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New approaches to Pell grants can save funds, aid students
This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

The nation's resolve to reduce the deficit often conflicts with other national priorities. Nowhere is the conflict clearer than in the area of higher education, where proposed reductions in federal financial aid clash with our need to increase the number of college graduates, as well as our commitment to increase degree completion within underrepresented groups.

Federal financial assistance, primarily in the form of Pell Grants for needy students and direct loans available to all students, constituted roughly 50 percent of the funds used for postsecondary education. But one proposal being considered by Congress would cut Pell Grants by at least 15 percent, reduce the maximum Pell Grant from $5,550 to $3,040, and perhaps make it harder for middle class families to qualify for aid.

In Utah, that would mean a loss of almost $50 million. At the same time, rising default rates on loans may make it harder for students to access those funds in the future.

The magnitude of the cuts being considered could cause a decline in college enrollment at the very time we most need it to increase.

Painful as it may be, cuts in total federal financial support for education are inevitable. But we can achieve savings and still serve students if we focus on where those funds can be used, rather than just imposing an across the board cut.

Public, private and for-profit colleges and universities; community colleges; online institutions; technical schools; and certificate-granting entities can all provide valuable educational experiences to students. We should make sure that they do just that.

Right now, too many don't.

At every institution there will be students who fail: who do not graduate, who do not repay their loans and who graduate, but can't find work.

There are some institutions, however, where that is the rule rather than the exception. Many of them are for-profit schools. Indeed, studies indicate that while students at for-profit institutions represent only 9 percent of all college students, they receive roughly 25 percent of all federal Pell Grants and loans, and are responsible for 44 percent of all student loan defaults.

A report by the U.S. Senate found that "more than half of students will withdraw from for-profit colleges within the first two years. For students attending a for-profit school, a degree is a possibility, but debt without a diploma is far more likely."

And the problem could get worse. Consider this: Right now, if a school has a loan default rate above a certain level, it becomes ineligible to receive other forms of federal financial aid, including Pell Grants.

But some schools have dropped out of the loan program in order to maintain their eligibility for Pell Grants.

According to one expert, more than 250 schools have exploited that loophole — and more are thinking about doing it if the loan default rate trigger is tightened.

We need to develop new regulations so that rather than just spending less across the board, we spend nothing to help students pay for an "education" at institutions that do not meet objective standards for quality and performance.

Some states, like California, are already doing that by denying state educational grants to students who attend schools with unacceptable loan default and dropout rates.

California estimates it will save over $124 million each year as a result.

If we took a similar approach at the federal level, we could reduce spending, prevent students from being taken advantage of and invest federal funds in students and institutions that can, without question, help us achieve our national goal of educating more Americans in meaningful ways.

Michael S. Bassis is the 16th president of Westminster College, the only private, comprehensive liberal arts college in Utah. An authority on educational change and an active participant in the national conversation on the future of higher education, Dr. Bassis has had a wide range of experiences as a teacher, scholar and administrator over his 30-year career in higher education.

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