HEA Overhaul in Congress: What the Senate and House Versions Could Mean for Your Institution
Congress is advancing a sweeping legislative package that includes major changes to the Higher Education Act of 1965. Known colloquially as the “Big Beautiful Bill,” this budget reconciliation effort includes provisions that would fundamentally reshape how students receive aid, how institutions are held accountable, and how the federal government supports postsecondary access.
While both the House and Senate agree on the need for reform, their respective versions of the bill diverge on several key fronts. Below is a breakdown of what your institution needs to know.
Student Aid Reform: What’s on the Table?
Both versions of the bill propose the following major changes:
End of Subsidized Loans and Grad PLUS: The longstanding federal subsidized loan program would be eliminated, along with Grad PLUS loans for graduate students.
Simplified Repayment Plans: Borrowers would have just two repayment options, one standard and one income-driven, streamlining what’s currently a complex landscape.
Lifetime Borrowing Caps: New aggregate loan limits by degree level would restrict how much students can borrow under the Direct Loan Program.
However, the details vary sharply between the two chambers.
Pell Grant Overhaul
Policy House Version Senate Version
Credit Requirements Full Pell requires 15 credits/term (30/year) Same
Part-Time Students Partial grants available for 6–14 credits No Pell for <½-time enrollment
Indexing Indexed to inflation Same
Takeaway: Institutions that serve part-time or nontraditional learners, especially community colleges, could see significant declines in Pell eligibility under either version, but the Senate’s restrictions go even further.
Institutional Accountability
Policy House Version Senate Version
Risk-Sharing New loan risk-sharing fee based on defaults No fee, but ties aid eligibility to graduate earnings
Program Reporting Required for all Title IV programs Required for all Title IV programs
Takeaway: The House creates a financial penalty system, while the Senate ties access to federal aid directly to graduate outcomes. Both approaches would raise compliance expectations.
Loan Repayment and Forgiveness
Feature House Version Senate Version
Deferment/Forbearance Retained Eliminated for most cases
Zero-Dollar IDR Payments Permitted in hardship Removed entirely
Forgiveness Pathways Narrowed but retained Further restricted
Takeaway: The Senate version is far more strict, signaling a policy shift away from borrower protections. This could affect institutional default rates and repayment support services.
Endowment & Tax Provisions
Endowment & Tax Provisions
Policy House Version Senate Version
Endowment Tax Progressive up to 21% Capped at 8%; religious institutions exempt
Employer Loan Payment Exclusion Extended through 2032 Made Permanent with inflation indexing
Key Implications for Institutions
Compliance and Reporting: Expanded program-level disclosures and outcome-based thresholds mean new administrative demands.
Enrollment Strategies: With tighter Pell and loan eligibility, nontraditional and part-time enrollment could decline.
Program Viability: Graduate and professional programs may face decreased demand without Grad PLUS or subsidized loans.
Aid Packaging: New borrowing limits and repayment restrictions will require institutions to rethink financial aid strategies.
Final Thoughts
While both chambers share a goal of reforming the federal student aid system, they approach that goal in distinct ways. The House emphasizes institutional accountability through risk-sharing, while the Senate leans toward fiscal control by reducing borrower support and aid access.
The path forward remains uncertain, as reconciliation negotiations will determine what makes it into the final law. For institutions, now is the time to:
Model financial aid packaging under both proposals
Evaluate Title IV compliance risks under new outcome-based standards
Assess enrollment impacts for part-time and graduate students
JHSG will continue to monitor developments and provide guidance to help your institution prepare.
