Our region’s continued economic recovery depends on a well-educated and highly-skilled workforce. At the same time, thousands of New England college and university students depend on federal financial assistance, such as that provided by the Pell Grant program, to help them acquire those skills and training. And so as Congress recently reached a significant compromise on the fiscal year 2011 budget, making countless cuts to federal programs, it is encouraging that the Pell Grant program fared so well.
Congress should be commended for recognizing the importance of this program and maintaining the maximum grant level for the federal Pell Grant program at $5,550 for the 2011-2012 school year, allowing thousands of New England students to continue their education and expand employment opportunities.
The 2011 budget compromise also presents some challenges for the Pell Grant program in the months ahead. With only $23 billion in discretionary funding and increasing numbers of applications for assistance, this simply won’t be enough funding to meet the demand. During the 2010-2011 school year, it cost $36 billion to provide Pell Grants to students at the same maximum grant amount. It will be necessary to make significant changes to the program, such as limiting recipients to only one grant per year, in order to maintain the maximum grant amount.
At the same time, as the 2012 budget debate heats up, countless federal programs, including Pell, again find themselves on the chopping block as Congress works to rein in spending and chip away at the mounting federal deficit. The 2012 budget proposal that recently cleared the House would reduce the size of grants by as much as $2,000 across the board. As the debate continues, Congress must consider the important benefits of the Pell Grant program for our region’s overall economic wellbeing.
Students aren’t the only ones who would be affected by additional cuts to Pell Grant funding in the 2012 budget. For example, additional cuts could have revenue consequences for higher education institutions large and small. Federal financial aid does more than just help students cover tuition costs — it serves as a source of revenue for colleges and universities. Cuts to federal financial aid translate to millions in lost revenue for colleges, and even more when students are left with no choice but to drop out. The higher education sector in New England employs thousands of people, and significant losses in tuition revenue could result in job losses.
The economic impact of cuts to federal financial aid the 2012 budget will be felt far more broadly than on college campuses. Higher education is a significant sector in the New England economy. The 236 higher education institutions certified by the New England Association of Schools & Colleges — representing more than 844,000 students across the region’s six states — generated an economic impact of almost $119 billion for the region during the 2006-2007 academic year.
But perhaps more importantly, the region’s colleges and universities provide a variety of long-term benefits which stem from an educated workforce, from higher earning potential for graduates, to lower incarceration costs. Our region’s institutions of higher learning provide the skills and training that workers need to compete for 21st century jobs. As the economy begins to rebound, more and more of the jobs that are becoming available require a high level of skill and technological training. Colleges and universities contribute to our economic prosperity by providing that much-needed training.
All the while, the cost of a college degree continues to rise. The Pell Grant was originally intended to cover 75 percent of the cost of attending college for low- and moderate-income students. Yet today, the maximum award level covers only a third of the cost of a four-year degree — and only 22 percent of Pell recipients receive the maximum amount. The average award in the 2009-2010 academic year was $3,646, which covers less than one quarter of the average tuition and fees at public universities.
Our leaders in Congress certainly face an enormous challenge in balancing the federal budget and eliminating the skyrocketing deficit. There is no question that cuts must be made, however Congress must consider the broader economic impacts of those cuts. Supporting Pell Grant funding represents an investment in our future, and an investment in our region’s economic wellbeing. That’s an investment worth making.
James T. Brett is the president and CEO of The New England Council, a non-partisan alliance of businesses, academic and health institutions, and public and private organizations throughout New England formed to promote economic growth and a high quality of life in the region.
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