Biden could slash student debt in half for the average borrower if Congress doubles the Pell Grant, report finds

INSIDER

Ayelet Sheffey

September 14, 2021

The Pell Grant, which is a form of federal financial aid given to low-income students, currently gives a maximum of $6,495 per year. But Democrats’ $3.5 trillion reconciliation bill includes a plan to raise that award, and a new report found that if Congress succeeds in doubling it, the vast majority of borrowers will see their student debt cut in half.

The Gender Equity Policy Institute — a nonprofit dedicated to advancing gender equity — found that if Congress doubles the Pell Grant award to $13,000, borrowers with an average student debt load of $33,342 will see their debt cut in half or more. Bachelor’s students who receive the maximum award will see a 79% reduction in their debt, and community college students who receive the maximum award will graduate debt-free, according to the report.

In addition, the report found more than 25 million Americas would benefit from an increased Pell Grant award, given that one in four adults are eligible for the grant and of the 25 million people eligible, there are 11.7 million who have college credit but no degree, disproportionately impacting women and people of color.

“Students with the greatest financial need would see the most dramatic reduction in their future student debt,” the report said. “Doubling Pell would enable these women and men to graduate nearly debt-free and immediately benefit from their higher earnings, allowing them to devote their earnings to save for retirement, buy a home, or support themselves and their families.”

While the House Education and Labor Committee proposed an increase to the grant award in the reconciliation bill, it did not detail a specific amount for the raise. But in June, the House and Senate Education Committees reintroduced the Pell Grant Preservation and Expansion Act of 2021, which would double the grant award and allow undocumented students to qualify.

“Students should never be forced to give up their higher education dreams because they can’t afford it—and this legislation will take a significant step in helping to make sure college is within reach for more students,” Chair of the Senate Education Committee Patty Murray said in a statement. 

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