Education Department Releases Proposed Rules for Pell Grants Under One Big Beautiful Bill
December 8, 2025
The Department of Education (ED) on Friday released draft regulatory language to implement new provisions on short-term Pell Grants and how institutions should award Pell Grants when students receive non-federal grant aid, advancing the next phase of negotiated rulemaking under the One Big Beautiful Bill Act (OBBB).
The release comes ahead of the rulemaking session on short-term Pell and the Pell Grant, scheduled for Dec. 8–12. The department plans to turn next to accountability issues beginning in January. According to Inside Higher Ed, the department’s agenda calls for taking an initial vote on short-term Pell at the end of this week, compressing what is typically a multi-week negotiation process.
How the Pell Grant Would be Restructured
The Pell Grant, the cornerstone of federal financial aid, is currently applied to a student’s aid package before other federal grant programs. After students complete the FAFSA, their Student Aid Index determines the Pell amount they receive, which is awarded first.
A provision in the OBBB will now force institutions to consider grant aid awarded to students from non-federal sources before considering Pell Grant award amounts. If students have non-federal grant aid equaling or exceeding the full cost of attendance, they would not have access to the Pell Grant at all. However, if students receive non-federal grant aid that does not equal the full cost of, they would still have access to the Pell Grant, and it would still operate as a first-dollar program.
