Budgetary Watchdog Warns Pell Grant Will Face Shortfall

"Using data from the Congressional Budget Office, the nonpartisan budgetary watchdog estimated that over the next 10 years, the Pell Grant will face a shortfall of at least $61 billion. The Pell Grant reserve was already dwindling, the committee noted. Then Congress passed the One Big Beautiful Bill Act and expanded eligibility for aid to short-term training programs through a new initiative called Workforce Pell."

""While Congress did successfully address the Pell program's near-term funding crisis, it kicked the can on fixing the longer-term structural imbalance between Pell Grant costs and funding," CRFB said in the news release. "Significant adjustments will still need to be made to boost funding and/or reduce costs." Workforce Pell alone is expected to cost between $2 billion and $6 billion on top of the original cost for traditional degrees. Combined, the cumulative 10-year shortfall could reach as high as $97 billion."

"In the meantime, the committee is calling on lawmakers to act. CRFB suggested that responses could include reallocating funds from non-education-related parts of the budget; changing the definition of full-time enrollment or eliminating Pell for students enrolled less than half-time to reduce the number of students benefiting from Pell, further restricting student loan access to save and reallocate higher ed funding; or reducing the cost of higher education tax credits."

Congress appropriated a one-time $10.5 billion fund in July to shore up the reserves for federal need-based student aid. Congressional Budget Office data estimate that over the next ten years the Pell Grant will face a shortfall of at least $61 billion. Expansion of eligibility to short-term training programs through Workforce Pell increases costs by an estimated $2 billion to $6 billion. Combined cumulative shortfalls over ten years could reach as high as $97 billion. Potential responses include reallocating non-education funds, changing full-time enrollment definitions, eliminating Pell for less-than-half-time students, restricting student loan access, and reducing higher education tax credits.

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