Biden’s Plan to Double Pell Grants

Tuition has risen as colleges have increased their costs in order to take advantage of additional government subsidies. Has this been explained to President Joe Biden? In his budget, he proposes doubling the federal Pell Grants, raising tuition even more.

The administration’s solution is to raise the maximum Pell Grant from $6,495 to $8,670 next year, with the goal of doubling it within ten years. “Pell Grants have been the foundation of low- and moderate-income students’ financial aid for decades,” the Department of Education budget says, “however, the value has diminished as college costs continue to rise.”

Pell Grants were established as part of Lyndon B. Johnson’s Great Society to assist the students in most need of support. However, about 40% of undergraduates currently qualify for Pell Grants, and with the maximum amount, the grant can cover the average cost of community college in-state tuition ($3,730). With the Biden administration’s help, many public four-year universities’ average in-state tuition ($9,340) would be free as well.

The Pell Grant expansion plan is likely to cost $229 billion next ten years, more than twice as much as his plan to make community colleges free for students. This would bring a huge fortune to the higher-education with no severe restrictions. The subsidies are paid regardless of how well students perform, resulting in colleges having little incentive to raise graduation rates.

About 62 percent of Pell Grant recipients do not or cannot finish their degrees in eight years, the longest federal data can track. In other words, more than two-thirds of $229 billion could be spent in a highly inefficient way. Progressives, once again, seem to care more about how much money the government spends than how students actually fare after college graduation. They also believe that students should not be burdened with an unpayable amount of debt. Liberals aim to eliminate college tuition for students first, on top of canceling government loans in the long run.

With a tremendous amount of debt, many students “start here” but find it extremely hard to “go further.”

Furthermore, the current administration’s financial plan also proposes to make student debt relief tax-free forever. Progressives hope the president to forgive $50,000 of debt for each borrower, but the forgiven loan is subject to federal income tax. Subsequent taxes following the loan forgiveness could immediately overwhelm the student borrowers. That is why the Covid bill last March exempted forgiven student loans from taxation through 2025.

Even if the president delivers what Democrats demand, graduate student borrowers will still be indebted with an enormous amount of loans. Many students have signed up for income-based repayment programs upon graduation, which allow them to pay 10% to 15% of their salary for 10 to 20 years and then have their remaining debts erased.

However, the tax bills from their discharged loans could be massive. Many people do not earn enough to pay off their principal loan balance as their massive loans accrue interest. The Biden administration intends to bail out these graduate debtors by exempting student debt from income tax for the rest of their lives.


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