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Canaries in the Coal Mine: The Debate over Pell Grant Eligibility

In case you missed it, the latest episode in the long-standing drama known as Pell Grant eligibility reached an anti-climactic conclusion in June. Although the Senate approved the $200 billion Innovation and Competition Act, ostensibly designed to counter China’s influence on trade and technology, it removed a “Workforce Pell” amendment that would have significantly expanded Pell Grant eligibility to include short-term programs.

While neither the first, nor likely the last, push to expand Pell Grant eligibility, this latest effort is an essential touchstone for a broader debate: can additional federal dollars for education lift more Americans out of poverty? Or, as critics worry, will new money attract predatory training providers and consign learners to dead-end, low-paying jobs?

Pell Grant Physics: Double, Expand, or Just Maintain?

With the pandemic resurgent, this is a debate worth having. What might Pell expansion mean for schools seeking to leverage federal aid to enroll more non-traditional learners?

Currently, 6.9 million students, or about 40% of all undergraduates, receive some kind of Pell Grant. Pell Grants effectively function as vouchers – they do not need to be repaid and are funneled directly to educational institutions.

In July 2021, a consortium of postsecondary advocacy groups, professional associations, and think tanks launched the #DoublePell lobbying effort, calling for raising the annual Pell award to a maximum of $13,000 from the current limit of $6,495. According to #DoublePell, this infusion of federal grants would catalyze enrollment and squash debt and be more than paid for by down-the-road gains in taxable income from a new crop of college graduates.

“Workforce Pell” would have extended Pell Grants to students enrolled in short-term, non-degree and noncredit programs. In brief, “Workforce Pell” would:

  • Reduce the clock-hour Pell eligibility threshold from 600 to 150 hours.
  • Extend funding to noncredit programs “articulated” with a credit-bearing program at accredited institutions.
  • Require programs to have operated for at least one year, and to provide evidence that graduates have had at least a 20% increase in income.
  • Provide disclosures to all prospective students, indicating costs, outcomes data, and projected earnings.
  • Require institutions to report demographic and financial data for both program completers and dropouts.

Arguments in favor of expanding Pell eligibility focus on income and access. Proponents of “Workforce Pell,” including the National Skills Coalition, Urban Institute, and the American Association of Community Colleges (AACC), argue that non-credit certificates are proven pathways toward increased income and motivation for degree attainment. Advocates believe that restricting access to Pell Grants deepens economic inequalities, penalizing women and some minority populations.

For example, the Urban Institute’s 2020 analysis of the most recent data provided by the U.S. Census Adult Training and Education Survey finds that 10% of American adults lack a degree and have a postsecondary “certificate” as their highest educational attainment, and that the majority (59%) of these certificates are noncredit. Completion rates compare favorably with associate degrees, the report concludes, and average earnings are decent.

About half of all these sub-bachelor’s certificates are in either health care or mechanical fields, and the third-most-common field is business or administration. Of these, two—health care and business and administration—disproportionally enroll women. Figure 1 shows enrollment by gender and program length.

 

Female Enrollment and Average Sub-Bachelor's Certificate Program Length in HoursFigure 1.

 

According to the Urban Institute’s analysis of federal data, women comprise 87% of those who complete sub-bachelor’s health care certificate programs, and 41% of these certificate holders reported program lengths of up to 479 hours. Similarly, for business administration programs, 78% of completers are women and 51% reported program length of less than 479 hours.

The authors of the Urban Institute report contend that expanded Pell access would encourage many more adults to enroll in such programs, boosting skills, aiding talent-starved industries and enhancing life chances for the most vulnerable. Proponents of an expanded Pell argue that lack of federal grants leads to greater levels of debt among already impoverished learners, as well as putting many off enrolling in the first place.

The argument opposed to the expansion of Pell centers on ensuring that learners, and by extension U.S. taxpayers, are protected from substandard and outright fraudulent providers of non-credit certificates. Several organizations vocally oppose the expansion of Pell Grant eligibility including The Brookings Institute, New America, the Third Way, and the Institute for College Access and Success (TICAS).

While these opponents acknowledge that increased availability of federal grants may result in short-term increases in earnings, and genuine career paths for some, they believe the risks of “Workforce Pell” would outweigh any potential benefits.

New America’s director of higher education policy, Amy Laitinen, has argued that reducing Pell Grant eligibility would “turbo-charge existing inequities in our higher ed system.” A July 2021 analysis by the Brookings Institute reported that 71% of non-credit certificate programs lasting less than 600 clock hours were provided by for-profit institutions, while only 24% were provided by public schools, down from 40% in 2010. Laitinen and others think expanded federal money would play to the excesses of for-profit providers and worry about the long-term career pay-off for most learners.

Absent the creation of enforceable consumer protection guardrails – judged unlikely after the “Gainful Employment” regulatory debacle of the past decade – opponents to expanding Pell Grant eligibility see more hazard than opportunity.

The Bottom Line

Current Pell Grant debates cut to the core of a fundamental question facing U.S. higher education: should the power and resources of the federal government be used to reverse structural economic inequalities, and if so, how?

This is not an abstract academic exercise; the ground has indeed shifted. Alternative providers and credentials are gaining greater relevance and viability, and are experimenting with novel financing (e.g., income-share agreements). Many employers are hungry for qualified applicants and are willing to invest in their own apprenticeship training programs. Is the market addressing the problem, and governments should steer clear?

Colleges and universities cannot afford to sit on the sidelines of these debates. Expanded Pell might help their enrollment but would also bring new competition. Leaving Pell alone will not do anything to arrest long-term enrollment decline at many community colleges and regional public and private four-year schools. The latest iteration of the Pell Grant eligibility debate may be over, but the issues of access, equity, and consumer protection remain unresolved and are certain to return to higher education’s front door.

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Howard Lurie

Eduventures Principal Analyst at ACT | NRCCUA
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