The federal Pell Grant program, named after the late Rhode Island Sen. Claiborne Pell, has money problems.
The Congressional Budget Office is projecting the program that provides financial aid to millions of college students will finish fiscal 2025 with a $2.7 billion shortfall, a deficit that could escalate to nearly $10 billion in the following years.
Unless Congress approves additional funding, the 60-year-old program will likely struggle to support students who rely on the grant to help pay higher education tuition.
Indeed, colleges and students across Rhode Island are contemplating what will happen if the Pell Grant program is rolled back.
As of now, grant amounts go up to $7,395 for undergraduate students who demonstrate a financial need and continue to make academic progress. And unlike loans, they don’t need to be repaid.
Steven Maurano, spokesperson at Providence College, says the anxiety over the future of Pell grants is palpable on campus, even though only 14% of PC students are recipients.
“If the program were in a deficit and the number of awards was reduced, that would absolutely have an impact on our students,” said Maurano, associate vice president of public affairs and media relations. “We really, really don’t want to see that happen.”
Other local universities and colleges have even more cause for concern.
At the University of Rhode Island, almost 24% of the school’s 14,000 undergraduate students receive a Pell grant, according to Victoria McNeil, URI’s director of financial aid.
“We haven’t seen this level of a Pell Grant funding shortfall in quite some time,” McNeil said. “The program has worked with a financial surplus for several years now. Now, we don’t know what will happen beyond 2026.”
The percentage of students who receive a Pell grant is even higher at the state’s other public colleges.
Rhode Island College had 54% of degree-seeking students receiving Pell grants in the 2022-2023 academic year alone, according to the R.I. Department of Education, while 48% received federal Pell Grant funding at the Community College of Rhode Island.
RIC declined to comment, and CCRI did not immediately respond.
The national percentage of undergraduate students receiving a Pell grant for the year 2022-23 was 31.6% across 5,400 collegiate institutions, according to the U.S. Department of Education.
The program is funded for the time being, and Pell Grant awards will be honored for the upcoming award year, but numerous organizations – including Washington, D.C.-based nonprofit Institute for College Access & Success – have urged Congress to increase the funding for the coming years.
If that funding isn’t approved, potential reductions in eligibility and grant sizes will “quickly rear their head in the context of the upcoming FY 2026 funding cycle,” said institute Director Michele Zampini.
What caused the shortfall?
In fiscal year 2025, the formula used to determine grant eligibility was changed, leading to a greater number of students qualifying for the maximum grant, according to Urban Institute, a nonprofit that conducts economic and social policy research.
But the Congressional Budget Office had assumed fewer students would receive awards due to issues with the rollout of the new Free Application for Federal Student Aid, which was marred by numerous delays and technical problems, the U.S. Government Accountability Office said.
The CBO was wrong.
Enrollment and aid awards actually increased 12.6% year over year, according to federal data analyzed by the Urban Institute.
The future of Pell grants now remains uncertain, although the program has historically seen bipartisan support. The last time its funding was cut was over 10 years ago when Congress reduced Pell Grant spending for the 2012-2013 annual budget, McNeil said. At the time, the CBO justified the cuts by blaming changes in the economy.
After those cuts, the maximum number of semesters a student could receive the grant was lowered from 18 to 12, and eligibility for summer courses was removed. In 2017, Congress approved the reinstatement of year-round grants, which was made possible by a $5.8 billion boost to Pell Grant funding.
Congress is supposed to finalize its annual budget resolution – including allocations for the Pell Grant program – by April 15, but it frequently misses that deadline.
“Congress needs to review and change the funding structure for Pell,” McNeil said. “This is a critical program for assisting low-income students.”
For its part, Rhode Island’s congressional delegation has supported increased funding, with Sens. Jack Reed and Sheldon Whitehouse introducing the Pell Grant Preservation and Expansion Act last year. It was never advanced to the floor for a vote.
Back in Rhode Island, the R.I. Office of the Postsecondary Commissioner is keeping a close eye on what’s happening in Washington, D.C.
R.I. Postsecondary Commissioner Shannon W. Gilkey, whose department oversees the advancement of the state’s higher education objectives, says it’s incumbent on the federal government to sort out the Pell Grant money problems.
“We need to be expanding Pell grants, not limiting them,” Gilkey said. “If the federal government can’t figure out how to close out this deficit and keep Pell Grant eligibility and award amounts, the state simply cannot carry that burden. We need the federal government to do that.”
