Unmet Financial Need is Widespread Among College Students. Federal Aid Helps Some, But Still Falls Short for Many.

Nine in ten students who have received a Pell Grant still face unmet financial need—the gap between what a student can afford and what they must pay for college—often falling short of college costs by thousands of dollars. Many students who have never received Pell Grants also still face unmet need, but this burden is not felt equally by students from different racial and ethnic groups. As Congress appropriates federal funds to need-based aid programs for fiscal year 2026, and states and colleges plan financial aid investments, maintaining and protecting student financial aid is more critical than ever. 

Last year, the federal Pell Grant helped over seven million students from low- and moderate-income backgrounds enroll in and complete college. While the Trump Administration proposed cutting the maximum award, bipartisan funding proposals from both chambers of Congress preserve the current maximum Pell award, $7,395, for the 2026–2027 academic year. But the maximum Pell Grant has not kept pace with rising college costs, and many recipients still face high levels of unmet need.  

By analyzing data from the 2020 National Postsecondary Student Aid Study (NPSAS:20), we find that unmet need is alarmingly high among Pell Grant recipients regardless of race and ethnic background, with roughly 90 percent of students in all racial or ethnic groups unable to fully cover the cost of college. In comparison, the overall share of unmet need is lower among students who have never received a Pell Grant. But racial disparities are more pronounced for students who do not receive Pell. At least 64 percent of Asian American, Black, and Hispanic or Latino students who have never received a Pell Grant face unmet need, compared to just 53 percent of White students and 56 percent of all students who have never received a Pell Grant.  

And although the Pell Grant is intended to support students with the greatest financial need, under current grant award amounts, grant recipients remain thousands of dollars away from covering their full financial need. Students who ever received a Pell Grant typically need an additional $9,791 per year to cover college costs. Among this group, Asian American students face the highest average unmet need—exceeding $11,000. Previous IHEP analysis also demonstrates wide disparities within Asian American student populations.  

In contrast, students who have never received a Pell Grant have much lower levels of unmet need. Some students even have extra financial resources. Yet the amount of unmet need among students who have never received a Pell Grant varies greatly by race and ethnicity. Asian American, Black, and Native Hawaiian or Pacific Islander students who do not receive Pell Grants all face some unmet need, with Black students experiencing the highest average amount at $1,164. Meanwhile, White students who have never received a Pell Grant can cover their college costs with nearly $7,000 to spare.  

These differences in unmet need among racial and ethnic groups could in part be due to differences in families’ income and wealth. Wealth in particular varies drastically by race, and financial aid decisions often fail to fully account for wealth in grant awards. This disproportionately affects students from low-wealth backgrounds. Some groups might also attend more expensive colleges than their peers, where their financial aid and resources fall short. 

Our analysis underscores the importance of protecting and increasing the Pell Grant to help students with the greatest financial need afford to get to and through college. Strong federal support for Pell Grants, alongside state and institutional investments in financial aid, can help ensure all students benefit from the social and economic mobility higher education can provide.