A recent New York Times op-ed blames the rules and regulations of the federal Pell Grant program for many of our nation’s higher education access and completion problems. In short, the authors contend that the rule that defines a full-time course load as 12 or more credits per term hinders students from graduating early or even on time.
The emphasis on that relatively small technical issue distracts from a much more important point: the Pell Grant – which currently maxes out at $5,645 for the academic year – is not nearly enough to cover college costs for any of its recipients. That is the key issue legislators must grapple with when thinking about how to raise graduation rates.
While public investment in the Pell Grant has expanded over time, its purchasing power has dropped dramatically. Forty years ago, a needy student could use the Pell Grant to cover more than 75 percent of the costs of attending a public four-year college or university. Today, it covers barely 30 percent. There is little other grant award or work-study funding available to students at public institutions, so even students borrowing the maximum available subsidized loans are left with unmet financial need and thus must work as well.
This is a sharp change from the past, when students could optimize their focus on school by borrowing instead of working. Now, the vast majority of students must work long hours and borrow heavily in order to make ends meet. On top of that, students from working poor families also tend to carry elder and child care obligations, are more likely to have expensive struggles with their health, and often need to contribute their parents’ household expenses even while finding resources for their books and supplies. These “opportunity costs” of attending college greatly exceed the meager financial aid we provide.
The headlines focus on elite colleges with no-loans policies. But the latest federal data show that at public colleges and universities, where most Americans attend college, students from families in the bottom 25 percent of the family income distribution -- earning an average of just $15,870 a year -- must pay almost $12,000 a year for college.
That’s right: after taking all grant aid into account, those families are expected to live on about $4,000 a year if they want their child to get a bachelor’s degree. In that situation, borrowing is hardly optional (but quite risky for families with such little financial slack) but with current loan limits it is also insufficient. Making ends meet on financial aid alone -- even for America's poorest -- is thus far more difficult than public perception currently holds.
Of course, community colleges are available to these families as well. In a recent U.S. Senate testimony, the researcher Judith Scott-Clayton stated that more students ought to recognize just how affordable these colleges really are. To do this, she pointed out that the Pell Grant often covers tuition and fees, and that its recipients get money back to live on.
That’s true, but even with those dollars in hand those same low-income families must come up with an additional $7,000 a year for their child to attend those lower-priced alternatives. Leaving the rest of the family to live on $8,000 a year isn’t often possible.
The hard truth is that college is the least affordable for America’s working poor families. If you are lucky enough to have earnings in the top 50 percent of family income (making more than around $85,000), your child can get a bachelor’s degree at an expense of about 20 percent of your annual income.
But if you reside in or below the middle class, securing access to the bachelor’s degree at a public institution for your children demands one-third to three-fourths of your annual income (even a community college education eats 21 to 46 percent of annual income).
Increasing the college completion rates of financial aid recipients requires actually making college affordable. We should start by restoring the value of the Pell Grant by bringing states and institutions to the table and driving down college costs.
We must provide incentives for states to move toward providing two years of community or technical college at no cost to families. Let’s dramatically expand the federal work-study program, especially at community colleges. Ensure that every Pell Grant recipient has access to a minimum of 20 hours per week of on-campus employment.
Require colleges to provide all students with supportive staff to can help them construct realistic schedules and financial plans, and ensure that they are screened for eligibility for all forms of financial aid and public benefits each year to support their college attendance.
Finally, adjust the calculation of need so that it is possible for the expected family contribution to drop below $0 for the most severely poor students; this will allow them to accept as much financial aid (and subsidized loans) as they need to ensure their college costs are covered.
The American dream holds that individual merit rather than family background determines educational opportunities. Unfortunately, spending money on federal financial aid has given us a false sense of satisfaction that we are all living that dream.
We have not done enough to ensure all students have more than a foot in the door of higher education. Opening their pathways to degrees requires more than platitudes -- it requires accountability for states and institutions and also serious money.