A $2.7B Deficit Could Impact Students Who Receive Pell Grants

Pell Grants are federal aid available to low-income families that demonstrate financial need when applying on the Free Application for Federal Student Aid website.

While some college advocates feel more hopeful that the Trump administration’s federal funding freeze will not impact Pell Grants and student loans, students receiving federal grants face a problem: the funds are running low.

According to CNBC, nearly 75% of all undergraduates receive some form of financial aid, and 40% of college students rely on Pell Grants. These grants are federal aid available to low-income families that demonstrate financial need when applying on the Free Application for Federal Student Aid website.

New numbers from the Congressional Budget Office in January show an estimated $2.7 billion funding shortfall for the 2025 fiscal year.

“If program funding is not shored up, students could face eligibility or funding cuts for the first time in more than a decade,” Michele Zampini, senior director of college affordability at The Institute for College Access and Success, told CNBC. “We are back in the danger zone.”

The simplified FASFA, which launched in 2023, was supposed to expand Pell Grant eligibility in an effort to provide more financial support to low- and middle-income families. However, the number of Pell Grant recipients has declined significantly over the last decade. They during the 2011-12 academic year when an estimated 9.4 million students were awarded grants. According to CNBC, the number dropped by more than 32%, with only 6.4 million students receiving Pell Grants.

But data from the Department of Education shows more students are eligible to receive Pell Grants this year. As of Dec. 31, more than 9.3 million applicants were eligible.

While Pell Grants saw a decline and has operated in a deficit before, this year’s shortfall could be worse for students since the changes to grant eligibility increased the number of eligible students starting in 2024-25.

Advocates now worry that if Congress does not provide supplemental funding, something it has done in the past, the U.S. Department of Education will be forced to cut the eligibility or the average grant.