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Financial-Aid Experts Discuss Ways to Strengthen Pell Grants

Student financial-aid experts gathered at a forum at the U.S. Capitol Wednesday to discuss the need to make the 40-year-old federal program more efficient and the importance of providing academic and social supports for students to boost college completion.

The National Association of Student Financial Aid Administrators (NASFAA), a Washington-based nonprofit member organization of student financial-aid professionals, hosted The State of College Access 2012 Forum. As part of the event, NASFAA released an issue brief about the role of Pell Grants in access, persistence, and completion.

While participants agreed that protecting the maximum Pell Grant award of $5,550 in this year's federal budget was a win for higher education, some suggested significant changes should be considered to maintain the long-term viability of the burgeoning $41 billion program.

Sandy Baum, an independent higher education policy analyst and consultant, said that if the Pell Grant program was more efficient and effective, the argument to continue funding it would be stronger.

"We need to think creatively about options for the future, not at the last minute, but in advance," said Baum. "If the program collapses of its own weight, we have a huge problem."

Total expenditures of Pell Grants, in constant dollars, are six times as high today as in 1976, and the number of recipients is five times as high. But Baum noted this reflects more students, not larger grants. More than one-third of undergraduates are receiving Pell Grants today. The growth begs the need to review the program and think about how to best serve the different needs of the students going to college, said Baum.

She is working on a project with the College Board, funded by the Bill & Melinda Gates Foundation (which also provides support to EdWeek), to look in-depth at the Pell Grant program with recommendations expected to be out this fall. "We need to think bigger," said Baum, "Maybe there are other ways we can structure the program. I think it's time for us to ask those questions."

Among the ideas on the table being discussed:

Complexity - To make dollars more effective, let students know ahead of time what they could get, perhaps with a simple table to see how much they qualify for based on income. .

Tax benefits - In reviewing federal student aid, look also at how much subsidy is going to offset college costs with education tax credits for students at all income levels (25 percent of tax deductions benefit families making more than $100,000) and not just Pell Grants that help low- and moderate-income students.

Structure - Think carefully about whether the same criteria and regulations work well for 18-year-old students just out of high school and 30-year-olds looking for short-term job retraining.

Incentives - Find ways to encourage institutions not to just open the doors to college but to accelerate completion.

Savings accounts - Create a college-savings program for the children of low-income tax filers so families have a stake in college education. Consider linking the amount of Pell Grant available to how long families were considered low income.

This year was a roller-coaster for the higher education community with a series of proposals in Congress to cut the program. In the end, only minor eligibility changes were made.

NASFAA President Justin Draeger added, "It's vital that we discuss the future of the Pell Grant program and other college-access programs before we have another funding crisis like we had this year."

Also at the forum, David Feldman, chair of the economics department at the College of William and Mary, said the notion that student-aid subsidies drive up the cost of college is a misconception. He noted that students, families, and the federal government are paying a greater share of the cost of college as states continue to cut higher education spending.

While need-based grants, such as Pell can increase college access, the panelists emphasized, other factors, such as academic preparation and sociocultural factors can determine college aspiration and success.

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