Yesterday, former Senator Claiborne Pell passed away. Pell, who retired after his fourth sixth Senate term in 1997, was something of an odd duck, an American aristocrat and a surprisingly effective legislator on behalf of the working man, so his obituary makes for interesting reading (great motto for a negotiator: "I believe in letting the other fellow have my way.") But let's take a moment to focus on his signature accomplishment, the Pell Grant, a program that dispenses billions of dollars (a little over $16 billion last year) to college students with demonstrated financial need, handing out on average this year $2,945 per student, with a maximum grant of $4,731.
Pell Grants are an important and popular program -- Democrats made increasing the grant part of their winning Six in '06 platform to take back the House five years ago -- but it is critical to recognize just how small the grant is compared to the need. Today, the average tuition for a public four-year college is $6,585, and for a private institution it rises to $25,143. That doesn't include the price of books or room and board. When the program began the maximum grant covered 72 percent of the average public tuition and 35 percent of the average private tuition; today it covers 65 percent and 17 percent, respectively -- and that's the maximum grant, not the average. Keep in mind as well that one of the first targets for state legislators looking to trim their budgets in these, say it with me, trying economic times will be their state's universities, which could lead to tuition increases.
That's not necessarily the fault of congress for not increasing the size of the Pell Grant -- not all college tuition increases could be called required, and there are other programs that provide college aid. For instance, the government insures student loans at somewhat reasonable rates from, er, private corporations, a model we saw work very well in the mortgage market. But there's hope that the Democratic congress will be able to increase support for the small but efficient Federal Direct Lending program, which provides loans to students at a much lower cost to the government than subsidizing private creditors to do it.
The other half of the rising-cost-of-college problem comes up in this article from the Times, with the terrific scare headline "College May Become Unaffordable for Most in U.S." Here's the heart of the problem: Family income has gone up 147 percent since 1982, college tuition has gone up 439 percent. Rising income inequality makes it harder for working people to send their children to college, and the recession isn't likely to help that.
Which brings us back to Senator Pell. His whole schtick, such as it was, included being ridiculously wealthy himself and supporting programs to help broaden general American prosperity. Today, both the poor and minorities are facing the increasing challenge of higher education access, as well as the many others facing the burden of loans resulting from education costs (quick fact: in the 1970s, the ratio of grants to loans was 70:30; today it is 25:75). Increasing higher education access has to be part of the equation in improving income equality and turning around the overall economy. Pell may have passed on, but hopefully his legacy will be remembered as the government returns to work in the coming weeks.
-- Tim Fernholz
