The House Committee on Education and Workforce last week approved the Student Success and Taxpayer Savings Plan, a budget reconciliation bill that would make dramatic and damaging changes to the federal student aid system.
Reconciliation is a congressional procedure that allows the majority party to pass budget-related legislation with a simple majority in both chambers, bypassing the Senate filibuster and its requirement for at least 60 votes to advance legislation. It’s often used to fast-track significant but partisan policy changes. In this case, the House committee was tasked with finding at least $330 billion in savings over 10 years.
Along with five other higher education associations, ACE sent a letter to the committee in advance of the vote, outlining their concerns. As they noted, “the overwhelming majority of provisions in the bill would reduce student aid to low-income students and would impose onerous financial penalties on institutions, particularly those least able to meet them.”
While there are elements of the bill the higher education community has long supported—such as stabilizing the Pell Grant program—the positives are far outweighed by provisions that would cause real harm. It imposes significant cuts to federal aid programs, limits access to affordable repayment options, and introduces a risk-sharing scheme that would disproportionately penalize institutions serving low-income and underrepresented students. Several proposals were drawn from the College Cost Reduction Act introduced in the 118th Congress.
A full summary of the bill here, but the key provisions include:
- Pell Grant restrictions: Although the bill addresses the projected Pell shortfall, it simultaneously curtails eligibility by raising the full-time threshold to 15 credits and excluding students enrolled less than half-time—changes that would hit working adults and student-parents especially hard.
- Loan program eliminations: It ends subsidized undergraduate loans, eliminates Grad PLUS loans, and severely restricts Parent PLUS borrowing, while also capping total loan amounts below current levels for many students.
- New repayment plan: The legislation replaces all current income-driven repayment options with a new 30-year plan that offers only limited relief and few borrower protections.
- Risk-sharing requirement: Nearly every institution—98 percent, according to the committee’s own data—would owe annual payments based on loan repayment outcomes, and 75 percent would face an overall financial loss even after accounting for proposed PROMISE grants.
- Regulatory constraints: The bill prohibits the Department of Education from issuing most regulations unless explicitly authorized by Congress, as well as eliminating several existing regulations, such as the 90/10 rule and the gainful employment/financial value transparency rule.
The bill now moves to the House Budget Committee. The Senate’s reconciliation process is expected to take a much different course, with far fewer mandated cuts—setting up a high-stakes negotiation that could define the future of federal higher education funding.