Center for American Progress

A Closer Look at the President’s Proposal for Changes in Student Assistance

Since its creation in 1972, the Pell Grant program has played an important role in helping to ensure that hard work and talent can continue to bring opportunity to those without wealth or family connections. This fact was recognized in the late summer of 2000 by presidential candidate George W. Bush, who bolstered his credentials as a compassionate conservative by committing to a dramatic increase in the size of the grants awarded under the program.

He stated that he would “ask Congress” to bolster aid under the program to “five thousand one hundred dollars per recipient,” and added that “increasing Pell Grants…will make college much more affordable to low and middle income students.”

At the time of his speech, the Pell Grant program was recovering its capacity to make college attendance more affordable. The $3,300 maximum grant for the 2000-2001 school year covered more than 39 percent of the cost attending a four-year public college, up from less than 35 percent just four years earlier. The persistent budget cutting of the late 1980s and early 1990s had eroded the portion of college costs covered under the program from more than 50 percent in the mid 1980s.

By the time President Bush was sworn in in January 2001, the fiscal 2001 appropriation had become law, setting the maximum grant for the coming school year at $3,750—enough to cover

nearly 42 percent of the cost of attending a four-year public college.

Contrary to Bush’s campaign pledge, the momentum toward affordability did not continue. During his first year in office, President Bush did not send Congress the $5,100 proposal. He instead proposed only a $100 increase in the Pell Grant for the 2002-2003 school year (significantly less than the projected increase in cost of attending college). Congress succeeded in persuading him to accept a $250 increase, the amount needed to roughly keep pace with the

rising cost of attending a public four year college.

The following year, the maximum Pell Grant was raised only slightly to $4,050, far less than was needed to keep pace with rising tuition, fees, room and board. Worse still, no adjustment in the maximum Pell Grant has been made since then. This failure to adjust the size of grants to account for the rising cost of attending college not only reversed five years of steady growth in both the size of Pell Grants and the share of college costs they covered, but it came during a period of accelerating tuition increases at state-sponsored institutions. As a result, college was much less rather than “much more affordable to low and middle income students.”

The first Bush budget maintained the 41 percent coverage, but since then, the portion of costs covered by the maximum Pell Grant has fallen all the way back to 1995 levels. The Omnibus

Appropriation which the president signed in December will provide a maximum grant that will cover only 33.1 percent of estimated annual costs at a four-year public college.

One defense of the president’s actions relative to the apparent commitment he made during his first campaign for office is that although he advocated a specific dollar amount for the maximum grant, he did not advocate a specific time frame in which that dollar amount would be reached. Some may have presumed that he was committing to a $5,100 maximum grant during his first year in office. Others may have presumed that he was intending to reach that level during his first term. Still, one could conceivably argue that he expected to serve two terms and that the $5,100 would be reached over a period of eight years.

The president dashed even that interpretation on January 14th at a community college in Jacksonville, Florida, where he announced that he would support raising the maximum grant to $4,550 in $100 increments each year over the next five years. Not only is this plan less than half of the increase that one might have expected from his August 2000 campaign pledge, but it is phased in so slowly that it only slightly reduces the current rapid rate of decline in Pell Grant purchasing power. If one assumes that tuition, fees, room and board continue to increase over the next five years at the same rate that they have increased for the last four, Pell Grants will cover only slightly more than one quarter (25.7 percent) of the cost of attending a four-year public college by the 2010-2011 school year.

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Scott Lilly

Senior Fellow