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

February 01, 2011

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."