How the ‘Big Beautiful Bill Act’ will change the Higher Education Act
Congress is currently advancing sweeping legislation aimed at overhauling the Higher Education Act, marking the most significant federal changes to student aid and institutional accountability in over a decade. Framed as a fiscally responsible effort to reduce federal spending and streamline postsecondary education policy, the bill proposes major revisions to student loan programs, Pell Grant eligibility, and the role of accrediting agencies. While supporters argue it will rein in costs and increase institutional performance, critics warn that the proposed changes could reduce college access, burden future borrowers, and weaken the long-term economic potential of the nation’s workforce. Below are the key provisions under consideration.
1. Student Loan Programs
Elimination of Subsidized Loans and PLUS Loans: The bill proposes ending subsidized Stafford Loans and the PLUS loan programs for graduate students and parents. This change would affect millions of borrowers and potentially increase reliance on private loans.
Borrowing Caps: A cap of $150,000 would be imposed on federal student loans for professional programs, including medical schools. This limitation could deter low-income students from pursuing advanced degrees.
Income-Driven Repayment (IDR) Overhaul: The bill seeks to consolidate existing IDR plans into a single option, requiring borrowers to pay 15% of their discretionary income with a minimum monthly payment of $25. Loan forgiveness would only be available after repaying an amount equivalent to the standard 10-year plan, potentially extending repayment periods for low-income borrowers.
2. Pell Grants and Financial Aid
Pell Plus Program: Eligible juniors and seniors on track to graduate could receive double the maximum Pell Grant award, aiming to incentivize timely degree completion.
Access Restrictions: Eligibility for Pell Grants would be narrowed, with increased credit requirements and new limits based on the Student Aid Index. These changes could reduce aid for some students by thousands of dollars.
3. Institutional Accountability
Risk-Sharing Measures: Colleges would be required to repay a portion of defaulted student loans, introducing financial consequences for institutions with poor loan repayment outcomes.
Performance-Based Grants: A new grant program would allocate funds to institutions based on student outcomes, such as earnings and enrollment of low-income students. To participate, schools must provide "maximum price guarantees" for degree programs.
4. Accreditation Reforms
State-Authorized Accreditors: States could designate alternative accrediting bodies, expanding the pool of recognized accreditors and potentially increasing competition.
Focus on Outcomes: Accreditors would be directed to emphasize student outcomes, including completion rates, loan repayment, and post-graduation earnings, in their evaluations.
Religious Mission Protections: Accreditors would be required to respect an institution's religious mission, and institutions could change accreditors without Department of Education approval.
Legislative Status
The bill has passed the House of Representatives and is under consideration in the Senate. While Republicans support the bill as a means to reduce federal spending and increase accountability, Democrats and higher education advocates express concerns about reduced access to aid and potential negative impacts on low-income and minority students.
