By Allie Bidwell, Communications Staff

The Federal Pell Grant Program is widely used as a way to measure socioeconomic diversity in higher education, and how trends have changed over time because most recipients come from low-income backgrounds. But according to a new report, using the Pell Grant as a proxy to measure access for low-income students might not be as accurate as some think.

In a new report published by the Brookings Institution, Jason Delisle, a resident fellow at the American Enterprise Institute, uses federal data from five editions of the National Postsecondary Student Aid Study (NPSAS) to analyze the accuracy of the "Pell Grant proxy," and identifies several flaws. Overall, he wrote, using the Pell Grant program as an indication of financial need undercounts low-income students actually enrolled in college, and also includes some students from middle-income backgrounds as low-income.

"While the Pell proxy could be a more accurate measure of a family's ability to pay for college because it captures more than income information, most of the findings in this analysis point to significant shortcomings in the Pell proxy," Delisle wrote. "Researchers and the media should do more to acknowledge and disclose those limitations when using the Pell proxy. That might also help convince policymakers to make better data available to measure the share of low-income students enrolled in colleges and universities."

Still, researchers and the media alike continue to use the proxy, Delisle wrote, for a few reasons: the program overall typically provides grants to students from the lowest-income families, the data is more "readily available" than other options, and data on students from different income levels at individual institutions are limited.

To reveal the shortcomings of the proxy, Delisle used NPSAS data from the 1995-96, 1999-00, 2003-04, 2007-08, and 2011-12 academic years to group students into four income groups for each year. The students he referred to as low-income throughout the report fell into the income bracket of $0 to $30,000 total annual income. The other groups are: $30,001 to $65,994; $65,995 to $106,993; and $106,994 and above. The income brackets were also adjusted for inflation.

Delisle found that low-income students may be undercounted because a significant portion do not actually receive Pell Grants. In 2011-12, just 68.7 percent of low-income students received a Pell Grant; 73.2 percent of low-income students at four-year institutions received a Pell Grant. Students may not receive a grant for several reasons – such as by not filing a FAFSA, or being declared ineligible for another reason not related to their family income.

He also found that although the share of students receiving Pell Grants has increased over time, it's not necessarily an indication that institutions are enrolling more low-income students. Rather, it could show that more low-income students are receiving grants – making it an unreliable measure for tracking low-income student enrollment over time.

Additionally, Delisle found that the share of students in the second-lowest income bracket – those from families earning between $30,001 and $65,994 – has increased more than for low-income students. Delisle categorized students in this second income bracket as middle-income because the median household income was $49,445 in 2010. Between 1995-96 and 2011-12, the share of middle-income students receiving Pell Grants more than doubled from 16.7 percent to 43.8 percent.

Delisle wrote that while some would claim students from the second income bracket should be counted as low-income, due to the more comprehensive Expected Family Contribution (EFC) formula, "the important point here is that eligibility has been moving up the income spectrum, changing what the proxy measures over time." More students from the second and third income brackets receive grants now largely due to changes outside of the EFC formula, Delisle wrote, such as Congress increasing the maximum Pell Grant at a rate faster than the rate of inflation.

If the maximum award increases faster than the rate of inflation, he wrote, "but the EFC for a middle-income family increases at only the rate of inflation, more families will qualify for a grant at the margin."

These sorts of changes over time, he argued, make it difficult to compare trends between years. He added that the federal government should make another data source available, such as one that is built from federal tax forms institutions must file for enrolled students.

"While the undercounting and overcounting issues might wash, the problems with using the Pell proxy to measure enrollment over time are irrefutable," he wrote. "The significant changes in Pell Grant take-up rates, eligibility rules, and enrollment patterns over time make the Pell proxy extremely unreliable for tracking changes in low-income student enrollment over more than a few years."

Delisle added that the shortcomings identified in the report point to other issues with the program at large and suggested that policymakers look more closely at which students are receiving Pell Grants.

"Policymakers and researchers may wish to scrutinize the merits of providing middle-income families with Pell Grants, especially when it comes at the expense of providing larger grants to students with the lowest incomes," he wrote.

Publication Date: 10/13/2017

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