Pell Funding: Is it Out of Control-- and Who Does it Support?

Catching up on my reading from the last few weeks and want to draw your attention to this bit of reporting from Inside Higher Ed.

Key lessons here:
(1) Pell spending leveled off in the last year.
(2) A very sizable fraction of Pell dollars are still going to for-profit institutions, but this has declined a bit in the last year.
(3) We could cut total Pell spending by $15 billion dollars (almost 45%) simply by deciding that public dollars cannot be spent at for-profit institutions.  This would make Pell policy consistent with the policies of most state grant programs.

The Bill and Melinda Gates Foundation is spending $3.3 million on efforts to "re-imagine aid design and delivery." I'm hoping they will revisit the decades-old decision to offer aid through a voucher system that rests on the premise that maximizing choices in an open market will promote the well-being of all students and the national interest in an educated citizenry.

But absent that, let's hope they push to create additional charts like these, including one that shows how much debt Pell recipients had to accrue in order to use their Pells at these institutions. In other words, let's get a sense of which states and institutions are matching this federal investment-- and which ones require students to make the match.

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Making the Pell Grant Memorable

In a new policy brief just released by the Scholars Strategy Network at Harvard University, I make the case that the emotional meanings of financial aid can and should be enhanced to promote student success.  Sociologists and psychologists have long known that money has social value and that this can be increased through social connections.  The creators of the GI Bill understood this and took advantage of it by ensuring all recipients understood where funding for that program came from and what it meant. The same must now be done for the federal Pell Grant.  In fact, it could be done for all grant programs.  Governors, mayors, legislators, and yes, presidents, should get involved in conveying a strong, supportive message to the millions of needy yet promising students struggling every day to make it through college.

PS. Just got the following response on Twitter.

@saragoldrickrab TRUTH. as #Pell Recipient, I had no idea why I received 3K for my education.. just thankful w. no one to thank
— Dan S. (@destatter) August 7, 2012

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Stop Subsidizing the Upper Middle-Class

Today Stephen Burd from Education Sector released a provocative new report that fully supports my contention (and that many others including Sandy Baum, Mike McPherson, Rick Kahlenberg) that we should stop subsidizing the upper middle-class with tax credits for college, and start focusing federal financial aid on those who need it most: Pell recipients.

Every time I've publicly discussed this idea I've been attacked as not caring about the middle-class.  This is a red herring-- suggesting that scarce dollars should be targeted to those who most need and will most benefit from them is simply good policy making. It's not about "who cares about whom."  As I pointed out following Obama's latest speech in Michigan, tax credits are demonstrably ineffective at their goals.  Burd calls a spade a spade when he adds, "Notably, while policymakers continue to tout the tuition tax breaks as a middle-class benefit, the introduction of the AOTC led to significant reductions in the share of the overall benefits going to families making between $25,000 and $75,000."

As a result, of the $55 billion distributed in college tax credits between 2010-2014, most will go to families earning over $100,000.  Tax credits don't make or break their children's decisions about attending or college, and are unlikely to even affect where they attend or how long they take to finish.  Instead they operate as a sort of "reward" to the family for having a college-bound child, and a little "apology" for the high costs. Of course these are nice things for the government to do for families, but since they don't change student outcomes, they simply aren't necessary.  Well, mostly.  The one caveat is that they may incur some political support for aid programs generally, a benefit that accrues to all recipients.  But that's very hard to demonstrate, and probably isn't worth their high cost.

Let's hope that Congress is listening, and stops attacking the Pell program as inflated and unbearable. What's clearly not needed are these tax credits.  Enough already.

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Focus on Pell

The National Association of Independent Colleges and Universities has released a new report highlighting the use of federal student financial aid by states and congressional districts.  It is fairly obviously intended to make the point that campus-based aid-- which President Obama is trying to leverage to hold colleges and universities responsible for rising tuition and fees-- is a tiny amount of money.  I think it does that quite effectively. But what it also highlights is how important the federal Pell Grant is to state and local economies.


Let's take Wisconsin, for example.  In 2010-2011, just over 130,000 Wisconsin students received Pell Grants, valued at over $454 million. In contrast, campus-based programs (the SEOG and work-study) distributed funds to just over 35,000 students to the tune of about $34 million.


