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KEY CHALLENGES IN REDIRECTING PELL TOWARD COLLEGE COMPLETION NCASFAA 2012 FALL CONFERENCE CONCORD, NORTH CAROLINA N

KEY CHALLENGES IN REDIRECTING PELL TOWARD COLLEGE COMPLETION NCASFAA 2012 FALL CONFERENCE CONCORD, NORTH CAROLINA NOVEMBER 11-14 ANTHONY JONES DIRECTOR OF POLICY RESEARCH. OVERVIEW

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KEY CHALLENGES IN REDIRECTING PELL TOWARD COLLEGE COMPLETION NCASFAA 2012 FALL CONFERENCE CONCORD, NORTH CAROLINA N

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  1. KEY CHALLENGES IN REDIRECTING PELL TOWARD COLLEGE COMPLETION NCASFAA 2012 FALL CONFERENCE CONCORD, NORTH CAROLINA NOVEMBER 11-14 ANTHONY JONES DIRECTOR OF POLICY RESEARCH

  2. OVERVIEW • Numerous efforts are underway to reimagine or redesign federal student aid programs, and proposals may emerge as early as next year. • These include proposals to redirect the Pell program in an attempt to increase college completion. • While improving college completion is a broadly shared goal, whether it is feasible to use Pell to do so depends ultimately on the answers to two key analytical questions: • Can unintended collateral damage to the program's underlying goal of ensuring access be avoided or, at least, minimized? • Can an increase in overall completion among low-income, Pell-eligible students actually be ensured? • This session will address these questions by identifying: • which students will be hurt by such changes, • the types of proposals that are likely to emerge, • a preliminary assessment of the impact of two types of proposals, and • an analytical framework for evaluating proposals when they emerge. 1

  3. BACKGROUND • College enrollment and completion depend not only on family financial circumstances but also on factors related to past academic merit and current academic progress – which, itself, is a function of past academic merit. • These factors include, but are not limited to: • test score, • high school grades and rigor of high school preparation, • college grades and credit hours completed, and • selectivity and resources of the college attended. • In order to increase college completion, some advocates propose that Pell awards, which are currently based primarily on family financial circumstances, be made to depend on merit-based factors as well. • This includes proposals to make an institution’s eligibility for Pell a function of merit-related factors. • Without additional program funding, such proposals require that higher Pell grants to recipients who appear more likely to complete college be financed by lower grants to recipients who appear less likely to do so. • If implemented, such proposals would trigger a zero-sum redistribution in which some students and institutions gain financially while others lose. 2

  4. STUDENT POPULATIONS THAT WILL • BE HARMED BY REDIRECTING PELL • The push to reform Pell by redirecting awards toward completion is strong and should be distinguished from efforts to reduce fraud and abuse. • Reform proposals can be expected to emerge over the next several months that would, if implemented, inflict certain financial harm on Pell applicants and recipients who appear less likely to complete. • Regarding such proposals, the issue will not be if at-risk students will be hurt but how badly. • The populations most at risk and thus likely to be hurt financially include: • lowest income students, • minority, disadvantaged, and first-generation students, • independent and nontraditional students, and • part-time and life-long learning students. • Certain financial harm will also extend to those institutions – both public and private – that disproportionately serve these students: • 2-year public colleges, • proprietary institutions, and • non-selective 4-year colleges. 3

  5. TYPES OF PROPOSALS • THAT COULD EMERGE • It is likely that proposals will assume that additional funding for need-based grant aid and Pell is simply not available. • The resulting zero-sum proposals could be of the following types: • Type 1: Disenfranchising certain types of currently eligible students • e.g., reducing or eliminating awards to independent students, less-than-full-time students, or those enrolled in for-profit colleges • Type 2: Injecting merit measures into calculation of initial Pell awards • e.g., making the initial Pell award a function of past merit – test score, high school GPA, etc. • Type 3: Using stricter measures of progress in calculating continuing awards • e.g., making the continuing Pell award a function of current academic progress – college GPA, credit hours completed, etc. • Type 4: Basing institutional eligibility on student progress or completion • e.g., making the eligibility of an institution a function of stricter measures of academic progress, completion, or graduation • Hybrid proposals – with features from more than one type – may also emerge. 4

  6. PRELIMINARY ASSESSMENT OF THE • IMPACT OF TYPE 2 AND 3 PROPOSALS • The following is a brief preliminary assessment of which students and institutions would win and lose under Type 2 and Type 3 proposals. • It does so by examining the distribution of test scores, high school GPAs, college GPAs, and semester hours completed among dependentand independent full-timePell recipients, by type and control of institution. • The most recent nationally-representative data available on these factors is the Beginning Postsecondary Students (BPS) study of 2003-04. • While it is unlikely that the distribution of these factors has changed much since 2003-04, the assessment is preliminary for two reasons. • Data from BPS 2003-04 are somewhat old and do not include observations on Pell applicants, only recipients. • A precise determination of who wins and who loses – and to what extent – depends on how exactly the factors will be used in the calculation of award, which has yet to be specified. • Nevertheless, it is possible to draw some conclusions about the magnitude and direction of likely shifts in Pell program funds if merit-based factors are used aggressively to condition the Pell award. 5

  7. PRELIMINARY ASSESSMENT OF THE • IMPACT OF TYPE 2 AND 3 PROPOSALS (CONT.) • The initial Pell award for first-time applicants and the continuing Pell award for re-applicants can be conditioned separately and uniquely by use of one or more merit-based factors. • Thus, the preliminary analysis is divided into two parts: • first, likely winners and losers are identified among first-time applicants and their institutions if test score and high school GPA are used to condition the initial Pell award; • second, likely winners and losers are identified among re-applicants and their institutions if first-year college GPA and semester hours completed are used to condition the continuing Pellaward. • While the data are not sufficiently robust to show the distributions for recipients enrolled in for-profit colleges, in most cases, the 2-year public college distributions are a good approximation for those as well. • The following represent only a few examples of the myriad ways that merit could be incorporated into the Pell program. 6

