Money for Nothing? The Impact of Changes in the Pell Grant Program on Institutional Revenues and the Placement of Needy Students (original) (raw)
Related papers
For whom the Pell tolls: The response of university tuition to federal grants-in-aid
Economics of Education Review, 2007
The Pell grant program is the largest federal program for college students, with support to over three million students at more than six thousand institutions. A prominent question in public debate is whether Pell grants tend to be appropriated by universities through increases in tuition -consistent with what is known as the Bennett hypothesis. Based on a panel of 1554 colleges and universities from 1989 to 1996, we find little evidence of the Bennett hypothesis for in-state tuition for public universities. For private universities, though, increases in Pell grants appear to be matched nearly one for one by increases in list (and net) tuition. Results for outof-state tuition for public universities are similar to those for private universities, suggesting that they behave more like private ones in setting out-of-state tuition. Institutional responses in these latter cases appear at odds with federal grants-in-aid policy.
A Poison Pell for Public Colleges? Pell Grants and Funding for Public Colleges in the U. S
2016
This study links federal Pell grants to college students in the United States to the decades-long decline in state-local funding for public colleges. The effect is at least as significant as other explanations based on taxes, Medicaid, or K-12 funding. Estimates are obtained from multiple identification strategies, including a crossover, repeated-measures (RM) design—a powerful design particularly well suited to the Pell program. The results offer a compelling example of how federal funding can induce an unintended cascade of effects even when it is given to individuals, not as traditional inter-governmental grants.
Rethinking the Allocation of Pell Grants
1996
This analysis examines alternative ways to use the approximately 6billionnowspentannuallyonPellGrantstoproducehighermaximumawardsforlow−incomestudents.TheneedforsuchalternativesisbasedontherapidlydecliningvalueofthemaximumPellGrantasapercentageofcollegecosts.Atableoffers5−yearbaselineprojectionsunderthecurrentallocationformula.Thepaperthenevaluateseachofsevenalternativeallocationformulas;(1)"frontloading"theawardsorlimitingPellGrantstofirst−andsecond−yearstudentsonly;(2)exclusionofallstudentsattendingproprietaryinstitutions;(3)frontloadingplusexclusionofproprietarystudents;(4)targetingawardsonlower−incomestudentsandfamiliesbyraisingtheassessmentratesonincome;(5)exclusionofstudentsenrolledinlessthanone−yearprograms;(6)exclusionofstudentsenrolledinlessthantwo−yearprograms;and(7)eliminatingallawardssmallerthan6 billion now spent annually on Pell Grants to produce higher maximum awards for low-income students. The need for such alternatives is based on the rapidly declining value of the maximum Pell Grant as a percentage of college costs. A table offers 5-year baseline projections under the current allocation formula. The paper then evaluates each of seven alternative allocation formulas; (1) "frontloading" the awards or limiting Pell Grants to first-and second-year students only; (2) exclusion of all students attending proprietary institutions; (3) frontloading plus exclusion of proprietary students; (4) targeting awards on lower-income students and families by raising the assessment rates on income; (5) exclusion of students enrolled in less than one-year programs; (6) exclusion of students enrolled in less than two-year programs; and (7) eliminating all awards smaller than 6billionnowspentannuallyonPellGrantstoproducehighermaximumawardsforlow−incomestudents.TheneedforsuchalternativesisbasedontherapidlydecliningvalueofthemaximumPellGrantasapercentageofcollegecosts.Atableoffers5−yearbaselineprojectionsunderthecurrentallocationformula.Thepaperthenevaluateseachofsevenalternativeallocationformulas;(1)"frontloading"theawardsorlimitingPellGrantstofirst−andsecond−yearstudentsonly;(2)exclusionofallstudentsattendingproprietaryinstitutions;(3)frontloadingplusexclusionofproprietarystudents;(4)targetingawardsonlower−incomestudentsandfamiliesbyraisingtheassessmentratesonincome;(5)exclusionofstudentsenrolledinlessthanone−yearprograms;(6)exclusionofstudentsenrolledinlessthantwo−yearprograms;and(7)eliminatingallawardssmallerthan600. Tables compare the seven alternatives for cost savings, maximum grants possible, and changes in the distribution of grants among public, private, and proprietary institutions. Discussion highlights major differences and effects of each of these alternative!. The paper concludes that a case can be made for each of these options but all demonstrate that, within current budgetary limits, greater access can be achieved than the current allocation formula permits. (DB)
Pell Grant Versus Income Data in Postsecondary Research
Educational Researcher, 2019
Given growing disparities in college enrollment by household income, policymakers and researchers often are interested in understanding whether policies expand access for low-income students. In this brief, we highlight the limitations of a commonly available measure of low-income status—whether students receive a federal Pell grant—and compare it to new data on enrollment by income quintile to evaluate a recent policy effort within elite colleges aimed at expanding access. We demonstrate that Pell is a rough measure of low-income status and that without more detailed data on colleges’ economic diversity, policy evaluations focusing on existing Pell data will suffer from measurement error and potentially miss enrollment effects for moderate- and high-income students.
