After weeks of brinkmanship and last-minute maneuvering, the Senate on Tuesday and the House this afternoon passed a final reconciliation bill and sent it to President Trump, ahead of the president’s July 4 deadline. The legislation, which represents the centerpiece of President Trump’s second-term legislative agenda was approved with no Democratic votes in either chamber. Despite a number of concerns and hours of wrangling between House GOP leaders and a group of holdout conservative Republican members that stretched overnight, the House adopted the Senate’s version of the reconciliation package without making any additional changes. While this version was a significant improvement over the initial House-passed bill, it still combines major tax changes with deep spending cuts that will carry significant negative consequences for campuses and the students you serve.
The margins in both chambers were close, especially in the Senate, reflecting the controversial nature of the bill. Even after extensive negotiations and an overnight series of floor amendment votes, final passage in the Senate required Vice President JD Vance to break a 50-50 tie, with three Republicans voting no. House Republicans, despite complaints by fiscal conservatives that the bill adds too much to the deficit and following an hours-long final floor speech in protest of the bill by House Minority Leader Hakeem Jeffries (D-NY), voted it through by a 218-214 count, with two Republicans voting no.
As expected, the final reconciliation bill includes a mix of policies affecting higher education: some steps forward, and some serious setbacks. Among the most important changes were the Senate rejecting House proposals to eliminate subsidized loans and restrict Pell eligibility—changes that would have stripped aid from millions of students. Advocacy by the higher education community was a key factor in making that welcome development happen and maintained in the final bill.
Here’s an overview of what else made it into the final package:
- Workforce Pell restored: A revised version of short-term Pell is back in the bill after initially being ruled out on procedural grounds. The final language applies only to programs offered at accredited institutions, narrowing the scope of eligibility from the initial language.
- Accountability measure narrowed: The proposed earnings test now applies only to students who complete a program rather than to all who enrolled. Graduate programs will be assessed four years after completion, rather than six or 10 years. Additionally, programs failing the test in two out of three years will lose access only to federal student lending, not all Title IV eligibility, as the initial version of the bill stated. This represents a more targeted and data-informed alternative to the House’s broad and punitive risk-sharing model, which would impose disproportionate burdens on lower-resourced institutions.
- Endowment tax adjusted: The bill still raises taxes on large institutional endowments, albeit with Senate adjustments that reduce the number of institutions affected and significantly lower rates across the three tiers. Nonetheless, these provisions represent poor public policy and will divert critical resources away from scholarships, research, and student support. A proposed exemption for religiously affiliated institutions did not make it into the final version.
- Loan caps remain: Unfortunately, new limits on Grad PLUS and Parent PLUS loans are still in the bill. These caps raise serious concerns about access to graduate and professional education for students without other financial resources.
- Safety net cuts hold: Reductions to Medicaid and other core programs that many students and families depend on are still included, though some of the most severe cuts were softened.
- Changes to the calculation of Pell eligibility: The bill contains language changing how Pell eligibility is calculated in circumstances where a student may meet their full cost of attendance through scholarships, grants, and other forms of non-federal aid.
- FAFSA fix for small businesses and family farms: The bill rolls back earlier FAFSA changes that counted small business and farm assets against student aid eligibility. The exemption was expanded to include commercial fishing operations, as Inside Higher Ed reported.
While both the initial House version and the final Senate version of the bill proposed Medicaid cuts, the Senate’s approach went further, with deeper reductions to federal Medicaid funding overall. It also includes stricter limits on how states can finance their programs, including cuts to state-directed payments and provider taxes. These provisions will significantly affect low-income students and their families, strain state higher education budgets, and put pressure on teaching hospitals and other providers that rely heavily on Medicaid. Despite vigorous efforts by critics of these provisions, including ACE, these too were kept in the final Senate bill approved by the House.
ACE and other higher education associations and individual higher education leaders from institutions across the country advocated powerfully for students and the entire sector. That participation and leadership kept key higher education issues front and center throughout this process and helped improve a deeply flawed House bill, even if the community did not get all the changes ACE and other organizations sought. ACE and other higher education associations will now turn to assessing the harm this bill causes, and advocating for as positive an outcome as possible for students and institutions during the coming appropriations process.