Back when the Pell Scholarship was created by Congress in 1973 to help students from low-income families pay for higher education, it covered 80% of the cost of attending a public college or university. of four years. And that covered more than 40% of the cost of going to a private home.
Today, thanks to rising tuition fees and Pell Grants not keeping pace, they cover less than 30% of costs at a public university and less than 20% of costs at private institutions, according to a researcher. analysis I conducted using data from the College Board.
With this story in mind, President Joe Biden’s budget, which increases the maximum Pell Grant by $400 – from $6,495 to $6,895 – for the 2022-2023 school year, is expected to boost purchasing power. of the grant. But it still fails to restore that purchasing power to where it was when the Pell Grant was created nearly 50 years ago, a goal that many higher education teachers have advocated for.
I make this observation as a seasoned university administrator and as a researcher who has spent the past 25 years studying the factors that enable students to enter college and graduate.
Pell grants then and now
More than $26 million in Pell Grants were awarded to about 6.2 million students in the 2020-2021 school year, with the average recipient receiving just over $4,200.
The grants, originally called Basic Educational Opportunity Grants, were renamed in 1980 in honor of the late United States Senator Claiborne Pell, a Democrat from Rhode Island and an early champion of the grant.
In line with the purposes of the Higher Education Act, originally passed in 1965, the scholarships were designed to form the basis of college education funding for students from low- and middle-income families. They were also meant to be a mechanism to help close the gap between the rates at which these students attend college and graduate compared to their peers from wealthier families.
The idea was that with a Pell grant, a student could afford to pay the main elements of the cost of attending a public four-year institution without having to borrow a lot of money or work a lot of hours at a job, especially off-campus.
For students at private colleges, Pell grants would also cover a substantial portion of their tuition, but not to the same extent as public colleges, which generally cost less.
Loss of purchasing power
As tuition fees have risen, the size of Pell grants – which are subject to congressional approval – has not kept pace, leading to a decline in their purchasing power.
This erosion of the value of a Pell Grant has affected access to college in several ways. Poorer students have become more dependent on loans to finance their studies, as Pell covers less of the costs.
These poorer students are also more likely to enroll in a community college due to lower prices at two-year colleges. The job prospects after graduation for a student with a community college degree are not as good as those for a graduate with a bachelor’s degree, studies show. And the labor market returns of a community college degree are lower than those of a bachelor’s degree.
The Pell Grants have helped close the college access gap. While low-income students nearly doubled the rate at which they enrolled in college after graduating from high school — from 35% in 1975 to 67% in 2016 — high-income students also increased their university attendance rate.
While the poorest students have reached parity with their middle-income peers, both groups still lag behind the college attendance rates of students from wealthier families. So, although the Pell Grants have helped close some of the gap, students from high-income families still attend college at a rate 16 percentage points higher than poor students.
Increase the power of the Pell Grant
The $400 increase in the Pell Grant maximum is the largest since the $619 increase in 2009. However, with the price of college education continuing to rise, this increase will bring Pell’s purchasing power to just a little more than 30% of the cost of a college education. It’s a small step in the right direction, but not enough to help students from low-income families.
Many higher education organizations, including the American Council on Education, the National Association of Student Financial Aid Administrators and the National Association of Independent Colleges and Universities, have called for doubling the Pell Grant. It would be an important step for Pell Grants to cover as many students today as they did a generation or two ago.
College Board data shows that a Pell Grant of $13,000 — about double this year’s maximum of $6,495 — would cover 57% of college costs at a public institution. However, this remains well below what it covered in the 1970s. Without increased support, poorer students will continue to lag behind their wealthier peers in achieving the American dream of a college education.
[Over 150,000 readers rely on The Conversation’s newsletters to understand the world. Sign up today.]