Here’s Your Grant Money, College Students. Don’t Spend It All in One Place.

House Republicans propose giving eligible students the flexibility to access all of their Pell Grant money at once. Would that reform raise graduation rates?

National Journal
Fawn Johnson
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Fawn Johnson
July 14, 2014, 12:11 p.m.

Ima­gine a would-be col­lege stu­dent filling out just one fin­an­cial-aid form and then be­ing giv­en her al­lot­ted Pell Grant money auto­mat­ic­ally each semester un­til gradu­ation. That, in prin­ciple, is what House Re­pub­lic­ans would like to see hap­pen as they up­date the cur­rent fed­er­al high­er-edu­ca­tion law. It is the most far-reach­ing pro­pos­al on their wish list of ideas to sim­pli­fy and stream­line the all-too-vex­ing col­lege fin­an­cing sys­tem.

These Re­pub­lic­ans, mem­bers of the House Edu­ca­tion and the Work­force Com­mit­tee, say that col­lege go­ers should be re­ceive just one loan, one grant, and one work-study pro­gram if they are eli­gible. Right now, most stu­dents juggle a con­fus­ing mix of dif­fer­ent loans and grants. “Stu­dents and par­ents, they look at all this stuff and go, ‘I don’t even know what I should do here,’ ” says com­mit­tee Chair­man John Kline, R-Minn.

The chal­lenge of nav­ig­at­ing that maze is daunt­ing enough that some pro­spect­ive col­lege go­ers give up en­tirely. Oth­ers make mis­takes and wind up sign­ing up for fin­an­cing they don’t un­der­stand or passing up avail­able money. They might con­fuse loans with grants and be shocked on gradu­ation day when they are presen­ted with an IOU for tens of thou­sands of dol­lars.

When it comes to Pell Grants, Re­pub­lic­ans say the pro­cess is too com­plic­ated. Their solu­tion would re­quire stu­dents to ap­ply one time only for grants that could span six years and al­low stu­dents to use those grants whenev­er they want un­til the money runs out or they fin­ish their de­grees. “The idea is that here’s the amount of Pell Grant that you’re go­ing to be eli­gible for. You would be able to draw down on it as you needed it,” says Kline.

There are a lot of ques­tions about the pro­pos­al, which is de­lib­er­ately vague be­cause com­mit­tee mem­bers are still ne­go­ti­at­ing de­tails. Michelle Asha Cooper, pres­id­ent of the In­sti­tute for High­er Edu­ca­tion Policy, wor­ries that if all the Pell money — roughly $35,000, in today’s dol­lars — were to be­come avail­able at once, stu­dents would use it on high-priced tu­ition in the first year and then be un­able to fin­ish their stud­ies.

Cur­rently, stu­dents must fill out an ap­plic­a­tion each year for a fall and spring semester al­lot­ment. The max­im­um Pell Grant for the 2014-15 school year is $5,730, which can cov­er full tu­ition costs at some, but not all, pub­lic uni­versit­ies and com­munity col­leges. Of­ten, grantees are left short and must take out loans to cov­er the cost of books and fees. The Re­pub­lic­an pro­pos­al is in­ten­ded to let them be more flex­ible so they might not have to take out loans un­til later.

The pro­pos­al also could give in­cent­ives to stu­dents to fin­ish col­lege stud­ies early. They could use the flex­ible Pell Grant to pay for sum­mer courses, which they can­not do now.

There are ways to do that without ex­haust­ing all the grant money in one year. Last year, the Na­tion­al As­so­ci­ation of Stu­dent Fin­an­cial Aid Ad­min­is­trat­ors pro­posed a “Pell Well” where stu­dents could “draw” funds as needed, with some lim­its like pro­rated pay­ments if they didn’t take a full slate of classes. Those pay­ments would be avail­able un­til they gradu­ate or their six-year en­ti­tle­ments ran out.

Rick Hess, an edu­ca­tion schol­ar at the right-lean­ing Amer­ic­an En­ter­prise In­sti­tute, says the flex­ible Pell Grant is a good way for con­ser­vat­ives to think about high­er-edu­ca­tion be­ne­fits. “I like the idea that if you de­cide you want to give grants to people to go to col­lege, you give them what you’re go­ing to give them and it’s their re­spons­ib­il­ity to do it.”