The contribution of federal student aid to congressional districts is sizable, but the relative contribution of campus-based programs is generally small. For example, in Paul Ryan's district, the Pell Grant contributes $36 million, while campus-based programs add just $2 million.  In Sean Duffy's district, the Pell contributes $45 million, and campus-based programs barely $3.2 million.  Of course, where there are more colleges and universities, districts benefit much more from campus-based programs.  Tammy Baldwin's district (which includes UW-Madison), receives $104 million from Pell, and just under $10 million from campus-based programs.


The variation in the contribution of campus-based aid dollars to economies in congressional districts illustrates the challenges Obama faces in getting his proposal passed.  In contrast, the widespread distribution of Pell dollars throughout congressional districts shows us why, generally speaking, the Pell is likely to survive for quite some time.  It also makes one wonder why Congress doesn't do more to focus on Pell, and even increase spending, especially given that Pell dollars clearly contribute to state economies-- both directly, and indirectly via increased human capital. 

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NEW EXPERIMENTAL STUDY SUGGESTS FINANCIAL AID ENHANCES COLLEGE SUCCESS AMONG THE MOST UNLIKELY GRADUATES

The following is a press release issued by UW-Madison this morning

Results from an ongoing random assignment study of a private grant program in Wisconsin indicate that low-income students who receive Pell Grants and are unlikely to finish college get a sizeable boost in college persistence from additional financial aid. The findings suggest that directing aid to serve the neediest students may be the most equitable and cost-effective approach.

Researchers with the Wisconsin Scholars Longitudinal Study (WSLS) at the University of Wisconsin–Madison have been examining the impact of the Fund for Wisconsin Scholars (FFWS) need-based grant program on the educational attainment of its recipients since 2008. FFWS provides $3,500 per year to full-time, federal Pell Grant recipients enrolled at University of Wisconsin System institutions. WSLS researchers have collected survey and interview data on 1,500 students, including 600 grant recipients and a random sample of 900 eligible non-recipients who serve as a control group.

“Our findings suggest that making college more affordable for students who were initially unlikely to succeed in college increased their college persistence rates over the first three years of college by about 17 percentage points,” says Sara Goldrick-Rab, WSLS co-director and associate professor of educational policy studies and sociology.

However, since financial aid programs usually do not explicitly target this particular group of students, prior research has found that the average effects of need-based grants are often modest. “It’s common to focus only on the average effects of financial aid programs, but it’s clear that often policies work better for some people than others,” says Goldrick-Rab. “In this case, the Wisconsin grant really helped some students, didn’t help others, and may even have had adverse consequences for another group.”

While policy discussions about targeting financial aid often focus on financial need, the WSLS researchers also considered challenges faced by first-generation students and those with inadequate academic preparation. According to the study, students without college-educated parents and those with lower test scores were initially much less likely to persist in college, while students with high test scores and whose parents held bachelor’s degrees began with a high probability of finishing. The effects of the additional financial aid provided by the Wisconsin grant were very different for those two groups.

Initial findings indicate the program has a moderate positive impact, on average, on the educational attainment of grant recipients. “Enrollment rates didn’t improve much over three years. But the good news is that some students who were awarded the grant were 28 percent more likely to finish 60 credits over two years, increasing the chances that they will earn a bachelor’s degree on time,” says Doug Harris, WSLS co-director and associate professor of educational policy studies and public affairs.

Given the WSLS is the first random assignment study of a program with a similar structure to the federal Pell Grant, it may have important implications for that program, one of the nation’s largest in the education sector. According to Michael McPherson, President of the Spencer Foundation and noted scholar of higher education policy, “This study is the result of an extraordinary opportunity to bring high-quality experimental research to a vitally important question: the effect of changes in need-based grant aid on outcomes for students already enrolled in college."

Goldrick-Rab, Harris, and co-authors James Benson and Robert Kelchen present and discuss additional findings in a working paper issued by the Institute for Research on Poverty entitled “Conditional Cash Transfers and College Persistence: Evidence from a Randomized Need-Based Grant Program.” It can be downloaded, along with an executive summary, here.

