• August 28, 2015

Pell Grants Are in Jeopardy, Senator Durbin Says, in Warning to Nonprofit Colleges

The federal Pell Grant program is in peril, and nonprofit colleges are not doing enough to save it, a key U.S. senator told a roomful of private-college presidents on Tuesday.

Sen. Richard J. Durbin, a veteran Democrat from Illinois, also chided nonprofit colleges for failing to challenge for-profit institutions over the "gainful employment" rule, and he urged the presidents to take a hard look at the outcomes of their own students.

"I'm here to tell you that you cannot afford to sit on the sidelines of this conversation anymore," he said at the annual meeting of the National Association of Independent Colleges and Universities. "You cannot come to Congress to ask for more funding for Pell Grants while looking the other way as billions of dollars of our current investment is wasted."

"I'm not talking only about low-performing for-profit colleges," he added. "There are public colleges and private nonprofit colleges that are also failing students."

The cost of the Pell program, the federal government's chief aid program for financially needy students, has exploded in recent years because of increases in the maximum award and a recession that has made more families eligible for need-based aid and driven unemployed workers back to school. Last year more than seven million students received Pell Grants, a million and a half more students than the year before.

'You Have a Friend'

The rapid expansion of the for-profit sector has also fueled the program's growth. For-profit colleges educate less than 10 percent of all college students but receive 25 percent of all Pell Grants.

Historically the Pell program has enjoyed bipartisan support. But with deficit concerns growing in Washington, some in Congress are beginning to question the long-term viability of the program. Republicans in the House are working on a spending bill for the remainder of the 2011 fiscal year that would slash spending on Pell Grants and other discretionary programs to 2008 levels.

Such a cut would have a devastating effect on the Pell program, reducing the maximum award by $1,500 for the neediest students, according to the U.S. PIRG, an advocacy group.

In his State of the Union speech last week, President Obama urged Congress to continue to provide funds for research and education, calling them critical to the country's competitiveness. Republicans in Congress have not said whether they will exempt the Pell program from their proposed cuts, but in a presentation here on Tuesday, a top Republican aide said the reductions would be "strategic."

"It doesn't mean they'll be across the board," said Jo-Marie St. Martin, general counsel to Rep. John A. Boehner, a Republican of Ohio and the newly elected speaker of the House.

Ms. St. Martin noted that Mr. Boehner was a former chairman of the House education committee and a recipient of a Perkins loan, "so you have a friend" in the leadership.

"You have a real opportunity because he knows your higher-ed issues," she said.

'Never Seen a Lobbying Effort Like This'

Against this backdrop, the Education Department has been working on a package of rules that aim to protect Pell Grants and other federal student aid from fraud and abuse. The most controversial of those regulations is the proposed "gainful employment" rule, which would cut off federal aid to colleges whose graduates have high debt-to-income ratios and low loan repayment.

For-profit colleges have lobbied vigorously against the rule, warning that it would displace thousands of needy students from their programs. Mr. Durbin, who took on the tobacco industry over smoking on airplanes and the credit-card industry over its "swipe" fees, told audience members that he'd "never seen a lobbying effort like this."

"It's like a full-employment program for former members of Congress," he said, referring to the large number of former members who were representing for-profit colleges in the fight.

Mr. Durbin has been highly critical of the for-profit sector, accusing the colleges of failing to prepare students for careers and leaving them heavily in debt. He repeated those accusations on Tuesday.

But the senator did not spare nonprofit colleges either, calling for "a serious conversation about the cost and quality of our higher-education system."

"It's time to talk not just about the number of students in college and the amount of federal aid dollars ," he said, "but about the quality and outcomes of that education."

He urged colleges to be "self-critical" and to act before the administration and Congress do, suggesting in particular that colleges "improve your accreditation systems now."

"The administration and Congress will likely push you to be better stewards of taxpayer dollars," he said. "But you shouldn't wait for that."


