MINNEAPOLIS — Colleges and universities are bracing for change after the massive policy bill passed the U.S. Senate this week, including serious cuts and restrictions to federal student loan programs, expansions to Pell Grants to fund short-term or workforce training, and a new accountability system for colleges based on their graduates’ earnings, ending federal loan eligibility if they fail.
The "One Big Beautiful Bill Act," as it's formally called, also reduces repayment options for student loans, leaving only one income-based option. Loan payments will rise for many borrowers, particularly those with lower incomes.
The bill also allocates $10.5 billion to the Pell grant program, which has been underfunded for years. Pell is a federal initiative that provides financial aid for thousands of the neediest undergraduate students.
“The increase in Pell will help with the anticipated shortfall in Pell funding, making it possible for our students with higher need to continue pursuing their dreams,” said Susan Rundell Singer, president of St. Olaf College in Northfield.
The House still must approve the bill and were debating it late Wednesday. Then President Donald Trump must sign it; he has said previously he wouldn’t hesitate to do so.
The version passed by the Senate "isn't great, but relative to the (original) House bill, it's certainly better in our view," said Justin Monk, director of student and institutional aid policy at the National Association of Independent Colleges and Universities (NAICU).
I want to be crystal clear that this is a relative term," he added. "It is still not a good bill for higher education.
Several higher education leaders said they're happy the bill no longer contains dramatic cuts proposed in the House's initial bill, such as requiring students to take more credits to receive a full Pell Grant — or 7.5 credits per term to get any Pell Grant at all.
"We are glad to see the Senate removed language that would prevent part-time students access to the Pell Grant," said Scott Olson, chancellor of the Minnesota State system, which includes 33 public colleges and universities.
Olson said officials are "still concerned" about the changes that remain in the Senate bill, including eliminating the Grad PLUS loan program and restricting the Parent PLUS loan.
The Parent PLUS loan is now capped, allowing parents to borrow up to $20,000 per year, with a lifetime cap of $65,000 per dependent. The Grad PLUS loan, which was aimed at graduate and professional students, would end next July.
The bill passed by the Senate also sets a lifetime cap of $100,000 for federal graduate student borrowing, or $200,000 for professional school borrowing, on top of existing undergraduate limits. When a student reaches that amount, federal borrowing is discontinued.
These limits are a "sizable reduction" from what was allowed before, Monk said.
Some officials have said that these changes, taken together, may push more families and graduate students toward private student loans, which lack federal protections.
Monk said the loan changes put graduate students who want to enroll in some health programs or the arts in a pickle.
They’re going to run out of money much, much sooner," he said. "And they’ll have nowhere else to go but the private market.
Some people won't qualify for private loans, however, he said.
The result? Many prospective graduate students with lower incomes will simply no longer enroll in certain programs because they have no way to pay for them, meaning the composition of certain fields will change significantly.
(The students) are going to be wealthier," he said. "They're going to have to be.
At St. Catherine University in St. Paul, Lauran Hundshamer, vice president of enrollment, said changes to those two specific loan programs — Grad PLUS or Parent PLUS — would be "difficult" for some students there. They might not be able to pay for college or have to take out higher-interest loans with co-signers.
The House's version had included a "risk sharing" provision that required institutions to be financially responsible for former students' unpaid student loans and calculated financial aid awards based on the median national cost of a degree in a given major.
The accountability system outlined in the Senate bill aims to hold schools—and academic programs within them—responsible for their students' outcomes, with a specific focus on comparing graduates' salaries to those of other state residents who have either high school diplomas or bachelor's degrees four years after graduation.
It's not as bad an idea as the previous House proposals," Monk said, "but it puts programs on the hook for labor market outcomes, which they can't control.
Rundell Singer said she's concerned about this system. Some St. Olaf graduates eventually earn master's degrees in fields such as art, social work, and education.
The bill would end a college or university program's access to federal student loans if, for example, their master's degree graduates are not earning more than the median salary of a working adult with a bachelor's degree in their state.
A university that fails this test for two out of three years would lose access to federal student loans for its students for at least two years.
We need the students that we graduate to go on into the whole range of careers that are out there, including ones that maybe don't have a huge increase in earnings when you get that master's degree," Rundell Singer said. "It's a societal issue — it's thinking about higher ed as a public good.
Republicans and Democrats in both the U.S. House and Senate favored allowing students to receive Pell grants toward workforce training programs, which are typically shorter in length than degree or certificate programs.
This change would make more students eligible for Pell grant awards, such as those enrolled in programs that award certificates or licenses.
Allowing Pell grants to be used for short-term workforce programs is a "great idea," but students served by Wallin Education Partners, a Twin Cities nonprofit that provides scholarships and advising to college-bound, low-income students, all attend two- or four-year nonprofit institutions. It appears many of these shorter training programs are offered by for-profit institutions, said Mohamed Sallam, Wallin's CEO.
Some higher education officials worry that allowing Pell eligibility for this kind of training could lead students to enroll in low-quality programs.
Monk, from NAICU, said letting these programs access Pell money concerns him. Any program that's been around longer than a year and has a 70% completion rate can access the funds, Monk said. They must also have a 70% placement rate 180 days after graduation.
There's 'limited evidence that short-term programs have any benefit to graduates,' he said.
One report has shown that such programs offer no increases in employment or earnings, he said. But he added that there's limited data on outcomes because reporting them often hasn't been required.
We don't know how it's going to play out," he said. "While we find that out, they're going to be using the Pell grant program as a bit of a piggy bank.
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