The Inability to Restrain Borrowing

June, 2014

Washington -- Ben Miller's latest offering in The Chronicle of Higher Education should be carefully read at the Department of Education, the White House, and the Congress. Especially this:

"The story of Pell and its inability to meaningfully restrain borrowing exemplify the challenges of unilateral federal financial-aid investments. Without conditions on states and institutions that introduce real requirements about providing an affordable education, federal dollars will keep getting gobbled up by insatiable college budgets and state officials looking for ways to supplant their own education spending."

In other words, no conceivable amount of Pell spending is going to slow down the student debt juggernaut without addressing the responsibilities of states and colleges.

This is not news to some of us. In 1997, I wrote in the Journal of Federalism that federal student financial aid programs that operated in the tradition of cooperative federalism (with some restraints on states and colleges) were more effective than those like the Pell program, which did not. In 2002, I completed an unpublished paper showing that increases in Pell grants were not associated with declines in student debt load for the low-income. Although that paper was written while I was at the National Center for Education Research within the Department of Education, it was unwelcome. The Department was adamant that its researchers were not to do any actual research, but rather administer grants to college researchers, who were unlikely to suggest that Pell grants might not be effective in holding down student debt burdens. That topic has long been verboten.

Two years ago, on an Education Sector panel in Washington, I suggested "re-balancing" federal student grant appropriations by tilting the funding more to programs in the cooperative federalism tradition, to help prevent the raw exploitation of mindlessly appropriated federal dollars that have been such a failure in reining in student loan debt. I think that is still a sound suggestion.