Double Pell Would Halve Student Loan Debt, New Report Details

NASFAA

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

View Original Source