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Should Pell Grants Be Better Targeted?

As policymakers debate options about how to deal with a likely shortfall in funding for Pell grants—the federal government’s primary vehicle for aid to low-income and working-class students—a new research paper from the University of Wisconsin suggests that scarce Pell dollars should be targeted to the neediest Pell students.

The research was released at a conference at the University of Wisconsin at Madison late last week. I spoke to the gathering about the need to create more socioeconomic diversity in higher education, and while I was in Madison, I had a chance to talk with both of the lead authors of the paper, Wisconsin professors Sara Goldrick-Rab and Douglas Harris. (The other authors are James Benson and Robert Kelchen.)

Broadly speaking, in the debate about why so many low-income students fail to graduate from college, conservatives emphasize the idea that such students lack adequate academic preparation, while liberals tend to emphasize inadequate financial aid. The new Wisconsin research is fascinating in part because it confounds some of the thinking of both liberals and conservatives.

The study examines a three-year old experiment in which 600 randomly selected Wisconsin Pell-grant-receiving, public-college students were given a separate, privately financed grant of $3,500 per year, while a control group of 900 Pell students did not receive the extra cash. The program, the Fund for Wisconsin Scholars, ended up netting students about $2,500 after other aid programs were reduced in response to the new cash.

The researchers found that on average, the students who received the supplemental grants were no more likely to persist in college than those not receiving extra financial support. Moreover, they found that more advantaged Pell students (those with higher ACT scores and parents with college educations) appeared to be less likely to persist when they received the private grant, perhaps because they had more money with which to socialize. (Win one for the conservatives.)

At the same time, those Pell students who were more disadvantaged (had lower ACT scores and parents lacking a college education) benefited a great deal from the supplemental grants. Their persistence rates after three years climbed dramatically, by 17 percentage points (or 31 percent), from 55 percent for the control group to 72 percent for the treatment group. These students, many of whom regularly send money home to their families, appear to have felt somewhat less pressure to work long hours for employers during college, and thus were able to spend more time studying for classes. (Win one for the liberals.)

This is just one study, but it’s a rare controlled experiment addressing higher-education-grant aid, so it’s worth considering the public-policy implications. In the larger scheme of things, I’d rather not see the Pell program cut at all. (The $5,550 maximum award, as Tom Mortenson has noted, would need to be $12,000 to have the same purchasing power that Pell had in the 1970s.) But if the Pell program must be trimmed, wouldn’t it be better to award its scarce dollars to those who would benefit the most?

It seems unlikely that policymakers will want to give Pell grants to those with low test scores and grades, given the perverse signals that would send to students and the conflict with deeply ingrained notions of meritocracy such a policy would present. But if Pell grants must be cut, shouldn’t special efforts be made to shield Pell-eligible students who seem to benefit the most from aid—those whose parents do not have a college education?

The new Wisconsin research suggests that targeting aid to the most vulnerable yields the greatest bang for the buck. At a time when budgets are tight, and when we’re trying desperately to boost graduation rates, holding low-income, first-generation college students harmless when cutting Pell would seem to be a win for common sense.

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