Pell Grant Faces a $5.5B Shortfall. What Does That Mean for Students?
Credit: shapecharge / E+ / Getty Images- The Congressional Budget Office projects a nearly $5.5 billion Pell Grant shortfall by the end of September.
- Experts say Congress could tighten eligibility for Pell Grants to save money, which it has done in the past.
- You can prepare for potential Pell Grant changes by accelerating your degree, applying for private merit scholarships, and preparing your budget for potential income changes.
The Congressional Budget Office (CBO) last year projected the Pell Grant would face a $2.7 billion shortfall. Last week, they updated their projection, and it’s significantly worse.
CBO’s latest report indicates the Pell Grant could be short by almost $5.5 billion by the end of September.
If Congress can’t come up with that money, the deficit could hit $11.5 billion in fiscal year 2027. This could mean cuts to the program that helps about 7 million low- and middle-income students afford the ever-growing cost of higher education each year.
If you’re receiving the Pell Grant for the 2025-2026 academic year, Congress can’t revoke your money, but financial aid and policy experts told BestColleges that changes are likely to come soon. Here’s what you should know.
Michele Zampini is the associate vice president of federal policy and advocacy at The Institute for College Access & Success (TICAS). TICAS is a research, design, and advocacy institute that promotes affordability, accountability, and equity in higher education.
Jill Desjean is the director of policy analysis at the National Association of Student Financial Aid Administrators (NASFAA). NASFAA is an organization supporting financial aid administrators and advocating for financial aid policy.
What Happens to Students Currently Receiving Pell Grants?
Students currently enrolled don’t need to worry about losing the financial aid they have for the current school year.
Congress cannot revoke Pell Grants for the 2025-26 school year, since the program is considered an “entitlement program.” This also applies to FAFSA applications submitted before the June 30 deadline.
“Students don’t have to worry right now that things are going to be revoked or pulled away,” Zampini told BestColleges. “It’s not like they’re going to claw back funds in this cycle. It’s more of, if no action is taken in the near term, future students could be looking at a lower award.”
What Could Happen to the Pell Grant?
Desjean said the government running out of money doesn’t mean payments to citizens have to stop. Historically, Congress has just borrowed from future appropriations and then made it up by passing legislation.
However, Desjean could see Congress revisiting previously proposed cuts starting as soon as next year; cuts that were initially introduced in the One Big Beautiful Bill before being voted down. Those included:
- Changing the full-time requirements from 12 credit hours per semester to 15 credit hours
- Changing the part-time requirements from 6 credit hours per semester to 7.5 credit hours
- Decreasing the maximum Pell Grant from $7,395 to $5,710
Zampini said that if Congress does make adjustments to address the shortfall, it will likely tighten eligibility to save money by making fewer students eligible. A primary example is the Obama administration’s temporary cut to year-round Pell Grants from 2011 to 2017, which meant students could no longer use the grants for summer courses.
Zampini thinks that Congress will invest in Pell rather than make cuts, since they’ve expanded Workforce Pell, increased eligibility through the FAFSA Simplification Act, and shown bipartisan opposition to proposed eligibility restrictions or reductions in the maximum Pell grant in final bills.
“I’m hopeful that Congress will recognize they’re going in the right direction by expanding the program, and they just have to follow that up with making sufficient investments,” Zampini told BestColleges. “Because what they’re doing is working in that it’s increasing aid, and it’s increasing access to higher ed, and it’s increasing access to training programs.”
What Can Students Do Now to Prepare for a Shortfall?
Zampini wants students to know that it’s unlikely Pell will go away entirely and encourages students to still attend school, since funding will remain available. She doesn’t want any students pulling out of college because Congress may or may not cut funding or eligibility in some years.
Here’s what you can do instead of changing your college plans.
Advocate
Desjean and Zampini said students can and should advocate for Pell Grant funding before Congress takes action. Zampini said real students’ stories humanize the issue and make lawmakers think twice about saying, ‘I’m going to take aid out of someone’s pocket that’s going to make it harder for them to go to college.’
“I think lawmakers like to hear from the people who are benefiting from their programs. They don’t want to hear from people like me at associations,” Desjean said.
“You think your voice, one little voice, may not matter, but if everyone’s making those calls and going to constituent meetings and things like that and making sure that their elected officials know that Pell Grant is a priority, they’ll take that back to D.C.”
File the FAFSA
Even if there is a Pell shortfall or eligibility gets stricter, it should not affect your decision to submit the FAFSA. Federal grants and scholarships are always free to eligible students, so you should always apply. There’s nothing to lose.
Maximize Your Financial Aid Now
Desjean said students should maximize their aid now to finish their degrees. You could accelerate your studies by taking advantage of the year-round Pell to get financial assistance for summer classes or by taking up to 18 credits per semester.
“Anything that can get you out of school faster,” Desjean said. “The money is there right now, so take advantage of it while it exists. But also, the quicker you can get out of college, the more you can maximize the aid you’re eligible for and limit how much you have to borrow to go to school.”
If you’re looking to graduate faster than the typical student, you could also take an online accelerated degree program.
Choose a Free Tuition Program or a Private School
As college has gotten more expensive, over 200 colleges and universities are committing to giving students with financial need free tuition at the very least. However, many free tuition programs may use Pell as a building block in their financial aid packages, treating it as the first dollar of aid.
Zampini said that if the federal government reduces financial aid funding, it could affect these colleges’ ability to provide aid. Elite private universities could weather the change better than a public institution.
Apply for Scholarships
Look for merit scholarships, both private and through your college. Nongovernmental organizations and companies offer private scholarships and typically provide students with funds they don’t have to repay. These may be awarded based on academic performance, written essays, test scores, and sometimes demographic information. Others may give preference to students with demonstrated financial need.
Search your college’s website for merit scholarships, ask a counselor, or peruse trusted websites like the College Board, ScholarshipOwl, and Scholarships.com.
Create a Budget
Budgeting in college is a fiscally responsible way to minimize debt and appropriately allocate your money based on what you have. With the potential for less financial aid, students should address their budget and prepare by evaluating where they can adjust their spending.
Create a budget, leave room for the possibility of less financial aid, and see which variable expenses, like entertainment and dining out, you can cut back on.
What Should Congress Do Next?
Desjean told BestColleges that one of the easiest fixes to Pell Grant funding is for Congress to make the program mandatory — not subject to annual appropriations — so students would know each year that their funds are stable and reliable.
She said the cycle of fixing yearly shortfalls is not sustainable, and students should be concerned that the maximum Pell Grant has stagnated at $7,395 since the 2023-24 academic year, even as the cost of living and college expenses have risen.
Zampini highlighted that people can also overlook the long-term effects of grant aid. It’s more than just lowering a student’s college bill. More grant aid means less student debt, less subsidized loan repayment, and faster graduation timelines since students don’t have to work as much.
“So all these things have a lot of benefits that aren’t necessarily accounted for in the numbers, but would be a big loss,” Zampini told BestColleges. “I think that’s why cutting Pell is really short-sighted for a lot of reasons.”