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April 10, 2013 12:33 PM Two Different Pell Grants, for Kids and Grown-Ups

By Anne Kim

Over the past several months, more than a dozen organizations, commissioned by the Lumina and Gates Foundations, have offered fresh ideas for reforming the federal student financial aid system to improve college access and success.

This week, the College Board was the latest to offer a plan for reforming the Pell Grant program, currently the largest source of direct federal aid for low-income students. This effort follows proposals by the New America Foundation, the Young Invincibles, the Institute for College Access and Success, and even the U.S. Chamber of Commerce.

Many of these proposals center on three broad concerns around the current federal financial aid system: the complexity of the financial aid process, which discourages low-income students from even applying for aid; the lack of information available to potential students about the true costs of college, as well as an institution’s graduation rates and the expected “return on investment”; and the lack of incentives to colleges to ensure that students graduate . As the Chamber of Commerce report put it, “students currently receive much of their financial aid without regard to whether they graduate and whether any expectations of whether their chosen field of study will yield a career that leads to self-sufficiency.”

The College Board’s proposal throws another twist into the mix by proposing to bifurcate the Pell Grant program into separate programs for kids and adults. A new “Pell for adults” has two major potential benefits: (1) it would better tailor federal financial aid to the unique needs of the growing population of adult learners; and (2) by demanding greater transparency and tying aid to outcomes, it could loosen the grip of for-profit colleges on the adult student market.

According to the College Board, older students are an increasingly important share of Pell grant recipients. In 1973, just 13.3 percent of Pell recipients were financially “independent” of their parents. Today, nearly 60 percent of students are considered “independent.” Moreover, the share of Pell recipients older than age 24 has doubled in the past 20 years, from 22 percent in 1980 to 44 percent in 2010.

The current Pell program, the College Board argues, is especially ill-suited for adult students. For one thing, the current system of “needs analysis” is meant to determine how much a student’s parents can contribute to their education. For adult students, however, “the issue is how they will support themselves and possibly their families — not just how they will pay tuition and fees.” Moreover, because adult students are more likely to be pursuing occupational certifications and career-focused credentials, they are also more likely to benefit from specialized counseling for curriculum decisions and greater access to information about the “return on investment” for a particular degree.

The College Board proposes dumping the traditional needs analysis for adult learners in favor of a much simpler, one-time analysis based on income or a student’s status as a permanently dislocated worker. And while the average grant is likely to stay roughly the same under the current program (meaning this change won’t have much effect on costs), it would still be generous enough to cover the average cost of tuition and fees at a community college. Moreover, the College Board proposes that any school enrolling adult Pell Grant recipients be required to provide basic data on completion rates, average debt burden, loan default rates, and job outcomes for graduates—something that colleges aren’t currently required to do.

While the College Board’s plan is certain to have its detractors, who may argue that this proposal creates even more complexity in an already complex system, it adds to an important debate around the need for new ways to help adult students. With federal funding for workforce development declining, Pell funding has become a vital resource for older workers who need to refresh their skills or who are returning to school to complete their degrees. According to the College Board, the United States spent 0.1 percent of GDP on workforce development in 2010, less than any other OECD country except Mexico, while federal spending on workforce development has dropped by 90 percent in the last three decades. In fact, the Pell program has de facto become the federal government’s biggest workforce development program, with $17 billion in Pell dollars going to adult students in 2010 (versus $12 billion in federal spending under the Workforce Investment Act in 2009).

Second, the College Board’s call for greater transparency on student outcomes—one that’s been echoed by many reformers—is a crucial first step toward bringing much-needed accountability to adult education in general, as well as the for-profit education industry in particular.

Last year, Sen. Tom Harkin (D-IA) released a scathing report on for-profit education, finding that for-profit schools spent far more money on marketing than on instruction, and that more than half of enrollees fail to graduate. The report also found that the amount of Pell funding going to for-profit schools soared from $1.1 billion in 2000-2001 to $7.5 billion in 2009-2010—or more than 20 percent of total Pell dollars. While the College Board’s proposal can’t clean up the whole industry, it could at least help students steer clear of the worst offenders.

Anne Kim is a writer based in Washington, D.C., and a senior fellow at the Progressive Policy Institute.