The Shifting 2025 Higher Ed Policy Landscape: What Boards Need to Know

Introduction:
Welcome to the Trusteeship Podcast from AGB, the Association of Governing Boards of universities and colleges. We cover everything higher education leaders need to know about the challenges facing our nation’s colleges and universities. More important, we provide the facts and insight you need to solve those challenges to be the storytellers and advocates higher education needs. Today, we’re talking about what’s next for higher ed policy. AGB’s Director of Strategic Communications, Joe Brenckle and Penn Hill Group Principal Alex Nock break down major federal proposals that could reshape funding, student aid, and accountability, and why governing boards must stay engaged. Thank you, Alex and Joe, there’s a lot to discuss, so let’s get started. Joe.

Joe Brenckle:
There’s a lot of activity in the federal policy space as it relates to higher education. Last week, the House narrowly passed the Budget Reconciliation Bill. Alex, can you tell us how might this reconciliation legislation reshape federal funding landscape this year and what should governing boards be watching most closely?

Alex Nock:
Hi, Joe, nice to be with you today. I think the most significant development here is the House higher education portions of the bill save nearly a third of a trillion dollars in federal higher education spending over the next 10 years. That’s a big amount of money that is coming out of what the federal government would normally spend for higher education governing boards definitely need to be paying attention to this. They’re pretty big changes in the bill regarding Pell, student loans, student loan repayment that can really affect institutions and their financial standing. I know we’re going to talk some about those, Joe, but it’s definitely something you should be paying attention to as a board member.

Joe Brenckle:
Thank you, Alex. In addition to the funding, what are some of the other policy implications in the Budget Reconciliation Bill?

Alex Nock:
Joe, there’s some pretty big changes in the bill, but let’s start first with Pell. What the bill does is change what constitutes full-time eligibility for Pell. Under the bill, it’s 30 credit hours in an award year, so not 12 in a semester or 24 in an award year as is currently. Also, students less than half-time would no longer be eligible for Pell. These are pretty big changes impacting who gets to come and especially if whether or not they have the financial resources to do it.

Joe Brenckle:
Thanks. One of the other things we’re hearing a lot about is risk sharing. Can you talk a little bit more about risk sharing and how that will affect institutions going forward?

Alex Nock:
Risk sharing is definitely a big part of this bill. Essentially what the concept of risk sharing is is a program-by-program look at an institution’s programs that essentially gauge how much of the students who enrolled in that program and then completed of their student loans they repay. And when you think about that for a second, you go, “Well, students repay their loans generally.” I think the issue here is whether or not they get interest written off or principal forgiven under the bill’s income-driven repayment plan would count on the negative side i.e as a student not repaying a portion of that loan in addition to just non-payments and things like that. What this means is that institutions on a program by program basis would owe the federal government money back based on the loan volume and the volume of non-repayment by students. It’s pretty significant change in how the federal government interacts with institutions, namely that an institution would have to pay back loan volume rather than just being on the hook for cohort default rates or other things like that.

Joe Brenckle:
Thank you. Maybe let’s talk a little bit about process. The House has passed the Budget Reconciliation Process, but the Senate still has yet to act. Could you give us maybe your thoughts on what you think that might look like? Do we think the Senate will drastically change what the House has sent over? Just get your thoughts on that.

Alex Nock:
That’s right, Joe. The House passed the bill and now it’s in the Senate’s hands, and I do think there are going to be changes with respect to the bill at large. I think there’s a question about what changes we might see with respect to higher education. Chairman Cassidy and Senator Cornyn have introduced legislation that doesn’t adopt a risk sharing approach, but adopts an earnings test approach on a program by program basis, i.e, can undergraduate programs make at least as much as the average high school graduate and can graduates of graduate programs make at least as much as the average bachelor’s degree holder? It’s a different sort of test, but also raises risks where if you don’t meet that test, you wind up being ineligible for federal student aid. That’s probably one of the biggest changes we could see in the Senate bill. Other changes like how the Pell Grant changes from the House bill might live in the Senate remain to be seen.

Joe Brenckle:
Obviously, this is probably the most urgent change coming through for higher ed for the legislative track, but there’s also a lot of action on the policy level, on the executive branch. Could you give us maybe an outlook or what are some of the trends you see on the executive branch through the president and the administration, the different changes that are coming through for higher ed that way?

Alex Nock:
Joe, one of the biggest developments we are seeing right now is the administration’s new budget. They proposed a skinny or more narrow budget because it’s the first year of this administration just recently, and they proposed there to defund federal work study, SEOG, TRIO, GEAR-UP, so pretty big changes there for higher ed. In addition, we know this administration has been more active in looking at Title IX cases, Title VI cases with respect to institutions, especially prominent institutions as well. In addition, they’re just beginning to do their own regulatory efforts. They’re beginning and negotiated rulemaking in late June and into early July, focused on the topics of public service loan forgiveness as well as some aspects of student loan repayment. But Joe, right around the corner is likely to be negotiated rulemaking on accreditation and other issues that definitely have institutional impacts and something that boards should very much be aware of.

