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For most of its 45-year existence, the Pell Grant has been known as the flagship federal aid program for low-income and disadvantaged college students. But new data released by the National Center for Education Statistics show that Pell’s circles have rapidly expanded in recent years. Far from being a program exclusively for the disadvantaged, a majority of full-time college students from middle-class families now receive Pell Grants.
In 1996, just 28% of dependent, full-time undergraduates from families earning between $40,000 and $60,000 per year received Pell Grants. Now, 69% of these students in this same income group receive the grants. (All income figures are adjusted for inflation.)
In the span of two decades, a majority of dependent middle-class college students have come to receive Pell Grants. The picture is similar for independent college students. In 1996, just 5% of independent undergraduate students earning more than $50,000 received a Pell Grant. Now that share has swelled to 27%, over a quarter of this income group.
The structure of the Pell Grant program makes it inherently difficult to target to low-income students. For most students, Pell Grant awards are calculated by subtracting an “expected family contribution” (EFC) from the maximum Pell Grant, which is set by Congress. EFC goes up with a family’s income and wealth, so higher-income students receive smaller grants, all else being equal. Past a certain level of income and wealth, EFC exceeds the maximum grant; with narrow exceptions, students with such high EFCs are not eligible to receive Pell Grants.
However, when the maximum Pell Grant award rises, many middle- and high-income students become eligible for the program. Between 2008 and 2012, Congress increased the maximum grant by 22% in real terms. This act delivered larger grants to low-income students, but also brought plenty of middle-class students into the program. Indeed, most of the rise in middle-class usage of Pell Grants since 1996 took place during the four years between 2008 and 2012.
Some might argue that this “middle-class creep” is a good thing, since the cost of college has risen rapidly and middle-class students need financial help as well as their lower-income peers. That’s a defensible position.
The problem is that researchers and policymakers see receiving a Pell Grant as a binary indicator of disadvantage. Several proposals in Congress utilize Pell Grants to encourage colleges to serve more low-income students. Ideas range from requiring accreditors to judge colleges based on the share of Pell Grant students they enroll to offering bonus subsidies to colleges that enroll high numbers of Pell students. On the state level, some public colleges have begun offering free tuition to students receiving Pell Grants.
Journalists and researchers, too, often use the share of students receiving Pell Grants as a proxy for low-income students’ access to college. Going farther than Congressional proposals, some scholars even suggest requiring colleges to enroll a minimum percentage of Pell students.
Incorporating the Pell Grant into federal policy as a proxy for disadvantage could have serious unintended consequences. Facing incentives to enroll more Pell Grant students, colleges may concentrate on enrolling middle-class students rather than lower-income ones. Middle-class students can afford to pay higher tuition out of pocket, in addition to the Pell Grant they receive. Colleges would leap at the chance to enroll students who both satisfy an equitable-access requirement and pay higher tuition.
Ironically, proponents of incorporating Pell shares into federal and state policy may end up hurting the disadvantaged students they aim to help. It’s long past time to recognize this new reality: Pell Grants are a middle-class benefit.
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