Academic journal article Journal of Business and Educational Leadership

The Effect of Pell Grant Changes on the Graduation Rate and College Finances: A Study of Rural Community Colleges in Virginia

Academic journal article Journal of Business and Educational Leadership

The Effect of Pell Grant Changes on the Graduation Rate and College Finances: A Study of Rural Community Colleges in Virginia

Article excerpt

INTRODUCTION

Nationwide higher education institutions are facing multiple financial challenges due to declines in student enrollment, budget cuts and the rising cost of higher education (Pope, 2013). The education budget cuts have direct impacts on available financial aid dollars to needy students, hence negatively impacting college enrollments and graduation rates (Katsinas, Davis, Friedei, Koh, & Grant, 2013). The ability for students to attain federal aid, notably Pell Grant monies, is now made harder due to legislative modifications that took effect in 2012.

The primary objective of the federal student aid programs is to increase access to postsecondary education. These Federal Programs include Pell Grants which support low income students to attain post-secondary education at undergraduate and certain post baccalaureate levels (U.S. Department of Education, 2011). Created in 1972 as the Basic Educational Opportunity Grant, the program was renamed in 1980 for Senator Claiborne Pell (D-RI), who led the creation of the program. Currently, the maximum award amount is set by the U.S. Congress, and administered by the U.S. Department of Education (The Pell Institute for the Study of Opportunity in Higher Education, 2013).

Community college students tend to be the most federal aided group amongst college students (Katsinas, Hagedorn, Mensel, & Friedei, 2011). Financially challenged students are often attracted to community colleges because of their mission of offering a high quality education at a low cost (Mendoza, Mendez, & Malcolm, 2009). The availability of financial aid for these students can be a determining factor of whether or not they pursue postsecondary education.

According to the American Association of Community Colleges (2013), most community colleges receive the majority of their revenue from state appropriations, tuition and fees, and local appropriations, respectively. Consequently, since 2008, Pell Grant awards have had the highest growth in rural community colleges (Katsinas, Hagedorn, Mensel, & Friedei, 2011; Katsinas, Bray, Koh, & Grant, 2012). Rural community colleges are defined as schools that reside in and service communities outside of urban cities and towns. Virginia's rural community colleges geographically are located from the Eastern Shore to the Southside and Southwestern parts of the state, often referred to as the 'Rural Horseshoe'.

Virginia's community colleges have traditionally responded to the years of state budget cuts and decreased state appropriations by increasing tuition (State Council of Higher Education for Virginia, 2013b). This increase is effective as long as enrollment continues to grow and federal grant dollars are available. However, recent studies have shown that when federal grant dollars are less attainable, finances for certain types of colleges are negatively impacted (Katsinas et al, 2013).

The recent changes to the Pell Grant program include the elimination of ability-to-benefit test, the income levels for zero expected family contribution (EFC), the elimination of the 10% maximum award, and the reduction in the maximum number of semesters to receive grant monies (The Pell Institute for the Study of Opportunity in Education, 2013). These changes in the Pell Grant rules and funding will have a direct impact on the capabilities of Virginia's rural community colleges to raise funds, manage their balance sheets, as well as, the ability of needy rural students to attain their education goals. As these changes in the Pell Grant award are very recent, there are few studies which have assessed the full impact of these changes on both student and colleges. This research is an attempt to study the impact of the changes in the Pell Grant rules on educational attainments and on college revenues of the rural community colleges in Virginia.

LITERATURE REVIEW

For more than 40 years, the Federal Pell Grant program has served as the federal foundation of support for needy students. …

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