August 2026

Key Takeaways

1. Federal student aid programs help millions of students access higher education each year. However, after adjusting for inflation, funding for student aid programs has remained largely stagnant despite rising costs. 
2. Congress should robustly invest in the federal student aid programs to expand educational opportunity and strengthen the nation’s workforce.

Since their inception, federal student aid programs have played an important role in opening the doors to educational opportunity for millions of students. These programs support students at various institutions of higher education nationwide — from community colleges and regional public universities to private colleges and Historically Black Colleges and Universities (HBCUs). 

Given the breadth of students that benefit from student financial aid, it is imperative that these programs receive robust funding to support students in an evolving higher education landscape. Unfortunately, the federal aid available to students has remained largely flat over the decades, when adjusting for inflation.

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Pell Grant Program

The Federal Pell Grant is the cornerstone of the federal student aid system, ensuring undergraduate students from low-income families can access postsecondary education. The Pell Grant assists approximately 7.5 million students each year, with 70% coming from families with an income of less than $40,000.¹

Despite increased attention to the importance of college affordability, the maximum Pell Grant award has not increased enough to keep pace with inflation and rising costs since its inception in the 1970s. The maximum award increased from $6,895 in 2022-23 to $7,395 in 2023-24 — the largest one-year increase in more than a decade before adjusting for inflation — but it has remained flat at $7,395 since then.² After adjusting to account for inflation, today’s maximum award remains at a level similar to fiscal year (FY) 1978.³ 

Figure 1. Maximum Pell Grant Award in Actual and Inflation-Adjusted Dollars, 2016-17 to 2025-26

Note. Inflation-adjusted to 2025 dollars, calculated by NASFAA, using CPI-U for the July beginning of the academic year.
Source: U.S. Department of Education, Federal Pell Grant Program End-of-Year Report, 2022-2023; FSA data from website, 2026.

The lack of meaningful increases to the maximum award have contributed to its diminishing purchasing power. The 2024-25 maximum Pell Grant award covered only 27.2% of the cost of attendance (COA) at public four-year institutions.⁴

Federal Supplemental Education Opportunity Grant (FSEOG)

The FSEOG program provides grants to low-income undergraduates who demonstrate the greatest financial need, with priority given to Pell Grant recipients and students who have the lowest Student Aid Indexes (SAI). The program requires a 25% nonfederal match from participating institutions, with both taxpayers and institutions assuming partial risk.

FSEOG is a campus-based program that provides institutions with the flexibility to decide both the recipients and grant amounts. As a result, institutions can use FSEOG to address the financial needs of their students that may not be fully met by the Pell Grant program. FSEOG supports 1.4 million students annually, with just over 64% of dependent recipients from families with incomes below $30,000. The total federal volume was $1.1 billion in 2023-24.⁵

Federal funding for the FSEOG program has remained at $910 million since FY 2023 (2023-24 award year), resulting in level funding over the past several fiscal years. During that time, multiple appropriations proposals have called for eliminating the program; however, Congress has ultimately continued to fund FSEOG at its current level.

Figure 2. Federal Appropriations for the Federal Supplemental Educational Opportunity Grant Program in Actual and Inflation-Adjusted Dollars (in millions), 2017-18 to 2026-27

Note. Does not include institutional matching funds. Inflation-adjusted data from CPI Inflation Calculator for the July beginning of the academic year.
Source: NASFAA, “National Student Aid Profile 2025”; Education Department Budget History Table: FY 1980-FY 2021, Federal Student Aid, "2026–27 Final Funding Authorizations for the Campus-Based Aid Programs" (March 30, 2026).

Federal Work-Study (FWS)

The Federal Work-Study (FWS) program provides part-time jobs to undergraduate, graduate, and professional students, and requires that participating institutions or the student’s employer provide a 25% match to the federal funds allocated. 

In 2023-24, the FWS program served approximately 419,932 recipients, and roughly 37% of dependent undergraduate recipients had family incomes below $42,000.⁶ In FY 2018, the program received a $140 million increase — the first in nearly a decade — which resulted in approximately 70,000 additional recipients.⁷ The FY 2018 funding level was maintained through FY 2019, followed by modest increases over the following five fiscal years. Since FY 2024 (2023-24 award year), FWS funding has remained flat at $1.23 billion, reflecting three consecutive years of level funding.⁸

FWS enjoys broad, bipartisan support — and rightly so. It supports needy students while also providing valuable work experience. In periods of financial austerity, FWS stretches federal investments further by requiring matching funds from institutions and work-study employers. 

