Do Pell Grants Raise Tuition?

Academics tend to circle the wagons when you suggest that Pell grant increases lead to tuition hikes. “There has been research on this that shows that Pell grants have not led to higher tuition,” Judith Scott-Clayton, of Columbia alleged in a forum at the National Press Club Monday.

Scott-Clayton is an assistant professor of economics and education at Teacher’s College at Columbia. She spoke at a forum sponsored by the Hamilton Project at the Brookings Institution.

On the same panel, Gail Mellow, president of LaGuardia Community College, claimed that, “One of the reasons tuition keeps going up has been a wholesale disinvestment in higher education by government.” Actually, neither claim holds up very well.

“College tuition and fees climbed once again this year, but the burden was tempered for some students and their families by a big jump in federal aid, according to a new report by the nonprofit College Board,” Stephanie Branchero reported in the Wall Street Journal in 2010. “The average price of tuition and fees for in-state students at public four-year institutions is $7,605 this school year, a 7.9% increase over last year.”

“At private nonprofit colleges and universities, the average price is $27,293, a 4.5% rise. Two-year state colleges saw a 6% rise to $2,713. Students occupy the hallway outside the office of the university chancellor at University of California Los Angeles to protest education funding cuts and rising tuition on March 4.”

“But the federal government gave out $28.2 billion in Pell grants to students in the 2009-10 school year, almost $10 billion more than the previous year.”

“The Pell grant program is the largest federal program for college students, with support to over three million students at more than 6000 institutions,” Larry D. Singell and Joe A. Stone, Jr. wrote in an study for the Economics of Education Review in 2007. “A prominent question in public debate is whether Pell grants tend to be appropriated by universities through increases in tuition–consistent with what is known as the Bennett hypothesis. Based on a panel of 1554 colleges and universities from 1989 to 1996, we find little evidence of the Bennett hypothesis for in-state tuition for public universities. For private universities, though, increases in Pell grants appear to be matched nearly one for one by increases in list (and net) tuition. Results for out-of-state tuition for public universities are similar to those for private universities, suggesting that they behave more like private ones in setting out-of-state tuition. Institutional responses in these latter cases appear at odds with federal grants-in-aid policy.”

 

Malcolm A. Kline is the Executive Director of Accuracy in Academia.

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