According to U.S. Department of Education data released today, the University of Phoenix became the first college in the history of the United States to take in more than a billion dollars worth of Pell Grants disbursements in a single academic year. Students at the for-profit chain received a total of $1,042,372,699.50 spread amongst 304,583 awards in the 2009-10 academic year.
That’s what happens when your average Pell Grant dollar disbursement increase is 62 percent. In 2008-09, Phoenix took in $656 million. The year prior to that it was $398 million and the year before that it was $244 million. Phoenix received more in additional Pell money this year than it got in the entire 2006-07 academic year and almost more than the 2007-08 year as well.
While Phoenix has steadily seen a huge increase in its Pell dollars disbursed, the general growth in the proprietary sector is astounding. For-profits received $7.34 billion in the 2009-10 academic year, or 70 percent more than they got the year prior. The sector took in $44 million less in 2009-10 than it did in the prior two years combined.
These patterns are amplified trends of what’s going on in the program overall. Total dollars disbursed increased by more than $11 billion this year, a 61 percent gain. Even if you take out dollars given to for-profits, the increase is still 58 percent. For-profits still increased faster than the rest of schools, but the rate is only 12 percentage points higher. By contrast, Pell dollars disbursed increased by 21 percent last year at public and nonprofit schools, but 40 percent in the for-profit sector.
These numbers are also a powerful testament that we should not rely upon Pell Grant increases to deal with rising college costs. The maximum Pell award increased by $619, or 13 percent this year; the program’s cost went up $11.1 billion, or 61 percent. Hoping to use the Pell Grant to curb the effects of annual 5 percent tuition growth will become prohibitively expensive very quickly. At some point the onus must be on keeping tuition down, not finding ways to pay for it.
Update: Craigie in the comments below also notes that a major cost source could be the year round Pell Grant, which allows students to get multiple awards in a year. Either way the point still stands that Pell Grants can’t keep up with tuition and rising costs.