College Completion or College Access?

The latest trend in public university financing is to give colleges funding based on performance, generally the graduation rate. While different states are proposing slightly different policies, the consensus seems to be that some performance measures are useful for encouraging colleges to educate students well.

Some advocates recommend focusing the Pell Grant program, which provides grants to low-income students to attend college, on completion. According to a recent study by Mark Kantrowitz, founder of finaid.org and an expert in college finances, however, the focus on college “completion” will likely reduce access to college for many poor students. As he writes:

This paper evaluates the potential impact of proposals to refocus the Pell Grant program on college completion instead of college access, such as proposals to establish a minimum graduation rate threshold on institutional Pell Grant eligibility.

What did he discover? It’s not very encouraging.

Establishing a minimum graduation rate threshold on institutional Pell Grant eligibility will shift significant amounts of funding from community colleges to 4-year colleges. Regardless of the graduation rate threshold, community colleges are always hit the hardest.

A 20% minimum graduation rate threshold on institutional Pell Grant eligibility would cut overall Pell Grant funding at community colleges by more than $5 billion. While 4-year for-profit colleges would also lose nearly $1 billion, the for-profit sector as a whole would experience a net gain of more than $500 million in Pell Grant funding.

Now, granted, this is not the final word on the completion-based Pell Grant proposal. Kantrowitz’s paper appears to have assumed no changes in the completion rate. If there is a 20 percent graduation rate threshold on Pell Grants, students who attend an institution with an 18 percent graduation rate will lose Pell Grant funding. This represents a loss of Pell Grant money, for sure, but those Pell Grants were being used to finance education at a pretty low performing school. Complains along this line (“ you’re hurting poor students!”) were commonly issued by administrators at for-profit colleges when the Department of Education issued new rules for such colleges last year.

But the reason to institute the graduation rate eligibility rule is to encourage colleges to do a better job graduating students. It’s possible new rule about Pell grants could encourage colleges to work a little better. This would, in theory, reduce the number of colleges (and students) who could be cut off from federal financial aid.

Still, Kantrowitz has a good point. Low-income people are the highest-risk college students. They are historically less likely to graduate from any colleges at all.

Reducing the amount of money they can receive in order to go to college is sort of like reducing the amount of Medicaid available to poor people because they have chronic illnesses. Of course we’d like people to be healthier, but a higher rate of chronic illnesses is a characteristic of the people who qualify for the program. The need for people to be able to address health problems is precisely why the program to exist.

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