FAFSA, SAI and Pell Grant · guide
What changed for Pell Grants in 2026
Public Law 119-21, signed on July 4, 2025, made four changes to the Pell Grant that took effect on July 1, 2026, for the 2026-27 award year. First, a student whose Student Aid Index equals or exceeds twice the maximum Pell Grant, 14,790 this year, gets no Pell at all, even when family income is under a minimum-award line. Second, foreign income excluded from U.S. tax is now added to AGI when that income is compared with the Pell lines. Third, a student whose grants from states, colleges or private donors already equal or exceed the cost of attendance for a period receives no Pell for that period. Fourth, Workforce Pell now pays for short job-training programs of 8 to 14 weeks. The maximum award itself, $7,395, comes from the February 2026 appropriations law plus the $1,060 the Higher Education Act adds, and the minimum is still 10% of it. The checker below applies the first and third rules to your own numbers.
Do the new Pell rules cut you off?
Pell Grant under the 2026-27 rules
$0
| SAI test (cut-off 14,790) | Fails |
| Grants against cost of attendance | Short by $22,000 |
| Scheduled award before the new rules | Minimum possible if income is under the minimum line |
The award amount stayed in the hands of Congress’s yearly budget. What the 2025 law rewrote is who can receive it.
Checked by Radif Partners · Editorial policy · How we calculate
The four changes side by side
All four rules come from Title VIII of the 2025 budget law, which the Department of Education now refers to as the Working Families Tax Cuts Act. Each one took effect on July 1, 2026 and applies to award year 2026-27 and every year after it.
| Rule | Section | Who it reaches |
|---|---|---|
| No Pell with an index at or above twice the maximum | 83001(b) | Index of 14,790 or more in 2026-27 |
| Foreign income added to AGI for Pell | 83001(a) | Families with income excluded from U.S. tax |
| No Pell when outside grants cover the cost | 83004 | Students whose state, school and private grants reach the cost of attendance |
| Workforce Pell for short programs | 83002 | Students in approved programs of 150 to 599 clock hours |
Three of the four take Pell away from some students; the fourth extends it to a group that never had access. None of them changes how the Student Aid Index is computed, which is why a family can see the same index as last year and still a different Pell result.
A ceiling on the index
Until this year the Pell decision had a back door. A student whose index was too high for a sliding award could still receive the minimum, $739.50, if family AGI sat under the minimum-award line. The index could be large for reasons that have nothing to do with income: savings, investments, a second property. Section 83001(b) shuts that door. When the index equals or exceeds twice the total maximum Pell Grant, the student is not eligible for that year (Public Law 119-21, section 83001).
Picture parents of a household of three with $64,000 of AGI, comfortably under their minimum-award line, and $320,000 in a brokerage account. Their student's index comes to about 16,229. Under last year's rules that student could have collected the minimum award; under the new one, nothing. The cut-off moves with the maximum award, so the threshold will change whenever Congress changes the award. Families who sit just above it should know that 12% of reportable assets flows into the parents' side of the formula, and paying down a debt or a necessary purchase made before filing changes what is reported on the day of filing.
The checker at the top of this page asks for an index rather than computing one, because the cut-off is a pure comparison: type the figure from your FAFSA Submission Summary, or from the SAI calculator, and it tells you which side of 14,790 you are on. The rule bites hardest in a narrow band. Below 6,656 the sliding award applies as before. Between 6,657 and 14,789 the minimum award survives for families under the minimum-award line. Only at 14,790 and above does the new ban take over. The students who lose money are the ones with modest income and substantial assets, for example a family that sold a rental property and still holds the cash, or one that received an inheritance shortly before filing.
Foreign income enters the test
The Pell lines compare AGI with a percentage of the poverty guideline. AGI leaves out foreign earned income that a U.S. taxpayer living abroad excludes on the return. From 2026-27, for Pell determinations only, that foreign income is added back, both for the parents of a dependent student and for an independent student and spouse. The FSA guide already builds it into the check: it tests AGI plus the foreign income exclusion amount against the 175% and 225% lines.
The effect is concentrated. Most families report no excluded income and see no change. A family working overseas that showed almost no U.S. AGI could previously clear the full-award line with ease, and can now land in the sliding zone or above it. The Pell eligibility page lists the lines by family size.
When outside grants already pay the bill
Section 83004 adds a short sentence to the Pell statute: a student is not eligible during any period for which grant aid from non-federal sources, including states, colleges and private sources, equals or exceeds the student's cost of attendance for that period. Take a student at a school with a $34,500 cost of attendance. A state award, an institutional scholarship and a foundation grant adding up to $34,500 or more remove Pell for that period. If the three add up to $33,000, Pell stays, and the school then fits it inside the remaining need under its usual packaging.
The test is per period, so a student with a generous fall scholarship and a smaller spring one may keep Pell for spring. Only grant aid counts; loans, work-study earnings and family contributions do not. A student who expects a full ride should ask the aid office how the period is defined at that school before accepting.
Cost of attendance is the school's own budget figure, not just tuition. It includes housing, food, books, transportation and personal costs, so a scholarship described as full tuition rarely reaches it. The rule mostly touches students with several overlapping awards at lower-cost schools, where the combined total can pass the whole budget. When that happens, keeping the extra grant is usually still worth more than the Pell Grant it displaces; the student simply cannot have both for the same period.
Workforce Pell and the shortfall reserve
The one expansion in the package is Workforce Pell, launched on July 1, 2026. It pays for short programs, from 150 to 599 clock hours over 8 to 14 weeks, that a governor and then the Department have approved, and it uses the same eligibility rules as the regular grant. Programs must show completion and job placement of 70% and earnings that justify their tuition. Students who hold or are pursuing a graduate credential cannot use it. The Workforce Pell guide walks through each approval step.
Section 83003 also raised the money set aside to cover a Pell funding shortfall, from $2.17 billion to $12.67 billion. That is a budget measure, not a change in what any student receives.
What stayed the same
The award for a student with an index of zero or less is still the full maximum, and a student with an index from 1 to 6,656 still receives the maximum minus the index. The minimum remains 10% of the maximum. Lifetime eligibility is still capped at the equivalent of 12 full-time semesters, and Workforce Pell periods count toward it. The automatic full award for families under the 175% or 225% lines and for non-filers is unchanged. The Pell Grant calculator applies the old and new rules together, and the maximum award is documented in Public Law 119-75.