As president of a public research university, one third of whose in-state students are Pell Grant recipients, I strongly oppose a provision in the proposed 2016 budget recently passed by Congress that would cap these grants for low-income students at 2015 levels for 10 years and make their funding discretionary rather than mandatory.
I oppose this legislation because I know the real human stories behind financial aid policy, stories of people like Miles Main, Mary Rowley and Antoine Williams. To learn their stories, watch this video:
And I oppose the legislation for reasons that are grounded in data.
The value of a college degree has never been greater. A 2014 Pew Research Center analysis found that college-educated Millennials aged 25 to 32 working full time earned on average $17,500 a year more than their counterparts with only a high school diploma, a gap that was much narrower for earlier generations. And a 2014 report from New York Federal Reserve Bank found that the wage premium for those with a four-year degree compared to those with just a high school diploma was well over $1 million over the length of the average career.
The Pell Grant program, launched in 1972, was created to ensure that the benefits of a college degree were available to all. While it's not perfect, the program has made clear progress toward achieving its goals. Nearly one million low income students received a Pell Grant to attend a four-year college in 2007. While their six-year graduation rates are lower than for college students as a whole -- at about 40 percent compared with 60 percent -- and should be improved, the program nonetheless benefits many Americans.
Pell Grants also benefit the economy. According to Anthony P. Carnevale, director of the Georgetown University Center on Education and the Workforce, our knowledge economy requires a 3.5 percent increase of college educated workers every year. Colleges and universities supply only a 1 percent increase. Constraining the Pell program would reduce the pool of college graduates, denying the economy the workforce it needs to keep growing.
Some critics fault federal financial aid programs like Pell for driving up the cost of college. Students with generous federal grants and low interest loans, the argument goes, provide a ready supply of cash that colleges are only too happy to absorb via tuition increases.
That claim ignores a central fact. One of the top drivers of rising tuition, after salaries and benefits, is the cost of institutional financial aid: the grants and scholarships institutions allocate from their own budgets to aid students and families, the vast majority of whom have financial need. At the University of Vermont, 25 percent of our general fund revenues go toward this kind of aid.
Most colleges use institutional resources to promote access. According to the College Board, institutional aid for grants and scholarships in 2013 reached $48.2 billion, about the same amount of grant aid the federal government contributes.
Colleges and universities are playing their part in making college accessible and affordable. But we can't do it alone. We need a strong partnership with the federal government, one where Pell awards are increased, not diminished in inflation-adjusted dollars, and extended to income levels that include the middle class, a group that is struggling to pay for college with no help from Washington.
Support of the Pell Grant program is critical to creating a positive future for our country. To enjoy that future, we must invest in the students of the present.