Rethinking Pell Grants. James Jacobs Macomb Community College April 11, 2014

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1 Rethinking Pell Grants James Jacobs Macomb Community College April 11, 2014

2 Number of Pell Recipients, Total Inflation-Adjusted Expenditures, and Maximum and Average Pell Grant Relative to the Level, to SOURCE: The College Board, Trends in Student Aid 2013, Figure 13A.! For detailed data, see: trends.collegeboard.org. Trends in College Pricing 2013

3 Number of Pell Recipients, Total Inflation-Adjusted Expenditures, and Maximum and Average Pell Grant Relative to the Level, to SOURCE: The College Board, Trends in Student Aid 2013, Figure 13A.! For detailed data, see: trends.collegeboard.org. Trends in College Pricing 2013

4 Student Financial Aid As A National Issue Ø About 42% of all students (53% of full-time students) borrow each year Ø About 18% of community college students (24% of full-time students) borrow each year Ø 39% of community college completers in had borrowed (62% all sectors, 87% for-profit)

5 Changes Within the Community Colleges Ø Student financial aid - a major source of revenue Ø Greater concern with completion and student success Ø How does Pell contribute to student success and completion agenda

6 Revenue Trends at Macomb Community College

7 Confronting the Reality: Part I Ø Pell brings income to students who need it Ø Pell is a grant which could harm student success Ø Pell is independent from counseling and advising

8 Confronting the Reality: Part II Ø Institutional goals for Pell often contradict student success Ø Pell should be integrated into student counseling and program completion Ø Pell features often undermine institutional objectives Ø On a policy level, the primary goal for Pell is driven by four year and private for profit institutions

9 Pell Grants and Community College Public Policy Ø Growing part of the community college landscape Ø Influences college enrollment, attendance and most importantly student success Ø Focus has been on grant award, not the purpose, impact, or potential changes to make it more effective and efficient Ø Policy group established to study Pell and come up with recommendations for change

10 Where is the Enrollment? Ø Pell recipients enrollment 60% at community colleges or for-profit institutions 40% at four-year public or private non-profit institutions

11 Who Relies on Pell Grants? Ø Age demographic of Pell recipients In , 44% older than 24 25% older than 30 Ø Older students have different enrollment patterns, needs, and goals Program type Attainment Employment outlook

Outcomes: 2003-04 Beginning Pell Recipients 60% 50% 49% 40% 37% 30% 25% 25% 24 or younger 25 or older 20% 10% 10% 9% 13% 16%

12 Outcomes: Beginning Pell Recipients 60% 50% 49% 40% 37% 30% 25% 25% 24 or younger 25 or older 20% 10% 10% 9% 13% 16% 14% 3% 0% BA AA Certificate No degree, still enrolled No degree, left without return NCES, Beginning Postsecondary Students Survey

13 Is Change Necessary? Ø Multiple populations with different educational and career goals Ø Student success rates too low Ø Federal budget-cutting pressures Ø Complex system Ø Lack of information and guidance Ø Eligibility determination problematic for older students Ø Lack of coordination with other subsidy programs

14 Single Program with Two Paths Ø A simpler Pell Y program for younger students Ø Educational accounts for children in low-income families Ø Pell A with more support for older students Ø Institutional funding to promote student success

15 Pell Y: Simple Application Process Ø Obtain tax filers information directly from IRS Ø Base eligibility on parents AGI and family size (# of exemptions) Ø Use average of 3 years of income (prior year + 2 previous years) Ø Exceptions to simple formula for families with negative AGI or other circumstances evident on tax forms Ø Maximum grant if parents receive means-tested benefits

16 Support Academic Success Ø Award amounts based on number of credit hours for which student enrolls Allow students to complete coursework as quickly as is feasible for them Ø Eligible for Pell Y for up to 125% of required credits Ø May earn multiple associate degrees/certificates Total Pell Y eligibility limited to 150 credit hours Ø Strengthen academic progress requirements for students who switch institutions

17 Winners and Losers Ø Students from higher income families, now eligible for Pell because of enrolled siblings, would lose eligibility Ø Many students who do not currently complete the complex process would receive Pell Y Grants Ø Students who enroll for more than 24 credits per year would receive more Pell Y aid Ø Students who switch institutions without making progress would lose aid

Pell A: Program for Adults Ø Simpler eligibility test based on applicant s household income obtained from IRS; no detailed need analysis Long-term disadvantaged adults Permanently dislocated

18 Pell A: Program for Adults Ø Simpler eligibility test based on applicant s household income obtained from IRS; no detailed need analysis Long-term disadvantaged adults Permanently dislocated workers Ø Partial grants for students who just miss eligibility cutoff Ø Apply once before beginning program No need to re-apply each year while completing program Transfer students would re-apply

19 Improved Guidance Ø Require Pell A eligible students to receive advising services to help them choose best program of study before enrolling Advising provided by One-Stop Centers or other independent third party Provide $500 to One-Stop Centers for each Pell eligible client (estimated total cost: $900 million) Require institutions to provide outcome information to help students choose program of study Ø Require students to receive ongoing academic and career guidance from institution after enrolling Ø Develop and evaluate pilot programs to deliver effective support services

20 Better Integration of Higher Ed and Workforce Services Ø Broader effort needed to make higher education and workforce services more responsive to local labor markets Greater capacity of One-Stops and more co-location of One- Stops and college campuses More data on which colleges and courses of study have biggest market payoff Incentives for colleges to be more responsive to labor market trends and rewards for labor market success of students Reforms of unemployment insurance to encourage more education and training among recipients

21 Institutional Incentives Program Ø Limit participation to institutions that meet more stringent requirements than the accreditation threshold for Title IV participation Ø Provide subsidies based on Pell recipients progress to next academic level, transfer, and completion Ø Allow institutions to determine how to use funds Ø Redirect federal campus-based aid funding to pay for this program ($1.7 billion)

22 Why Important? Ø Recognition of the workforce mission within the Pell program Ø Eliminates the FAFSA compliance process Ø Concentrates change around the main mission: completion and student success

23 Full report on Pell available at: college-affordability-financial-aid/ rethinking-pell-grants-report.pdf

VASFAA Midyear Government Relations Report Federal. Brett Lief

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