President Obama’s proposed 2015 budget includes $7 billion over 10 years to reward colleges that do a good job of graduating Pell Grant recipients, reports the Chronicle of Higher Education. The maximum Pell Grant would increase by $100 to $5,830.
The spending plan seeks $4-billion over four years to encourage states to maintain their higher-education spending and adopt performance-based funding models and $6-billion for job-training programs at community colleges. Community colleges would compete for grants to offer training programs and apprenticeships.
The plan partially restores eligibility for Pell Grants to high school dropouts who pass an “ability to benefit” test.
All borrowers would be eligible for Pay as You Earn, which caps monthly payments at 10 percent of discretionary income and forgives borrowers’ remaining debt after 10 to 20 years. Currently, only recent borrowers with no older debt qualify.
Community colleges are concerned about the call to “strengthen academic progress requirements in the Pell Grant program to encourage students to complete their studies on time,” reports Inside Higher Ed. The Education Department can do this at any time without congressional approval.
“This is absolutely something that causes us great concern,” said David Baime, vice president for government relations and policy analysis at the American Association of Community Colleges.
Under the current rules, Baime said, students effectively have to pass two of every three classes they take in order to satisfy the requirement. “Since the standards were tightened a couple of years ago, we’ve heard concerns from our campuses,” he said, “So anything that would go further in the direction of tightening them is something that we would be looking at carefully.”
The budget request also seeks funds to develop a national college ratings system to “encourage colleges to improve and help students compare the value of colleges.”
Clare McCann has more on EdCentral.
Pell Grants help low- and moderate-income students go to college, but graduation rates are low. In an Education Next forum, Isabel Sawhill, co-director of the Center on Children and Families and Brookings’ Budgeting for National Priorities Project, and Sara Goldrick-Rab, associate professor of educational policy studies and sociology at the University of Wisconsin, discuss what to do about it.
Target federal aid to low-income, college-ready students, argues Sawhill. Needy students who are likely to complete a degree could get more money, if well-to-do families gave up their tax subsidies and low performers weren’t eligible for Pell.
According to 2009 National Assessment of Educational Progress (NAEP) data, only a small fraction of high school seniors are at or above proficiency in math and reading: 26 percent and 28 percent, respectively. This lack of preparation makes it difficult for them to do college-level work. For example, of younger students enrolling in college in 2003–04 with a high school grade-point average (GPA) below 2.0, only 16 percent had received a degree six years later, while 84 percent had not. The question we need to ask is whether taxpayers should foot the bill for students whose odds of success are so low.
Currently, Pell Grants are available to anyone with a high school diploma or GED. That doesn’t predict the ability to do college-level work, Sawhill writes.
Linking Pell to academic performance denies help to those who need help most, responds Goldrick-Rab. Instead, she proposes increasing the size of grants so low-income students can work less and study more.
While 54 percent of wealthy Americans complete college, only 9 percent of low-income Americans earn a degree, Goldrick-Rab writes. The college gap is growing.
The K–12 system remains overwhelmingly unequal, and chaining Pell eligibility to it even further ensures that both ends of the educational process remain unequally distributed. It transforms the Pell Grant from a policy aimed at transforming lives to one that simply rewards students lucky enough to be born into situations where their families are able to seize good high-school educations for them.
When it was first created, “the Pell Grant covered nearly 90 percent of the costs of attending a public college or university,” writes Goldrick-Rab. Today, the maximum $5,550 grant covers 30 percent of the average costs at state universities.
President Obama has proposed rating colleges and universities by “value.” One measure would be the graduation rate of Pell Grant recipients. Linking Pell to performance would make colleges look a lot better.
After growing very rapidly, the Pell program is running a $1.7 billion budget surplus this year, according to the Congressional Budget Office.
Don’t give up on the longshots, writes Matt Reed. “Open-door public colleges exist to give people options.”
Thanks to donors, including Panera Bread, hungry students at Bunker Hill can make themselves peanut butter and jelly sandwiches to get through the day, Sloane writes. Every Pell-eligible student — some nine million — should get a free PB&J sandwich every day, he argues. That’s 45 million sandwiches a week.
Many of these students . . . received federal free and reduced lunch in high school, didn’t they? Why? Because their families cannot afford enough food for the family. Why have we, the people, snatched lunch from these low-income students going on to college?
On a Friday last summer, Sloane made five sandwiches to go for a student who was phoning homeless shelters in vain.
What the heck? I put the jar of peanut butter and a loaf of bread and a plastic knife into the bag, too.
“All this?” he asked me.
“Sure. Just finish your education, run for president, and make sure no one in the U.S. is ever homeless again,” I said.
“I haven’t seen him again,” writes Sloane.
In Sooner, Simpler, Smarter, the National College Access Network calls for simplifying federal financial aid, reports Clare McCann, a New America Foundation policy analyst, on Ed Central. Ideas include notifying families with young children about college aid eligibility and using tax returns, instead of FAFSA, to calculate Pell Grant eligibility.
