Pell Grant funding shortfall on the horizon as nearly 2 million more students qualify

Pell Grants, the federal financial aid program that helps low-income Americans afford college and has enjoyed broad bipartisan support, are projected to have big funding shortfalls that could jeopardize the education of thousands of students.  

The grants, which have recently seen expanded eligibility, give low-income students a chance to go to college without incurring debt. But the program itself is in financial difficulties with a projected shortfall of billions of dollars that could lead to trouble for students as soon as 2028.   

By the end of this fiscal year, the Congressional Budget Office (CBO) projects the Pell Grant program will be $5 billion in debt. Over the next 10 years, that number jumps to between $104 billion and $132 billion if nothing is done about the issue.  

The projections come even after lawmakers gave the program a one-time boost of $10.5 billion in President Trump’s One Big Beautiful Bill Act last year.  

The Committee for a Responsible Federal Budget said interruptions to full Pell Grant awards would begin as soon as the 2028-2029 school year, according to these projections. 

“The current Pell Grant funding shortfall is this time primarily driven by an increase in eligible students for the program, which is due to changes to the Pell eligibility formula, and that was because of the FAFSA Simplification Act, which was passed back in 2021,” said Megan Walter, senior policy analyst at the National Association of Student Financial Aid Administrators. 

“So, beginning with the 24-25 award year, more students were eligible for Pell than normal, and sometimes for more than they were eligible for in the past … It’s also due to Congress not increasing discretionary funding for the program in recent years,” she added. “In short, they expanded eligibility without allocating more funding to the program, which is going to create a shortfall every time.” 

Lawmakers also added new short-term workforce Pell Grants, which the CBO projects could cost an additional $2 billion over the next decade.

In the 2025-2026 school year, almost 7.5 million students, around 40 percent of them going to college, received Pell Grants.  

An analysis by the National College Attainment Network (NCAN) said the FAFSA Simplification Act gave Pell Grant eligibility to another 1.7 million students, a 27 percent jump.  

“I think the streamlined process also demonstrates that there’s really strong demand for college and post-secondary education, despite the national narrative and there’s also bipartisan support for the program. It was expanded to include short term workforce training programs. It was expanded to include students who are incarcerated, so members of Congress from both parties want to make this program available to more students, and that does come with a price tag,” said Catherine Brown, senior director of policy and advocacy at NCAN. 

The Hill has reached out to the Education Department for comment.

There are numerous ways lawmakers could go about addressing the shortfall.  

The Trump administration has previously suggested cutting the maximum award amount to $5,710. It currently sits at $7,395.  

Other options would be increasing the number of credits to be considered a full-time student to receive the maximum Pell Grant award or only allowing the full award for eight semesters instead of 12.  

But, Walter said, “None of those changes have been enacted in response to the current shortfall or past shortfalls, so no idea if they would actually do any of that, and I don’t know those would make significant enough changes to really make up” the gap.

A popular preference by advocates is full, mandatory funding of the Pell Grants to stabilize the program. 

“I think the best scenario and long-term solution would be full mandatory funding,” Walter said. 

The bright spot for the program is the long-standing bipartisan support, which advocates believe make it unlikely for the program to be completely cut or sufficiently downsized.   

The Hill has reached out to Rep. Tim Walberg (R-Mich.), chairman of the House Education and the Workforce Committee, and Rep. Bobby Scott (D-Va.), ranking member of the House committee, for comment. 

“In reconciliation, House Republicans proposed targeted reforms to reduce the shortfall and encourage completion — a responsible approach that recognizes fiscal realities,” Walberg said in a statement to Inside Higher Ed.  

 “We will continue to advocate for concrete solutions to ensure Pell remains strong and focused on students with the greatest need,” he added. 

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