The Problems With Pell Grants
Once high school graduation approaches, many high school seniors begin to apply for universities. As they begin to apply for schools, some students are faced with financial issues. Pell grants are important to help low-income students overcome financial issues so they can attend university.
Federal Pell grants are a need-based aid that are given to low-income undergraduate students to help promote postsecondary education and they do not have to be repaid. As well, students cannot use Pell grants from more than 12 semesters or 6 years. The grant amounts are determined by a student's expected family contribution (EFC). A students’ EFC is determined by the U.S. Department of Education. The Department of Education uses a standard formula established by congress to assess financial information provided on the Free Application for Federal Student Aid (FAFSA).
According to the U.S. Department of Education website: “The EFC is the sum of: (1) a percentage of net income (remaining income after subtracting allowances for basic living expenses and taxes) and (2) a percentage of net assets (assets remaining after subtracting an asset protection allowance). Different assessment rates and allowances are used for dependent students, independent students without dependents, and independent students with dependents.” This means after looking at all financial reports from both the student and the parents an EFC is produced by the government which helps to determine how much federal aid a student receives.
Another type of aid is merit-based aid. Merit aids are scholarships that are awarded to students based off academics or extra-curricular activities. Merit base aid is not funded by the government but by outside sources like companies, banks, etc. Students wishing to receive merit aid must fill an application and indicate why he or she feels they qualified to receive these aids and like Pell grants, merit aids do not have to be paid back.
In 1972, during Nixon’s presidency, Pell grants were created under the Higher Education Act of 1965. Pell grants and federal student loans were created to help provide low-income students access to higher education without families having the cost of tuition as a financial burden. At the very first start of the program the maximum Pell amount was $452 but then in 1975 it was increased to $1,400 where it stayed constant until 1978 when it increased to $1,600 (To see full timeline of Pell Grant see chart below). The first increase was to help offset the cost of school tuition.
When the Pell grant was first created it was able to cover more than half of a college tuition since the average cost of tuition for public universities was $490. In 2012, the average in-state tuition was $8,244 and the maximum amount for the Pell grant was $5,550 which means students had to pay $2,694 out of pocket. The main function of Pell grants are to provide financial assistance to low-income students so they may attend university. The Pell grant was functioning well when it first started because it was able to cover either half of or more than half of tuition but now the Pell grant will not make a dent in the cost of college tuition or students won’t even receive the maximum amount of the grant. For instance, in 2012 the Pell grant only covered 27 percent of college expenses while in 1975 it covered 67 percent
As universities have increased their tuition, more low-income students found it hard to pay for tuition. In the 2014-2015 the tuition increase was 3.7 percent for private universities and a 2.9p percent increase for public universities. Some reasons for increased tuition include the rising cost of faculty and administration salaries as well as the building of amenities to attract prospective students. Since many universities have decided to add amenities to their university many of their students have to be burden with the high cost of tuition to help offset the cost institutions’ spending. The high cost of tuition has caused many low-income students to work long hours while attending school full time.
A general rule for students wanting to work while attending university is to not work more than 20 hours a week if the student hopes to graduate within four years and have a respectable GPA. Many students have to work because of the amount of financial aid they are receiving is not covering their cost of attendance they then are forced to work long hours to help offset the amount of tuition due which in a long term affect the way a student performs academically. In 2010, about 17 percent traditional full time students worked from 20-34 hours and about 6 percent of undergraduates worked more than 35 hours a week.
Once a student applies for the FAFSA and their EFC is calculated, the student may still not receive the full Pell amount because of other factors like being a full time or part time student or how much your university charges for tuition. When a students attend college part time he or she will only receive a portion of the Pell grant because the U.S. Department will only give you what you need for the academic year; since the student is not attending full time his or her cost of attendance will be half of the tuition of what a full-time student would pay.
The Pell grants are truly not working to help students attend college because of the amount of money they are providing to their students. The cost of attendance has increased dramatically but the amount of federal aid given has not. Many low-income students have to decide wherever the cost of attending university is worth paying.