AGB Policy Alert: Urgent Action Needed on Senate Budget Reconciliation Bill Affecting Higher Education

The Senate Committee on Health, Education, Labor, and Pensions (HELP) has released draft text of its portion of the Senate budget reconciliation bill. This marks a critical milestone in the budget reconciliation process as Senate leaders aim to finalize the full budget package before the July 4 recess. While Senate GOP leadership has not finalized the process of combining each committee’s reconciliation text, including HELP’s, into one bill, AGB expects that the HELP Committee will not mark up and the committee’s text will be incorporated into the larger reconciliation bill as it is considered on the Senate floor. AGB also expects that any differences between the House and Senate versions will be reconciled before Senate floor consideration. This sets the stage for potentially swift passage by the Senate and then the House by early July and then on to the president for his signature. This proposed legislation carries significant implications for federal student aid policy, institutional eligibility, and programmatic funding.

The full bill text can be found here.
A section-by-section summary provided by the committee is available here.

What Is in the Senate Budget Reconciliation Package

Federal Student Loans

• New federal student loans issued after July 1, 2026, would be repaid through either a standard repayment plan or a newly created income-driven repayment plan with loan forgiveness after 30 years.
• Borrowers with loans issued before July 1, 2026, could access a modified income-based repayment option with forgiveness after 20 or 25 years, depending on origination date.
• Graduate PLUS loans would be eliminated; new borrowing caps would be established for graduate students ($20,500 annually, $100,000 total) and professional students ($50,000 annually, $200,000 total).
• Parent PLUS loans would be capped at $20,000 annually and $65,000 total per student.
• Loan amounts would be prorated based on student enrollment intensity.
• $1 billion in federal funds would be allocated to support Title IV aid administrative operations.
• Borrowers would be allowed to rehabilitate loans twice, with a minimum payment of $10 per month.

Program Eligibility Based on Earnings

• Undergraduate programs would become ineligible for federal loans if graduates’ earnings fall below the median earnings of high school graduates in their state.
• Graduate programs would be disqualified if former students earn less than the median bachelor’s degree holder in the same field and state.
• Programs failing to meet these thresholds for two out of three years would lose federal loan eligibility.

Regulatory Limitations

• The bill would repeal the current Borrower Defense to Repayment and Closed School Discharge rules.
• The bill would also prohibit the secretary of education from issuing economically significant regulations or executive actions that would increase subsidy costs.

Pell Grant Provisions

• Pell eligibility would be revised to include foreign income and exclude certain high-income students.
• Students receiving grants other than Pell that, in total, equal or exceed the full cost of attendance would be ineligible for Pell Grants.
• Pell eligibility would expand to include workforce programs lasting 150 to 600 clock hours.
• The bill proposes $10.5 billion in new mandatory funding for Pell Grants.
• Notably, the bill does not increase the full-time credit hour threshold for Pell eligibility and maintains access for less-than-half-time students—departing from the House’s version.

Key Implications for Governing Boards

Institutional leaders and governing boards must assess how these proposed changes, if approved, could impact enrollment, tuition revenue, program viability, and long-term financial sustainability.

• Strategic Financial Oversight: Changes to federal loan caps and new income-driven repayment structures will alter revenue streams and may affect graduate and professional program enrollment.
• Program Review and Risk Assessment: Boards should collaborate with presidents and chief financial officers to evaluate academic programs vulnerable to disqualification based on the proposed earnings thresholds.
• Compliance and Governance Readiness: Prohibitions on borrower defense and closed school discharge regulations may reduce federal oversight, increasing reputational risk if institutional safeguards are not robust.
• Access and Equity: Reduced loan availability will disproportionately affect historically underserved populations. Boards should monitor demographic trends and maintain equitable access as a guiding principle.
• Advocacy as a Fiduciary Responsibility: Board engagement in advocacy is essential. Trustees bring credibility and influence in discussions with elected officials and must be prepared to elevate institutional stories and data.

Board-level leadership and involvement are indispensable as institutions navigate this fast-moving policy landscape. Governing boards must act now to help shape a legislative outcome that supports mission, access, and sustainability.

Strategic Recommendations for Governing Boards

1. Align Advocacy Across Institutional Leadership
   Presidents, chancellors, and board members should coordinate messaging and outreach strategies immediately to present a unified front.
2. Meet with Members of the Senate
   Schedule urgent meetings with home state senators. Decisions made over the next few days will shape the future outcome of higher education policy.
3. Use Institutional Data to Drive Your Case
   Prepare to share localized data to highlight the real-world impact of proposed changes:
   • Number of Pell recipients affected
   • Impact of loan eligibility changes
   • Financial risk from repayment policies
   • Workforce programs potentially benefiting from expanded Pell Grants

Why It Matters

• While this legal settlement does not create new federal mandates, it creates powerful precedents—and pressures—for institutions to reassess their approach to athletics funding and student engagement.
• Boards must revisit relevant policies, clarify institutional values, and ensure appropriate oversight mechanisms are in place.
• Critically, institutions must evaluate how this settlement intersects with ongoing Title IX compliance, state legislative actions, and collective bargaining efforts now underway on some campuses.

Back to Top

Immediate Action Steps

• Convene internal advocacy teams.
• Arrange meetings with Senate offices without delay.
• Bring forward compelling institutional data.
• Coordinate with state associations and higher education coalitions.

By speaking with a unified voice, we can ensure that federal higher education policy supports—not undermines—our mission and our students’ futures. Silence is not an option. With time rapidly running out before the July 4 deadline, this bill is on a fast track to approval. Your voice—and your institution’s voice—can positively shape this legislation’s impact on student access, affordability, and institutional resilience.

This is an urgent moment for action.