“There is near unanimity on the fact that the financial aid ‘system’ is layered with inconsistencies, redundancies, and overlapping federal programs,” writes McCann. “Students find it confusing and un-navigable, so despite all the taxpayer investments in student aid, students often don’t know how to access them or which benefits to use.”
A Congressional Budget Office reports analyzes ideas for revamping Pell Grants. Replacing FAFSA with federal tax returns would raise costs by about $10 billion over 10 years, the CBO estimates.
. . . the Department of Education would issue about 2 percent more grants averaging $1,500 – some to newly eligible students who wouldn’t have to report that income now, and some to new would-be students who otherwise wouldn’t have applied because the application was too complex. Additionally, about 20 percent of the grants that are already awarded would be larger under the new formula, by about $350 on average.
Another option is to tie Pell Grant eligibility to the federal poverty level replacing the complicated formula now used. That would make it easy for families to predict college costs and aid. students know early where they stand.
Taxpayers would save $1.4 billion over 10 years if the maximum Pell Grant was reserved for families at or below 150 percent of the federal poverty level (about $35,000 for a family of 4), with smaller grants for families between 150 and 250 percent (almost $59,000 for a family of 4).
Without federal student aid — loans, Pell Grants, tax credits — higher education would cost less and be less elitist, said economist Richard Vedder in a Nov. 15 speech in San Diego. While fewer people would enroll in college, those who do would be more likely to earn a degree and less likely to end up as sales clerks and bartenders. Colleges would hire fewer administrators.
Vedder recommends seven steps he thinks are “politically feasible.”
First, return the program to its roots: helping poor persons attend college. Right now, over 17 percent of students from families with incomes from $60,000 to $80,000 a year get Pell Grants—these individuals have above median incomes. Over a few years we should tighten eligibility significantly, reducing the number of Pell recipients by perhaps 50 percent. Similarly, PLUS loans to parents of high income kids should end. Tuition tax credits benefit families whose kids would go to college in the absence of the credit, mostly from above average incomes. Go to a single grant program and a single loan program.
Second, impose academic performance standards to continue receiving grants. Reward students who graduate in less than four years, and cut off aid for, say, students who are in their sixth year of full-time attendance.
Third, he’d get the federal government out of student loans and let private lenders “strengthen the tie between interest rates charged students and market rates.”
Fourth, make participating colleges have some skin in the game. If colleges accept students and promise them Pell grants or guaranteed loans, make them share in the burden of high levels of defaults on loans, or the failure associated with Pell recipients not graduating. This would lead to a needed reduction in lending to persons who lack the aptitude, background, or discipline for college level learning.
Fifth, he’d gear federal aid to the cost of a basic college education from a relatively low cost state university. Increases would be linked to the inflation rate to discourage colleges from raising tuition to capture increased aid.
In step six, Pell Grants would become a voucher for very low-income students tied to academic progress. “Top students could be paid extra for superior academic performance,” Vedder suggests.
Finally, he’d “encourage private investors to begin human capital equity funds.” Investors would pay college costs in return for a portion of the graduate’s future earnings for a set time period, Vedder writes. “A graduate from M.I.T. majoring in electrical engineering might have to pay 8 percent of his income for 12 years, while a graduate in anthropology from Central Michigan University might have to pay 15 percent for 20 years.” These market signals would be useful for students.
Directing aid to low-income students — and away from the middle class — doesn’t sound all that politically feasible to me. Setting performance standards also would generate a lot of resistance.
Ohio’s community college students are “second-class citizens” when it comes to Ohio College Opportunity Grants, editorializes the Toledo Blade.
Community college tuitions average $3,800 a year — about one-third that of those at four-year schools — in Ohio.
In 2009, the General Assembly cut the OCOG budget from roughly $395 million to $171 million. Making matters worse, it also forced low-income students to use federal Pell grants to cover tuition expenses at community colleges before tapping state grants. Those changes made nearly all community college students ineligible for OCOG.
Unlike Pell grants, state grants cover tuition only. And because tuition is low at community colleges, Pell grants typically cover students’ tuition.
Before the changes, 20,000 community college students in Ohio received state grants.
Ohio needs legislation that would permit community college students to, first, use OCOG to cover tuition costs, thereby enabling them to tap federal Pell grants for other college-related expenses. That change also would call for setting aside another $20 million a year to cover the more than 20,000 newly eligible community college students.
Last year, as Ohio began to refund OCOG, money was set aside to fund for-profit college students but not community college students, reports Inside Higher Ed.
Aid Like a Paycheck – low-income students get financial in two-week increments — promotes academic success and good money management, concludes an MDRC study. The Institute for College Access and Success came up with the idea in 2009.
