House Republicans’ “big, beautiful bill” doubles down on President Trump’s education agenda, including raising taxes on university endowments and overhauling the student loan program, even as colleges are already feeling a funding pinch and borrower defaults are on the rise. \u00a0\u00a0<\/p>\n
Advocates are hoping to seize on the opportunity to have the legislation reformed in the Senate, where GOP moderates and conservatives are calling for significant \u2014 and sometimes contradictory \u2014 changes. \u00a0<\/p>\n
Education experts warn that in its current form the package, which also boosts student vouchers and gives a tax break to religious colleges, will financially cripple student loan borrowers and universities alike.\u00a0<\/p>\n
\u201cThe major takeaway is that this bill is going to make paying for college and paying off student loans more expensive and more risky for millions of students and working families with student debt,\u201d said Aissa Canchola Ba\u00f1ez, policy director for Student Borrower Protection Center.\u00a0 \u00a0<\/p>\n
Student loan borrowers have faced a whirlwind in policy shifts between former President Biden and President Trump, but the current budget reconciliation bill would be an earthquake to the 45 million Americans with student debt. It would reshape repayment options, only offering one income-driven repayment plan or a standard repayment plan; all other options would be terminated. \u00a0<\/p>\n
Advocates fear significant increases in monthly payment as more generous repayment plans disappear at a time when default rates are already going up.\u00a0<\/p>\n
\u201cIt’s very bad for borrowers. I don’t want to sugar coat it, you know, it’s not looking good,\u201d said Natalia Abrams at the Student Debt Crisis Center.\u00a0<\/p>\n
\u201cIt will lengthen the time for undergrads from 20 years to 30 years\u201d to receive debt forgiveness after consistent payments, she added. \u201cFor grad students, from 25 to 30 years. It’s really unfortunate that this bill passed, especially by one vote\u201d in the House.\u00a0<\/p>\n
The package also intends to end Parent PLUS loans, limit how much federal student loan debt an individual can take out and changes eligibility to Pell Grants. \u00a0<\/p>\n
The maximum an undergraduate student could take out is $50,000, with parents able to match the amount.\u00a0<\/p>\n
For Pell Grants, the number of credits needed to qualify will increase. Other changes include eliminating subsidized loans.\u00a0<\/p>\n
\u201cOne of our big worries is that there will be borrower confusion amidst this return to repayment and with servicers potentially needing to implement, if this reconciliation bill goes through, a new income driven repayment plan that departs significantly from any IDR plan that has come before. And so, I think that borrower confusion is a big problem for policymakers,\u201d said Sameer Gadkaree, president and CEO of the Institute for College Access & Success.\u00a0<\/p>\n
Republicans and conservatives have cheered the legislation as a way to simplify student loan repayments and ensure those who did not go to college do not pay off others’ debt through their taxes.<\/p>\n
\u201cIt\u2019s time we stopped asking taxpayers to foot the bill for our broken student loan system that has left borrowers in trillions of dollars of debt and has caused college costs to balloon,\u201d said Rep. Tim Walberg (R-Mich.), chairman of the House Committee on Education and the Workforce. \u00a0<\/p>\n
\u201cIt\u2019s time we stopped asking a factory worker in Michigan or a rancher in Texas to subsidize the student debt of a lawyer in Manhattan. I urge my colleagues in the Senate to end the status quo and get this bill to the president\u2019s desk,\u201d he added. \u00a0<\/p>\n
Colleges, already beset by the Trump administration, face a financial hit too: tax increases on their endowments ranging from 1 percent to 21 percent, with major universities such as Harvard and Yale at the top end.<\/p>\n
Those are an addition to the taxes on endowments passed in 2017 during Trump\u2019s first administration back. Before then, endowments were never taxed.\u00a0<\/p>\n
\u201cWe know that almost 50 percent of endowment spending goes to financial aid. If you add financial aid and academic programs, that’s two-thirds of endowment spending, and so, if you take money away from the school, from its endowment resources, it’s going to undermine their ability to provide robust financial aid. That’s why we call it a scholarship tax, because that’s what it is,\u201d said Steven Bloom, assistant vice president of government relations at the American Council on Education. \u00a0 \u00a0<\/p>\n
Despite Trump calling for Republicans to unite around the bill, some in the Senate are demanding changes before they’ll give it their support.<\/p>\n