For Whom the Pell Tolls: Market Power, Tuition Discrimination, and the Bennett Hypothesis
SSRN Electronic Journal, 2003
Are federal Pell grants "appropriated" by universities through increases in tuitionconsistent with what is known as the Bennett hypothesis? Based on a panel of 71 universities from 1983 to 1996, we find little evidence of the Bennett hypothesis among either public or lower-ranked private universities. For top-ranked private universities, though, increases in Pell grants appear to be more than matched by increases in net tuition. The behavior most consistent with this result is price discrimination that is not purely redistributive from wealthier to needier students. "If anything, increases in financial aid in recent years have enabled colleges and universities blithely to raise their tuitions, confident that Federal loan subsidies would help cushion the increase."
2017
In this paper, we examine the effects of receiving a modest Pell Grant on financial aid packages, labor supply while in school, and academic outcomes for community college students. Using administrative data from one state, we compare community college students just above and below the expected family contribution (EFC) cutoff for receiving a Pell Grant. Between 2008 and 2010, students just below the cutoff qualified for an average of $500 in Pell Grants. We find that other financial aid adjusts in ways that vary by institution: students at schools that offer federal loans borrowed more if they just missed the Pell eligibility threshold, but at other schools, students who just missed the cutoff for Pell were compensated with higher state grants. Focusing on the loan-offering schools where students face a discontinuity in total grant aid, we find suggestive evidence that receiving a modest Pell Grant instead of additional loans leads students to reduce labor supply and increase enrol...
2017
In this paper, we examine the effects of receiving a modest Pell Grant on financial aid packages, labor supply while in school, and academic outcomes for community college students. Using administrative data from one state, we compare community college students just above and below the expected family contribution (EFC) cutoff for receiving a Pell Grant. Between 2008 and 2010, students just below the cutoff qualified for an average of $500 in Pell Grants. We find that other financial aid adjusts in ways that vary by institution: students at schools that offer federal loans borrowed more if they just missed the Pell eligibility threshold, but at other schools, students who just missed the cutoff for Pell were compensated with higher state grants. Focusing on the loan-offering schools where students face a discontinuity in total grant aid, we find suggestive evidence that receiving a modest Pell Grant instead of additional loans leads students to reduce labor supply and increase enrollment intensity. We also provide indirect evidence that students' initial enrollment choices are influenced by an offer of Pell Grants versus loans.
Journal of Student Financial Aid
Data from all 2010-2011 undergraduate students, who received a Pell Grant disbursement at Kentucky's two-year and four-year public institutions, were used to simulate the eligibility changes to the Pell Grant program in the Consolidated Appropriations Act of 2012 and from the termination of year-round Pell. Specifically, these changes: a) the number of semesters a student may receive a full-time Federal Pell Grant award reduced from 18 to 12, b) the income threshold for an automatic zero EFC reduced from 32,000to32,000 to 32,000to23,000, c) elimination of eligibility for students who would have received less than 10% of the maximum award, d) eligibility achieved based on passing an ability to benefit test or by completing six credit hours of postsecondary education, and e) the termination of year-round Pell affect students at two-year and four-year institutions differently. In general, more students at two-year institutions and racial minorities will be affected greatly by the Pell Grant changes. Opportunities and challenges for financial aid administrators are discussed in light of these changes and their subsequent affects.
Journal of Student Financial Aid
In examining national data on Federal Pell Grant eligibility in the National Postsecondary Student Aid Study (NPSAS), we were puzzled to discover that many students who appear to have eligible Expected Family Contributions (EFCs) do not receive the award. We use institutional data from a large public university to understand and enumerate changes from initial Free Application for Student Financial Aid (FAFSA) EFC to final Pell Grant EFC and explore why EFC changes occur. We determine that the nonreceipt of Pell Grant observed in NPSAS is likely due to NPSAS not reporting final Pell Grant EFCs. We examine how the verification process results in changes to EFC and describe how nearly half of students who experienced a change in EFC during the award year were not asked to verify. We also observe that selection for Quality Assurance verification and EFC changes varied based on students' demographics characteristics. The paper concludes with discussion of improving the verification process.