By Catherine Brown, Senior Director, Policy and Advocacy
Reading time: Three minutes
The Congressional Budget Office (CBO) released its long-awaited update to the federal budget baseline, revealing what close watchers of the Pell Grant program
widely anticipated: a looming and growing funding shortfall.
According to the newly released projection, demand for Pell will exceed funding for the program by $5.4 billion in fiscal year 2026 and grow to nearly $11 billion in fiscal year 2027.
These changes are the result of expanded access to Pell through the revised formula enacted into law as part of the FAFSA Simplification Act, and improvements in
FAFSA, or Free Application for Federal Student Aid, functionality as Federal Student Aid worked through widespread technical challenges in award year 2024-25. While CBO does not publish its methodology, these projections likely also take into account
implementation of Workforce Pell, which may lead to more students receiving grants.
The National College Attainment Network (NCAN) recently released analyses showing that 1.7 million additional applicants were eligible for the maximum Pell Grant in 2025-26 when compared with 2023-2024 and that the nation is on track to achieve the highest rate of FAFSA completion in history. While unambiguously
good news for students, their families, and our nation’s economy, higher rates of Pell uptake will require higher levels of investment.
"Increasing the number of students eligible for Pell Grants is something to be celebrated!” said NCAN CEO Kim Cook. “More students are submitting the FAFSA and are eligible for Pell because of the positive changes Congress made, and this president signed
into law with the FAFSA Simplification Act. Congress also chose to expand the program to include Workforce Pell programs. Now, we look forward to Congress providing enough funding to support the students who have been promised they will have help
to make their college dreams a reality."
Due its targeted and effective design, Pell has long enjoyed strong bipartisan support. The FAFSA Simplification Act and related FUTURE Act were crafted on a bipartisan basis and signed into law by President Trump. Congress has regularly provided funding for Pell shortfalls when they have occurred, including as recently as last summer in the budget reconciliation act, which included $10.5 billion to cover the Pell shortfall.
Still, Pell will need our advocacy. While net tuition and fees have fallen in recent years, inflation has risen dramatically. Had the maximum Pell kept pace
with rising living costs, it would be $800 higher than it is today. Instead, the award has not increased in three years and covers less than a third of the cost of attendance for an in-state
student at a public four-year university.
Pell is one of the greatest investments in economic mobility our country has to offer, boosting college completion rates, which bolsters earnings, state GDPs, home values, spending on automobiles, and reduces unemployment. With Workforce Pell
going online, a new and improved FAFSA that takes as little as fifteen minutes to complete, and the impending state budget squeeze,
adequate funding for Pell is essential for maintaining access to postsecondary education.
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