As anxieties over college affordability and student loan debt continue to rise, some experts are calling for a reevaluation of how federal financial aid is allocated. Currently, Pell Grants are awarded based on family income and household size, without factoring in family wealth — such as college savings, investment funds, and other assets. Critics argue this model leaves many families, particularly Black, Latino, and Indigenous families with lower wealth but higher wages, ineligible for sufficient aid, forcing them to take on student loans and perpetuating racial inequality.
In response, Laura Hamilton, a sociology professor at the University of California, Merced, and her team at the Higher Education Race and the Economy (HERE) Lab have proposed a new wealth-based Pell Grant. The plan, outlined in a report supported by the Lumina Foundation and the Institute for College Access and Success (TICAS), suggests increasing federal aid and targeting low-wealth students. The proposed grant would supplement the existing Pell Grant program, potentially doubling the maximum award for students with less than $500 in family wealth.
“[A]Wealth-Based Pell Grant would end racial disparities in student loan borrowing and equalize debt-free college across racial groups,” the report reads. “This is because a Wealth-Based Pell Grant will be afforded to a greater share of Black and Latine students, who are more likely to have low wealth than White students. In doing so, a Wealth-Based Pell Grant would join other policy proposals, like Baby Bonds, that are designed to redress the financial legacy of slavery and counter the complex of racialized policies that have long expropriated wealth from communities of color.
However, the plan comes with a significant cost. Researchers estimate that it would require an additional $17.4 billion in federal funding to support the lowest-wealth students. Some experts have raised concerns about the practicality and effectiveness of the proposal. While many agree that the current aid system needs reform, opinions are mixed on whether the wealth-based Pell Grant is the best solution.
Critics like Robert Levine, a professor of economics at Wellesley College, argue that a broader restructuring of the Pell Grant formula is necessary to address wealth inequality, while others, like Jason Cooper, a senior research fellow at the conservative American Enterprise Institute, believe the focus should be on controlling rising tuition costs. Despite these concerns, many experts see the proposal as a valuable starting point for discussions on how to make college more accessible to low-wealth students.