Joe Brenckle:
Thank you, Alex. Can we talk a little bit more about the student loan debate? Obviously, it sounds like Department of Ed wants to push that to Treasury. Can you give us the latest on where that is?

Alex Nock:
Yeah, certainly. There’s been a lot of talk about this, Joe. You might remember that President Trump in the Oval Office actually talked about student loans being transferred to the small business administration. More recently, Secretary McMahon said she was exploring transferring student loans to the Department of Treasury. It seems to be that most of this focus, Joe, is on the collection side, i.e. the side when students are struggling to repay their student loans, that Treasury might come in and be involved in versus origination or things like that, but it still remains to be seen. Also, it’s unclear, at least to me, how these operations would be financed because you need to transfer the money that pays for a lot of this work from Ed to Treasury if that’s what the administration did indeed do, and current law throws up some barriers for the administration in terms of doing that.

Joe Brenckle:
And obviously as we’re talking about changes, anytime there’s change, it can be a little unsettling and I think there’s a lot of focus on the negative changes. Do you think there are any positive changes, any positive things going forward for higher ed that are going to actually help improve things?

Alex Nock:
I think positive’s in the eye of the beholder, Joe, in terms of that. I will say that higher ed’s getting a lot more attention obviously than maybe it did in the past administration. Certainly, there was a focus on loan forgiveness, but in terms of the core operations of higher education, loan forgiveness is typically on the back end of things. This administration has talked about trying to prioritize career and technical education as well as post-secondary credentials, a degree for that matter, shorter term certificates. There is some interest in that. The question is how does that work for existing institutions that don’t prioritize certificate-based attainment and things like that? I think this is something that institutions and their boards need to think about in terms of how this administration will continue to drive priorities.

Joe Brenckle:
What are your thoughts on how boards and institutions can maximize their actions on these upcoming changes? What can they do to prepare? What can they do to better understand these changes and look ahead?

Alex Nock:
It’s really critical, Joe, that if institutions want to have a voice at the table, they need to engage first. Second, they need to talk about how changes or what they want to propose to change, if it’s their idea, what sort of impact it can cause, which students get enrolled? How? What are success rates when you do it? How are you meeting the needs of the local economy, the state economy, but the regional economy that you’re focused on? What are the data points you want to make arguments about? One of the most powerful things with elected officials and those who are in the executive branch is really to understand what the impact of a series of changes might be, not just on an institution, but the individuals that they serve their students. Really be prepared to localize or state-ize or regionalize that the impact on what it is, the results of the impact from the changes that you’re proposing or that you’re concerned about.

Joe Brenckle:
Thank you. As we move forward, who do you think we should keep an eye on in the federal policy landscape that most likely will be involved in some of these big changes? Obviously, we have the chair and ranking member on the education committees in the House and Senate, but are there other members that you see especially engaged, especially passionate about this issue?

Alex Nock:
Yeah. There are a number of members, but Joe, I think really the landscape here, especially in the budget reconciliation context and the more partisan environment we find ourselves in, it’s really the committee chairs, Tim Wahlberg and Bill Cassidy, who are defining a lot of the agenda so far. There hasn’t been as much room for rank-and-file members to assert their particular point of view. That may come with more time, but right now those two gentlemen are really the main players at the table.

Joe Brenckle:
That’s great. I’m going to throw a little bit of a curveball at you. If you could think of something that is not on anyone’s radar screen, but that could possibly come up, what do you think that would be? What do you think is out there that no one’s thought about yet?

Alex Nock:
Joe, I think that’s a great question. I don’t know if this is no one’s thought of it, but I think it’s a surprising thing for folks that maybe aren’t following some specific court action. Many of our listeners may remember that the first Trump administration repealed gainful employment regulations, the Biden administration came back, reenacted them or re-promulgated them, and also brought along fair value transparency, which was something that applied to all programs at all institutions and essentially brought transparency or reporting to the idea of debt loads and earnings of graduates of specific programs at institutions.

While the implementation of that is a ways off, the Trump administration just went into court and actually argued in favor of keeping the gainful employment and fair value regulations. This was something that a lot of folks would not have expected six months ago, eight months ago, certainly not five, six years ago when the Trump administration was moving forward with repealing regulations in this area. They seem very interested in keeping this sort of policy focus, and I don’t know if that’s shocking to people who’ve been following the details like you and me, but for board members who are hoping to get educated by listening to this, I think that’s a pretty significant development that if you thought GE and fair value transparency were going away because they were Biden administration regulations, that doesn’t seem to be the case right now.

Joe Brenckle:
Alex, thank you so much. This has been enlightening. I wanted to see if you had any final thoughts or ideas you wanted to share with everybody?

Alex Nock:
I just think this is a time when board members really have to be ocused in on what their institution does, who they educate, who they work with in the community, with employers, because so much is going on, it’s really important to know who and what you’re about, as well as realizing the risks that you’re taking on by focusing in on different areas. But that’s it, Joe, and just happy to be here and thanks again.

Joe Brenckle:
Thank you, Alex.