Student loan debt in the United States amounted to nearly $1.75 trillion As of April this year. The average public university graduate who borrows owes around $30,000 for a bachelor’s degree.

As policymakers debate solutions like canceling some or all student debt and doubling the Pell grant, let me make the argument as we do must approximately twice the maximum annual Pell allocation (from the current $6,895 to about $13,000), at the same time significant structural and regulatory reforms must be implemented to reduce future student loan indebtedness. Under my proposal, Pell Awards would only go to institutions where 80 percent of the cost of participation can be covered by a combination of Pell grants and government, private, and institutional grants. Essentially, a student receiving the maximum Pell amount should only need to borrow to cover up to 20 percent of tuition costs.

While this reform focuses on students who receive Pell, this solution would have a downward impact on those students who do not qualify for Pell and would still need to borrow to attend college.

Why are Pell students currently taking out loans?

Pell students still borrow sizable amounts of money, as Pell pays only a fraction of tuition — and that fraction has declined significantly over the past two decades. According to the latest “Trends in college awards and student aidIn the 2001-02 academic year, a maximum Pell award covered 42 percent of tuition, fees, and room and board at a public four-year institution and 16 percent at a private non-profit four-year institution. For 2021-2022, the maximum Pell grant covered just 29 percent of the average tuition, fees, and room and board at public four-year colleges and 13 percent of the average tuition, fees, and room and board at private nonprofit four-year colleges.

Why focus reform on Pell?

A significant proportion of students receive some form of Pell. According to the College Board report, about 30 percent of all students enrolled in undergraduate programs in the United States received a Pell scholarship in the 2020-21 academic year. From an equity perspective Underrepresented minority students are more likely to receive Pell Grants.

If you focused on an institution’s eligibility for access to Pell grants, you would force more expensive institutions to either get more state and/or local support, work with their foundations to raise funds for institutional grants, or to lower their prices significantly. How many colleges could, should, or can neglect 30 percent of the student body and still survive financially?

Even if you use Double Pell, under your proposal, can students attend a four-year public college?

Increasing the maximum Pell award to $13,000 would cover an estimated 56 percent of the cost of tuition, fees, and room and board at public undergraduate institutions National Network for University Degrees.

An institution would be eligible to meet the 80 percent threshold I propose if other forms of student assistance were added. For public institutions that would not meet the 80 percent threshold, this would force state and local governments to either contribute more to their public four-year institution or have the institution reduce its costs and/or provide an institutional complement to meet the minimum threshold reach.

Another (or partial) solution for some would be to lower the cost of attendance by having students commute to campus and live with family, saving money on room and board, which public four-year institutions say average $11,950 the university council. According to the report, 72 percent of Pell students already live off campus Municipal Institutewhich would suggest that the calculation of off-campus living expenses is already being done with Pell students the vast majority of the time.

The average state tuition and fees (excluding room and board) at a public four-year institution is $9,400 National Center for Education Statistics. For a student living off-campus with family, the average cost of attending a public institution is four years $14,900 (or about $5,500 via tuition and fees). A $13,000 Pell award alone would cover more than 80 percent of those costs without requiring additional government or institutional help.

In contrast, NCES estimates the average cost of enrollment for students attending a four-year public university and living on campus at $25,500: for these students, the institution would need a tuition discount or other forms of assistance of about $7,400. Find dollars to supplement Pell to cover 80 percent of the cost of attending.

It should be noted that the cost of attending for a student who lives off campus and not with a family is comparable to that of students who live on campus. Not all Pell students have the opportunity to live off-campus with their families, and perhaps exceptions can be made and/or alternative solutions explored for these students.

Even if you do Double Pell, under your proposal, can students attend a private four-year college?

For private four-year institutions, some will be able to reach this threshold, while others will not. NCES estimates the total estimated cost of attending for students living with a family while attending a four-year private nonprofit university at $42,200 and the average cost of just tuition and fees at $36,700. Currently, the average tuition discount is around 50 percent, as recently reported by Within the Higher Ed. A 50 percent discount brings tuition and fees down to $18,350. For students living with a family, the cost of attending is around $23,850. The institution would have to find other forms of help to reduce costs by another $2,410 to reach the 80 percent threshold. If that means an institution would lose access to 30 percent of potential students, many will get creative with student awards to make it work.

Waiting! Do you limit choices for Pell students?

Probably. Students may still choose to attend ineligible institutions but do so at their own financial risk and expense. But remember, Pell is a federal program and benefit. We currently have similar restrictions on other government programs such as Medicaid and Medicare. If you participate in one of these programs, not every doctor will accept this insurance due to the lower reimbursement rates, which limits the patient’s choice of doctors and specialists. We are also currently limiting federal financial support to accredited institutions. The key is that students must, and will, have access to quality and affordable college options.

Why can’t you just double up on Pell and call it a day?

While doubling Pell would bring some relief, we wouldn’t be able to prevent a future student debt crisis. Former Secretary of Education Bill Bennett formulated a hypothesis 1987 that increases in federal grants are associated with increases in tuition. While the merits of this hypothesis are debated, we know that college costs have increased by more than twice the rate of inflation since the mid 1980s. There are numerous reasons for this increase, from Changes in state and local funding to the proliferation of offices and services needed to run a college (such as technology, institutional research, holistic student care, etc.).

Simply raising Pell without taking any further action is like personal credit card debt consolidation. Yes, you can provide temporary relief, but if you don’t change your spending patterns or expand your income streams, you’ll most likely find yourself back in the same situation that got you there in the first place. The 80 percent minimum threshold I propose would force institutions to reconsider their core cost control functions and argue with state legislators for investments in public institutions.

What about students who aren’t Maximum Pell?

To receive Pell dollars under this proposal, students would need to attend an institution that meets the 80 percent threshold. Students who qualify for a Pell Award lower than the maximum may choose to attend an accredited institution or forego their Pell Scholarship and assume the financial risk of attending an ineligible institution. For example, if a student is eligible for 50 percent Pell, they can receive that funding at an accredited institution and pay the rest through a combination of loans and personal/family contributions. But by attending an accredited institution, they still benefit from lower college costs, which reduces the amount of credit they may need to borrow.

Final Thoughts

We cannot completely solve the need for students to borrow to fund college. Ultimately, it is an investment from a personal, governmental and societal perspective. But what we do know is that business as usual has led to a student debt crisis that is disproportionately affecting our poorer students and forcing many others into a situation that may take them decades to emerge from. From an economic justice perspective, we need to increase the federal government’s contribution by significantly increasing the Pell price. States and local governments that want quality public institutions would need to make appropriate investments. Responsibility for higher education is shared by all levels of government. Finally, institutions that want to serve all students must fundamentally change the way they do business to bend the cost curve on their side.

This proposal is intended to initiate a dialogue. There are parts of the proposal that those across the political spectrum might and might not like – and that’s fine. Finding a sustainable solution is the best way forward.