Proposal: Changing the Pell Grant to Encourage Bigger Course Loads

By Staff

Three experts are encouraging a (somewhat) radical new way of distributing Pell Grants to needy students: encouraging larger course loads to help ensure graduation within four years. In a New York Times opinion piece, Sandy Baum, economist at George Washington University and the Urban Institute, Kristin Conklin founding partner at HCM Strategists, and Nate Johnson, consultant at Postsecondary Analytics, all suggest that colleges should move toward a flat, per-term pricing system.

They further suggest that Pell Grant award levels and the flat, per-term rates should then be reviewed for parity. This would enable students who receive Pell Grants to take a full course load, speed graduation and not worry about the difference in per-credit cost between larger and smaller loads. According to the authors of the Times piece, the Pell grant program is the federal government’s main strategy for helping low-income students finish college, but the way the program is designed makes it harder for those same students to graduate on schedule.

Baum, Conklin and Johnson write that the problem is that Pell grants provide support for only 12 credit hours per term, which the government defines as full time for financial aid purposes. To complete a bachelor’s degree in four years, though, students need to enroll for 15 or 16 credit hours. Categorizing students as full time even though they aren’t taking enough credits to graduate, the Pell program works against the interests of the very people it seeks to help.

At a vast majority of selective private colleges and 35 out of 50 public flagship universities, students pay a flat amount each term that covers the courses they need to graduate on schedule. When Pell grants were created in 1972, it was presumably this pricing system that the designers had in mind for the full-time grant, with 12 hours as a minimum floor.

But three-quarters of Pell grant recipients today enroll in community colleges, vocational schools, for-profit institutions or other nonselective institutions. For these students, prices are typically set à la carte. A survey that looked at one randomly selected community college in each state found that 42 of 50 set prices by the credit hour. So do large for-profits like the University of Phoenix.

Students in community college and other nonselective schools, unlike many of their counterparts at private colleges and top state schools, have to pay as much as 25 percent more if they want to enroll in 15 hours’ worth of classes. Since Pell students get no additional federal support, the 12-hour floor essentially becomes a ceiling. Few can pay without help so they stick with what the program allows, which essentially makes it impossible for them to graduate on time.

Here’s what the combination of Pell grants and per-credit pricing looks like in practice. Most Pell grant students are needy enough to qualify for the maximum annual grant of $5,645. Under a semester system, they would receive $2,822.50 each term. At an institution where that happens to be the tuition for 12 hours, students would pay nothing at all. But to take 15, they would have to come up with $705 on their own every semester.

In fact, tuition at community colleges is usually lower than the typical Pell grant. Students receive the difference as a refund. Since little institutional or state aid is available at these colleges, Pell refunds provide much-needed help for low-income students, who are often older or working, to defray the cost of books and living expenses.

But when Pell grants are capped and tuition isn’t, a student taking 15 hours ends up getting a smaller refund check than one who takes 12. A student enrolled in 12 hours at a community college charging the national average of $100 per credit hour would receive a refund of $1,622.50, while one enrolled in 15 hours would get $300 less. In effect, these students are being paid not to take a full schedule. A recent survey by Complete College America and Postsecondary Analytics found that less than a third of technically full-time students at two-year colleges actually took 15 or more hours.

Congress could solve this problem by awarding larger grants to students who enrolled for more than 12 credit hours. This would change how students and institutions think of full-time enrollment and would probably increase the number of students who completed degrees on time. Since students would need grants for fewer semesters, the government could also increase the size of annual awards without increasing spending.

If Congress won’t act, states could use their own aid programs, as Minnesota does, to provide more funding for students who enroll for 15 credit hours. Institutions could also encourage real full-time enrollment by not charging extra for those last three or four credit hours.

Better advice also makes a difference. After it was implemented in 2012, Hawaii’s “15 to Finish” campaign significantly increased the percentage of students taking 15 credits in the state’s higher education system. These improvements were greater in universities with flat-rate tuition than in community colleges charging by the credit.

Adjusting Pell funding for students who are enrolled for more credit hours does not mean failing to fund part-time students, many of whom are adults with other responsibilities who otherwise might not enroll at all. And we are well aware that our proposed changes would certainly not remove every barrier to full-time attendance.

But it is one thing for a federal program that is supposed to help low-income students to acknowledge that they can’t all attend school full time, and quite another to actively discourage them from doing so. As it stands, the Pell program and most of its state counterparts fall into the latter category. Congress should modify the program so that the low-income students it is trying to help will know what it really takes to complete their degrees on time — and it should provide them with the money to make it happen.