Key Points
- The Trump administration’s FY2027 budget proposes $76.5 billion for the Department of Education (a $2.3 billion cut) while putting the agency on an explicit “path to elimination.”
- The maximum Pell Grant would remain frozen at $7,395 for the fourth straight year, while FSEOG would be eliminated entirely and Federal Work-Study funding would be slashed by shifting 90% of wage costs to employers.
- The budget is a proposal, not law. Congress must still write and pass its own spending bills by September 30, 2026 and lawmakers rejected nearly identical cuts last year.
If you’re a college student or family relying on financial aid, President Trump’s newly released fiscal year 2027 budget proposal (PDF File) could signal major changes ahead. The plan calls for eliminating two long-standing aid programs, freezing Pell Grant awards at their current dollar amount, and continuing the administration’s push to shut down the Department of Education entirely.
The proposal, unveiled on Friday, requests $76.5 billion in discretionary funding for the Department of Education, a $2.3 billion (2.9%) decrease from last year. Including both mandatory and discretionary funding, the administration requested $124.4 billion for federal student aid.
The budget document describes these moves as putting the department on a “path to elimination,” with programs transferred to other agencies and staff reduced.
Here’s what the proposal includes, what it would mean for your wallet, and why it may or may not actually happen.
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Pell Grants: Move Overall Funding, Same Award Amount
The budget proposes a $10.5 billion increase in discretionary funding for the Pell Grant program, bringing the total to over $33 billion. But that number is misleading on its own. The increase is designed to cover a projected funding shortfall in the program, not to boost awards for students.
The maximum Pell Grant would remain at $7,395 for the 2027–28 award year. That’s the same amount students can receive today, and it would mark the fourth consecutive year without an increase.
The budget also references “Workforce Pell,” a provision from the One Big Beautiful Bill Act that expanded Pell Grant eligibility to short-term workforce training programs. The administration says it will continue partnering with employers to ensure these programs lead to in-demand jobs.
FSEOG Eliminated And Work Study Almost Gone
Two of the oldest campus-based aid programs would face severe cuts or outright elimination under this proposal.
Federal Supplemental Educational Opportunity Grant (FSEOG): The administration proposes eliminating this grant program entirely for FY2027. FSEOG currently provides need-based grants of up to $4,000 per year to undergraduate students with financial need. Schools receive FSEOG allocations from the federal government and distribute them to eligible students. This is the second consecutive year the administration has called for FSEOG’s elimination, but Congress voted to maintain funding last year.
Federal Work Study (FWS): The budget doesn’t eliminate Work Study outright, but the proposed changes would effectively gut the program. Currently, the federal government pays 75% of a work-study student’s wages, with the employer covering 25%. The new proposal flips that ratio and more: employers would pay 90% of wages, with the federal share dropping to just 10%. Total program funding would be $123 million.
For students, this matters directly. Roughly 600,000 students participate in Federal Work Study each year. If employers are required to shoulder 90% of wage costs, many (especially nonprofits, schools, and community organizations) may simply stop offering work study positions. Fewer positions means fewer students earning money to help cover their college costs.
Other Higher Education Cuts
Beyond the headline financial aid programs, the budget proposes other higher education program eliminations. These include a $354 million cut to Minority-Serving Institution (MSI) programs, including funding for Historically Black Colleges and Universities and Tribally-Controlled Colleges and Universities. The Fund for the Improvement of Postsecondary Education (FIPSE) would lose $136 million. International and Foreign Language Education programs would lose $81 million.
The budget also eliminates federal TRIO programs, GEAR UP, and the GAANN graduate assistance program. TRIO alone serves nearly 800,000 low-income and first-generation college students annually with academic tutoring, counseling, and college preparation.
Reminder: How The Federal Budget Process Works
Before anyone panics, it helps to understand what the presidential budget proposal actually is0.
The president’s budget proposal is a wish list. It’s a formal proposal that outlines the administration’s spending priorities, but it does not become law on its own. Congress holds the power of the purse under the Constitution, and both the House and Senate must draft, negotiate, and pass their own appropriations bills to actually fund the government.
Here’s the typical timeline: The president submits a budget proposal (which just happened). Congressional committees then hold hearings and draft their own spending bills. The House and Senate each pass their versions, a conference committee reconciles differences, and the final bills go to the president’s desk for signature. All of this is supposed to be completed by September 30 or Congress must pass a continuing resolution to keep the government funded, or risk a shutdown.
History offers reason to be skeptical that these exact cuts will happen. The administration proposed nearly identical cuts to FSEOG and Federal Work Study last year, and Congress rejected them, voting to maintain flat funding for both programs. That doesn’t guarantee the same outcome this year, but it shows that the president’s budget is a starting point for negotiations, not the final word.
What This Means For Students And Families
National Association of Student Financial Aid Administrators President Melanie Storey said in a statement, “American families are facing rising costs of basic necessities, and forthcoming changes to federal student aid programs from the One Big Beautiful Bill Act will give many of them fewer options to pay for college. Now is not the time to abandon critical need-based aid programs with a proven track record of improving student outcomes and academic success.”
If any version of these cuts were to pass, the impact would fall hardest on low-income students. FSEOG exclusively serves students with the greatest financial need. Work Study jobs provide both income and professional experience. TRIO programs help first-generation students navigate the path to and through college. Cutting all three simultaneously would remove multiple rungs from the ladder that lower-income students use to access and afford higher education.
Even the Pell Grant freeze, while not a cut in dollar terms, represents a real reduction in value as college costs continue to climb.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.