Students are encouraged to think of school as a job that requires regular attendance and effort, notes Ed Week‘s CollegeBound. If they stop going to classes, their aid stops too.
Typically, a college applies a student’s financial aid award toward tuition and fees, and then gives the remaining money to the student as a financial aid refund in one or two installments a semester. MDRC research shows that money often runs out, leaving students short on living and school-related expenses. If students get all of their refund, but then drop out, they may be required to return a part of the money to school.
Colleges aren’t very good at collecting that money.
Aid Like A Paycheck was tested first at Mt. San Antonio College, a large community college in southern California. Tuition is only $780, while Pell Grants are worth up to $5,500, so students had large refunds to manage. In the pilot, 200 students received biweekly payments of $125 to $350 instead of getting all the money upfront.
Soon after Mt. San Antonio College, another pilot began at Triton College outside of Chicago.
At the colleges, as students signed up for more credits or dropped classes, the disbursements would be adjusted to reflect their new eligibility status. Exceptions were made in the event of a demonstrated hardship, but few students made these requests. Students in the pilot program were regularly emailed information about online tools to help with budgeting, borrowing, and money management.
Students told MDRC the new system helps them “spend their money wisely, reduce their work hours, and put more energy into their school work,” reports Ed Week.
Redesign Pell Grants, stretch out income-based loan repayment and simplify college cost estimates urged outside experts at a Hamilton Project forum today.
Pell Grants should provide guidance and support services tailored to recipients’ needs, write Sandy Baum of George Washington University and Judith Scott-Clayton of the Community College Research Center at Teachers’ College, Columbia.
They also propose dramatically simplifying eligibility and the application process and strengthening incentives for students to move quickly to a degree.
Income-based repayment should extend beyond the first 10 years after college, propose Susan Dynarski and Daniel Kreisman of the University of Michigan. Payments would rise and fall with a borrower’s income.
This model could prove less costly for taxpayers than the current system and it could even be less expensive; the proposal would reduce defaults and cut the cost of loan servicing, as well as eliminate what would become redundant policies, such as the student-loan interest deduction and the in-school interest subsidy. For the very small percentage of borrowers who take on significant student debt, the authors propose improving bankruptcy protection as well as tightening regulation of the private lenders who own most of these very large loans.
A better college cost calculator would help students from lower- and middle-income families to make informed college choices, writes Wellesley’s Phillip Levine. His Quick College Cost Estimator uses six basic financial inputs.
Federal student aid should reward success, said Richard Vedder at a Brookings Institution event last week. An Ohio University economist, Vedder directs the Center for College Affordability and Productivity.
Despite rapid growth in federal student aid since 1971, lower-income students make up a smaller share of college graduates, Vedder pointed out. As federal aid expands, state governments spend less and universities charge more.
He believes financial aid has “contributed to high dropout rates, mediocre levels of student work effort and academic performance” and underemployment for college graduates.
I think we are probably over-invested, not under-invested, in higher education in the United States, creating a credential inflation arising from using degrees as an obscenely expensive screening device, one involving massive wastes of potentially highly productive human resources.
Phasing out federal aid isn’t politically viable, at least in the short run, so we need to “correct two perverse incentives,” Vedder argues.
First, there needs to be rewards for good academic performance and negative financial consequences for poor performance. . . . Second, colleges should have skin in the game. Their inappropriate admissions decisions or inattention to floundering students massively contributes to loan defaults, yet they face no adverse consequences. That needs to change.
Beyond that, simplify the system, restricting aid to more affluent families, doing away with PLUS loans and tuition tax credits, in line with RADD (Reimagining Aid Design and Delivery) recommendations. We also should convert Pell Grants into progressive performance vouchers. . . . No full-time student should get money for more than five years. “A” students graduating in less than four years should get a small bonus for saving the government money and as a reward for high academic achievement.
Federal policy should encourage private approaches to financing, such as letting students “contract to forfeit part of post-graduate earnings in return for financial support of college,” Vedder argues.
Changing financial aid to promote college completion could limit access, warns Do No Harm, a report by the U.S. Advisory Committee on Student Financial Assistance. Several proposals under discussion could make it harder for low-income students to attend college, the panel advises.
The report lists 10 financial aid “fallacies.”
For example, redirecting need-based grants to higher achievers and colleges with higher graduation rates would not improve completion, the report argues. The loss in access and completion for unfunded students will offset completion gains, it predicts.
To increase completion, financial aid proposals must address barriers for low-income students, the panel recommends. These include: high net prices for low-income students; excessive borrowing; decoupling of federal, state and institutional aid; complex forms and eligibility determination; inadequate early information and intervention, and insufficient in-college support services.
To increase access and completion, the panel proposes: Using federal aid to spur state and institutional aid; doubling the maximum Pell Grant; converting higher education tax credits to Pell Grants, and redesigning income-based loan repayment.