Use our Contact Congress form to make your voice heard about the damage this legislation would cause
A budget reconciliation bill advancing in the House of Representatives proposes hundreds of billions of dollars in cuts to student aid, imposes new taxes on colleges and universities, and jeopardizes health care for millions of students.
These sweeping changes, intended to extend tax cuts and achieve other Trump administration policy goals, are drawing strong opposition from the higher education community, which warns of the severe consequences for college affordability, access, and research.
“It is a full-out assault on the ability of students—especially low-income students—to access and afford higher education,” ACE’s Jon Fansmith told Inside Higher Ed this week. “It will have a dramatically negative impact, not just on higher ed, but on the whole population.”
There is more information below about how to contact your lawmakers about why they should oppose this measure in its current form.
While reconciliation is technically a budget procedure allowing fiscal legislation to pass the Senate with a simple majority, it has increasingly become a vehicle for dramatic, partisan overhauls of federal policy. Past reconciliation bills have delivered the 2017 Trump tax cuts and the 2010 Affordable Care Act. Unlike most legislation, which requires 60 votes to pass the Senate and overcome a filibuster, a reconciliation bill can advance with a simple majority in both the House and Senate.
The current reconciliation effort involves multiple House committees crafting their portions of the overall bill. That process is nearly complete, but House GOP leaders still face some obstacles before their hoped-for “Big, Beautiful Bill” can go to the House floor.
That is in part because he legislation suffered a setback in the House Budget Committee on Friday—when several conservative Republicans joined Democrats in voting to block it. Still, GOP leaders are working behind the scenes to reach compromises with hardliners pushing for even deeper spending cuts, a dynamic that could worsen the bill’s already significant harm to higher education.
House Education and Workforce Committee: Deep Cuts to Student Aid
The House Education and Workforce Committee has put forward proposals that would result in a staggering $351 billion in cuts to education and workforce programs. Almost all of that comes at the expense of student loan borrowers and low-income students.
Key provisions of the committee's proposal include:
Limiting Pell eligibility: The bill would exclude one in five current Pell recipients at community colleges—disproportionately impacting low-income students and forcing hundreds of thousands out of college altogether.
Eliminating subsidized student loans: By ending subsidized loans, which prevent interest from accruing while students are in school, the bill would increase borrowing costs for low-income students and raise barriers to degree completion.
Eliminating Grad PLUS and restricting Parent PLUS loans: These changes would strip away critical funding sources for graduate students and families, especially at minority-serving institutions that rely heavily on these programs to support access and equity.
Imposing new limits on federal aid: The legislation would further restrict aid availability without regard for student need, undermining access and shifting more of the financial burden onto students and families.
Reducing forbearance and deferment options: Cutting back these safeguards removes essential tools students use during periods of financial hardship—leading to greater loan default risk and worsening long-term financial outcomes.
Narrowing repayment options: The bill proposes less favorable loan repayment terms, which would result in students paying more over time, borrowing more upfront, and facing a more punishing and less flexible repayment system.
House Ways and Means Committee: New Taxes on Higher Education
The House Committee on Ways and Means has advanced a tax package that includes several provisions detrimental to higher education and nonprofit institutions. For a detailed list of these provisions, see this ACE summary.
Modification of the endowment tax: The current 1.4 percent excise tax on net investment income for certain private colleges and universities would be replaced with a four-tiered system, with rates ranging from 1.4 percent to a new high of 21 percent for institutions with endowments exceeding $2 million per full-time equivalent student. As ACE’s Steven Bloom told Higher Ed Dive, ACE opposed the initial endowment tax, and this new proposal makes "bad policy even worse."
He emphasized that "it’s always been a scholarship tax" and "will be incredibly detrimental" to student aid efforts at affected colleges. The calculation of an institution's student-adjusted endowment would also exclude international and undocumented students, potentially subjecting more institutions to the tax or pushing others into higher tax brackets. The tax would include student loan interest income and royalty income from federally subsidized research.
Impact on charitable giving: The bill would make permanent the increased standard deduction enacted in the 2017 tax cuts, which has been linked to a drop in donations to colleges and universities. While a temporary deduction for non-itemizers is included, its impact may not fully offset the negative effects.
Taxation of royalty income: The bill would apply the unrelated business income tax (UBIT) to royalty income from the sale or licensing of an institution's name or logo. This would create new costs and administrative burdens for many institutions, potentially diverting resources from educational programs and student aid.
Expansion of tax on executive compensation: An excise tax would be imposed on executive compensation exceeding $1 million annually at tax-exempt organizations.
Social Security Number requirement for tax credits: Taxpayers would be required to include their Social Security number to access the American Opportunity Tax Credit and Lifetime Learning Tax Credits.
Termination of tax-exempt status for “terrorist-supporting” nonprofits: This provision grants the Treasury Secretary broad authority to revoke the tax-exempt status of nonprofits deemed to be supporting terrorist organizations, raising concerns about due process. “It could be used in improper and abusive ways to punish tax-exempt organizations,” Bloom said in an interview with Inside Higher Ed.
House Energy and Commerce Committee: Harmful Medicaid Cuts
The House Committee on Energy and Commerce is proposing substantial cuts to the Medicaid program as part of the reconciliation bill.
The potential Medicaid cuts would not only harm the most vulnerable Americans, including potentially millions of students, but also jeopardize support of student health, medical training, and public higher education,” ACE President Ted Mitchell noted in a letter to the committee. In 2023, 3.4 million low-income college students depended on Medicaid for healthcare, a significant increase from 2010.
Teaching hospitals and health systems, already financially strained, would face spikes in uncompensated care, particularly in rural and underserved areas under this bill. States would be forced to choose between funding health care and higher education, likely pushing more costs onto students.
Contact Congress Today
ACE is urging all college and university leaders, faculty, staff, and students to make their voices heard. The House reconciliation bill would reverse decades of progress in expanding access to college, undercut the ability of institutions to support their students, and jeopardize the nation’s future workforce and research enterprise.
Use this Contact Congress letter to send a message to your representatives and ask them to oppose this damaging legislation in its current form. You can also use the links on the sidebar to our Tax Reform and Higher Education in 2025 page to write lawmakers about the tax provisions in the bill.
Please share the link for the letter as widely as possible to ensure that lawmakers hear from as many individuals as possible.