Obama Wants To Permanently Link Pell Grants To Inflation

The proposal would keep the 44-year-old financial aid program from getting too far off from the cost of college.

President Barack Obama would be tied to one of the nation's main college financial programs long after he leaves office if Congress approves a request in his last budget proposal.

In Tuesday's funding request, Obama asked Congress to permanently tie Pell Grant awards to inflation. Pell Grants are given to low-income college students, and unlike student loans, do not need to be paid back. It's potentially the last effort by Obama to boost Pell Grants, which during his presidency fell to a historic low in the proportion of cost of attendance they covered.

Pell Grants have been tied to inflation since 2013, but that provision expires after 2017. Obama wants to index the Pell Grant to inflation indefinitely with mandatory funding, which the administration anticipates will cost $33 billion over 10 years.

Without indexing the maximum Pell Grant award to inflation, Congress would have to keep coming back to pick out the precise amount it is willing to make available to eligible students.

Obama's request is likely to meet rejection from Republicans in charge of the House and Senate, who have proposed scrapping the inflation adjustment and instead freezing the maximum amount that can be given to a student in Pell.

The maximum a student can get for the 2016-17 award year, according to the Education Department, is $5,815. Obama also proposed a $300 bonus for Pell recipients who take at least 15 credits per term, which the administration hopes would encourage students to graduate on time and thus carry less debt.

The maximum Pell Grant covers less than a third of the in-state cost of attending a public four-year college, according to The Institute for College Access & Success, a nonprofit consumer group. In 1980, the maximum Pell Grant covered three-fourths of the cost to get a degree at a public college.

Still, TICAS President Lauren Asher called Obama's proposal an "important step" to strengthening the Pell Grant program. TICAS also praised Obama for calling for a reinstatement of the year-round Pell to allow grant recipients to have summer classes covered.

Higher education groups are hoping people don't write off Obama's proposals just because he's on his way out of office.

The Association of Public and Land‑grant Universities, which represents a number of state colleges, said the budget request "should not be immediately dismissed simply because there will be a new occupant at 1600 Pennsylvania a year from now," nor should Congress ignore it because it may not finish reauthorization of the nation's main higher education law this year.

"Year-round Pell grants help students graduate faster, with less debt, and join the workforce sooner -- all of which contributes to student success and a healthy economy," said APLU President Peter McPherson in a statement Tuesday. "Combined with full funding of the Pell grant program and indexing future increases to the rate of inflation, the president's budget proposal seeks to broaden access and accelerate completion. These are shared goals that should be immune from party politics."

The decline in the Pell Grant's strength is not solely because Congress has not increased the maximum award to keep up with the growth of college costs. States controlled by both political parties continuously cut support for public universities in the past two decades, and the schools in turn raised tuition to try to make up the difference.

While some research suggests a correlation between state budget cuts and rising tuition, and other studies say colleges raise prices precisely because of the availability of financial aid, the cost of room and board, books and meal plans often is larger than tuition at public universities.

A report released last week by the U.S. Public Interest Research Group noted that a survey of current students found 30 percent had used financial aid to pay for their textbooks, and on average spent around $600 per academic year. According to the report, the price of textbooks grew four times faster than inflation in the past decade.

Another proposal floated by liberals in the past has been to make Pell mandatory, noted Robyn Hiestand, a former Senate Budget Committee staff member now at Ed Trust. Instead of having Pell subject to the discretionary budget process as it currently is, Hiestand said, making it mandatory would put Pell on "autopilot" for increases, similar to Social Security, Medicare or Medicaid.

Inflation adjustment for Pell is the "middle to left ground" of making the program mandatory, Hiestand said.


Tyler Kingkade covers higher education and is based in New York. You can reach him at tyler.kingkade@huffingtonpost.com, or find him on Twitter: @tylerkingkade.

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