What Does a Pell Grant Buy?

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There’s an interesting piece in the latest issue of Democracy about Pell Grants and the state of higher education. Pell Grants, awards for higher education sponsored by the Department of Education, give money (actual money, not loans) to allow low-income students to go to college. But Pell is essentially a failure:

Students are borrowing at record levels and loan default rates are rising. More and more low-income students are getting priced out of higher education altogether. The numbers are stark: When Pell grants were named for the senator in 1980, a typical public four-year university cost $2,551 annually. Pell Grants provided $1,750, almost 70 percent of the total. Even private colleges cost only about $5,600 back then. Low-income students could matriculate with little fear of financial hardship, as Pell intended. Over the next three decades, Congress poured vast sums into the program, increasing annual funding from $2 billion to nearly $20 billion. Yet today, Pell Grants cover only 33 percent of the cost of attending a public university. Why? Because prices have increased nearly 500 percent since 1980. Average private college costs, meanwhile, rose to over $34,000 per year.

The article, by Kevin Carey of Education Sector (full disclosure: the Washington Monthly often works with Ed Sector and Carey) explains that now even when poor students do go to college, they don’t do very well there. Less than half of low-income students who start college, any sort of college, earn a degree.

Why is this? The trouble is, for the most part, Americans don’t really know. But by focusing too much on the finances of education, policymakers ignore the fact that it’s actually really hard to determine what all of that money buys. This happened because with the vast expansion of higher education (and federal money to support it) in the aftermath of World War II new schools:

Insisted that questions of quality, particularly as they relate to what students are taught and how much they learn, are nobody’s business but the institution’s own. This position was derived from the principle of academic freedom, a tremendously important and necessary idea when it comes to protecting controversial scholarship. Unfortunately, it was extended to the student side of the equation-colleges demanded freedom to teach as well or poorly as they pleased. Thus, any attempt by the government to inquire about academic matters was resisted at all costs.

So most people now make colleges choices based the murky concept of “reputation.” As Carey explains: “higher education has become a luxury good, the educational equivalent of a Prada shoe. These are unusually nice shoes, of course, just as Harvard is an unusually good university.” The trouble is that in America’s eagerness to avoid Payless, it’s terribly difficult to figure out what schools are equivalent of Dexter Shoes (reasonably priced, reasonable quality, appropriate for obtaining a professional job).

There are a number of institutions and programs designed to provide information about schools. The trouble is that, because higher education information is so unfashionable, and the higher ed lobby so powerful, information gathering programs are often weirdly misused.

The Monthly’s College Guide, like many other institutions, often focuses on the ruinous cost of higher education. But, as the Democracy article points out, cost is only part of the story of college. Considering there’s so much government money surrounding academia, it’s probably damn time to figure out where all of the money goes.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer