Paying for higher education
Although low-income students are the intended recipients of federal Pell Grant aid, they are not receiving the full benefit, according to MPRC faculty associate Lesley Turner. Turner's research shows that schools strategically respond to changes in federal grant aid by systematically altering institutional aid. In other words, when the federal government makes more financial aid money available to students, schools respond by decreasing their own financial aid budgets. By this method, Turner estimates that institutions of higher learning are able to capture about twelve percent of all Pell Grant aid. In 2013, the federal government distributed $32 billion in Pell Grants to 8.9 million students, but educational institutions captured at least $3.8 billion of this aid.
Turner found that public schools, which are more motivated to offer opportunities to disadvantaged students, capture less than five percent of students' Pell Grant aid. But at some selective nonprofit schools, decreases in institutional grant aid "crowd out" as much as two-thirds of Pell Grant aid. These differences illustrate differences in schools' objectives and market power across sectors.
Turner's work was cited in a recent New York Times article about the increasing cost of higher education.