Pell Grant Shell Game

, Malcolm A. Kline, Leave a comment


Expect the education community to be up in arms over attempts by House Republicans to scale back college grant programs, but don’t expect their charges to be all that accurate.

Historically, what Republicans have done once in power is to make incremental budget proposals that usually go by the wayside after they go through committees and get to the floor. This year, the GOP is running true to form.

For example, the House Republicans are looking to cut about one-sixth of the more than $30 billion that the federal government currently doles out in Pell grants that college students use to pay for their education. Students can get up to $5,500 per school year in Pell grants.

Meanwhile, entitlement programs such as this one are bleeding cash, with every indication that their original intent, helping the poor, is being betrayed.  For example, “The cost of Pell grants has doubled over the past three years, largely because of increases in the number of recipients and growth in the maximum award,” Kelly Field reported in The Chronicle of Higher Education on March 25, 2011. “This year some 9.4 million students are expected to receive the grants, up from 6.2 million in 2008.”

But they need not necessarily be downtrodden. “In 2007, Congress raised the income cutoff for automatically receiving the maximum award to $30,000 from $20,000, increased the minimum award to 10 percent of the maximum, and allowed applicants to exclude more of their income and benefits when applying for aid,” Field reports.

Here’s the loophole whereby the wealthier recipients can get the grants. “Under current law, the size of a student’s Pell Grant is determined by subtracting the expected family contribution from the maximum award or the student’s cost of attendance,” Field explains. “Using that formula, every increase in the maximum award not only provides more aid to existing recipients but also expands eligibility to students with higher incomes.”

In other words, the Department of Education treats the students as self-sufficient independent earners, whether they are or not. Nevertheless, Field notes that “During the 2009-10 academic year, 76 percent of Pell Grant recipients had incomes less than or equal to $30,000, and 70 percent qualified for the maximum award.”

Although Pell grants are awarded based on the student’s income, not the families, Fields claims that “Only one percent came from families earning more than $60,000.”

Finally, the data that is drawn from is self-reported and, as Field shows, the program guidelines allow recipients to shield income in order to qualify.

“I am dubious of that number for reasons you mention plus the vast expansion in the number of Pell recipients,” Ohio University economist Richard Vedder noted in an e-mail to us. Dr. Vedder, who heads the Center for College Affordability and Productivity, will be the featured speaker at Accuracy in Academia’s next author’s night.

Malcolm A. Kline is the Executive Director of Accuracy in Academia.