As Congress reaches the September 30 fiscal deadline, uncertainty remains over the fate of Title IV federal student aid programs, including Pell Grants, Federal Supplemental Educational Opportunity Grants (SEOG), Federal Work-Study (FWS), and Direct Loans. With competing proposals from the House, Senate, and White House, higher education institutions and financial aid professionals are watching closely for clarity on funding levels and program rules.
Where Things Stand in Congress
House Proposal
The House Appropriations Committee advanced its FY 2026 Labor–HHS–Education funding bill earlier this month. The House version would:
- Eliminate SEOG funding entirely, ending the supplemental grant program for students with exceptional need.
- Reduce Federal Work-Study funding by approximately $451 million, representing about a 37% cut from current levels.
- Flat-fund Pell Grants, holding the maximum award at current-year levels with no inflation adjustment.
- Maintain Direct Loan authority without structural changes.
However, the full House has not yet voted on this proposal. Leadership is prioritizing a short-term continuing resolution (CR) to keep the government operating beyond September 30.
Senate Proposal
By contrast, the Senate Appropriations Committee introduced a bipartisan measure that preserves current funding for all major Title IV programs. The Senate bill:
- Keeps Pell, SEOG, and Work-Study at FY 2025 levels.
- Avoids program eliminations or eligibility changes.
- Provides stability while broader fiscal negotiations continue.
This version has bipartisan support in committee but has not yet reached the Senate floor.
The Continuing Resolution (CR)
Because none of the 12 annual appropriations bills have cleared Congress, lawmakers are negotiating a Continuing Resolution (CR) to avoid a government shutdown.
- The Democratic proposal extends current FY 2025 funding through October 31.
- The Republican proposal extends the same funding levels through November 21. This plan has passed a full vote in the House and is onto the Senate for a vote.
Both versions would temporarily maintain all Title IV programs at existing levels. The main difference lies in the length of the extension.
If no agreement is reached, the federal government would shut down after September 30. While Pell Grants and Direct Loans would continue (they’re on mandatory funding authority), SEOG and Work-Study could face administrative delays during any closure.
Program-by-Program Snapshot:
Sources: House and Senate Appropriations Committees; NASFAA; U.S. Department of Education Budget Summary (FY 2026).
* The One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025, closes the projected Pell Grant shortfall by increasing mandatory funding under § 401(b)(7)(A)(iii) of the Higher Education Act. This ensures the maximum Pell award remains at $7,395 for the 2026–27 award year.
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What Happens Next
- September 30: FY 2025 funding expires. Without a CR, a partial shutdown begins.
- October–November: If a short-term CR passes, Congress will continue negotiating a full FY 2026 spending package.
- Late 2025: Lawmakers may merge education funding into a larger omnibus package covering all 12 appropriations bills, or into smaller “minibus” bundles that group several together.
For now, current FY 2025 funding levels remain in effect, and no changes to Title IV programs have been enacted.
Negotiated Rulemaking: RISE Committee
The Department of Education’s Reimagining and Improving Student Education (RISE) Committee began its first negotiated rulemaking session this week (September 29–October 3, 2025).
According to NASFAA, “if there is a shutdown, the remainder of the week’s session could be conducted virtually between October 15 and 17. However, planning is still in flux as the department evaluates whether it could continue the week’s session if there is a lapse in appropriations.”
While separate from FY 2026 funding talks, the RISE process could also face schedule adjustments depending on the outcome of budget negotiations.
Key Takeaways for Institutions
- No immediate changes to student aid programs.
- Monitor CR negotiations closely — funding stability depends on avoiding a shutdown.
- Prepare for and communicate potential Title IV processing or disbursement delays if a government shutdown occurs.
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Fun Fact: The Elusive “On-Time” Federal Budget
The last time Congress passed all 12 appropriations bills by the September 30 deadline was 1996, for Fiscal Year 1997. Since then, every single year has required at least one Continuing Resolution (CR) to keep the government open — averaging nearly four CRs per year over the past three decades. The federal government has gone nearly 30 years without completing all appropriations bills by the start of the fiscal year.
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McClintock & Associates will continue tracking legislative updates and will issue alerts if Congress finalizes new funding levels or policy changes affecting federal student aid.
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