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The Pell Grant program is expected to run a $11.4 billion surplus for the fiscal year, the Congressional Budget Office (CBO) said this week, averting fears of a potential shortfall that could have led to cuts in the program.
The Biden administration had requested an additional $2.1 billion for fiscal year 2025 to increase the maximum Pell Grant from $7,395 to $8,145 and cover a funding gap it projected in the roughly $29 billion program, which provides federal financial aid program to low-income students. That budget request has yet to move forward, and Congress appears unlikely to increase the award. The CBO projection assumes there will be no increase.
The CBO estimates that about 5.94 million students will receive a Pell Grant in 2024—about 490,000 fewer than it projected last year. The Biden administration has estimated that more than 7 million students would receive a Pell Grant in fiscal year 2025, the first full fiscal year with a new formula in place that expands access.
The CBO numbers are lower because of a projected drop in financial aid applications for 2024 and 2025 as a result of issues with the roll-out of the new Free Application for Federal Student Aid (FASFA), a spokesperson said. CBO expects FAFSA applications to drop by about 10 percent compared to 2023. That estimate was finalized in May, when submission rates were about 30 to 40 percent lower than the prior year, the spokesperson said.
CBO projects that the Pell program will cost about $26.5 million for fiscal year 2025, while the Biden administration had put it at about $30 billion. The administration’s estimates didn’t factor in Congress’s decision in early March to adjust the formula that determines a aid eligibility and cut off about 100,000 students from the Pell Grant starting in the 2025–26 award year.
The American Association of Community Colleges said in its analysis that the CBO projection shows the Pell Grant program won’t face a shortfall until fiscal year 2029, assuming all costs stay the same. The CBO’s budget baseline will guide appropriators in the House and Senate as they figure out how to divvy up federal dollars.
