College Tuition up 1,120% in 35 years. Can the Pell Grant Program Keep Up?

September 13th 2014

Lindsay Haskell

As the school year begins, it is nearly impossible to overlook the ever-increasing cost of the college experience, from textbooks, to room and board, to the tuition itself. College tuition has increased so drastically (1,120 percent in 35 years) that the federal Pell Grant program can no longer keep up with it. This program, which was created to give lower income undergraduates grants that don't need to be repaid, now only covers less than one-third of college tuition. It used to cover 77 percent of tuition in 1980.

The Pell Grant was originally created in the 1960’s to encourage lower-income students to attend college and has continued to play an important role in access to higher education, with over 9 million American receiving it each year. More than half of recipients, a 2002 study revealed, come from families that earn less than $15,000 a year. Thus, the Pell Grant’s decreasing purchasing power is especially troubling, since it means that more of these lower income students must rely on loans. In fact, Pell Grant recipients are more than twice as likely than other students to take out students loans.

And this is exactly what legislators who propose cutting the Pell Grant want: more loans. Take U.S. Congressman Paul Ryan, who proposed a budget that would cut Pell Grant money by $90 billion. As Ryan sees it, the country needs a “system of viable student loans” instead of the Pell Grant, which he calls “borrowed money,” implying it will add to our debt.

This ideology might be short-sighted however. A Congressional study of the GI bill, which provided free tuition for World War II vets, found it returned 7 dollars in productivity for every 1 dollar from tax payers it invested.  




An overreliance on student loans also increases personal debt. Already, our cumulative student loan debt as a nation has reached $1.2 trillion, a portion of which is likely to never be repaid, considering that senior citizens alone owe around $18 billion in student loans. In 2010, the national three-year default rate was 14.7%, meaning that 14.7% of students who started to pay their debt off in 2010 will default by 2012. This default rate represents a large portion of monetary losses that the government is not able to fully recover. The interest rates on student loans - one of the highest rates in the country - also make the loans particularly difficult to pay off.  So while Rep. Ryan sees his budget cuts as a way to balance the country’s finances and prompt economic growth, by cutting the Pell Grant’s budget, he is really only adding to the Americans’ personal debt.

With bachelor degree holders earning roughly 75% more than people without a degree, a college education is still essential for economic prosperity. The Pell Grant is a necessity to ensuring that America’s often-touted social mobility is not just a myth.