UNSUSTAINABLE HIGHER ED SPENDING

The Obama administration claims that the budget approved by the House of Representatives, authored by House Budget Committee Chairman Paul Ryan, would “slash” Pell Grant funding. The White House argues the budget would mean “students would see their Pell Grants fall by more than $1000 in 2014, and, over the next decade, over one million students would lose support altogether.” 

While the White House admits the “Budget doesn’t say” which programs would be cut, the Office of Management and Budget assumes cuts totaling $897 billion (the House-approved budget has the goal of cutting non-defense discretionary spending by 20 percent by 2014), are “distributed equally” across agencies and programs.

Yet the budget suggests limiting the number of recipients in order to target the low-income students the aid was originally designed to help:

“This budget puts Pell on a sustainable path by limiting the growth of financial aid and focusing it on low income students who need it the most…Additionally, the federal government should act to remove regulatory barriers in higher education that act to restrict flexibility and innovative teaching, particularly as it relates to non-traditional models such as online coursework.”

Increases in Pell have been on an unsustainable path for the past decade. More than 9 million students received a Pell Grant during the 2010-2011 school year – double the number that were given grants during the 2000-2001 school year. Part of the program expansion was due to an increase in eligibility, created through a combination of legislative changes in laws such as the College Cost Reduction and Access Act of 2007 and the Student Aid and Fiscal Responsibility Act of 2010. Pell got an additional adrenaline shot through the “stimulus” bill in 2009, to the tune of more than $15 billion, in large part to increase the maximum award available. 

The House-approved budget suggests rolling back the recent eligibility expansions, eliminating administrative fees paid by the federal government to colleges for administering the program (colleges get $5 per grant for administration, and as the budget notes, “schools already benefit significantly from the Pell program,”) and cap the maximum award at $5,550, among other reforms. 

Of course, Pell is just the tip of the federal higher education subsidy iceberg. Total federal student aid, including tax credits and deductions, reached $169 billion during the 2010-2011 school year. Continuing to increase federal subsidies – as a 439 percent increase in college costs since 1982 suggests – will do nothing to improve affordability for students.

The first step to mitigating the rise in college costs is reforming Pell so that it is seriously targeted – particularly during a time of budget restraint – to the low-income students the aid was originally designed to help.

 As “higher education” moves away from the old college model and toward customization through technology and online learning, these are reforms that are more timely than ever. And something the White House should support if truly interested in increasing access for all students who are interested in pursuing higher education.

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Posted by: Lindsey Burke

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