Washington Watch: Pell estimates better than expected


The Congressional Budget Office (CBO) on Tuesday released its latest cost projections for the Pell Grant program, and the news was surprisingly better than anticipated.

Most observers had predicted that the Pell program would exhaust its current surplus and cross over into a shortfall that Congress would have to fill in as early as fiscal year (FY) 2025. But the projections released today predict that will not happen until FY 2029, assuming Congress appropriates the same amount for the program every year and no other costs are added to the program (such as an increase to the Pell Grant maximum award).

At press time, it is unclear why the projection is so much rosier than anticipated. However, one major difference between CBO’s May 2023 projection and the one released today is the number of projected Pell recipients in the next few years. Last May, CBO predicted 6.43 million Pell recipients in FY 2024, while the new report estimates that number at 5.94 million, or almost 500,000 fewer Pell recipients than previously projected. The predicted number of Pell recipients for the next few years also is lower in the new report compared to last May’s. The two reports more or less converge starting in FY 2027.

CBO’s projections also do not project cost increases anywhere near as most were expecting resulting from changes made in the FAFSA Simplification Act.

The new projections, which are the official guideline for how much must be appropriated each year to cover the program’s costs, will come as a relief to congressional appropriators, who had been bracing for the need to come up with billions of additional dollars in the near future just to keep the Pell Grant maximum award at its current level. The thought-to-be impending shortfall also affected the debate over proposals that would add costs to the program, including Workforce Pell. Those dynamics may now change because of this report.

About the Author

Jim Hermes
Jim Hermes is associate vice president of government relations at the American Association of Community Colleges.
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