The authors will discuss their results at 8 a.m. on Friday, July 8 in room 159 of the Education Building of the University of Wisconsin-Madison as part of a WSLS-sponsored conference entitled “Affordability and College Attainment in Wisconsin Public Higher Education.” More information is available here.

The WSLS is a collaborative effort among the University of Wisconsin System, the Wisconsin Technical College System, and the Wisconsin Higher Educational Aids Board. The study is also supported by UW-Madison's Wisconsin Center for Educational Research, Wisconsin Center for the Advancement of Postsecondary Education, and Institute for Research on Poverty. The Bill and Melinda Gates Foundation, the William T. Grant Foundation, and the Spencer Foundation provided funding for the research.

**
For more on this story please see coverage in Inside Higher Ed and the Chronicle of Higher Education, as well as the Wisconsin State Journal

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Making Our Investments Count

In a few weeks my research team will release findings from our ongoing study of need-based financial aid, as we host a conference on Affordability and Attainment in Wisconsin Public Higher Education. Preparing for this event has given me the chance to think more about the things colleges and universities might do to maximize the substantial investments federal and state governments--and taxpayers--make in college students.

In particular, I propose that institutions begin to leverage their existing resources-- namely, their faculty-- to support the neediest students, those who enter with a low probability of success. While some might argue those students simply shouldn't be admitted, I take a different stance: given the labor market returns to college degrees and the widespread ambitions for college, it's incumbent upon higher education institutions to get "student-ready" -- rather than simply demanding that students get "college-ready."

I hope to begin writing about this concept of "student-ready" colleges from time to time over the coming months, but let's start with two ideas for how it could work.

(1) The Chronicle of Higher Education today highlights a program that assigned retired faculty to mentor first-generation students. Love this-- it's a win-win for all involved. Students without college-educated parents gain the benefits of having a college-educated "grandparent" of sorts who has not only attended but succeeded in college and worked at one!

(2) Here's an idea of my own. Policymakers should experiment with a new program to provide colleges and universities with incentives to place Pell Grant recipients in contact with faculty. Student-faculty interactions have been shown to enhance retention rates, and they are less common among low-income, first-generation students. A work-study type program could be a starting approach, but typical work-study jobs are located in cafeterias and libraries where students cannot form new connections with their educators. This approach should enhance the effectiveness of financial aid by supplementing it with increased faculty interaction. The federal government could begin with a trial effort using funds from the Trade Adjustment Assistance Act. The effort should be rigorously evaluated and used to inform future revisions of financial aid programs.

For sure, many faculty are overworked as it is. These kinds of things won't work everywhere and under all conditions. But let's say we tried them at four-year universities first. I'm willing to bet that even with uneven quality of mentoring, the effects on some students would be large enough as to raise persistence rates. The mentors will also benefit, and perhaps become advocates for these students and the programs that serve them. Student contact reminds us why we got into this biz in the first place, energizes us, and grounds us. We should be urged and rewarded for focusing that contact where it's most needed.

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Increasing % Pell-- What Does it Tell Us?

Over the last several years, UW-Madison has increased its tuition at a higher rate than its System peers, thanks to the Madison Initiative for Undergraduates. That shift has not been accompanied by a decline in the percent of students receiving Pell Grants--in fact there's been a 5.5 percent increase in % Pell since 2000. Some are saying that this means that low-income students have been "held harmless" from the rising tuition, and that further increases would likely not lead to diminished economic diversity on campus. Furthermore, we are told, we can look to the outreach campaigns of institutions like UVA and UNC-Chapel Hill (home to Access UVA and the Carolina Covenant respectively) for models of anti-"sticker shock" programs that "work."

These claims are terrific examples of why it's a bad idea to make causal claims based on correlational data. If you want to make those statements, you can look to those examples and find support for your agenda. But you shouldn't.

In fact, the increase in the percent Pell at UW-Madison over the last few years is consistent with increases in % Pell at many colleges and universities nationwide over that time period. The cause lies not in successful outreach campaigns, or the failure of tuition increases to inhibit student behavior, but mainly in the recession. The recession had two relevant effects: First, many people were laid off-- and thus saw a temporary loss of income. Thus, students from families that in 2007 were not Pell eligible found themselves eligible for the Pell in 2008. The Pell is based on current and not long-term disadvantage. So an increase in % Pell doesn't mean you coaxed "new" low-income students into attending Madison or did a better job retaining those you already enrolled, but rather that a greater proportion of those who were already UW-bound (or already enrolled) now found themselves eligible for the additional help. Second, the Pell reduced the number of jobs available to students not enrolled in college--thus lowering the opportunity costs associated with college (e.g. foregone earnings). This could have independently increased both enrollment and persistence.

