The Republican domestic policy bill that cleared Congress on Thursday has far-reaching implications for colleges and students, and could make attending college less accessible, higher education leaders said.
The bill would expand the tax on endowments that universities use for financial aid, roll back student loan protections and cap the amount students can borrow for graduate programs.
The bill would “make college less affordable,” said Lynn Pasquerella, president of the American Association of Colleges and Universities, adding that schools could become less economically and racially diverse.
Republicans have said that the measures impose accountability on a sector that has failed to police itself. The caps on student borrowing are intended to reign in ballooning graduate student debt, they say, and the tax on university endowments, which schools often use to provide financial aid, fulfills a Trump campaign promise to target the nation’s wealthiest schools.
The student loan changes are expected to save the government more than $300 billion over a decade, according to a Congressional Budget Office estimate.
It comes as the Trump administration has unleashed an attack on colleges and universities, cutting research grants and making it harder for international students to enroll. The administration has singled out top schools like Harvard, Columbia and the University of Pennsylvania. But the bill shows that the Republican agenda for higher education extends far beyond the Ivy League.
The sweeping cuts to Medicaid at the center of the bill could also have ramifications for higher education. Experts say the changes, which include new work requirements, will make juggling work, education and family responsibilities even harder for low-income students.
Here are other ways the bill would affect college students and universities.
Getting student loans will be more difficult.
The bill places restrictions on how much money graduate students can borrow from the federal government to pay for school. Students cannot take out more than $100,000 for a master’s degree and no more than $200,000 for doctoral, medical or professional degrees.
Advocates of these measures say that unlimited borrowing has encouraged colleges to charge more for their programs. “By reducing borrowing availability, we break the cycle of debt, making higher education more accessible for all Americans,” the Trump administration said in a statement.
But opponents say that some students will be unable to pursue these programs while others will be forced into the private loan market. Private loans are not eligible for Public Service Loan Forgiveness programs, which help many students reduce their debt.
“Medical school may be impossible for these students at a time when we need more doctors,” said Jon Fansmith, a senior official at the American Council on Education. Graduates of medical schools owe on average more than $240,000, according to the Education Data Initiative.
The bill would also phase out the federal Grad PLUS loan program, which helps graduate students finance their studies.
Student loans may depend on alumni salaries.
Critics of higher education often point out that some college graduates end up in poorly paid jobs.
Congress hopes to address that by limiting student loans. Under the new policy, degree programs will be ineligible to use federal student aid if their graduates fail to meet certain income thresholds. This applies to both undergraduate and graduate programs.
How to measure the value of college programs and impose accountability have been a bipartisan concern. But Mr. Fansmith, of the American Council on Education, said the bill did not make room for nuance. Not all programs measure themselves by financial value, he said.
“You don’t necessarily pursue social work because your goal is to be rich,” he said. “You don’t pursue a master’s in English because your expectation is this is a path to a lucrative career.”
University endowments face higher taxes.
Mr. Trump has long targeted university endowments, like Harvard’s pot of $53 billion. In 2017, during his first term, Congress levied a 1.4 percent tax on colleges with endowments of $500,000 or more per student, affecting a few dozen of the wealthiest schools.
The bill expands that tax on these colleges. Universities like Harvard and Princeton that have endowments of $2 million or more per student would face an 8 percent tax on investment income. It’s a smaller amount than the 21 percent that was originally in the House bill, or the 35 percent that Vice President JD Vance floated in 2023 as a senator.
Colleges withdraw a sustainable portion from their endowments annually, typically about 5 percent, to help pay for financial aid, professorships and operating expenses. Opponents of the endowment tax note that these cash piles are a critical source of student aid.
They also say that the tax is a vendetta rather than a measured policy, noting that the benefit to the Treasury would be a rounding error, compared with the expected $3.3 trillion the overall bill is expected to add to the national debt.
An addition to the Senate bill spared colleges with fewer than 3,000 students from the tax. Hillsdale College, a conservative Christian institution with about 1,700 students, lobbied against it.
Pell Grants can now be used for nondegree programs.
Students attending short-term work training programs, like for a cloud-computing credential or a forklift driver certification, are now eligible for Pell Grants, which millions of students rely on to pay for college. The bipartisan move was welcomed by community colleges, which said it would make work-force training more accessible to nontraditional students.
The bill had included a controversial plan to expand Pell Grant eligibility to unaccredited programs, but the Senate’s parliamentarian struck down the provision.
Vimal Patel writes about higher education with a focus on speech and campus culture.
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