(The University of Texas at Austin)

A Massive Gift Highlights Pell’s Declining Purchasing Power


The news: A $100-million gift from the Michael & Susan Dell Foundation will give an extra $20,000 in financial aid to the neediest students at the University of Texas at Austin. It’s one of the biggest gifts ever focused directly on low-income students.

But it highlights just how much more money such students need to cover the total cost of college.

The background: Since 2004, the Dell Foundation has supported about 5,000 students through its Dell Scholars program. The partnership announced last week with UT Austin will substantially scale up that program, giving every incoming student who is eligible for a Pell Grant a variety of support services, like financial-aid coaching, career planning, and a laptop. Those will go to roughly 2,000 students a year, according to the university. In addition, 1,200 of them — those from families with expected family contributions of $1,000 or less — will get an additional $20,000 in financial aid.

The goal: The university and foundation want to increase the graduation rate for Pell-eligible students to 90 percent. Right now it’s 73 percent — about 13 points lower than the overall rate.

This all comes on top of the announcement, back in June, that the university would use some of its oil money to expand its free-tuition guarantee. Families with incomes up to $65,000 now pay no tuition at UT Austin.

Of course, tuition is just one of the costs of going to college. (In-state tuition at Texas is about $10,300; total costs top $27,000.) That’s where the Dell money would come in. Students would get $20,000 — roughly $5,000 a year — to help pay for things like room and board, books, and transportation.

What this says about Pell Grants: It’s a reminder that they don’t go nearly as far as they once did. Back in the 1980s, the maximum Pell Grant covered about half the total cost of attending a public college. The $6,195 maximum grant now covers just 28 percent.

The story at UT is similar. Back in 2001, when today’s freshman were born, the maximum Pell Grant ($3,750) covered all but $1,000 of the in-state tuition at UT Austin. Now, the gap between a Pell Grant and the tuition has quadrupled to $4,100.

The difference is that, unlike some states and institutions, Texas is filling in that gap with its tuition guarantee. Plus, now the Dell money will help cover other costs.

Turning back the clocks: That means for about 1,200 students a year, the Dell gift creates a sort of time machine, giving them the financial support that millions would have gotten 20 years ago.

And it’s another reminder that place matters. In the fall we wrote about a report from the Institute for Higher Education Policy about the high cost of flagship universities. Pell might be a federal program, but state policies and deep-pocketed philanthropists mean Americans pay radically different prices depending on where they live.

Finally, philanthropy is a drop in the bucket compared with the $28-billion Pell Grant program. The Dell Foundation gift — an enormous $100-million over the next decade — is roughly equivalent to the Pell Grants that students at a single California State University campus — Northridge — get in a single year.

— Scott Smallwood

Failures in Student-Aid Communication

How well do colleges talk to students and families about their aid packages? Often, not very.

Many times, the notices to families lack transparency, obscure differences between money that has to be earned or paid back and money that doesn’t, and fail to clearly state the net price people have to pay. That makes it hard for students to choose the most-affordable college for them.

For more than seven years, the Education Department has offered templates for colleges that would allow them to supply aid information to students they can better understand and compare. But colleges haven’t flocked to use them. And over the past couple of years, groups like New America, uAspire, and The Institute for College Access & Success have analyzed how aid offers fall short and called for more transparency. A lot of problems remain.

We want to hear your experiences and ideas. Tell us about colleges that have excelled or lagged in this area. Share a personal story — or, better yet, an example of a good or bad aid offer. Send them to Andrea at andrea@opencampusmedia.org.

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