Can’t solve inequality—not a sufficient change to the squo and pulls necessary focus from community college and HBCUs

Over the past three months, some in the higher education community have launched a large, well-organized campaign to double the size of the federal Pell Grant for low-income college students. The is supported by a who’s who of college associations, universities, and college opportunity advocates, with a total of . In one sense, there is nothing surprising about this broad support for Pell Grants: increasing funding in this way is an easy way to signal college and university support for low-income students. But in another sense, the sudden emergence of this major campaign, right now, deserves a closer look, since the universities, not just the students, stand to benefit financially, and some of those now excited about Pell have not always considered it a priority. Some college leaders, in other words, may now be more enthusiastic about a Pell increase because they are concerned that other higher education investments on Democrats’ agenda will not send as much revenue their way. With the budget slated for approval, Congress and the Biden administration are prioritizing an equity agenda that features support for community colleges, HBCUs and other minority-serving institutions, and financial aid for . These investments are being proposed in the wake of an unprecedented push from the left about student debt, and in particular the racial impacts of student debt. Congress is poised to put a healthy portion of the $3.5 trillion (or whatever total amount ends up being negotiated) into higher education. Who will get the money? The momentum has been pointing toward community colleges and HBCUs. The Double Pell Grant push could shift the momentum, steering Congress in a direction that sounds like it benefits low-income students, but actually spreads the funds to a broader set of institutions where the benefits will end up being less targeted to needy students, and in many cases does not make college more affordable for such students. The Double Pell campaign puts supporters of HBCUs and community colleges in a tough spot. They can’t oppose the movement because Pell—a mainstay of college aid flowing to these schools—has always been a high priority. But working out the details of a national free-tuition community college plan—and an , if it gets traction—is going to be vexing. That makes the simplicity of a Pell Grant boost attractive in comparison. A larger Pell Grant, for example, doesn’t require any new formulas, state opt-in decisions, or matching funds. It’s a classic example of the worst kind of incrementalism, in which modest bump-ups of resources in one funding pipeline do nothing to change the underlying system of higher education finance. And if the nation truly wants to address equity concerns in higher education (and beyond), that system needs change. So while doubling the Pell Grant sounds dramatic and well-intentioned, it does too little to change the status quo, not least of which because it allows universities to claim a financial windfall without ensuring that needy students get more overall aid. An alternative Pell plan is needed, one that truly and more accurately directs whatever investment toward college equity and affordability comes out of the Build Back Better plan. It could be called the Pell Bonus: a premium on top of the Pell Grant at institutions that are actually using the money to reduce student debt, and that are serving students from low- and middle-income families. This commentary briefly reviews how Pell Grants work in practice right now, followed by some details about how a Pell Bonus proposal could be fashioned in service of targeted, more effective change. Pell Grants Don’t Necessarily Reduce Student Costs The Pell Grant program is popular with the public because it has been promoted—especially by private colleges—as money that “goes to the student” to help them afford higher education. It doesn’t really work that way, however. Pell Grant funds are paid directly to colleges, which include them in their pricing and financial aid strategie. Too often the Pell funds displace institution-given aid or tuition discounts, which means at the end of the day, the school has more revenue while the student’s costs are unaffected. When more money becomes available to the leaders of a nonprofit or public college, they essentially have two options for what to do with it. They can increase their investment in any of the college’s operations, such as reducing class size, providing more services to students, or improving facilities and equipment. Or they can pass the money along to students through scholarships or tuition waivers, reducing the amount that students may need to borrow or work to attend school. (For-profit schools have a third option: they can deliver more profits for owners and investors, which has caused . Government aid to those schools should not be delivered through vouchers such as Pell Grants and student loans, or the U.S. Department of Education should screen out any institutions that do not put most of these funds into instruction and student support.) Under the current structure of the Pell Grant program, colleges can use the nefarious science of to increase their capture of financial aid and use it for purposes other than reducing costs to the students whose enrollment delivered that aid. These colleges, knowing that the grant money is coming, invisibly reduce the amount of tuition discount or other aid they would have given these students, and instead use the “extra” funds for purposes other than reducing the student’s need to borrow or work. Another unfortunate truth is that state lawmakers, ever-strapped for budget funds, often will reduce their support of public institutions in response to the growth of federal grants. That seems to be one reason a previous era’s near doubling of the Pell Grant resulted in in low-income enrollment. In practice, very little about the Pell Grant actually results in a more affordable system for low-income students. Instead, the program simply provides colleges with more money, absent accountability. That is why, if the goal is to reduce debt among low-income students, making a major federal investment in community colleges instead makes more sense. One idea, based on a plan by President Obama in 2015, is to provide matching funds to states for two-year colleges that do not charge tuition at all, ensuring that grant aid such as Pell could be used to help address the cost of books, supplies, rent, child care, transportation and other expenses that low-income students often cannot afford without taking on crippling debt. That is the approach that the in its Build Back Better plan. Still, politically, the Pell Grant is more compelling than a complicated-formula matching grant to states. In fact, the battle between a support-for-institutions plan and a misleading but more compelling support-for-students plan is precisely the that led to the Pell Grant and student loan programs of today. Congress chose the bumper sticker “money to students” plan, in the form of grants and loans—money that has, in many cases, been gobbled up by well-endowed, high-tuition colleges and has undoubtedly contributed to state disinvestment in public higher education systems. In any event, attaching accountability to the Pell boost is the way that progressives can better direct Congress’s investment, whether it ends up focusing on community colleges and HBCUs or on Pell Grants. That accountability should focus on two metrics: diversity, and affordability.