Beyond its Intended Scope – The Pell Grant Predicament | Citizens Against Government Waste

Beyond its Intended Scope – The Pell Grant Predicament

The WasteWatcher

On July 1, 2013, the interest rate for federally subsidized student loans doubled from 3.4 percent to 6.8 percent.  Lawmakers left for the July 4 recess without addressing the increase, in part due to differing opinions regarding the extent to which the federal government should subsidize higher education, which has become significantly more expensive in recent years.  One reason for rising costs is the government’s subsidy portfolio, which includes Pell grants.

Every year, the Department of Education (DoED) gives low-income students tuition assistance through Pell grants that they are not required to pay back.  In 2012, the Pell Grant program delivered $34.5 billion in financial aid to 9.4 million recipients, making it the DoED’s single largest expense.  Unfortunately for taxpayers, as the number of recipients has been increasing, the percentage of those individuals completing their education has been decreasing.

An April 10, 2013 National Public Radio (NPR) story stated that one of the main reasons a higher percentage of Pell grant recipients are defaulting is due to a previously unrecognized population of recipients: adults 25 years or older who are attempting to make themselves more marketable through vocational training.  The program was not designed to assist these individuals.  According to the NPR story, these non-traditional recipients account for 44 percent of the total number of individuals receiving Pell grant funding, yet “only three percent ever earn a bachelor’s degree.” 

Low graduation rates are not limited to older Pell grant recipients.  According to the NPR story, “High dropout rates, though, are not limited to older students. Among 18- to 25-year-olds in the program, only a fraction earn a bachelor's degree within six years — often because they're just not ready for college-level work.”

In an April 8, 2013 article in The Wall Street Journal, James Jacobs, president of Macomb Community College in Michigan, stated, “Many [non-traditional recipients] are workers who have been laid off or are seeking to change careers but have little guidance about what to study...They’re often desperate and hastily enroll in schools with low graduation rates.”

Lawmakers on both sides of the aisle agree that the Pell grant program is in dire need of reform; more steps need to be taken to increase recipient graduation rates.  One potential modification to the program would be to further reduce the length of eligibility for Pell grants, which was reduced from 18 semesters, or nine years, to 12 semesters, or six years, on July 1, 2012.  Another potential reform could involve tying part of Pell grant funding to academic performance.  

Students receiving high grades would receive higher levels of funding, while those receiving lower grades would receive lower amounts.  Although opinions may differ on the best way to reform the Pell Grant program, the current abysmal graduation rates should be enough to force lawmakers to enact major changes in the near future, which would be helpful to both students and taxpayers.

PJ Austin

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