In recent years, the Warren-Sanders wing of the Democratic Party has succeeded in reshaping the debate on higher education policy. Proposals once seen as radical and not very serious, such as the free university and the widespread cancellation of student loans, have come to the forefront of the national debate.
Releasing its $ 1.8 trillion U.S. Plan for Families (AFP), the Biden administration called for limited versions of these two progressive enthusiasms, while pushing to oversize a familiar agenda with more bipartisan appeal: the Pell Grant.
For years, calls have been made to dramatically increase the size of the Pell Grants, a federal grant given to low- and middle-income undergraduates to offset tuition fees. The Pell Grant program has its roots in the Higher Education Act of 1965 and has required appropriate updates and revisions over time. Now, the Biden administration, however, is looking to double the size of the grants – to a figure that far exceeds what has been proposed previously.
We think doubling the Pell Grants is promising, if done right. Sadly, the Biden administration appears to be intent on doing things wrong.
Biden’s plan would raise the maximum Pell grant to just under $ 13,000, at an additional cost of around $ 30 billion per year. This is a major expense at a time when the US Treasury is swimming in red ink. Nonetheless, we believe doubling the Pell Grants holds promise, if done right.
Sadly, the Biden administration appears to be intent on doing things wrong.
The Pell program is popular because it caters to both the left and the right. For Democrats, it offers unconditional funds to low-income students. For Republicans, it funds students rather than colleges, offering a voucher that students can use at the accredited institution of their choice. If policymakers are looking for a university affordability program with bipartisan appeal, even in our polarized moment, that’s it.
Related: Pell changes could mean more eligible students, more money, more programs
At the same time, it is worth remembering a simple economic truism: subsidies raise prices, as they tend to make consumers less cost-conscious. This is especially relevant when the Biden administration argues that Pell’s massive expansion is necessary because the subsidy has not kept pace with inflation.
First of all, Pell actually kept pace with inflation. What it did not keep up with was the ever increasing cost of higher education, which has increased at a rate that exceeds the level of inflation in almost every other major sector of the economy.
What to do with that? Well, increasing Pell’s size seems like a reasonable approach to promoting university affordability, especially at a time when Democrats are looking to spend hundreds of billions on educational programs that lack sane, mission-centric design. student of Pell. But doubling down on Pell is only reasonable as part of a consistent and sane approach to addressing concerns about cost and personal liability in higher education – not as part of an eclectic purse of gifts and bad ideas.
Here’s what we have in mind.
First, the rationale behind Pell’s oversizing is that it allows low-income students to attempt a college education without having to go into debt to do so. Pell’s proposed size means that most students will be able to attend two years of a community college or local four-year public college without needing to borrow money for tuition or fees. This helps solve the pressing problem of students who attend college for a year or two, leave with debt but without a degree, and then struggle to find a job that allows them to pay off their loans.
But it raises all kinds of additional questions about AFP’s more than $ 100 billion proposal for a “free” community college. If the Expanded Pell is going to cover the cost of community college for those in financial need, what exactly problem is the Biden free community college proposal designed to solve? After all, on average, Pell Grants already cover more than tuition and fees at community colleges.
This means that the “free” community college is really about subsidizing students who don’t qualify for Pell, letting taxpayers subsidize those who don’t. Further, since community college systems are creations of the states, any “free” college plan would force Washington to design a cost-sharing system that would work in all fifty states. And why would we want to invite federal micro-management and intrusive oversight of a complicated regulatory regime (think: Medicaid), if it can be avoided?
Doubler Pell also points to the perversity of the Democrats’ aggressive pressure to write off up to $ 50,000 in student debt. Efforts to boost access should be accompanied by a clear signal that those who choose to attend university with taxpayer assistance are expected to pay off their debts. Extending the unconditional Pell for low-income students is one thing, but combining it with a taxpayer’s gift card for those who used public funds to attend expensive private law school or colleges would send exactly the wrong message.
The most important solution here would be to simplify federal borrowing by combining it into a single, easy-to-understand program that allows borrowers to repay an affordable amount based on what they earn. The existing set of income-tested repayment (IDR) programs, administered by the Federal Ministry of Education, succeed in theory, but their complexity and poor administration have prevented them from helping many of the most vulnerable borrowers. most needy. With better access to this type of financing scheme, borrowers should also be given more reasonable borrowing limits, making it more difficult to incur debts that they will not be able to repay.
In truth, if we broaden Pell, associate it with a cohesive approach to IDR, and move away from the fashionable embrace of loan cancellation and “free” college, issues of affordability and access that plagues higher education can be reduced to a manageable size – one that no longer invites grandiose federal projects.
Beth Akers is a Senior Fellow in Educational Policy Studies at the American Enterprise Institute. Frederick M. Hess is Director of Educational Policy Studies at AEI.
This story on Pell Grants and Making Colleges Affordable was produced by The Hechinger report, an independent, non-profit news organization focused on inequalities and innovation in education. Sign up for The Hechinger newsletter.