More About Kelsey Merrick

Kelsey Merrick

Kelsey Merrick is a research assistant with the Federal Budget and Tax team.

Full bio and recent public appearances | Research archive at

Setting the Record Straight on Pells

June 19, 2012 at 3:04 pm

The Wall Street Journal’s recent editorial attacking the federal Pell Grant program, which helps low-income students afford college, was rife with misleading and inaccurate statements.  For example, the editorial (based on a paper from the conservative John William Pope Center for Higher Education Policy) claims that 60 percent of college students receive Pell Grants — double the actual figure of about 30 percent.   Below are some basic facts that the editorial ignores, distorts, or turns upside down.

  • Pell Grant costs are projected to stay flat over the next decade. Contrary to the editorial’s portrayal of Pell Grant spending as out of control, the nonpartisan Congressional Budget Office projects almost no increase in program costs over the next decade, after adjusting for inflation (see graph).

    Pell Grant Costs Expected to Stabilize Over Decade
    To be sure, Pell Grant costs rose substantially between 2008 and 2011.  But that increase reflects modest eligibility expansions that Congress approved on a bipartisan basis to encourage more low-income students to get a college degree; increases in the maximum Pell Grant award that offset only a small part of the grant’s long-term decline in purchasing power; and the economic downturn, which has depressed family incomes and led more people — including people who have lost their jobs — to pursue college in order to improve their education and skills.

  • Pell Grants are targeted to needy students. Three-fourths of all Pell Grant recipients in 2010-11 had family income of $30,000 or less, according to the most recent data.

    The editorial claims that the increase in Pell recipients has shifted the program away from serving the most disadvantaged students.  But the biggest reason more students now qualify for Pells is that more students have financial need.

    The editorial and the Pope Center paper also imply that better-off students can procure larger Pell Grants by attending costly institutions.  That’s another egregious error:  the program considers a student’s cost of attendance in determining Pell Grant eligibility only when that information shrinks the size of the grant for which the student can qualify — namely, when the cost is less than the maximum Pell Grant.

  • Pell Grants help students attend and complete college. The Pope Center report argues that Pell Grants haven’t been effective in helping students who get into college actually get their degree.  While gains in college graduation rates in recent decades have been relatively small for the poorest students, this is not the fault of Pell Grants.  Students who qualify for Pell Grants are more likely than other students to face significant hurdles to completing college, such as single parenthood and lack of financial support from their own parents.

    If you control for these risk factors, Pell Grant recipients who get their degrees do so faster than other students, a Department of Education study found.

  • Pell Grants are not responsible for tuition increases. The evidence simply doesn’t support the editorial’s claim that “student aid raises tuition.”  Education experts, including economists Sandy Baum and Bridget Terry Long, find no convincing evidence that Pell Grants raise tuition. The few research studies that show a link between financial aid and tuition increases only apply to private and for-profit institutions, which relatively few Pell Grant recipients attend.  Indeed, public institutions — which educate over 60 percent of all Pell Grant recipients — are much more likely to increase tuition in response to reductions in state funding.

    While the share of Pell Grant recipients at for-profit schools is on the rise, the Department of Education now requires these institutions to improve student outcomes if they wish to remain eligible for federal student aid — a policy to hold institutions accountable without punishing students.

Pell Grants on a Downward Slope

March 13, 2012 at 4:41 pm

Pell Grants, which help nearly 10 million low- and moderate-income students afford college, are an important weapon against growing inequality in higher education.  But, as Paul Krugman recently highlighted, they have shrunk considerably over time as a share of college costs.

In December, we explained why Congress’s cuts to the program in fiscal year 2012 were both unnecessary and unwise.  Here’s a revised version of our chart showing the grants’ long-term erosion.

Pell Grants Have Lost Purchasing Power

Cutting Pell Grants Is Unnecessary and Unwise

December 21, 2011 at 11:18 am

The appropriations agreement for fiscal year 2012 that Congress finalized last weekend included some harmful changes to the federal Pell Grant program, which helps nearly 10 million low- and moderate-income students afford college.  While the deal omits the most severe Pell Grant cuts in an earlier House-approved bill, it will still make it harder for many low-income students to afford college.

The Institute for College Access & Success (TICAS) estimates that more than 100,000 students will lose their Pell Grant entirely next year because of a retroactive cut in the number of semesters for which a student can receive a Pell Grant; thousands more will lose part or all of their grant due to other provisions in the appropriations agreement.

