Thinking and Linking by Joanne Jacobs
Pell Grant recipients, who come from lower-income families, often start college in remedial classes and drop out before earning a degree. Requiring evidence of college readiness, such as SAT scores of at least 850 (verbal and math) and a 2.5 grade point average in high school, would boost success rates, but limit access.
California leads the nation in poorly educated adults and in low-income workers, not a coincidence. Should community colleges take over adult education?
Pell isn’t broke! Changes designed to cut the cost of aid to low- and moderate-income students have turned a projected deficit into a surplus that will last till 2015.
Students must take more credits, use aid for fewer semesters and forego summer courses, unless they pay their own way.
A “more understandable effective and fair” student aid system doesn’t need to cost taxpayers more money, concludes a new report that calls for shifting funding and incentives to help needy students and encourage speedy completion of degrees.
Federal grants to college students should be replaced with grants to states, which would have to match the money, recommends another report.
Some 37 million Americans have “some college” but no credential. What would help more reach their goals — and boost the economy?
Financial aid should be redesigned to help needy students, says the National College Access Network. That means dumping subsidized loans and tax credits for families earning $100,000 or more. The savings could fund Pell Grants for low- and moderate-income students.
President Obama’s more generous plan for income-based repayment of student loans means “typical undergraduate borrowers will not repay their loans,” writes Andrew Gillen, now research director at Education Sector.
Using the New America Foundation’s IBR calculator, Gillen looks at repayment for average student borrowers, who run up $26,600 in debt, and starts work at $27,000 with 3 percent salary growth per year.
To pay off the debt in the standard (10 year) plan, their monthly payment would be $307. But under IBR, their monthly payment in the first year drops to $63, which doesn’t even cover the interest on the loans (meaning their balance is growing over time). Over the 20 year life of the loan, they will repay less than what they borrowed (<$23,000), and will have over $40,000 of debt forgiven (paid by taxpayers).
Even if their starting salary is $35,000, they will still end up having $20,000 of debt forgiven. Moreover, borrowers who become parents during their loan repayment will find their monthly payments are reduced drastically. If the $35,000 starting salary graduate has children 5 and 7 years into repayment, they will repay much less than the principal of the loan (total payments <$18,000) and will have more than $45,000 of debt forgiven (paid by taxpayers).
Many borrowers won’t repay the principal, let alone the interest.
The priorities are skewed, Gillen writes. While low-income students will get $22,000 in Pell Grants to attend community college, upper-middle-class students will get a (delayed) grant of $40,000 or more, a gift from the taxpayers.
Big borrowers — those who’ve chosen a high-cost private college or earned a professional degree — get the best deal, notes the New America Foundation in Safety Net or Windfall?
. . . contrary to benefitting low-income borrowers, the pending changes to IBR will actually provide generous benefits to borrowers with higher federal loan balances – those with graduate or professional degrees. A borrower with an MBA or a law degree can easily have a six-figure loan balance forgiven, even if his income exceeds $100,000 for much of his repayment term.
IBR treats the symptom (high college debt) rather than the disease (high college costs), Gillen writes on Minding the Campus. He favors income-contingent lending (ICL), which actually requires repaying loans.
Pell Grants will go off a “funding cliff” in 2014. The federal college aid program needs to be reformed — but first research what’s working and what’s not, an analyst argues.
“Swirling” students who transfer multiple times may lose eligibility for Pell Grants under new time limits.
While the “sticker price” at community colleges is up to $3,130, the average student receives more in grants, tax credits and other aid than tuition, leaving $1,220 for books, transportation and living expenses.
Community colleges are rethinking placement tests and looking for ways to start more students at the college level. About 60 percent of community college students are start in developmental education. Only 25 percent finish a credential in eight years, compared to 40 percent of students who start at the college level.
In an appeal to Hispanic voters, President Obama’s new campaign ad says Romney would cut Pell Grants, costing Hispanic students $1,000. In an interview with Univision, a Spanish-language network, the Republican challenger called for letting the maximum grant rise with inflation, a larger increase than the president’s proposed 1.5 percent boost.
Both candidates are running Spanish-language ads attacking the rise in college costs. Obama’s ad promises to decrease the tuition growth rate by 50 percent over 10 years.
At the Univision event at the University of Miami, Romney told students that what they need is “good jobs,” not more loans. “I don’t want to overwhelm you with debts. I want to make sure you can pay back the debts you’ve already got and that will happen with good jobs.”
College graduation rates are low for Pell Grant recipients, who come from low- and moderate-income families. But requiring colleges to raise Pell graduation rates would shut out the neediest students for whom the grants were created, writes an analyst. “One of the easiest ways to increase graduation rates is to exclude high-risk students.”
After nearly tripling in five years, federal spending for Pell Grants declined in the last fiscal year. The college aid program for low- and moderate-income students is 40 years old.
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