Tipsheet

How to Control Exploding Federal Subsidies for College

A new CBO report exposes the explosion in Pell grant subsidies for college students over the last seven years and options to rein in the substantially-higher spending. From 2006 to 2011, Pell grant spending increased by 158% and eligibility for the program rose by 80%. While one of the reasons for increased spending is because more low-income students became eligible due to the recession, the Obama Administration also undertook a general eligibility expansion.

900,000 additional students received Pell grant eligibility as a result of expansion implemented in the last decade than would have otherwise. This massive expansion tracks with President Obama's explicit goal to send as many Americans to college as possible - no matter what the cost or consequences:

In President Obama's first speech to a joint session of Congress in 2009 outlined his administration's ambitious higher education agenda, saying that "by 2020, America will once again have the highest proportion of college graduates in the world." As Peter Wood wrote at the Chronicle of Higher Education, "that would mean more than doubling the number of domestic students attending the nation's colleges and universities."

This ignores that not every college education is a good investment. But President Obama has pushed a massive expansion of college subsidies, and we're seeing this in the numbers released in the CBO's recent report.

Luckily, there are easy ways to rein in these costs. The CBO also outlines potential solutions. A mere $700 cut in the maximum Pell grant award would save $68 billion - and that would have come after the maximum Pell grant increased by $1500 in the last few years, so that would represent a return to a level higher than we'd seen before Pell expansion.

The Obama Administration's push for a massive expansion of college attendance will bring benefits to many students, but does not come without downsides. The CBO has outlined ways that the federal government can constrain the costs. Hopefully the Obama Administration will pay attention.