The Wall Street Journal Is Wrong About Pell Grants

The Wall Street Journal Is Wrong About Pell Grants

The once-loved Pell Grants are under a surprising amount of right-wing assault.

The Biden administration wants to raise the maximum Pell Grant by more than $2,000 next year and double it by the end of the decade. The editorial board of the Wall Street Journal recently stated that such a shift would raise tuition expenses and that the Pell program is simply a waste of money. However, there is little evidence that federal higher education aid raises tuition rates, and the Pell program is a tried and true rung on the educational ladder in the United States. Conservatives should embrace — and fight to enhance — rather than reject what has generally been a politically popular public investment with long bipartisan origins.

Student aid, particularly the government Pell Grant program, is not responsible for the long pattern of tuition rises over the last 50 years, according to studies conducted by us and other academics. Robert Kelchen of the University of Tennessee provides current evidence that is quite convincing. The government abolished graduate school loan limits in 2006, allowing professional students in law, medicine, and business to borrow much more money. As a result, one may anticipate allegedly predatory public and private professional institutions to raise tuition. They didn’t do it.

The for-profit sector is the sole exception to this rule. For-profit colleges charge more for short certificate programs if their students are eligible for federal aid, according to Stephanie Cellini of George Washington University and Claudia Goldin of Harvard University. However, there is no indication that federal aid affects tuition rates for the 95 percent of students who attend mission-driven not-for-profit institutions and public universities whose tuition is generally determined by state boards.

Broad nationwide trends are the key determinants of sticker price tuition. Cuts in state funding for public university budgets, rising income inequality that allows schools to charge high-income families a high and rising list price while offering lower-income students discounts, and the long-term rise in the cost of personal services — everything from dental care to child daycare — relative to manufactured goods are among them.

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President Joe Biden’s proposed increase in the maximum Pell Grant amount would pay the full cost of tuition at practically all community institutions and many four-year public universities. During the Pell Grant’s early years in the 1970s, it covered the whole cost of attendance at community colleges and around 80% of these expenditures at most public four-year institutions.

This previous level of federal assistance put students from low- and middle-income households on a more level playing field with their richer peers, allowing them to attend college with little or no debt and job commitments of less than 10 hours per week. A considerable increase in the maximum Pell Grant would start the process of restoring its purchasing power to that of previous generations of students.

To attack the Pell program, the Wall Street Journal editorial noted the extremely low eight-year graduation rate. However, it turns out that non-Pell students had a similar eight-year graduation rate. Pell grantees have lower graduation rates than higher-income students who aren’t eligible for Pell help for students who go straight from high school to college, generally known as “first-time full time” students. This is due to poverty issues rather than the Pell program. An expanded Pell would aid in increasing completion rates.

Many factors contribute to low graduation rates. One reason for this is financial constraints, which require many low-income students to attend school part-time while working long hours. Many of these students quit before completing their education. Students who borrow relatively small amounts ($5,000 to $10,000) and leave school without a diploma or degree to enhance their wages face the greatest risk of default. Increased Pell funding will boost graduation rates by reducing financial instability among low-income students and allowing more students to enroll full-time.

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Low university spending per student on instruction and student support also contributes to low graduation rates. The great majority of Pell Grant beneficiaries attend community schools, regional public universities, or non-profit private colleges with little endowments. And the amount spent per student on instruction and student support at these schools is often a fraction of what is spent on small classes, extensive mentorship, advising, and counseling at America’s higher-income colleges and universities.

In the past, public universities have passed on the majority or all of any boost in Pell grants to students in the form of lower net tuition. Net tuition is the advertised price of tuition minus grant aid received from all sources, including tuition discounts from the institutions. Cutting net tuition makes a school year cheaper, but it does nothing to improve it.

A significant increase in the maximum Pell Grant would enable these under-resourced institutions to accomplish two objectives. The first is to lower net tuition as the country recovers from the flu. Equally important, these schools may repurpose some of their own aid funding to invest more in student services and support, allowing Pell users to finish their degrees faster.

One of America’s nonpartisan political success stories is the Pell program. It’s a well-targeted initiative that has bipartisan support and reaches every congressional district in the country. A Pell Grant is not welfare; it is a financial investment that encourages students to work hard and invest in their own future. College graduates pay more in taxes than persons with only a high school background because of their greater wages. According to one study, college graduates pay nearly half a million dollars more in taxes over the course of their lives.

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Other shortcomings in higher education accountability should not be blamed on the Pell Grant. Instead of pushing the federal government to do more to hold education providers accountable for how they utilize Pell Grant money, Republicans who are wary of rising tuition rates and mishandled aid monies might press the federal government to do far more.

The for-profit industry has the most accountability issues, as its students are disproportionately large borrowers who frequently do not earn enough to repay their debts. Pell Grants are distributed disproportionately to for-profit colleges. Despite enrolling only 5% of all undergraduate students, they got 13% of Pell Grant funds in 2019. The previous government scrapped the federal gainful employment criteria, which were a crucial accountability metric for preventing abuses at for-profit universities across the country. To ensure that for-profit colleges are operating in the best interests of the nation’s students, the Department of Education should reinstate some form of these criteria.

More persons with the abilities and experiences gained via postsecondary education are in demand in America’s work markets. The country should respond by enacting laws that make quality education more accessible to pupils regardless of family income. The most potent and focused weapon we have for making college more accessible for low-income families is to increase the maximum Pell Grant size. For America’s future, this should be a bipartisan priority.

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