The Trump administration really, really wants to get people back on the Moon. In March, Vice President Mike Pence, who oversees space policy, said NASA needs to have astronauts up there within five years “by any means necessary.” “Means” is short-hand for money, and on Monday night, the administration proposed an amendment to NASA’s budget that adds a $1.6 billion request to the initial $21 billion ask.
Because money has to come from somewhere, the administration has proposed re-allocating surplus Pell Grant funds to NASA. A spokesperson for the Office of Management and Budget has also emphasized that doing so would not affect individuals currently receiving grants.
Critics of the plan argue that this decision could not only put the future of Pell Grants on unsteady footing, but limits the opportunity for the program to become better. A Pell Grant is a U.S. government subsidy to help students attend college if they meet very specific conditions and display “exceptional financial need.”
There Are Just Two Problems…
Brent Evans, Ph.D. is an assistant professor of public policy and higher education at Vanderbilt University who studies the benefits of financial aid.
Evans tells Inverse that using surplus Pell Grant funds has the potential to cause two negative outcomes: Using the surplus now could harm future students who need aid during future recession.
"If we raid the surplus now, then we might not have that extra money that’s saved up for rainy days in the future"
“The worry is that if we raid the surplus now, then we might not have that extra money that’s saved up for rainy days in the future, when we might have a higher need for Pell Grant expenditures,” Evans says.
Another worry that higher education advocates have is that, if this money is used now; there’s no surplus for the future, and a future Congress doesn’t go out of its way to find more money for Pell, then future Pell awards will be reduced. That would counter a trend of increasing Pell over time, which is generally thought of as a good idea, because of rising college costs and rising inflation.
Why Is There a Pell Grant Surplus, Anyway?
The surplus itself exists because of the way the Pell Grant system is set up. Title 4 of the Higher Education Act makes Pell Grants entitlements, which means that if a student qualifies, they will receive it. But it’s funded through annual allocations: Congress has to estimate how much will be spent on Pell Grants and then pass that number through an appropriation process.
That why the program can run surplus or deficits each year. We’re now in the surplus range because the economy is better than when it was during the Great Recession. Back in 2008, more students enrolled in college because of the poor labor market and the students were lower income, so more people qualified for Pell Grants.
Enrollment has declined since 2011, leading to an overall surplus of nearly $9 billion. Meanwhile, years with worse economies have seen deficits: In 2010 there was a $9,569 deficit and in 2008 the deficit was $2,657.
Essentially, whether Pell Grants sees a surplus or a deficit fluctuates with the economy.
Drew M. Anderson, an associate economist at the RAND Corporation who studies financial aid programs, tells Inverse that, currently, the number of college-going students are expected to plateau and then decline.
“However,” he notes, “if there is a recession, this would likely increase enrollment and more of those college-going students will again become eligible for Pell Grants, necessitating more spending.”
Studies: Pell Grants Result in Higher Graduation Rates and Better Jobs
Anderson also points out that studies show that students who receive Pell Grants benefit from them — they achieve higher graduation rates, get better job opportunities, and borrow less for college. Evans has seen this in his own research as well: When looking at the benefit of need-based grant aid as a whole, beyond Pell Grants, he and his colleagues have found that about $1,000 in increased grant aid increases the probability of enrolling in college by about three percentage points. They’ve also found that $1,000 is associated with a one point percentage increase in persisting in college from one year to the next.
"It’s very clear that need-based aid works better than merit-based aid"
“I think it’s important that the government continues to find ways to increase need-based grant aid,” Evans says. “It’s very clear that need-based aid works better than merit-based aid for the improvement of these academic outcomes.”
Which leads to the next idea: Instead of allocating Pell Grant surplus funds to NASA, Congress could decide to just use that money to make the Pell Grant program even better.
There are two ways they could do that. One is by increasing the maximum Pell Grant award and reallocating some of that surplus to students in need. Currently, the yearly maximum an awardee receives is $6,095. That’s helpful, but a drop in the bucket compared to how much college actually costs: In 2016, the annual price for undergraduate tuition, fees, room and board were $16,757 at public schools, $43,065 at private nonprofit institutions, and $23,776 at private, for-profit institutions.
Second, they could use that money to increase the number of Pell Grant recipients. Currently, there’s an income threshold at which an individual qualifies. In light of the surplus, Congress could decide to raise that income threshold and provide Pell Grants to more middle-class families who normally don’t qualify.
Meanwhile, Janice Friedel, Ph.D., an associate professor at Iowa State University, who has studied the positive impact Pell Grants have on community college students, emphasizes that this could mean there’s space to allocate funds to students who have to attend college on a part-time basis; as of now, the amount you receive depends on your status as a part-time or full-time student.
“I realize that there are multiple demands on our federal resources, however, any surplus Pell Grant money should go to support the intent of Pell,” Friedel tells Inverse.
The government has to choose between the importance of increasing the college attainment of Americans, versus the importance of space exploration. This budget request is still just a request. 2024 could be the year that the United States puts a man and woman on the Moon — but it’s also a year when Americans on Earth will be trying to make it to college.