Federal Policy Update: March, 2026

Introduction:
Welcome to the Trusteeship Podcast from AGB, the Association of Governing Boards of Universities and Colleges. Today, we’re talking about a looming $17 billion Pell Grant funding shortfall and what it could mean for students and institutions. AGB’s Joe Brenckle and Penn Hill Group’s Alex Nock also explore upcoming federal actions—from accreditation rulemaking to the president’s budget—and how timing, politics, and policy decisions could shape higher education in the months ahead. Let’s get started. Joe?

Joe Brenckle
Hello and welcome to AGB’s Public Policy Podcast. This is a great opportunity to hear what’s going on in the higher ed world, because there always seems to be a lot going on.

There’s a lot of significant policy developments unfolding right now, but one of the things that I think people are talking about, and if not, they definitely should be, is the pending Pell funding shortfall.

Alex, can you fill us in on what’s going on with that?

Alex Nock:
Hey, Joe. Nice to be here with you again. Happy to. And I agree with you. They definitely should be focused on it if they’re not focused on it already. Hopefully this podcast will get some people thinking about it a little bit more.

So Joe, as you’re alluding to, the Pell Grant is projected, and we should talk about what that means by the word projected, to experience over FY26 and ’27 a $17 billion shortfall. And the entity that does projections, the Congressional Budget Office, projects shortfalls in ’28 and ’29 and ’30. So this is an ongoing sort of projected structural issue with the Pell Grant program.

So Joe, if you can indulge me in being a little bit of a nerd for a second, I think it’s important to talk about what this word projection here means.

So for folks that heard me say FY26, you’re probably like, “Wait, didn’t Congress just pass that bill?” Yes, Congress did finalize ’26 appropriations, and the CBOs projecting for that fiscal year a shortfall of $5.45 billion. Coupled with 11 billion in change for FY27, that’s how you get to 17 billion over FY26 and ’27.

But Pell is uniquely funded in the sense that the FY26 bill that Congress just passed funds the ’26/’27 award year for Pell Grants. So in other words, no single Pell Grant has been issued under that bucket of money that would fund it. So this is a projection, right? So students actually have to attend, enroll, be eligible, right? We have to go through a full award year that we have not yet begun.

And Joe, I say none of that to make people go, “Oh, well, nevermind.” But that’s why it’s a projection. If you hear the word projection, you may be like, “Oh gosh, that’s just more DC kind of guesses at things.” Well, this is a pretty good sign that something’s going to move or shake, I guess, here.

This is a pretty significant shortfall. And just to put it into context, 17 billion is about half of the annual spend on the Pell program. So this is a pretty significant thing.

Joe Brenckle:
Thanks, Alex. That’s a great overview of what the problem is.

Let’s talk about potential solutions. What do we think Congress is going to do? Are they going to try to patch it this year, try to patch it going forward? What do we think is going to happen?

Alex Nock:
I won’t go into too much detail on this, but Congress actually has something in place called the Pell Scoring Rule, which really means they need to address it sometime really this current calendar year for them to pass existing appropriations bills.

So what are some of the solutions? The most obvious one, right, Joe, is Congress provides $17 billion in extra funding, makes up the gap, makes up the shortfall. Obviously, for our listeners who have been around Pell for a while, you might remember in the early 2010s when Congress eliminated Summer Pell, and Congress did other cost saving measures like reducing lifetime eligibility from 18 to 12 semesters.

So there are steps Congress can take to also reduce Pell spending in general, which obviously, Joe, if you reduce Pell spending, you have an impact on the Pell shortfall because not as much Pell money will be going out the door, because obviously this is a projected shortfall, right? We have not yet begun to spend the money.

But obviously those reductions are probably not what members of Congress want to do. So this is a pretty important debate that has a bit of a short shelf life in terms of being able to come to a resolution.

Joe Brenckle:
And I think to add to the fund, timing is also an issue, right? Because it’s an election year, Congress most likely will pull the ripcord on their legislative session at the end of September. So if they don’t finish it before then, then potentially it’ll push into the end of November, December, right? And so that’s a very short timeframe.

Alex Nock:
Yeah, you’re right, Joe. And again, for our listeners who have been watching this for a while, the administration, or in this case, the Department of Education typically says, “Hey schools, the maximum Pell Grant for any given year is X,” and they do that in January before the award year starts. So two months ago, the administration came out and said the maximum Pell Grant for the ’26/’27 award year is $7,395, because obviously for folks listening, your financial aid offices have to start thinking about aid and packaging it and that sort of stuff.

So Joe, to your point, Congress typically in an election year leaves to finalize their campaigning around the end of September and doesn’t come back until after the elections. Then you have Thanksgiving, then you have the holidays that are at the end of December. So really, if Congress doesn’t address this issue by September, you’re probably looking at three or four weeks in November and December before the department would historically have their usual announcement on what the maximum Pell Grant is.

