Related Topics in the Ref Desk: Pell Grant; Cost of Attendance

By Megan Walter, Policy & Federal Relations Staff

President Joe Biden’s focus on college affordability and higher education in general early in his term as a means to help the country recover from the impact of the ongoing pandemic has served as an opportunity for Democrats in Congress to champion tuition-free and debt-free college proposals. Just last week, two proposals surfaced, setting the stage for what could be incorporated in Biden’s upcoming sweeping infrastructure plan.

The College for All Act, a bicameral bill that would make public universities tuition- and fee-free for most students, as well as double the maximum Pell Grant award, was introduced by Sen. Bernie Sanders (I-Vt.) and Rep. Pramila Jayapal (D-Wash.) in early April. This is the fourth time an iteration of this bill has been introduced into Congress and comes as a larger debate regarding the cost of college and student loan debt relief has made its way to the forefront. 

The College for All Act is not the only proposal put forward by Democrats this session that seeks to reform the student debt and college affordability landscape. Sen. Brian Schatz (D-Hawaii) last week reintroduced the Debt-Free College Act, a bill that would provide states with a dollar-for-dollar federal match in exchange for the money they use to fund students' cost of attendance without having to take out loans.

Free Public Universities & Community College

Sanders and Jayapal’s bill creates a free college program funded through a federal-state partnership. For four-year public institutions, the bill would eliminate tuition and required fees for families with an adjusted gross income (AGI) of up to $125,000, and for community colleges or two- and four-year tribal colleges, the bill would eliminate tuition and required fees for all students, regardless of family AGI. The program would only be eligible to students who have not already received a bachelor’s degree or higher. 

Any participating state or eligible Indian entity must provide a non-federal share equal to 25% of the amount that would be required to eliminate tuition and fees at their institutions. In the case of an economic downturn, or other economic trigger, the legislation builds in an automatic stabilizer that would increase the federal government’s share to 90%. For both two- and four-year tribal colleges that have student populations where 75% or more are considered low-income, the Indian entity would only have to provide 5% of the amount necessary to eliminate tuition and fees at their institutions. 

The bill allows the Secretary of Education to define the meaning of low-income for purposes of this bill, but does stipulate that the definition must include Pell Grant recipients. The bill also encourages participating states to continue to sustain and expand their existing “College Promise” programs, in particular noting states that have “last dollar” programs. 

To qualify for and maintain the state-federal free college partnership, the participating state or eligible Indian entity must meet certain requirements, such as:

• Ensuring the participating public institution or state or tribal institution maintain expenditures on instruction that are equal to or exceed the previous award year

• Ensuring tuition and required fees for eligible students are eliminated

• Maintaining state expenditures on need-based financial aid programs

• Maintaining state expenditures for public institutions of higher education or tribal colleges and universities 

• Ensuring that no later than five years after the first award year, at least 75% of instruction at eligible institutions is provided by tenure-track or tenured faculty

• Ensuring students who receive maximum Pell Grant awards have the rest of their need met by institutional aid

• Ensuring that participating institutions won’t adopt policies to reduce enrollment

The College for All Act also creates a separate grant program for private, non-profit historically Black colleges and universities (HBCUs) and minority-serving institutions (MSIs), that were not eligible for funding under the general program. Institutions participating in this program must ensure that tuition and fees for eligible students, who are defined as those who have not already received a bachelor's degree and whose family or self AGI is less than $125,000, are eliminated, and they maintain spending on need-based aid programs, as well as other stipulations. 

While previous iterations of the proposal from Sanders have included measures related to reducing student loan interest rates for new borrowers, there was no mention of it in this version, as Sanders presumably attempts to put forward a more simplified proposal.

Schatz’s bill differs from Sanders’ in that it takes into account additional living expenses for students beyond just tuition. 

Schatz’s proposal stipulates that participating states that voluntarily opt-in would get a dollar-for-dollar match from the federal government for however much funding they appropriate for state schools. Those schools would have to, in exchange, commit to ensuring students can pay for the full cost of college without taking on student loan debt, mostly through need-based and institutional aid grants to help students who can’t afford the full costs associated with earning their degree, including things like housing, books, and other expenses.

“If we are going to be serious about solving the student loan debt crisis, we need to focus on the real cost to students and their families – and that includes books, room and board, and supplies,” Schatz stated in a release.

The two proposals reemerging relatively early in the congressional session underscores the importance of the college affordability issue to the left, as the costs of college continue to rise and borrowers are burdened with growing student loan debt.

While it's not immediately clear what appetite Republicans have for comprehensive higher education reform taking place outside the confines of a Higher Education Act (HEA) rewrite, a modified version of one of the proposals could make its way into Biden’s infrastructure package, which could pass without any Republican support through budget reconciliation. 

On the campaign trail, Biden called for making two years of community college and other trade schools tuition-free, as well as making public colleges and universities tuition-free for families making less than $125,000. His platform also included doubling Pell Grants, further raising speculation that some higher education provisions could make their way into the infrastructure package.

Pell Grant & Other Federal Aid Programs

The College for All Act also takes aim at the federal Pell Grant, proposing an increase in the maximum grant award for the 2021-22 award year to $12,990, which would not apply to students at for-profit institutions. The current maximum Pell Grant award amount for the 2021-22 award year of $6,495. The bill also calls to extend the length of time that students are eligible to receive a Pell Grant from the current 12 semesters (or six years of full-time study) to seven years and six months (or roughly 15 semesters of full-time study). The bill updates the allowable uses of the federal Pell Grant, adding that students may use their payments for living and non-tuition expenses. Additionally, the bill amends the IRS Code to ensure that any federal Pell Grant received shall not be taxable under any circumstances. 

The bill would also designate all federal Pell Grant funding as mandatory, making it no longer subject to the annual appropriations process, and would create an annual adjustment to the award amount tied to the Consumer Price Index, or the inflation rate. 

Both Sanders’ and Schatz’s proposals would open Pell Grant eligibility to undocumented students who came to the United States with their families as minors under the Deferred Action for Childhood Arrivals (DACA) program, commonly referred to as Dreamers. 

Within the legislation, appropriations for the federal TRIO program would be nearly tripled from its most recent amount of $1.1 billion, to $3 billion for fiscal year 2022, and GEAR UP funding would be nearly doubled, to $736 million for the same year. 

Equity Grants

Sanders’ proposal would also create a $10 billion equity grant program, designed to encourage eligible institutions to invest in support programs with the goal of improving student outcomes. Eligible institutions would be those that are either under-funded, meaning they receive less than the national average state appropriations per full-time equivalent student, an HBCU, or are a predominantly Black institution (PBI) or MSI. To participate, an eligible institution would submit an institutional application to the Department of Education, which must include an assurance that the institution’s state is willing to provide a non-federal share of funds equal to 25% of the cost to carry out the improvements that the institution plans to make. 

The grants can be used by recipient institutions to make investments in reforming remedial education, academic advisors, mental health counselors, trauma-informed care and tutors, as well as reducing class sizes. Institutions may only use these funds to supplement, not supplant, their own financial resources, and the Secretary is required to set goals for the institutions, as well as track the progress of each institution.

To pay for the legislation, Sanders simultaneously introduced another bill that would impose a tax on Wall Street transactions, a similar funding mechanism that he has called for in previous free college proposals to cover the estimated $700 billion price tag. The plan would raise up to $2.4 trillion over 10 years, according to Sanders, by imposing a tax on trades with stocks at 0.5%, bonds at 0.1%, and derivatives at 0.005%. 

Publication Date: 4/26/2021

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