New Report on the Federal Pell Grant Program!

Dear Commons Community,

With all the discussion this summer of the federal Pell Grant program, a report released last week by the Congressional Budget Office (CBO) examines the growth of the program and explores some ideas that have been proposed to deal with concerns about the program’s cost.

The report found that between the 2006-7 and 2010-11 award years, inflation-adjusted spending on Pell Grants increased by 158 percent, stemming from an 80-percent rise in the number of recipients and a 43-percent real increase in the average grant amount. The rise in the number of grant recipients was the most significant contributor to rising costs, the report says. But spending for the program declined in 2011–12, it says, because of a reduction in the amount of the average grant.  The report cites three major reasons for the increase in Pell Grant expenditures:

  • Changes in the economy,
  • Changes in the way postsecondary education is provided, and
  • Choices made by policymakers to expand the program.

The recession of 2007–2009 and the subsequent slow recovery drew more students into the recipient pool. Eligibility increased as adult students and the families of dependent students experienced losses in income and assets; enrollment of eligible students also rose as people who had lost jobs sought to acquire new skills and people who would have entered the workforce enrolled in school because they could not find employment. The expansion of online education, particularly at for-profit institutions, attracted still more students, many of whom were eligible for Pell grants. Rising tuition has put more pressure on family finances and made applying for the program more attractive. Legislated policy changes, including larger grants, simpler applications, expanded eligibility, and the increased availability of federal aid for online study, provided more grants to students who would have enrolled even without the changes and encouraged others to enroll and submit grant applications.

The report also explores alternatives for the Pell Grant program including:

  • Reduce the number of grant recipients,
  • Reduce the amounts of the grants,
  • Increase the grant amounts, and
  • Simplify eligibility criteria and the grant application.

However, in keeping with the non-partisan nature of the CBO, the report does not make any recommendations.

As reported in The Chronicle of Higher Education, the report comes as Congress gears up for the next reauthorization of the Higher Education Act, the main law governing federal student aid. The act was last renewed in 2008 after five years of debate.




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