On July 4, President Donald Trump signed the sweeping Reconciliation Bill, dubbed by supporters as the “One Big Beautiful Bill,” into law. At 940 pages, the legislation ushers in a new period of federal policy that includes the continuation of Trump-era tax cuts, major shifts in federal spending, and significant reforms to higher education policy.

While the final bill contains major changes, effective advocacy from the higher education community helped blunt the most harmful proposals that would have disproportionately impacted private colleges and universities.

Key Changes to Higher Education Policy

• Loan Limits and Repayment Plans

One of the most notable impacts of the bill on students and institutions is the overhaul of federal student loan programs. The popular Grad PLUS loan program has been eliminated, and Parent PLUS loans are now capped, with both annual and lifetime limits. In addition, there are new limits on how much graduate students—factoring in prior undergraduate borrowing—can take in unsubsidized federal loans. These loan limits will have the greatest impact on graduate students from lower-income families pursuing high-cost professional degrees such as law, dentistry, and medicine. Further, a simplified repayment system has been introduced, consisting of one standard and one income-driven repayment plan, replacing all previously available options.

• Pell Grant Reform

The bill allocates $10.5 billion in funds to address the existing Pell Grant shortfall, an important step toward stabilizing this critical financial aid program. However, eligibility changes may reduce access for some students. Pell Grants will no longer be available to students whose non–Title IV aid (e.g., institutional or private scholarships) meets or exceeds their cost of attendance, though the semesters in which a student was eligible for Pell but did not receive it will count against a student’s lifetime Pell eligibility. On the positive side, the FAFSA needs analysis has been corrected to better reflect the finances of family farms and small businesses, an important fix.

A new Workforce Pell Grant Program has also been created, supporting students enrolled in short-term credential programs. These programs must be approved by state governors and offered through accredited institutions, potentially opening the door for private colleges to expand offerings that meet state workforce needs.

• New Accountability Measures

Replacing a more punitive risk-sharing proposal, the bill introduces a performance-based accountability model. New metrics compare graduates’ earnings to those with only a high school diploma or a bachelor’s degree, depending on the level of credential earned. Institutions with programs that consistently fail these earnings tests may see their students lose eligibility for federal loans. While not ideal, this model is considered more balanced than previous proposals.

• Tiered Endowment Tax

For institutions with significant endowments, the bill introduces a tiered tax structure of 1.4 percent, 4 percent, and 8 percent, depending on the size of the endowment. Further, the threshold for applicability has been raised from 500 to 3,000 tuition-paying students. As a result, all Wisconsin Association of Independent Colleges and Universities institutions are expected to be exempt.

Positive Advocacy Outcomes

Thanks to concerted advocacy from independent institutions and higher education associations, several damaging proposals were removed from the final bill. These would have included:

• The elimination of subsidized undergraduate loans. This would have raised the cost of college for students from lower-income families.
• A cap on federal aid based on the national median program cost. This proposal would have significantly disadvantaged private, nonprofit institutions that do not receive state funding to subsize the cost of tuition.
• Limiting Pell Grants to full-time students only.
• The original risk-sharing provision, which could have imposed severe financial penalties on private, nonprofit colleges.

In sum, while the “Big Beautiful Bill” is far from perfect, its final version reflects meaningful compromises. It preserves key aid programs, reduces the most severe risks for private institutions, and introduces new opportunities through workforce Pell Grants. As implementation begins, we will need to remain proactive and diligent to protect student aid for our students who need it most.

Eric Fulcomer