And maybe that can be pushed a couple of weeks, maybe. I’m not speaking for the department. But the window is not very large at the end of the year and into the next year. It’s really better if Congress addresses this before the end of September.

Joe Brenckle:
Yeah. So it sounds like this is something that we all should be keeping an eye on. Maybe we’ll have a better idea as we move through summer.

Let’s switch gears. There’s a new negotiated rulemaking occurring right now on accreditation. Can you give us an update on where we are with that?

Alex Nock:
Yeah, sure. So the Department of Education is the entity that runs that negotiated rulemaking. And for our listeners that haven’t heard that term before, negotiated rulemaking essentially is a little bit what it sounds like. The department brings interested stakeholders that they select from individuals that are nominated by themselves or constituency groups to represent key constituency groups at the table, and actually negotiate a regulatory regime or structure around a particular issue.

In this case, Joe, the topic is some accreditation changes that the Department of Education wants to see. The department has solicited input from the public on nominations for that committee. The first meeting of that committee is April 13th. There’ll actually be two sessions; the week of April 13th, and the last full week in May, I would describe it as. And we expect in the coming days to hear who’s on that committee, but that’s going to be a fairly involved negotiated rulemaking effort.

Everything from how do you ease the path for new accreditors to enter the marketplace of who gets recognized by the secretary to accredit institutions of higher education, to speeding up the process for recognizing new accreditors; also speeding up the process for institutions that want to, or by state law, have to shift accreditors at different times during their process; and lastly, how can accreditors focus more on outcomes as part of their accreditation work?

Joe Brenckle:
Thank you, Alex. I think that’s something we’ll definitely have to also keep an eye on.

This is also budget season. I know traditionally the president releases his budget usually at the end of March. So if you could pull out your crystal ball, what do you think higher ed has to look forward to in terms of the president’s budget for next year?

Alex Nock:
Statutorily, the president’s supposed to submit a budget in early February, but there is no penalty on the president or any administration that isn’t. And so, you know, over the years, presidents have been later rather than earlier. No one seems to be early in submitting their budget to Congress. So no extra credit for presidents or administrations when they do that.

So right now, we’re expecting the administration to issue their budget the week of March 30th. We’ll have to see if that holds, Joe, but for our listeners who are listening to this, and it’s almost the week of March 30th, maybe you’re listening Sunday night on March 29th, that week may be the actual week it comes out. That’s what we’re being told at the moment.

So the real question is, “Okay, great, Alex. I’m pleased to know the 30th or 31st or April 1st is the day it could come out. What’s in it?”, like you said, right, Joe?

So last year’s budget was actually kind of surprising for me as a kind of older, I guess, grizzly-d Washington veteran in these education circles. The budget did cut the maximum Pell Grant, or it proposed to cut the maximum Pell Grant, I should say. That surprised me a little bit. There’s a lot of bipartisan support for not reducing the maximum Pell Grant, a topic we just addressed earlier in this podcast actually. We’ll have to see how that plays out, but they did propose that.

They did also propose to not fund numerous other higher education programs. But Joe, the most surprising thing to me about the budget was it kept 85% of the Department of Education’s funding at the Department of Education. And this, remember, at the time was from an administration that was saying, “We want to dismantle the Department of Education.”

So I mean, that was a year ago, so certainly this administration has taken steps. Like they’re in the process of moving Office of Post-Secondary Education programs to the Department of Labor to have that agency manage some of the grant programs, like TRIO and GEAR UP and institutional aid programs.

But I think the biggest question, Joe, is not do we see a cut in the Pell Grant from this administration? We already know Pell is experiencing funding shortfall, so that could be a policy reaction from the administration. But do we see any signs of them reflecting the current work they’re doing to move programs from the Department of Education that are higher ed related to the Department of Labor? Does that change their priorities? Do they seek to defund certain programs they don’t support, like work study and SEOG and things like that?

I think we’ll have to see. But again, the most interesting thing to me is do they reflect some of these transfers and authorities that they have begun over the last year to do?

Joe Brenckle:
As a fellow budget nerd, I feel it’s also important to point out that the president’s budget does not have the rule of law. It is just the blueprint. It is just suggestions. It’s up to Congress to implement it. So I think a lot of times when people see the president’s budget, they get really upset and you think, “Well, nothing’s happened yet.” And I think you can attest to most of the time, whatever the president suggests, Congress will take it and shape it to what they want to do with it. So I think that’s important to focus on.

Alex Nock:
100%. And Joe, often, at least if you consider the first Trump administration and the second Trump administration, oftentimes they didn’t put some of their biggest priorities in their budget document. So we’ll have to see what does this mean versus other actions they may take.

Joe Brenckle:
That’s all I have for now. Alex, do you have anything that you want to focus on or maybe tune into next time?

Alex Nock:
Well, like you said, with higher ed, it’s never a dull moment. So I think we hit upon some of the key issues at the moment.

Joe Brenckle:
That sounds good, Alex. Thank you so much, and we’re going to talk to you soon.

Alex Nock:
Thank you.