Why Were Pell Grants Left Out of Obama’s Speech?

Stephen Burd

In his State of the Union Speech last night, President Obama proposed reducing the interest rate on federally subsidized student loans in the 2013 fiscal year, expanding the Federal Work Study program, making the American Opportunity Tax Credit permanent, and pressuring colleges to curb tuition growth.
But he made no mention of Pell Grants.
In pointing out this omission, we’re not suggesting that administration officials are any less committed to the Pell Grant program than they were before the speech, or that they will abandon their herculean efforts to maintain the maximum grant at its current level. But it does suggest that the White House now recognizes that when it comes to promoting college access and affordability, it can’t keep putting all its eggs, or at least most of them, into the Pell Grant basket.
Pell Grants are the cornerstone of the federal student aid programs and will remain so. However, the program has become so prohibitively expensive – costing nearly $40 billion in 2011 just to maintain the maximum grant at $5,550 – that even in the best of times, it is extremely difficult to increase the awards enough to make a meaningful difference.
And these are not the best of times. As Quick and the Ed readers know, the Obama administration and Congress had to repeatedly take emergency actions last year in order to rescue the Pell Grant program –  including narrowing eligibility for the awards (potentially kicking out as many as 100,000 recipients from the program). And this may just be the tip of the iceberg, as the program is facing yet another major funding cliff when the supplemental funding that Congress provided Pell in last summer’s debt ceiling deal runs out next year. In other words, administration officials and lawmakers will once again have to go to extraordinary lengths just to maintain the status quo
But even if policymakers miraculously found the money needed to significantly raise the maximum Pell Grant, their progress would be fleeting unless they could commit to pumping substantial amounts of additional funding into the program each year. Otherwise, ever-escalating college prices would continue to eat away at the program’s purchasing power, leaving low-income students no better off than they were before.
As President Obama said last night, “It’s not enough for us to increase student aid. We can’t just keep subsidizing skyrocketing tuition. We’ll run out of money.”
For a president who has been such a stalwart supporter of the Pell Grant program, this is a striking statement. It is, in our opinion, a recognition that the administration needs to look beyond Pell and find new and more creative ways to spur colleges and states to keep college accessible and affordable for low- and middle-income students.

Higher Education
College Costs
For-Profit Higher Education
Student Loans and Financial Aid