The Real Pell Grant Fail

Today in education failures: Apparently only 40 percent of Pell Grants recipients actually earn bachelor’s degrees. According to an article by Richard Vedder at the Chronicle of Higher Education:

based on statistical examination of the Pell Grant/graduation rate relationship for about 750 colleges and universities, aided by Chris Denhart and Jonathan Robe, I would “guesstimate” that roughly 40 percent of full-time, first-year students receiving Pell Grants graduate within six years (from four-year institutions). This is significantly lower than the graduation rate of non-Pell recipients, which appears to be closer to 60 to 65 percent

Looking at the four-year graduation rate, regression analysis (with several other variables introduced for control purposes) suggests that for every 1 percent of a student body receiving Pells, the graduation rate falls by roughly one-quarter of a percentage point.

The amount of students receiving Pell Grants is generally taken as proxy for the amount of low-income students at a college. Vedder suggests that there are two problems with this situation: “The first is that we have been spending of late well over $40-billion annually on a program with a huge failure rate—60 percent of four-year college participants never graduate—or at least within six years.” The second problem “is that the government does not systematically gather or publish the data (at least in any of the documents my colleagues and I read, and we look at a lot of data) on this very important statistic.”

Perhaps. I suggest that there’s a third problem. Some evidence indicates that the number one reason students don’t graduate from college is that they experience financial problems.

Realistically Pell grants, which provide a maximum $5,550 to low income students for the 2011-12 school year, don’t really come close to meeting the cost of college. The average total annual cost of attending a public university is $16,140.

The reason low-income students don’t finish college may be that that the maximum Pell Grant is too low; it’s simply too expensive for them to finish college.

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