Pell Grants have been under pressure in this year’s budget process, for two reasons.  First, the Budget Control Act placed restrictive caps on overall discretionary funding starting in 2012, forcing Congress to find savings among these programs.  Second, Pell Grants in 2012 require an additional $1.3 billion over the 2011 funding level in order to continue serving all of the students who qualify.

Responding to these pressures, lawmakers cut Pell Grant eligibility in ways that will reduce the level of annual appropriations needed for the program by an estimated $11 billion over the coming decade.  The Pell Grant changes contained in the new legislation, which will take effect July 1 (and thus affect students starting with the 2012-13 academic year), will:

  • Cut the number of full-time semesters for which a student can receive a Pell Grant from 18 to 12. This provision is retroactive, so any students who have received grants for 12 semesters will be ineligible for more, even if they’re just a semester away from graduation.  Pulling the plug on these students’ grants will impose additional hardships and likely prevent some of them from finishing college.
  • Make people who lack a high school diploma or equivalent ineligible for all federal student aid programs, including Pell Grants, even if they have completed the requisite testing or obtained the needed credits for their post-secondary program.
  • Cut the income ceiling below which students automatically qualify for the maximum Pell Grant from $32,000 to $23,000. The automatic qualification simplifies the complex financial aid application process — which can discourage low-income students from considering college altogether — by allowing very low-income students to bypass some of the more complicated and cumbersome parts of the application form.  With this change, students in the $23,000-$32,000 range will no longer be eligible for automatic qualification.
  • Make ineligible for Pell Grants any students who would otherwise qualify for only a very small grant, usually because their families’ incomes are near the program’s eligibility ceiling.  (This Congressional Research Service report provides detail on the “bump” award, which this provision eliminates.)

Cutting Pell Grants is unnecessary and unwise.  While Pell Grant spending has grown significantly in recent years, this reflects: eligibility expansions that Congress approved on a bipartisan basis to encourage more low-income students to get a college degree; increases in the maximum Pell Grant award that offset only a portion of the grant’s decline in purchasing power in the face of large increases in tuition charges (see graph); and the economic downturn, which has depressed family incomes and led many people to pursue college in order to improve their education and skills.

Pell Grants Have Lost Purchasing Power
*We revised this chart on March 13, 2012

Moreover, the Congressional Budget Office projects that Pell Grant costs would decline and then stabilize in real terms over the coming decade even if none of these cuts were made (and the maximum grant, now $5,550, increased with inflation through 2017, as current law prescribes).

Both to expand equality of opportunity and to improve the productivity of our workforce, the nation should make college more affordable, not less so.  Cutting Pell Grants is a wrongheaded step that is ill-advised both from the standpoint of promoting the well-educated workforce that we need for economic growth and from the standpoint of providing opportunity to all Americans.

Pell Grant Funding Should Be Part of Final Debt-Limit Deal

July 29, 2011 at 5:18 pm

One element that the debt-limit plans from House Speaker John Boehner and Senate Majority Leader Harry Reid have in common — and that should be part of any final agreement — is increased funding for Pell Grants, which help nearly 10 million students from low- and moderate-income families pay for college.

Pell Grant Costs Expected to Stabilize Over Decade

To be sure, the Boehner plan as a whole could lead to greater increases in poverty than any other law in modern U.S. history, as we have explained.  But, like the Reid proposal, the Boehner proposal would help address a funding gap in the Pell Grant program.  With recent economic data suggesting that the economy is simply not growing fast enough to significantly reduce the need for Pell Grants, the Reid and Boehner proposals would help fully fund the program for the next two years.

Pell Grant costs have jumped recently, partly in response to sensible policy expansions such as an increase in the maximum grant, which has failed to keep pace with college costs.  The recession has raised program costs as well, as students have greater financial need and many laid-off workers have sought to improve their education and skills through college.  But Pell spending is not expected to grow further in inflation-adjusted terms (see graph).

Because of Pell’s complicated funding structure, the program needs additional funding over the next two years to avoid drastic cuts in the number of students it can help, each student’s award level, or both.  The Boehner and Reid debt limit proposals, acknowledging Pell’s role in providing access to opportunity for lower-income students, provide most of that additional funding.  And both plans fully offset the additional Pell funds with reductions in other higher education spending.  Unfortunately, some House Republicans are objecting to the Pell funding.

The Pell Grant provisions are one area in the debt-limit fight where both parties are right.  These funds should be part of the final agreement.