Double Pell Would Halve Student Loan Debt, New Report Details
By Hugh T. Ferguson, NASFAA Staff Reporter
As congressional committees parse their way through legislation that could bring about a significant increase to the Pell Grant, a new report has found that by doubling Pell, student debt could be cut in half.
The report comes from the Gender Equity Policy Institute (GEPI), which has looked to examine the impact of improvements to the Pell Grant program by focusing on how the proposed expansion of benefits would be distributed across gender, race, and ethnicity.
GEPI developed a number of borrower scenarios to demonstrate what impact Double Pell would have for specific students.
“To put this in perspective, under the current program, a Black woman who took out loans for four years of study to supplement a maximum Pell Grant will owe $32,974 in principal and interest. With the increase in the Pell, she would owe $6,526—for a total savings of $26,448,” the analysis found.
In terms of costs associated with degrees by institution type GEPI’s analysis projected that students at public two-year institutions who receive an average Pell Grant would see their debt decrease by 69%, students at public four-year colleges would see their debt decrease by 56%, and the youngest college students, aged 23 and younger, would see their debt reduced by at least 60%.
On the policy front, GEPI considers doubling the Pell Grant to be an equitable proposal that is well-targeted to students with the greatest financial need since the funds are directed at making college accessible to lower-income students.
GEPI’s analysis is based on what impact the Pell Grant Preservation & Expansion Act of 2021 — which doubles the maximum award to $13,000 — would have on student debt for future cohorts.
Currently Congress is considering two separate increases to the Pell Grant, the first, a $400 increase, being made through the annual appropriations process and the second, a $500 increase, being tacked onto the reconciliation process.
Publication Date: 9/16/2021
Patricia W | 9/16/2021 4:9:52 PM
how can four people live on 26,000 in New York City or Boston or even St. Petersburg, Florida.
Patricia W | 9/16/2021 4:7:08 PM
Kathy do you mean direct costs?
Patricia W | 9/16/2021 4:6:18 PM
Doubling the Pell Grant is a great idea, if schools don't increase tuition. The true root of the problem is the needs analysis calculation. The maintenance allowance for a family of four with two in college is 26,570 - where can a family of four live for that amount of money.
Joel T | 9/16/2021 11:12:23 AM
Doubling the Pell grant would literally meet the full cost of attendance for some community colleges, for example. While it's a noble idea, I have no doubt in my mind that there would be a huge cliff for those that need assistance but qualify for nothing - all while looking at someone that may have an extra sibling get thousands of dollars. There will still be inequities and we would be better served to extend the eligibility range for Pell.
And considering that college costs are nearly doubling every nine years one would have to wonder if we'll be right back where we are with student debt in another decade. The problem isn't necessarily the aid amounts as much as the rising costs - which no one wants to discuss or address.
Jeff A | 9/16/2021 9:47:29 AM
Many students will still borrow the same amount and just spend more. It would NOT cut student debt in half. It would fund more living expenses. You would also have considerably more people entering higher ed because they would be paid to do so, and many would also borrow some amount. Aggregate borrowing wouldn't increase much. It is way more complex than this study purports.
Advocacy certainly does highlight the hypocrisy of advocating for 9010 policy as well.
Kathy B | 9/16/2021 8:11:17 AM
In order to reduce student loan debt, they need to change the regulation that a student must be package to maximum eligibility and only packaged to cost.
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