Want to reduce hunger among college students? Stop taxing their Pell Grants

The Biden administration announced in January that it would provide $198 million in COVID-19 relief funds to help colleges support students suffering from hunger and housing insecurity. It’s a welcome first step, but Congress needs to do more.

It is hard to imagine, but food insecurity—hunger—plagues millions of college students. It’s a serious and widespread problem, one which the current pandemic has only exacerbated.  

An April 2021 report by the Hope Center found in a 2020 survey of 195,000 students that nearly three in five students experienced basic needs insecurity, including food and housing. A new Hope Center survey of 5,000 students from 14 private and public Historically Black Colleges and Universities released Jan. 24 found that 46 percent of respondents lacked sufficient food a month prior to when the survey was taken, and 55 percent were housing insecure, with 20 percent saying they were homeless in the last year. “Food-insecure and/or housing-insecure students” was among the most pressing issues identified by college presidents on the American Council on Education’s December 2021 Pulse Point survey. 

Student hunger is especially acute at community colleges, which serve a disproportionate share of low-income college students. Many community colleges, like Bunker Hill Community College in Boston, now operate their own food pantries. Countless others have formal relationships with local food programs to help their students eat. That 2021 Hope Center study found that 39 percent of community college students—almost 4 million students—reported hunger issues.

While the $1.75 trillion House-passed social spending package known as the Build Back Better bill appears stuck in the Senate, there are reports that lawmakers are considering breaking it up into more narrow pieces of legislation. Either way, there’s a real opportunity to help students with food, housing, and other basic needs.

How? The Pell Grant — the nearly 50-year-old federal need-based voucher program that provides low-income students with money to pay for college tuition and living expenses. 

About seven million students get Pell Grants, with the money targeted to low-income students. Roughly 90 percent of Pell dollars go to students with a family income below $50,000. Students use Pell Grants to pay tuition and fees and if any money is left over, they use those funds for living expenses. For low-income students that also support a family, it is often a precarious balance between having enough to pay the bills and being forced to forego basic needs such as groceries.

For students at community colleges—where a year’s tuition averages just $3,800, Pell recipients have money left over that can be devoted to other expenses. And this is where Build Back Better or a narrower version has a chance to make a decisive change in the lives of millions of students. 

First, Build Back Better would increase the maximum Pell Grant, currently $6,495, by $550. That is a significant increase for low-income students. This would put more money into the pockets of millions of students, particularly those at community colleges, and help reduce hunger. While short of doubling the Pell grant that the Biden administration has proposed and that advocates like me know is needed, it will make a real difference. The Senate should quickly adopt the House proposal so that students can begin to get the money this fall. 

Second, the House bill also ends one of the most regressive policies in American social programs—the taxation of Pell grant benefits. Any student who gets a Pell Grant is taxed on any Pell funds that exceed the amount of tuition and fees. So a student who gets a $6,500 grant and spends $3,000 on tuition and fees at a community college, faces a tax bill on $3,500. It goes without saying that money spent on taxes is not available for other goods and services—like food, health insurance, rent, and child care.

Because Pell Grants are so targeted on low-income students, it comes as no surprise that the public supports increased spending on the program. A national survey of registered voters commissioned by my colleagues at the National Association of Independent Colleges and Universities found 82 percent in favor of “expanding” Pell and 75 percent in support of “doubling” Pell, with answers to both questions crossing partisan lines. 

If Build Back Better is to be broken up into smaller, more digestible pieces, expanding Pell Grants ought to be at the top of the list. Helping more students—especially low-income students—complete college is a powerful way to increase social mobility, reduce dependency, and address income inequality. It’s a common-sense move that is a win-win for students and our society.

The pandemic has hit those with the fewest resources the hardest. In higher education, the enrollment of low-income students has tumbled more than at any point in the past 50 years. This threatens to undo decades of hard-earned progress in expanding access to college degrees.

Increasing Pell grants and ending taxation of the grant is not the only answer to the serious problems that challenge many low-income students facing food and housing insecurity. But it’s the easiest and fastest place to start.     

Ted Mitchell is president of the American Council on Education (ACE), in Washington, DC.