How to reform Pell and help neediest students

Once a sacred cow, Pell Grants now face cuts, writes Andrew Rotherham in Time. The program is very expensive and growing rapidly.

Pell grants are being scrutinized because taxpayers now spend more money on them — $36 billion this year, up from $14 billion in 2007 — than on entire federal agencies. Almost half of all college students currently receive some Pell grant assistance, ranging from $555 to $5,550, based on their financial need. In July, Congress is tightening the purse strings by reducing the number of semesters a student can receive a Pell grant (to 12, down from 18) and, most controversially, lowering the household income level that determines which students’ families are not required to contribute any money for their college education. That threshold is dropping from $32,000 to $23,000.

Broader changes are needed to make Pell “more beneficial and effective,” Rotherham argues. One option is to front-load grants, giving more aid early in a student’s career.  More students could avoid borrowing till they get close to a degree — which many will not. This would help community college students especially.

Other ideas also would help community college students, who tend to come from low- and moderate-income families.

Focus more on the poorest students. On one level it’s great that Pell grants are now touching so many students, but the program arguably should be focused most on low-income Americans and able to give them grants far larger than the $5,500 maximum today. In a country where only 8% of low-income students earn a four-year college degree by age 24 (compared with three in four affluent students), poorer kids should be Pell’s top priority. . . . Stephen Burd, a higher education analyst at Education Sector, suggests conditioning extra aid to colleges based on a high-enrollment of Pell recipients.

Reward colleges for graduating Pell recipients.  Colleges and universities don’t have much skin in the game when it comes to federal aid. It’s one of several reasons college costs continue to rise. Higher education analyst Art Hauptman suggests conditioning some aid on graduation rates for Pell Grant recipients.

Rotherham also suggests further simplifying FAFSA, the financial aid application form.

In 2009 the online version started including some performance information about schools to at least signal to students that they should think about the quality of the degree they’d be getting at these places. . . . Using tax return data like the standard 1040 form, augmented with a few additional education-specific questions such as how many schools a student is applying to, would accomplish the same goals and be a lot more user-friendly.

The Education Department hasn’t tracked success rates for Pell Grant recipients. Doing so could be embarrassing, but I don’t see how Pell can be reformed without information on what’s working and what isn’t to help needy students complete a useful college credential.