He doesn’t get credit for it, but President Obama is responsible for a massive increase in college financial aid. He doubled Pell Grant funding, tripled tuition tax credits, and capped student loan payments. How did he do it?
Well, the guy Maureen Dowd called O-Bambi played hardball — at times infuriating Democrats as much as Republicans.
Here’s the story around Pell Grant funding.
The Policy & Politics:
Rewind to January 2009 when President Obama took office in the depths of the nation’s worst economic recession since the Great Depression. Consensus among mainstream economists was that some type of federal stimulus package was needed to compensate for cratering consumer demand. Indeed, work on an economic stimulus package, the American Recovery and Reinvestment Act, began prior to Obama taking the oath of office.
Economists normally view education spending as a long-term investment. But early Obama Administration officials and Congressional Democrats seized upon the short-term economic recovery act vehicle to invest heavily in education. In fact, one in eight Recovery Act dollars went to education. Over $17 billion alone was dedicated to Pell Grants.
Hardball Tactic #1: Rahm’s Rule – “Never Waste a Crisis”
Mayor Rahm Emanuel, then Chief of Staff for President-Elect Obama, presciently noted:
You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before…things that we had postponed for too long, that were long-term are now immediate and must be dealt with.
Recovery Act dollars, however, provided only a one-time, short-term increase in Pell Grant funding. Knowing that Pell Grant funding levels would expire after a couple of years, the Obama Administration pursued partisan work with Congress to sustain newly elevated levels in the out years.
A year after taking office, in 2010, the Obama Administration and Congressional Democrats shifted some $40 billion in taxpayer funds away from student loan bank subsidies to the Pell Grant program instead.
Hardball Tactic #2: Reconciliation
Obama whacked subsidies to Sallie Mae and other student loan banks by using a filibuster-proof tactic pioneered by President Ronald Reagan.
“Take the Hill by storm,” former OMB Director David Stockman said in 1981 when laying out his strategy to use the filibuster-proof reconciliation process to ram through Reagan’s first budget.
Obama heeded that advice in passing the Health Care and Education Reconciliation Act. And yes, it passed on a strictly party-line, majority vote.
Republicans hated the technique, their inability to filibuster, and the underlying policy. But today, there is little debate about Sallie Mae bank subsidies, and Republican efforts to roll back Pell Grant funding increases have abated. (Not gone away, but abated.)
The Results:
In the time since Obama took office between FY 2008 and FY 2015, the Administration nearly has doubled Pell Grant funding from $18 billion to $34 billion annually. Measured against baseline levels, that represents a cumulative boost of over $100 billion in added Pell Grant funding over the last seven years.
Today, there are 2.7 million more Pell Grant recipients each year and the maximum Pell Grant is over $1,000 greater than before Obama took office. It’s not a home run. Obama didn’t bend the college cost curve or appreciably raise the purchasing power of the Pell Grant, but it’s not a bad legacy.
The deeper higher education legacy story though is that Obama paired increased resources for college access and affordability with new reforms focused on college completion and quality.
Will the next President retreat to politically comfortable turf and just promote either substantially increased resources or free-market, laissez-fair reforms for higher education?
Or will he or she take up the challenge of pairing badly needed increased resources for higher education with reform? We’re hoping for the latter.
For more on the Obama higher ed legacy and the 45th President’s challenge, read our new report.