Budgetary Watchdog Warns Pell Grant Will Face Shortfall
Using data from the Congressional Budget Office, the Committee for a Responsible Federal Budget estimates the Pell Grant reserve will face a $61 billion to $97 billion shortfall over 10 years.
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Congress appropriated a one-time fund of $10.5 billion in July to help shore up the reserves for federal need-based student aid. While that may tide over a shrinking pot of Pell Grant funding for now, it’s not nearly enough to sustain the program over the long term, the Committee for a Responsible Federal Budget warned in a news release Monday.
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. So while the $10.5 billion appropriation—issued to address similar concerns from CRFB—it comes nowhere near solving the problem, the committee said.
“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.
“The Department of Education can also play a role in controlling costs by ensuring that Workforce Pell is held to the highest accountability standards possible under the law to disqualify underperforming programs,” the news release said. “Policymakers should not wait until reserves are once again near depletion to act.”
