By Joelle Fredman

To support state-subsidized initiatives such as ‘Promise’ programs, in which institutions offset students’ costs most often after financial aid is applied, Congress must continue to tie funding for the Pell Grant program to inflation, according to a new report by the Center for Law and Social Policy (CLASP).

The paper, Indexing Pell to Inflation Benefits States, calls on Congress to renew its commitment to automatically increasing Pell funding based on the Consumer Price Index (CPI), which it agreed to do only through the 2017-18 award year ending on June 30, 2018.

For the past five years, funding for Pell has increased with inflation. For example, the maximum award rose by $40 from the 2015-16 award year to the 2016-17 award year, and by $105 for the current award year. If the current maximum award of $5,920 flatlines, however, Pell will lose its “spending power” as tuition costs and living expenses increase, according to the report. This current maximum award is already 30 percent less than the annual cost of attending a public, four-year institution.

CLASP Senior Policy Analyst Lauren Walizer, who authored the paper, argues that Pell Grants are essential to innovative programs such as ‘Promise’ programs because they reduce the financial burden on states that are covering students’ costs after other federal, institutional, and state grant aid is applied. These types of programs, which are becoming increasingly more popular among public universities as they continue to show positive results, require that states pull from their own pockets to support students.   

“The greater aid a student receives, the less state funding is needed to fulfill its Promise commitment,” Walizer wrote. “By reinstating the annual CPI increases, Congress could continue the guarantee started through states’ last-dollar programs, without requiring even more state funds to make up the gap left by a stagnating Pell Grants.”

‘Promise’ programs have proven successful at encouraging students to pursue more courses and at raising retention rates. After Michigan state schools created the ‘Kalamazoo Promise’ program, they found that more low-income students were attempting an increased number of credits, a positive marker that students will graduate before exhausting their financial aid. The ‘Tennessee Promise’ program also showed positive results, such as an increase in transfers to four-year institutions.

Walizer argues that ensuring that Pell Grants rise with the increasing costs of tuition and living not only helps schools support their students, but it also ensures that states do not have to create stricter terms of eligibility for these programs.

“When students have access to more Pell funds, states have greater flexibility to invest in innovative programs like Promise, to make their current programs more inclusive, and to fund additional priorities,” Walizer wrote. “To support innovations in state funding to students though programs like Promise, and to further states’ ability to increase investment in their colleges, Congress must continue to tie Pell Grants to inflation.”