To Increase College Grads, Obama Should Eliminate Pell Grants

Pell Grants are federal funds provided to college students from low-income families. Since its start in 1973 the program has grown both in the number of students receiving grants and the amount of each grant. Today over nine million students receive Pell Grants worth up to almost $6,000 a year. Yet if the federal government really wants to boost American human capital and improve college outcomes one of the best things it could do is eliminate the Pell Grant program completely.

While we continually hear about the high cost of college and the rapid increases in college tuition, cost is not a crucial issue in college attendance or graduation rates. During the last twenty years, while average college tuition has been rising rapidly, total college enrollment has also been growing. In fact, since 1990 college enrollment nationwide is up about 52% according to the National Center for Education Statistics.

Partly this is due to the increase in financial aid offered by colleges (and the federal government through Pell Grants) over this same time period. The net cost of college-the full price minus the financial aid offered to students-has increased much more slowly than the posted full price. Secondly, the incentive to go to college remains high due to a tight job market and the persistent earnings gap between college graduates and non-graduates. College may be expensive, but studies continue to show that it pays off.

However, the Bureau of Labor Statistics has estimated that 48 percent of college graduates are in jobs that do not require a four-year college education. That suggests that subsidizing college education and encouraging more people to attend college is not really what the country and the economy need. Instead, what is needed is improved K-12 education, particularly for children from low-income families.

For all the money spent by colleges on affirmative action programs, remedial education, and other support programs for students with disadvantaged backgrounds, more could be accomplished if the money was spent earlier in ways that improved the education of those students before they arrived at college. Tutoring, mentoring, summer enrichment programs, and teacher's aides all provide educational gains during grades K-12. Vouchers to allow parents to choose their students' schools would also help many students trapped in underperforming schools.

All of these options have been shown to produce student achievement gains, but they all also cost money. State and local governments are struggling to simply maintain education funding and Congress is unlikely to pass an increase in federal education funding. The logical place to find the necessary funding is the Pell Grant program.

After all, why provide funds to help people from low-income families attend college if they are not well-prepared to succeed once they get there? While some students rise above their disadvantages in upbringing and early schooling through either high intelligence or very hard work and perseverance, many more cannot do so.

The money we are spending to make college more affordable would be better spent making those same people ready to succeed in college. Knowing that there is some money waiting for you does not help if you either cannot get accepted or if you flunk out once you get there.

The fact that 48 percent of college graduates are in jobs that do not require a college degree proves that career success is predicated on more than simply graduating from a college. The quality and reputation of the college attended matters as does how well the student did in college. These can be impacted more by improving the quality of the K-12 education received by low income students than by making college slightly more affordable for those who reach it.

Given that we live in a world of limited financial resources, the money dedicated to helping low-income students with their educations needs to be spent in the most beneficial manner possible. Pell Grants make college more affordable for low-income students, but the impact of the funds is limited by the fact that at many prestigious and expensive colleges getting a Pell Grant simply reduces the amount of financial aid the college awards meaning that the net cost of college is unchanged.

In contrast, more federal dollars used to boost resources at K-12 schools in low-income areas could have a big impact if dedicated to enrichments that are proven by research to work. By targeting these funds to specific uses, the federal government can ensure that they do not simply replace state or local funds thus leaving things unchanged.

By augmenting existing educational programs, students can be better prepared for college leading to better long-run outcomes than if Pell Grants are offered to badly prepared students who enroll in college. Moving the funding for Pell Grants down to enriching the K-12 educations of students will do more good. Thus, to help low-income students succeed in college, eliminate Pell Grants and divert the money to help the students earlier in their lives. It seems counterintuitive, but we will get better college outcomes if we do less for college students.