Making college more affordable for poor Americans
Obama's proposal to permanently fund Pell Grants will help the US regain global competitiveness.
"Entitlement" is a scary word in these days of hyper-deficits, because it locks the government into spending.
In this case, the White House wants to change a longstanding program – Pell Grants – from one that is now subject to the vagaries of congressional approval each year to one that is permanently funded.
Pells help millions of low-income Americans. Last year, 5.5 million students received these grants, and 98 percent of them had family incomes totaling less than $50,000.
Obama proposes paying for this come-rain-or-come-shine funding by no longer subsidizing the vast private business of student loans (instead the federal government would directly make those loans).
The Congressional Budget Office estimates this move can save $94 billion over 10 years – just about covering the increased cost of a Pell entitlement. But estimates can be fallible and Congress will need to impose firm budget restraints.
"Commitment" is a less scary word than entitlement, and that's what the country needs when it comes to higher education for its citizens who are less well off.
The US is falling behind in the global race to a college-educated – and thus more competitive – society. In 1998, the share of American 25-to-34-year-olds holding a bachelor's degree was rising, and the US was tied for first place with South Korea. Since 2000, that share has slipped, with America falling to seventh place, behind Korea and Denmark.
The US also gets dismal marks in graduating students who enter college, ranking 26th among the world's democratic market economies that belong to the Organization for Economic Cooperation and Development.
Obama wants America to get back on top with college graduates by 2020. To do that, it needs to improve K-12 education and graduation rates (a job that No Child Left Behind is helping to tackle).
But it also needs to open up access to college by lowering the financial burden on low-income students, who now account for 44 percent of the K-12 population (as measured by kids who get free or reduced-price school lunches).
The grant's purchasing power has shriveled over the decades. In 1975-76, the maximum grant covered 84 percent of the cost of a four-year public college (and 38 percent of the cost of attending a four-year private college). This academic year, the maximum grant of $4,731 covers 33 percent and 14 percent of those costs, according to an April article in the Chronicle of Higher Education.
Much of this is due to an explosion in tuition costs, but part of it is because the Pell program can go through years of drought due to congressional budget pressures or politics.
The annual reauthorization makes the Pell unreliable for needy families trying to budget their way through the college process. Obama proposes to fix that by tying Pells to inflation (the administration wisely chose not to link them to tuition increases, which would simply encourage colleges to charge more).
But families should realize an inflation peg won't restore the Pell its early purchasing prowess. To do that, this year's maximum grant would have to almost triple – a nonstarter in this era of high deficits.
Neither will reliable Pell Grants necessarily translate into higher degree completion rates. The disparity in bachelor-degree attainment between high- and low-income students has grown even as more Pell money has become available – indicating that students from disadvantaged households need more academic support, and not just more tuition help.
The hard reality is that the federal government can't solve the affordability problem by itself, nor should it be expected to. States must reverse their 30-year slide in spending on public higher ed, which has led to tuition increases. And colleges must emphasize thrift and need-based aid.
Whether or not Obama gets his new entitlement, the demands of the global economy are forcing America to consider whether higher ed should become a public necessity – as high school is. A college degree is now the earnings-driver that a high school diploma once was.
Poor American students cannot be left by the wayside. They need dependable college aid from all quarters – not just from the federal government.