  8. Table 1-A shows that, among Pell recipients enrolled in 2-year public colleges, 75% (38% + 37%) had test scores < 950, compared to only 43% (15% + 28%) of peers enrolled in 4-year public colleges and only 36% (13% + 23%) of peers enrolled in 4-year private colleges. • A similar pattern is shown for high school GPA: 47% (38% + 9%) of Pell recipients enrolled in 2-year public colleges had a high school GPA < 3.0, compared to only 21% of their peers enrolled in 4-year public colleges (15% + 6%) and 4-year private colleges (13% + 8%). • Combining test score and high school GPA, 38% of Pell recipients enrolled in 2-year public colleges had a test score < 950 together with a high school GPA < 3.0, compared to only 15% and 13% of their peers enrolled in 4-year public and private colleges, respectively. • If the awards of lower ranking recipients were reduced or eliminated in order to fund higher awards for their peers who are higher ranking, those losing grant aid would outnumber those gaining grant aid by 22 percentage points (38% –16%) at 2-year public colleges. • The opposite would be true in 4-year public and private colleges: winners would outnumber losers by 36 percentage points (51% –15%) and 43 percentage points(56% – 13%), respectively. 7

  9. Table 1-B shows that selectivity (and institutional resources to support such students) would be a key factor in the percentage of recipients in each 4-year college sector who would be winners. • Combining the two factors, the ratio of recipients with test score ≥ 950 and high school GPA ≥ 3.0 (winners) to recipients with test score < 950 and high school GPA < 3.0 (losers) varies dramatically: • For non-selective 4-year public colleges, the ratio is less than 3 to 1 (46% ÷ 16%). • In contrast, for selective 4-year public colleges, the ratio is over 8 to 1 (67% ÷ 8%). • For non-selective 4-year private colleges, the ratio is only 2.5 to 1 (45% ÷ 18%). • In contrast, for selective 4-year private colleges, the ratio is nearly 27 to 1 (80% ÷ 3%). • Pell recipients enrolled in selective 4-year public and private colleges – who have the highest college completion rates and highest level of need-based grant aid from other sources – would most likely be the big winners if level of award was conditioned by test score and high school GPA jointly. • This crystallizes the challenge in ensuring that gains in completion more than offset losses. 8

  10. Table 2-A shows that first-year college GPA was distributed relatively evenly: among Pell recipients enrolled in 2-year public colleges, 49% (40% + 9%) had first-year college GPA below 3.0, compared to 50% (32% + 18%) of their peers enrolled in 4-year public colleges and 48% (26% + 22%) of their peers enrolled in 4-year private colleges. • A different pattern is shown for semester hours completed: 71% (40% + 31%) of Pell recipients enrolled in 2-year public colleges had semester hours completed below 27, compared to 48% (32% + 16%) of recipients in 4-year public colleges, and 36% (26% + 10%) of recipients in 4-year private colleges. • Combining the two measures, 40% of Pell recipients enrolled in 2-year public colleges had first-year college GPA below 3.0 and semester hours completed below 27, compared to only 32% and 26% of their peers enrolled in 4-year public and private colleges, respectively. • It should be noted that injecting merit into both initial and continuing Pell awards introduces a “bait-and-switch” character into the program, in that the initial award is not guaranteed for multiple years. 9

  11. Table 2-B shows that selectivity (and institutional resources to support such students) again would be a key factor in the percentage of recipients in each sector who would be winners. • Combining the two factors, the ratio of recipients with first-year college GPA ≥ 3.0 and semester hours ≥ 27 (winners) to recipients with first-year college GPA < 3.0 and semester hours < 27 (losers) varies: • For non-selective 4-year public colleges, the ratio is less than 1 to 1 (30% ÷ 36%). • In contrast, for selective 4-year public colleges, the ratio is over 2 to 1 (41% ÷ 19%). • For non-selective 4-year private colleges, the ratio is over 1.5 to 1 (41% ÷ 26%). • In contrast, for selective 4-year private colleges, the ratio is 1.5 to 1 (39% ÷ 26%). • Pell recipients enrolled in selective 4-year public colleges and both selective and non-selective 4-year private colleges would be the winners – relative to recipients in non-selective 4-year public colleges – if level of award was conditioned by first-year college GPA and semester hours completed jointly. • This again crystallizes the challenge in ensuring that gains in completion more than offset losses. 10

  12. ANALYTICAL FRAMEWORK FOR • EVALUATING PELL PROPOSALS • The potential redistributive effects of using merit measures in Pell requires that proposals must be carefully specified and independently evaluated with data. • The merit-based factors to be used must be identified,as well as the precise manner in which they will enter calculation of the Pell award. • Research that supports use of the factors and ensures that gains in completion would more than offset losses must be identified. • This requires creation of a current Pell applicant/recipient database that contains the observations on the merit-related factors to be used – which does not now exist. • Merit can also be introduced by making institutional eligibility for Pell a function of academic progress or completion. • Research that shows that students will not be harmed must be identified. • Any and all harm to at-risk students must be identified and avoided – or, at least, minimized, to the extent possible. • Redistributive effects, by type and control of college, must be modeled, made public, and carefully considered. • All proposed merit-based changes to the calculation of the Pell award or eligibility must be pilot tested to identify their likely impact on students and institutions. 11

  13. QUESTIONS & DISCUSSION

  14. WEBSITE AND CONTACT INFORMATION www2.ed.gov/acsfa ANTHONY JONES DIRECTOR OF POLICY RESEARCH anthony.jones@ed.gov

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