The prob­lem, Hess says, is that if the stu­dent blows all the money be­fore ac­tu­ally get­ting a de­gree, he’s out of luck. As a coun­try, “we tend to be not very good at the ‘out of luck’ part,” he says. (Be­sides, giv­ing someone money not to get a de­gree is just bad policy.)

Politi­cians like Kline are look­ing at re­form­ing Pell Grants as a re­sponse to the pub­lic’s stick­er shock about $1 tril­lion in stu­dent debt and ever-rising tu­itions. The is­sue has cap­tured the at­ten­tion of un­abashed lib­er­als like Sens. Eliza­beth War­ren, D-Mass., and Tom Har­kin, D-Iowa, and tea-party darlings like Sen. Marco Ru­bio, R-Fla. Sen­ate col­leagues Mi­chael Ben­net, D-Colo., and Lamar Al­ex­an­der, R-Tenn., even teamed up on le­gis­la­tion to shrink the daunt­ing Free Ap­plic­a­tion for Fed­er­al Stu­dent Aid to just two ques­tions.

Ad­voc­ates are hope­ful that the at­ten­tion can trans­late in­to a real over­haul of the fin­an­cial aid pro­cess, even in a highly di­vis­ive Con­gress. The pub­lic con­ver­sa­tion alone could res­ult in a col­lege-go­ing stu­dent body that is sav­vi­er about its choices. “People will at least know what kinds of ques­tions they need to be think­ing about,” says IHEP Pres­id­ent Cooper. And if the gov­ern­ment-aid sys­tem ac­tu­ally be­comes sim­pler through a new law, so much the bet­ter.

Al­most two-thirds of high school stu­dents who didn’t go to col­lege said that the price of tu­ition was ma­jor factor in their de­cision, ac­cord­ing to IHEP. An­ec­dot­ally, stu­dents told sur­vey re­search­ers things like “I’m broke” or “I can’t af­ford it.” The sur­vey was con­duc­ted in 2006, well be­fore the fin­an­cial melt­down of 2008 and the sub­sequent squeeze on state budgets that caused an es­cal­a­tion in pub­lic-uni­versity tu­itions. House Re­pub­lic­ans cited the IHEP study in their policy primer, say­ing they want to make the fin­an­cial-aid ap­plic­a­tion pro­cess a lot sim­pler. Why do we need three types of fed­er­al loans when one will suf­fice? Why must a stu­dent re­apply for a Pell Grant every year and wait un­til the fall to get their money when they could be tak­ing sum­mer classes?

These ques­tions are mu­sic to the ears of col­lege-ac­cess ad­voc­ates, who have sought some of these changes for years. “I think it’s great that they laid that out there as a mark­er,” says Megan Mc­Cle­an, fed­er­al re­la­tions and policy dir­ect­or for NAS­FAA. 

Of course, there is a “but.”

“We sup­port the spir­it of sim­pli­fic­a­tion. Like all policy things, there are some things that we need to think through. There is so much right now that goes in­to the for­mula. There is a pos­sib­il­ity of things be­com­ing too simple,” Mc­Cle­an says. “How do we make sure the money’s really go­ing to the people it should be go­ing to?”

Ad­voc­ates are wary of Re­pub­lic­an calls to stream­line the sys­tem for fear that over­all fund­ing will be cut. For ex­ample, ad­voc­ates cite one wor­ri­some part in the GOP pa­per that comes un­der the head­ing “En­sur­ing the Long-Term Sta­bil­ity of the Pell Grant Pro­gram.” Re­pub­lic­ans say award in­creases and ex­pan­sions have been “reck­lessly ex­pan­ded” un­der Pres­id­ent Obama’s ad­min­is­tra­tion, and the pro­gram must be put back on “stable foot­ing.” That’s code for cut­backs in one form or an­oth­er.

Kline is pre­pared for such cri­ti­cisms, but he is also de­term­ined to move for­ward on the items that most parties can agree on. “Sim­pli­fic­a­tion and flex­ib­il­ity are things that we would like to see and I think there is bi­par­tis­an agree­ment on that so that’s the dir­ec­tion we’re mov­ing.”

That may mean the big idea of the six-year Pell Grant will fall by the way­side, but it also means oth­er smal­ler Re­pub­lic­an ideas will likely pep­per high­er-edu­ca­tion law. Hess views that as the best out­come. “High­er edu­ca­tion is a place where Re­pub­lic­ans have been com­pletely out of the game for a while. I think it’s great to see con­ser­vat­ives ac­tu­ally in­to the game.”

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