Center for American Progress

Middle-Class College Dreams Take Serious Hit Under Ryan Plan

Middle-Class College Dreams Take Serious Hit Under Ryan Plan

House Budget Cuts to Pell Grants Puts College out of Reach for Many Americans

Julie Margetta Morgan says its clear from the House budget plan that Rep. Ryan and his colleagues need an education on the realities of college affordability.

Rep. Paul Ryan's (R-WI) budget plan would slash the Pell Grant program, making higher education much less accessible to many Americans. (AP/ Reed Saxon)
Rep. Paul Ryan's (R-WI) budget plan would slash the Pell Grant program, making higher education much less accessible to many Americans. (AP/ Reed Saxon)

The latest House Republican budget plan asks low-income and middle-class Americans to shoulder the entire burden of deficit reduction while simultaneously delivering massive tax breaks to the richest 1 percent and preserving huge giveaways to Big Oil. It’s a recipe for repeating the mistakes of the Bush administration, during which middle-class incomes stagnated and only the privileged few enjoyed enormous gains.

Each component of the new House Republican budget threatens the middle class while doing nothing to add jobs or grow our economy. It ends the guarantee of decent insurance for senior citizens, breaking Medicare’s bedrock promise. It slashes investments in education, infrastructure, and basic research, all of which are key drivers of economic growth and mobility. And it cuts taxes for those at the top, asking the middle class to pick up the tab. It’s a budget designed to benefit the top 1 percent at everyone else’s expense.

Each year college students are taught that proper analysis of a topic requires more than just reading one book or consulting one expert. So it’s alarming that Chairman Paul Ryan (R-WI) of the House Budget Committee, by slashing the Pell Grant program, would deprive thousands of Americans access to college based on a misunderstanding of academic scholarship. The higher education section of Rep. Ryan’s new budget proposal would earn an “F” for poor research at any American college.

The House budget plan proposes to cut Pell funding and refocus the program on “truly needy” students. Rep. Ryan’s rationale for the change is that students load up on excessive loan debt to pay for rising tuition inflated by “federal tuition subsidies.” The problem with this theory is that Rep. Ryan is relying on misinterpretation of research that masks the complicated nature of the relationship between college pricing and federal aid programs.

Let’s take a look at the problem with Rep. Ryan’s analysis.

First, the House plan exaggerates the student loan debt problem, citing $22,900 as the “average per student debt” of a 2011 graduate. The actual number is likely much lower. It fails to include students who completed an associate degree or certificate program. About 48 percent of the undergraduate degrees and certificates completed in 2010 were bachelor’s degrees, so Rep. Ryan’s average debt figure most likely counts only half of the students who graduated in 2011. What’s more, the financial aid expert Mark Kantrowitz, who provided the number Ryan cites, estimates a much lower debt load for associate degrees, putting the figure at just more than $13,000.

The House budget plan also claims that federal financial aid is responsible for increasing college tuition and cites a 2007 study conducted by University of Oregon economists showing that increases in Pell Grants are matched by increases in tuition at private nonprofit schools. But this study found no evidence that higher Pell Grants drive tuition increases at public universities, where 75 percent of all college students are enrolled.

The House Republican budget also cites the work of economist Richard Vedder as support for the notion that college prices are driven up by federal student financial aid. Yet Vedder’s own Center for College Affordability and Productivity recently released a paper that reexamines the link between federal aid and tuition, concluding that aid directed at low-income students does not, in fact, increase tuition. Since the Pell Grant is a program for low-income college students, even the research of Rep. Ryan’s favored scholars would not support cutting the program as a way to control tuition.

Even if there were a dollar-for-dollar relationship between tuition hikes and Pell Grant increases at some colleges, as the budget proposal asserts, that would still only account for a fraction of the recent surge in tuition. The average Pell Grant rose only $1,705 in constant 2010 dollars over the last 20 years, a period in which average tuition at four-year not-for-profit schools rose by more than $12,000. Among the bigger drivers of tuition increases are state cuts in higher education support and competition among private universities for students, according to the research Rep. Ryan’s own budget cites.

And of course, an obvious flaw in the factual basis for Rep. Ryan’s proposal is that Pell Grants already do focus on the “truly needy.” Seventy-four percent of Pell Grant recipients in 2011 had family incomes of $30,000 or less. And 2012 changes to Pell Grant eligibility further concentrate federal aid on the poorest students. But the House Budget Committee ignores these facts and instead implies that Pell Grants are somehow going to those who are not “truly needy.”

Despite its myriad flaws, not everything in the new House budget rings false. Rising student debt is a problem, and so are high tuition costs. Cutting Pell Grants, however, will solve neither. Solving the college affordability crisis first requires accurately understanding its specific causes. Cherry-picking and misinterpreting statistics for partisan gain is irresponsible. Worse, it has the very real potential to hurt students and deprive the economy of a more educated and more mobile workforce.

Julie Margetta Morgan is the Associate Director of Postsecondary Education at American Progress.

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Julie Margetta Morgan

Director of Postsecondary Access and Success