Figure 3. Federal Appropriations for the Federal Work-Study Program in Actual and Inflation-Adjusted Dollars (in millions), 2017-18 to 2026-27

Note. Does not include non-federal matching funds. 
Source: Education Department Budget History Table: FY 1980—FY 2021, Federal Student Aid,  "(CB-26-05) 2026–27 Final Funding Authorizations for the Campus-Based Aid Programs" (Updated March 30, 2026), Inflation-adjusted data from CPI-U Inflation Calculator using May 2026.

What Congress Can Do

Ensure that the appropriate resources are available for education funding.

Congress should provide a sufficiently robust allocation to the House and Senate Labor, Health and Human Services, Education, and Related Agencies (Labor-HHS) Appropriations Subcommittees to support an increased investment in student aid programs, including a sufficient maximum Pell Grant award. Although the small increases passed by Congress in previous years have helped provide momentum for the program, Congress should, at a minimum, increase the maximum Pell Grant by $200 for FY 2027 as an inflationary adjustment, while working toward a maximum award of $13,000. This proposal is long overdue and has been supported by many in the higher education community. 

Congress must also invest more heavily in campus-based programs, whose current funding levels are lower than they were nearly four decades ago, after accounting for inflation. For example, when adjusted for inflation to FY 2026 dollars, FWS and FSEOG appropriations from FY 1986 totaled $1.71 billion and $1.19 billion, respectively — both exceeding the FY 2026 funding levels of $1.23 billion and $910 million.⁹ For FY 2027, NASFAA and the higher education community have requested $1.31 billion for Federal Work-Study and $966.26 million for FSEOG.

Shift the Pell Grant program to full mandatory funding.

Sustained and certain investment is necessary to ensure the Pell Grant regains its purchasing power. The annual federal budget and appropriations process adds unnecessary uncertainty to a program that plays a vital role in the lives of millions of students each year. Pell Grants should be protected from the annual appropriations process by moving the funding stream from the discretionary year-to-year funding to mandatory funding.

Increase certainty for low-income students and families by reinstating the automatic inflation adjustment to the maximum Pell Grant award.

The maximum Pell Grant award was indexed to the Consumer Price Index for All Urban Consumers (CPI-U) from FY 2014 to FY 2017, but this small boost averaged just $69 per year and expired at the end of FY 2017. Since then, Congress has, in some years, passed small increases to the maximum award as part of the annual appropriations process that have barely kept pace with inflation. The FY 2026 appropriations law maintained Pell Grant funding at prior-year levels, resulting in no increase to the maximum Pell Grant award for the 2026-27 award year, which also remained at $7,395. Congress should reinstate an automatic inflation adjustment to ensure consistent annual increases to the maximum award amount.

Address the Pell Grant Shortfall.

In February 2026, the Congressional Budget Office (CBO) released new projections for the Pell Grant program, indicating a potential funding shortfall of nearly $5.5 billion by the end of FY 2026 and an additional $11.5 billion by the end of FY 2027, totaling nearly $17 billion over both years. The report also estimates a cumulative shortfall of nearly $132 billion over the next decade.¹⁰ The projected shortfall numbers already account for the additional $10.5 billion that was provided for the program through the One Big Beautiful Bill Act. It is prudent to ensure adequate funds are available for a program whose costs are difficult to estimate precisely due to fluctuating student enrollment and program eligibility. Congress must work to address the projected Pell Grant shortfall by ensuring the program is on a strong financial footing without cutting the maximum award or limiting program eligibility.

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1. U.S. Department of Education, Federal Pell Grant Program End-of-year Report, 2023-24.
2.   NASFAA, “National Student Aid Profile: Overview of 2026 Federal Programs.” 
3. The 1978 Federal Pell Grant maximum of $1,400 (U.S. Department of Education, Pell Grant Program End of Year Report 1980-81) equals $7,095 in 2026 dollars, adjusted using the Consumer Price Index for All Urban Consumers (CPI-U) annual averages (Federal Reserve Bank of Minneapolis, "Consumer Price Index, 1913-,").
4.  NASFAA, “Issue Brief: Doubling the Maximum Pell Grant,” updated July 2026.5.  NASFAA, “National Student Aid Profile: Overview of 2026 Federal Programs.” 6.  NASFAA, “National Student Aid Profile: Overview of 2026 Federal Programs.”
7.  NASFAA, Pell Campus-Based Funding and Data-Sharing Among Victories in FY 2018 Spending Bill, 2018.
8.  NASFAA, “National Student Aid Profile: Overview of 2026 Federal Programs.”
9.  U.S. Education Department, Budget History Table: FY 1980-FY 2021; NASFAA, “National Student Aid Profile: Overview of 2026 Federal Programs.” Inflation-adjusted data from CPI-U Inflation Calculator using May 2026.
10.  Congressional Budget Office, https://www.cbo.gov/system/files/2026-02/51304-2026-02-pellgrant.pdf, February 2026.