Pell Grant Program Faces $2.7 Billion Deficit. Here’s What Students Need to Know.
Credit: Sarah L. Voisin / The Washington Post / Getty Images- The federal government is expected to run out of funds for Pell Grants in 2026.
- Congress will likely either allocate more money or cut parts of the program to make up for this shortfall.
- College students should still expect to receive the full grant they qualify for.
- Still, it remains unclear how lawmakers will address the funding shortfall.
Congress now faces a projected $2.7 billion funding shortfall for the federal government’s primary grant program for low-income college students.
The Congressional Budget Office (CBO) recently released cost projections for the Pell Grant program, anticipating a $2.7 billion funding deficit by 2026. This won’t impact students for the upcoming 2025-26 academic year, but the shortfall could spark cuts to the program that helps over 6 million students attend college each year.
Alternatively, Congress may move to allocate more funds to compensate for the gap.
Pell Grants act as an entitlement program. This means all students and families who qualify for a Pell Grant will receive what is promised to them, no matter how much funding exists for the program.
Still, Congress can authorize changes to the program to lower projected costs.
Michele Shepard Zampini, senior director of college affordability at The Institute for College Access and Success (TICAS), told BestColleges that lawmakers faced a similar predicament in 2011 and 2012 in the wake of the Great Recession.
To cut costs, Congress eliminated year-round Pell Grants, which meant students could no longer utilize these grants for summer courses. Congress also reduced the lifetime limit on Pell eligibility from 18 to 12 total semesters.
Those cuts remain in effect, even over a decade later.
“Funding woes also mean the maximum award may not increase,” Shepard Zampini said, “which means the grant amount will not keep pace with inflation and essentially lose its value year over year.”
The 2011 actions saved the federal government an estimated $50 billion over 10 years, according to TICAS.
CBO projects that at current funding rates, the Pell Grant shortfall will only worsen in successive years. The shortfall will grow to $9.9 billion in 2027 and $17.8 billion in 2028, according to CBO.
Congress’ inability to pass a new budget has led to level-funding Department of Education (ED) programs in 2025. Should lawmakers agree on a fresh budget, an increase in Pell spending could avoid potential cuts.
The maximum Pell Grant award will remain at $7,395 for the 2025-26 academic year. The minimum award is $740.
Forty-one U.S. senators penned a letter in mid-2024 calling on the Senate’s Labor, Health and Human Services, Education, and Related Agencies subcommittee to allocate more funds toward the Pell Grant program to avoid a shortfall. These lawmakers also called for an increase to the maximum Pell award to help keep up with rising tuition costs.
“Congress must confront the shortfall for future years to protect the program and ensure the millions of students who rely on Pell can continue to benefit from the grant,” Shepard Zampini said.
There is bipartisan support for expanding Pell Grant eligibility to college programs as short as eight weeks. This potential expansion could spur lawmakers to increase Pell spending, rather than cut parts of the program.
However, it remains to be seen how a new Congress and a second Trump administration will address this issue.
CBO’s projections are also subject to change. As recently as June, CBO anticipated the Pell Grant program wouldn’t face a funding gap until 2029, but future enrollment estimates can lead to dramatic swings in projected funds.