Dive Brief:

• The Pell Grant system is broken and needs to be overhauled, according to a new policy paper co-written by the Education Trust, New America Foundation's Education Policy Program, and Young Invincibles.
• The “purchasing power” of Pell Grants has dropped dramatically in the last 34 years, with the maximum grant now covering only 31% of the cost of attending a four-year public school, down from 77%.
• The federal government should set a 10% “college affordability guarantee,” where Pell Grant-eligible students don’t have to pay more than 10% of their family’s income on college, the paper’s authors recommend.

Dive Insight:

The paper, "Beyond Pell: A Next-Generation Design for Federal Financial Aid," blames cuts in state funding for college as the main reason for higher education’s financial problems, forcing public schools to shift financial aid away from poor students toward inducements that will attract upper-income students. Meanwhile, the federal government is doing nothing to require states or colleges to make tuition affordable, or to improve quality, graduation rates, or on-time graduations. To help states ensure that college is affordable, the paper recommends linking federal Pell Grant funding increases to state funding. The paper also recommends modernizing the federal work study program.