Furthermore, during the same time period, as part of the legislation that increased the maximum Pell the federal government also increased the family income (AGI) a student could have and qualify for the Pell-- from $20,000 to $30,000. Thus, a whole bunch more people became Pell-eligible during the period in which the MIU was implemented. And, the maximum Pell was increased-- possibly helping to offset the increase in tuition.

Thus, it should abundantly clear that it would be incorrect to state that the increasing % Pell at UW-Madison over the last several years is evidence that tuition increases do not inhibit enrollment of low-income students and/or that additional investments in need-based financial aid hold students harmless.

Same goes for the "success" of programs like the Carolina Covenant. Don't get me wrong-- the program seems great, and feels great, and the leadership is great. And for sure, the program's data looks nice-- they've seen an uptick in the representation of Pell recipients on campus and increased retention over time. As an evaluation they show better outcomes than prior cohorts of students. But as compelling as those numbers seem to be, they cannot be interpreted as evidence that these changes are attributable to the program itself-- and that's where the burden of proof lies. Indiana saw increases in college enrollment among the children of low-income families when its 21st Century Scholars Program was implemented, but reforms to the k-12 system were made at the same time, and the economy was booming. The program "effects" may have been little more than happy coincidence. We cannot rely on the potential for such happy coincidences when crafting new policies and making decisions about affordability.

It's time to get honest about what data can and cannot tell us. I've heard too many claims around here that it can tell us whatever we want. While that's undoubtedly partially true under the best of circumstances, it is especially true when we take no steps to collect data systematically and use sophisticated tools when analyzing it. If we were really committed to holding students harmless from tuition increases, we'd have commissioned an external evaluation (external= not done by institutional researchers) and made the data available for analysis. There are plenty of talented folks on campus who know how to do this work-- why not ask them to take a look at what happened under MIU?

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Stand Up for SAFRA

It's all about the bankers-- again. As I've said in this blog numerous times, the Student Aid and Fiscal Responsibility Act is poised to dispense critical aid to low-income college students and the colleges they attend-- if the lending industry doesn't kill it first.

The savings that would result from a move to direct lending are substantial. Money would go directly to the neediest college students and to community colleges, a sector that is swamped and struggling in this recession. This investment in human capital is in so many ways a no-brainer-- it'll generate a large return, benefit folks in nearly every community in the country, and support the American dream.

Of course, the bankers will have none of it. In the current system they draw profits on the backs of students, lending them money and selling those loans to the government. They are so eager to hold onto those profits that they argue that the status quo is actually good for students. Disgusting, but not surprising. This is how the power elite maintains its position.

What's terribly sad is that some Democrats from states with pathetically low college attainment rates are actually buying into this hooey, giving credence to the banks' arguments that there are ways to save money while preserving their profits.

Senators Thomas R. Carper of Delaware, Blanche Lincoln of Arkansas, Ben Nelson of Nebraska, Bill Nelson of Florida, Mark Warner of Virginia and Jim Webb of Virginia ought to be ashamed of themselves. Just look at the state of their higher education systems:

• Delaware ranks last in the nation in community college completion rates--just 10.8% of those who start at a two-year college finish an associates degree in 3 years.
• Nebraska's commitment to low-income students is pathetic--for every dollar in federal Pell Grant aid to students, the state spends only 19 cents.
• Arkansas has one of the largest black/white gaps in college completion in the country (16 percentage points)
  
• Florida doesn't make college affordable--the state's poor and working-class families must devote 24% of their income, even after aid, to pay for costs at public four-year colleges.
• Virginia is a place of great inequity--just 29% of black young adults are enrolled in college, compared to 42% of whites.

The children in these states deserve the support for an affordable higher education that SAFRA will provide. Their leaders should (quickly) stop stalling, develop backbones, and stand up to the banking industry.

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