Maximum Pell Grant Versus College Costs
"The dark blue line on the chart is the amount in billions of dollars spent on Pell Grants each year. And it’s clear that the large increases in the grant over the past few years have been met with near exponential growth in the overall cost. That reflects not only the higher award, but also a general downturn in family incomes that make more students eligible and also the provision that students can now get multiple awards in a year.
The red and yellow lines are the Pell grant’s buying power—what percent of a sector’s average tuition and fees and room and board are covered by a maximum Pell Grant. And what these lines show should be incredibly frustrating. In exchange for substantial growth in the program costs, Pell’s buying power at nonprofit four-year institutions has stayed at about 15 percent; at public institutions it declined from 39 percent to 35 percent. If you extend the window back to 1990, the picture is even worse–the buying power of the Pell Grant dropped 10 percentage points at public four-year colleges. Maybe the picture would be slightly better if it could take into account multiple Pell awards for a student, but it wouldn’t get back up to the 45 percent level.
And remember, the growth in that blue line is not sustainable. There’s already concerns about finding enough money to pay for the program at a constant level this year, to say nothing of how annual tuition increases well over the inflation rate will readily eat into the future funding bumps from the student loan legislation passed last spring."