As of Wednesday, August 5, 2015
The Obama Administration announced it will begin providing Pell grants to federal prisoners, effectively overturning a 1994 ban on the practice.
While overturning the ban requires Congressional action, the administration is circumventing Congress by designating the plan a “pilot program.”
If allowed to stand, the administration’s unauthorized action would be costly to taxpayers. From 1972 to 1995, before Congress issued the ban, inmates received $34.6 million a year in Pell grants.
Under the new pilot, prisoners will receive up to $5,775 for tuition, books and other related expenses – money which does not have to be repaid.
Federal lawmakers have quickly cast the administration’s plan as overreach and responded quickly with legislation to stop it in its tracks. The Kids Before Cons Act would ban the Education Department’s plan to pilot the idea.
While some see the plan as well-intentioned, critics point out that there are millions of students clamoring for tuition aid who did not commit felonies that landed them in a federal penitentiary. They ask, “Shouldn’t they be the priority for scarce tuition aide?”
Diverting Pell grants to federal prisoners will only worsen the shortage of money available for tuition relief for students on the outside struggling to pay for a college education. Pell grants, along with student loans, form the backbone of student aid in the U.S.
Annual student loans have more than doubled since 2001 to $120 billion in 2012. About 90 percent of those loans were subsidized by federal taxpayers in an effort to make higher education more accessible and affordable.
But according to a study by the Federal Reserve Bank of New York, those subsidies have done just the opposite. The study found that when government loans and grants become more generous, schools jack up tuition.
Researchers discovered that, for every new dollar made available in federally-subsidized student loans, schools – particularly expensive private schools – hiked their rates by 65 cents. For every new dollar in federal Pell grants and unsubsidized loans, schools raised tuition 55 cents.
This situation was predicted almost 30 years ago by then education secretary William Bennett, who warned in 1987 that ballooning federal aid would allow colleges and universities to raise tuition.
While the practice appears to be more prevalent in toney private colleges, tuition at all four-year schools has increased 46 percent over the last decade, more than double the rise in health care costs. Nationally, the total student loan debt has ballooned to $1.2 trillion.
So, what’s the answer?
First, nix the President’s plan to lift the 1994 ban and expand Pell grants, not loans, to non-offending students.
Second, continue efforts to stabilize tuition. In its 2015-2017 budget, Washington state legislators agreed to cut four-year college tuition by 15 to 20 percent by 2016. Co-sponsor Sen. John Braun (R-Centralia) noted, “Tuition at four-year universities went up 34 percent in inflation-adjusted dollars over the past five years – much higher than the national average increase of 17 percent.”
Third, higher education leaders should look at their hefty endowments to provide additional student tuition grants.
The majority of endowment funds are donated with strings attached. The money is directed to a specific purpose – to endow a faculty chair or support a particular department or field of study.
But some endowment money is untethered and universities should use more of their endowment money to create scholarships or reduce tuition across the board.
Student debt has reached a crisis level and will only get worse if tuition increases continue to accelerate. It will continue to drain more money from family budgets and that is not good for our country or our economy.
Don C. Brunell is a business analyst, and past president of the Association of Washington Business.