The Administration's Pell Grant Initiative

By Richard Vedder

I received a nice email yesterday afternoon from Sara Martinez Tucker, our capable Undersecretary of Education who oversees higher ed. She noted the President's budget, out Monday, will propose a fairly hefty increase in Pell Grants, with the maximum going immediately from $4,050 to $4,600, and up by smaller increments annually for several years. Politically, the Administration is bowing to the reality of a Democratic-controlled Congress, and is trying to be consistent with the recommendations of the Spellings Commission that it created (the recommendation to increase Pells was pushed strongly in the Commission by former North Carolina Governor Jim Hunt).

I have long argued that: 1) our federal financial aid system is exceedingly complex and dysfunctional and needs to be simplified, 2) that massive increases in federal financial aid in modern times have had unintended consequences, including accelerating tuition increases in some cases, and 3) that a voucher approach that builds on Pell Grants is the best vehicle on which to base any short-term reform, although a strong case can be made that the Feds should exit the financial assistance business altogether.

The Administration's plan does partly deal with the third point. Even there, however, the current system of giving money to colleges to administer grants is grossly inferior to giving vouchers directly to students and letting them select the college they want. The current system is a step towards a voucher, but does not give students full control. In my reply to Undersecretary Tucker, I made note of this fact and agreed with Bob Zemsky's comment in the Chronicle that the Spellings Commission did not really address dealing with the financial aid morass.

Sara has written back, promptly, in response to my comments, and apparently a similar one from Western Governors University's able Prez Bob Mendenhall: "watch this space." I take that to mean we will be hearing more from the Administration in the coming months, which I interpret very positively (the system cannot get much worse).

And I hark back to Charles Murray's marvelous Wall Street Journal article where he noted that success in college is strongly correlated with cognitive ability. We ought to be researching whether our past Pell Grants money to marginally qualified students has had any impact on student completion. Charles's article would suggest that the answer to that question may be "no." We want to give people educational opportunity, but we also have finite resources, and any policy towards pushing "greater access" should consider whether the incremental spending is promoting greater true academic attainment or is contributing to higher attrition from college than otherwise would be the case. Are we sending some students down the primrose path of disappointment in trying to show our generosity and support of equal educational opportunity? Stay tuned. This debate will be growing in the months and years ahead.