FY26 budget plan would slash maximum Pell Grant by nearly a quarter

Dive Brief:

• Maximum Pell Grants would be cut by nearly $1,700, or about 23%, under the U.S. Department of Education’s fleshed-out fiscal 2026 budget request released on Friday. The new maximum award would be $5,710 for the 2026-27 award year.
• The number of Pell Grant awards would fall by 111,000 from fiscal 2025 levels and aid available to students would decrease by $9.3 billion, to $27.7 billion, according to the budget document. Additionally, the proposal would cut all $1.6 billion from a grant program for low-income students supplementing Pell.
• The department also outlined its intention to seek a reversal of who pays the lion’s share of student wages under a drastically reduced Federal Work-Study program. As requested in President Donald Trump’s “skinny budget” last month, the program would be cut by nearly $1 billion, leaving employers to pick up more of the tab.

Dive Insight:

Early this year, warning signs about the financial stability of the Pell program began flashing. In January, the Congressional Budget Office issued a report projecting a $2.7 billion deficit for fiscal 2025 for the program that helps lower-income students attend college.

At the time, the nonprofit advocacy group Institute for College Access & Success warned that the shortfall could mean cuts for fiscal 2026 on a scale not seen since the Great Recession. 

The Committee for a Responsible Federal Budget followed up with projections of persistent shortfalls in the program over the next decade and said Pell Grants would need increased appropriations, smaller awards, tighter eligibility or some combination of those to stabilize the program. 

A January report from the Urban Institute attributed the Pell shortfalls to a combination of formula changes expanding eligibility and increases in undergraduate student enrollment in recent years. 

In its budget document, the Education Department blamed the funding shortfalls on “Congressional inaction” and “increasing instances of fraud.” 

The fraud allegations were tied to an Education Department announcement last week that it had found almost $90 million in student aid payments to ineligible recipients, including more than $30 million to people listed as dead in a Social Security Administration index.

The department, in its budget detail document, said the Pell Grants program is the “foundation of low- and moderate- income students’ financial aid package and helps ensure access to postsecondary education.”

But some higher education groups worry the administration’s budget plans would reduce access. 

“The President’s budget slashes student financial aid, effectively reducing college accessibility and affordability at a time when many families are already struggling with the daily cost of living,” Melanie Storey, president and CEO of National Association of Student Financial Aid Administrators, said in a statement Monday.

House Republicans last month passed a budget reconciliation bill backed by President Donald Trump that — among many other provisions —  would alter the Pell Grant eligibility formula and increase the course hours required for full-time student designation from 24 to 30 per academic year needed for maximum grant awards. 

The American Council on Education called the proposed Pell changes “crippling” and warned that some 700,000 students could lose eligibility under the bill. The measure is now under consideration in the Senate. 

The administration’s proposed cuts to Federal Work-Study would also radically alter that program by slashing most of its funding. 

The fiscal 2026 budget document calls for working with Congress on changing the program to serve “the most low-income students” and incorporate an “appropriate split between Federal and employer wage subsidy.” 

Specifically, the department aims to flip the ratio of contributions from the federal government and employers. Where now the government covers up to 75% of wages and employers put in 25%, the Education Department aims to have employers paying 75% in the future.