CBO: Pell Grant Costs Revised Down Again, Funding Cliff Moved to 2018

Another budget estimate brings good news for the Pell Grant program. The CBO released its annual cost projection for the Pell Grant program today in its March 2015 Baseline. This closely-watched estimate details how much Congress needs to provide for the program in the upcoming appropriations process if the program is to continue providing its current level of benefits.

That figure has been flat for the past several years thanks to temporary funding Congress provided from other sources back in 2011 -- and the estimate for this year's appropriations process (fiscal year 2016) will be no exception. But at some point the temporary funding will run out and Congress will have to decide to increase funding or reduce the cost of the program. The new CBO estimate tells us when that day will be and how much additional funding lawmakers will need to provide.

In the past few years this "funding cliff" has been pushed further out into the future as Pell Grant costs came in below expectations. This year's estimate brings more of the same news. Congress can get by funding the Pell Grant program at its current level for a few more years.

CBO's new estimate says the funding cliff starts during the fiscal year 2018 appropriations process. Congress and the president will need to provide a $2.3 billion increase to the appropriations bill they enact for that year (total funding for the program would then total $33.6 billion, including all sources). Moreover, lawmakers will need to sustain and build on those increases each subsequent year. That means over the next 10 years, appropriations will need to be $31.8 billion higher in total.

Under the estimate that CBO provided last year, the funding cliff started a year sooner, in fiscal year 2017, and was slightly larger over 10 years, at $38.1 billion. The nearby table compares this year's estimate with the one from last year.

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