of College Access 2012 Forum in Washington D.C., reports Ed Week‘s College Bound. The National Association of Student Financial Aid Administrators (NASFAA), which hosted the event, released an issue brief on the role of Pell Grants in access, persistence, and completion.

If Pell can improve its efficiency and effectiveness, it will be able to make a stronger argument for funding, said Sandy Baum, a higher education policy analyst.

“We need to think creatively about options for the future, not at the last minute, but in advance,” said Baum. “If the program collapses of its own weight, we have a huge problem.”

Pell expenditures have increased six-fold since 1976 in constant dollars as more undergraduates receive the grants, which are capped at $5,550. Now costing $41 billion, Pell escaped serious cuts this year, but could be back on the chopping block next year.

Baum is working with College Board on a Gates-funded analysis of Pell Grants. Several changes are under discussion:

Complexity – To make dollars more effective, let students know ahead of time what they could get, perhaps with a simple table to see how much they qualify for based on income. .

Tax benefits – In reviewing federal student aid, look also at how much subsidy is going to offset college costs with education tax credits for students at all income levels (25 percent of tax deductions benefit families making more than $100,000) and not just Pell Grants that help low- and moderate-income students.

Structure – Think carefully about whether the same criteria and regulations work well for 18-year-old students just out of high school and 30-year-olds looking for short-term job retraining.

Incentives – Find ways to encourage institutions not to just open the doors to college but to accelerate completion.

Savings accounts – Create a college-savings program for the children of low-income tax filers so families have a stake in college education. Consider linking the amount of Pell Grant available to how long families were considered low income.

While the federal government doesn’t track graduation rates for Pell Grant recipients, it’s believed that success rates are low.

NASFAA’s site has advice on applying for federal financial aid.

POSTED BY Joanne Jacobs ON January 24, 2012

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