#DoublePell Costs Three Times as Much
The #DoublePell movement to increase the maximum Pell Grant – a federal subsidy to help eligible low-income students pay for college – will likely play out in the current budget reconciliation process. This week, Congress held a hearing on the Pell Grant, including current legislation to double the Pell Grant award. But the Double Pell narrative is misleading and will counterintuitively lead to rising college costs – at odds with its purported intent.
Instead of doubling Pell, policymakers should increase the annual Pell Grant award by $400 to a total of $6,895 and index the amount to inflation in the years ahead. This also places the onus on colleges and universities to sustain the purchasing power of the Pell Grant over time
The Pell Grant Preservation and Expansion Act, introduced in June, would more than double the maximum annual Pell Grant award from $6,495 to $13,000 over the next five years; it also would shift the lifetime eligibility from 12 to 18 semesters or six to nine years. Thus, the push to double Pell effectively triples the current maximum lifetime award from about $39,000 to $117,000. Once the Pell Grant doubles, annual Pell spending will total at least $60 billion, but likely more because of a lengthier Pell lifetime eligibility period. This massive price tag is concerning, given our national debt is already $28 trillion and stands to jump to $123 trillion when given unfunded liabilities of entitlement programs like Social Security and Medicare before accounting for new education responsibilities.
If President Joe Biden signs a spending bill that effectively triples Pell, thousands of colleges and universities will receive up to $13,000 a year in Pell for qualifying students beginning in five years. Rather than make college more accessible, these subsidies will do just the opposite: further inflate tuition, just as they have in the past. It’s these surging costs, far exceeding inflation across other sectors, that have decreased the purchasing power of Pell Grants, which have, for the most part, kept up with inflation.
Raising the maximum lifetime Pell award from about $39,000 to $41,400, assuming a lifetime limit of 12 semesters, should be sufficient to cover tuition and fees if a student takes advantage of community college and public university options, where average in-state tuition is $3,400 and $10,486. Policymakers should also consider a conditional relationship between increased Pell Grant funding and colleges and universities’ ability to mitigate future tuition increases, preventing the cycle of tuition and fees from increasing to match the availability of federal aid.
Another option to protect Pell’s purchasing power is to allow for open and fair competition in the postsecondary education marketplace. Our education system should allow learners of all incomes and backgrounds to pursue more individualized pathways. But existing federal student aid policies effectively shut out competition from higher education alternatives. Even the current debate around expanding Pell for short-term programs still limits these to programs offered only by public and non-profit colleges and universities despite the flexibility offered by proprietary institutions and alternative providers.
Restricting student aid to a segment of higher education is problematic because nearly half of U.S. parents want their children to access alternative postsecondary education pathways such as noncollege-based skills training programs, including apprenticeships, specialized technical training, and trade schools. And interest in alternative programs like industry certifications, boot camps, and career-focused micro-credentials is increasing among employers, learners, workers, and policymakers. Limiting Pell funds to college and university programs places many alternatives out of reach for students from low-income households.
Doubling Pell would pump more taxpayer funding into a federal subsidy that ultimately benefits the bottom line of colleges and universities and do little to control costs. Instead, policymakers should consider how they can create more competition in the marketplace. This would force colleges and universities to compete on equal footing with alternative higher education providers and could have the benefit of driving down costs and making postsecondary education more accessible and affordable.