As Stephen Burd of Education Sector writes in a recent report, the federal student aid programs initially focused on providing resources to those who would not be able to attend college without the help. This has changed over time to a point where government funds increasingly subsidize higher education for upper-middle income families who are more able to afford sending their children to college without the help.
For those interested in this topic, one good place to find more information is the Education Sector’s new report, “Moving On Up: How Tuition Tax Breaks Increasingly Favor the Upper-Middle Class.” The report recommends that instead of making further cuts to Pell eligibility, reducing grant amounts, or eliminating interest subsidies for student loans, Congress should allow the American Opportunity Tax Credit to expire at the end of this year, eliminate all of the other tuition tax breaks and use the savings to keep the Pell grant program alive and sustainable.
This is one of a number of new ideas floating around to help solve the “Pell grant problem.” The Education Sector also sponsored a forum on April 11 to discuss these issues.
The Pell grant program has many benefits, including that it does a good job of targeting needy students. According to the Education Sector, in the 2010-11 academic year, approximately 74 percent of the nearly 9 million Pell Grant recipients had family incomes of $30,000 or less.
The problem is that the cost of keeping the grants at current levels keeps growing. And stagnant grants fail to keep up with the increasing costs of college.
The Obama Administration has made it a priority to support the Pell program, but temporary funding solutions only go so far. The hope is that policymakers and advocates can come up with creative solutions so that targeted aid for financially needy students can survive.