A grant program offering non-repayable financial aid may face major disruptions in the coming years if Congress fails to intervene. The Federal Pell Grant Program is facing shortfalls that could exceed $100 billion, according to the Committee for a Responsible Federal Budget (CRFB), a nonpartisan budget watchdog.
The CRFB found the Pell program is projected to end the fiscal year $5 billion in debt, despite recent funding from President Donald Trump’s One Big Beautiful Bill Act. Unless Congress intervenes, students could start feeling the effects as soon as the 2028-29 school year.
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What are Pell grants?
Pell Grants are financial aid given to students from low- and moderate-income families. Unlike loans, they do not need to be paid back and are awarded based on the Free Application for Federal Student Aid (FAFSA).
The grants cover tuition, fees, books, housing and other education expenses and can be used at accredited colleges, universities and community colleges.
The amount granted to students each year varies. Congress and program administrators set a maximum award, and individual grants are based on information in the FAFSA.
In the current school year, the maximum amount is $7,395, according to the Education Data Initiative (EDI). Other EDI stats show that about 29% of Pell Grant recipients have family incomes of $20,000 or less.
Looming financial burden
The CRFB is projecting that the program could face a shortfall of $104 billion to $132 billion over the next decade. The shortfall stems from changes Congress made to the award formula in 2020.
Lawmakers expanded eligibility to more groups, simplified FAFSA forms, automatically allowed very low-income families to receive the full grant and more. However, they did not earmark new funding for the program.
As a result, the program awarded more money than it was appropriated. According to CRFB, the program grew from $21 billion in 2021 to $35 billion in 2026. Now, the program finds itself in a hole of future debt.
Addressing the issue
Lawmakers have a couple of options when it comes to fixing the issue, including passing another one-time cash infusion, changing eligibility or reducing award amounts. However, some higher education experts say the problem runs deeper.
Lodriguez Murray, senior vice president of public policy and government affairs at the United Negro College Fund, told Politico that there needs to be a solution that prevents future shortfalls.
“The fact that Congress has been willing to help make up the gap in recent times has been promising, but the fact that this is becoming a little bit too routine is not where we should be heading,” Murray said. “We should be heading towards the goal of doubling the Pell Grant and restoring the purchasing power of the grant, not to these shortfalls.”
Budget experts cautioned against one-time infusions, calling them temporary fixes.
“Congress chose to increase the cost of the Pell Grant program back in 2020 without paying for it, and has since ignored many opportunities to fix the problem, despite knowing about the looming shortfall,” CRFB wrote in its report. “Now the bill has come due, and the late notices can no longer be ignored.”
