Home Online Education Access and Affordability The Shortfalls of the American Financial Aid System: Pell Grants

The Shortfalls of the American Financial Aid System: Pell Grants

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The Pell Grant, originally known as the Basic Education Opportunity Act, was created in 1972 to support the postsecondary educational needs of the country’s least advantaged students.  The original maximum amount for Pell Grant recipients was $452.  In 1980, the program was renamed the Pell Grant in honor of Senator Claiborne Pell and his initiatives in creating the program.  After periodic increases to meet the rising cost of college tuition, the Pell Grant remained stagnant at $4,050 for four years during the Bush Administration from 2003 until 2007.

By the time President Obama took office, the maximum Pell Grant was $4,731.  With the recent implementation of the American Recovery and Reinvestment Act of 2009, the maximum Pell Grant increased to $5,350.  Even with this increase, however, there are significant deficiencies with the Pell Grant system that must be addressed if the United States is to improve affordability and access to postsecondary educational opportunities.

The Pell Institute for the Study of Opportunity in Higher Education published a report in 2008 titled, “Moving Beyond Access:  College Success for Low-Income, First-Generation Students.”  The authors cite recent National Center for Educational Statistics that identify seven factors that put students at risk of leaving post secondary education before completing their degrees: 1) delaying entry into postsecondary education after high school, 2) attending part-time, 3) working full-time while enrolled, 4) being financially independent from parents, 5) having dependent children, 6) being a single parent, and 7) having a GED.  Interestingly, due to the limited resources (the authors state the median annual income of this group as $12,100) of the members of the group classified as low-income, first-generation, they are often forced to work, at least part-time.  Ironically, their employment status often leaves them ineligible for Pell Grants, the very program originally designed to assist them.  Further, due to their need to work, they are often only able to attend classes on a part-time basis, another factor that leaves many ineligible for Pell Grants.

Aside from the vast numbers of low-income students that find themselves ineligible for Pell Grants, the amount of the Pell Grant is still inadequate.  The average four-year public college tuition for the 2007-2008 academic year was $6,180 (see my June 2008 blog article comparing the cost of tuitions at public and private four-year colleges).  This is more than half the median annual income cited in the Pell Institute report for low-income families.  When one factors in the cost of room and board, books and other fees, the first year cost of attendance at a public four-year college for the 2007-2008 academic year was $13,783.  Considering this figure in the context of the median annual income of low-income students, it becomes easy to see why many find it increasingly difficult to attend college.  Prior to the American Recovery and Reinvestment Act, Pell Grants provided enough support to cover only about 34% of the first year cost of attendance; with the increase in the Pell Grant maximum after the Act, the Pell Grant covers only 39% of the first year cost of attendance.  The situation becomes more urgent when one considers that colleges and universities show no signs of slowing the rate of and regularity with which they have been increasing tuitions.

The Pell Institute report states that “the mean amount of unmet need for low-income, first-generation students is nearly $6,000 (before loans), which represents half of their median annual income…”  Even with the recent increase in Pell Grant maximums, the low-income family is still left to finance an amount equal to nearly 45% of their annual income, a slight but inadequate improvement.  The Pell Grant was designed to promote postsecondary educational opportunities among the nation’s least advantaged citizens.  As colleges and universities increase tuitions the Pell Grant program has proven unable to keep up.  Further, increasingly strict eligibility requirements in the Pell program have made it ineffective at meeting the needs of the population it was established to serve.

As the United States battles the consequences of a globally connected economic downturn it must simultaneously address the indirect consequences of financial aid policies.  Especially in a time of economic decline, low-income students seek employment and attend classes only part-time.  Instead of punishing these students by deeming them ineligible for Pell Grant awards due to their employment and/or enrollment status, the government should provide that much more incentive to these students to encourage them to continue their educations including the eligibility for benefits even if they are part-time students because of their employment statuses.

Wally Boston Dr. Wallace E. Boston was appointed President and Chief Executive Officer of American Public University System (APUS) and its parent company, American Public Education, Inc. (APEI) in July 2004. He joined APUS as its Executive Vice President and Chief Financial Officer in 2002. In September 2019, Dr. Boston retired as CEO of APEI and retired as APUS President in August 2020. Dr. Boston guided APUS through its successful initial accreditation with the Higher Learning Commission of the North Central Association in 2006 and ten-year reaccreditation in 2011. In November 2007, he led APEI to an initial public offering on the NASDAQ Exchange. For four years from 2009 through 2012, APEI was ranked in Forbes' Top 10 list of America's Best Small Public Companies. During his tenure as president, APUS grew to over 85,000 students, 200 degree and certificate programs, and approximately 100,000 alumni. While serving as APEI CEO and APUS President, Dr. Boston was a board member of APEI, APUS, Hondros College of Nursing, and Fidelis, Inc. Dr. Boston continues to serve as a member of the Board of Advisors of the National Institute for Learning Outcomes Assessment (NILOA) and as a member and chair of the board of New Horizons Worldwide. He has authored and co-authored papers on the topic of online post-secondary student retention, and is a frequent speaker on the impact of technology on higher education. Dr. Boston is a past Treasurer of the Board of Trustees of the McDonogh School, a private K-12 school in Baltimore. In his career prior to APEI and APUS, Dr. Boston served as either CFO, COO, or CEO of Meridian Healthcare, Manor Healthcare, Neighborcare Pharmacies, and Sun Healthcare Group. Dr. Boston is a Certified Public Accountant, Certified Management Accountant, and Chartered Global Management Accountant. He earned an A.B. degree in History from Duke University, an MBA in Marketing and Accounting from Tulane University’s Freeman School of Business Administration, and a Doctorate in Higher Education Management from the University of Pennsylvania’s Graduate School of Education. In 2008, the Board of Trustees of APUS awarded him a Doctorate in Business Administration, honoris causa, and, in April 2017, also bestowed him with the title President Emeritus. In August 2020, the Board of Trustees of APUS appointed him Trustee Emeritus. In November 2020, the Board of Trustees announced that the APUS School of Business would be renamed the Dr. Wallace E Boston School of Business in recognition of Dr. Boston's service to the university. Dr. Boston lives with his family in Austin, Texas.

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