1. tgraham13 - February 01, 2011 at 04:46 pm

"For-profit colleges educate less than 10 percent of all college students but receive 25 percent of all Pell grants." Sorry, but that's not true. It is STUDENTS at for-profit colleges who receive the funds. The purpose of the Higher Education Act is to help educate people who might not otherwise be able to afford to go to college. That's what it's for. To the extent that people qualify for grants, it would be illegal to deny them.

I am pleased to see Senator Durbin acknowledging that all sectors have a responsibility to meet the same standards. It's not widely known that national accreditors have far more rigorous standards for institutions in the areas of completion and placement than the regional accreditors.

Gainful Employment for all sectors!

2. bpdavis - February 01, 2011 at 05:05 pm

Your parsing of this question seems unusual. Are you saying that the studens of for-profit, or even non-profit, colleges and universities can choose to do something other than pay their educational expenses with their Pell Grant money? If not, you distinction seems meaningless.

3. jbarman - February 01, 2011 at 05:19 pm

"Sen. Richard J. Durbin, a veteran Democrat from Illinois, also chided nonprofit colleges for failing to challenge for-profit institutions over the "gainful employment" rule, and he urged the presidents to take a hard look at the outcomes of their own students."

It's unlikely that non-profits will challenge anyone on "gainful employment" because entire majors in areas such as humanities and social sciences could not meet the requirements of the regulation. That's not a condemnation of the majors. Instead, it points out the hypocrisy of the rule. The DOE has determined that the only value of higher education is to provide instant employment in a related area.

4. tgraham13 - February 01, 2011 at 05:25 pm

Thanks for your question, bpdavis.

My point is that it is the students and their families who qualify for the aid, using a formula provided by the government. The school has nothing to do with how much aid is awarded, except to the extent that it welcomes students from lower socio-economic strata. Schools can inform students about Pell grants all day long, but if the students don't qualify, they aren't getting them. If they do qualify, it's the government formula that determines how much they are awarded, and the schools are not part of that determination.

The reason I make that point is that schools serving greater numbers of students from less affluent families are acting in harmony with the Higher Education Act as passed by President Johnson and Congress in 1964. Just a reminder that that's what Pell Grants are for.

5. lindalll - February 01, 2011 at 06:47 pm

The student qualifies for the grant based on income, not what school he or she is going to. One of the reasons that so many people at for profit schools qualify for Pell grants is because they are non traditional students and are too old for their parents income to be a factor. The income bar for Pell grants is pretty low and if an 18 year old has two parents working full time, odds are he/she will qualify for little or no funding.

6. forprofitedu - February 02, 2011 at 01:00 pm

All colleges need to be held to high standards. It's just political BS that leads one sector of higher ed to be held to a higher standard than another. Isn't it interesting that the oldest, most well off elite sector is given an easier framework to operate. If GE is what the majority wants and believes in then it should be the rule for all of higher ed, not just the for profits. Yet we all know it wont be mandated on the non-profits, isn't it clear that it is not a good rule and that unintended consequences will be extremely negative to those who need the most attention. For more visit forprofitedu.com

7. wmahoney52 - February 02, 2011 at 01:06 pm

The goal here is to pit college segment against college segment. jbarman is correct about non-profits having the same issues as for profits. And don't be mislead, if it sticks to one today, tomorrow it will stick to the other.

8. willynilly - February 02, 2011 at 08:35 pm

These institutions should have never been authorized to participate in the Pell Grant Program in the first place. If they had had to meet a five year probationary period, their performance record would have likely led to Pell Grant Participation in only about 25% of these fly - by - night enterprises. Another blunder by Congress in allowing carte blanche approval.

9. feudi - February 03, 2011 at 02:39 pm

Gainful employment must be part of any federal funding for all schools. I agree with willynilly that many of these schools should never have been permitted into the Pell grant program. With a $14,000,000,000,000 national debt, we must make cuts in spending or the nation will collapse. We can no longer afford Pell grant for massage therapist and cosmetologist...or lawyers for that matter.

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