Indexing Pell to Inflation Benefits States
Known as the foundation of student aid, the Pell Grant program has been a significant financial resource for decades among low- and moderate-income students. The federal program provides funding directly to students through the institutions they attend. Because states play no active role in Pell, it’s easy to assume the program does not influence the effectiveness of state and local policies. However, Pell Grants can be a critical part of states’ college affordability policies.
When state budgets are tight, Pell Grants can indirectly give states more financial flexibility to support the success of innovative state and local ideas. Conversely, cuts to Pell, or the failure to maintain current provisions such as tying the value of it to inflation, can have lasting negative impacts on the success of state postsecondary initiatives. This brief is designed to show examples of these linkages that may not be initially clear to policymakers.