The message from the Trump administration to working-class Americans who want to go to college is: You’re on your own. It is part of the One Big Beautiful Bill Act’s broad effort to scale back spending on the poor and middle class in order to finance tax breaks for the rich. It’s also a dramatic reversal in the American compact with higher education that enshrines into law a flawed policy that will discourage college enrollment among a generation of lower-income Americans.
For a century, the US has improved its global competitiveness by cultivating a higher education system that creates a talented and skilled workforce. As vast as the US higher education system is, however, it has fallen short. Costs are soaring, public trust is declining, and universities aren’t meeting the needs of high-impact professions like engineering, which must recruit talent from other countries because the US is not producing enough graduates. On top of these concerns, the prospect of rising college costs — and a shrinking earnings premium for degree-holders — has many high school students rejecting the traditional four-year pathways and increasingly turning to trade schools for their future careers.
But rather than strengthen four-year schools to target these shortcomings and boost trade schools to meet rising demand, the tax-cuts-and-spending law slashed $300 billion from the higher education system and made college less accessible for anyone who receives a scholarship or a loan to cover the cost — which is to say, most people.
Starting next year, the act caps government-backed student loans at $65,000 per student, which will hurt Black and Latino families, who rely on them most. It eliminates the Grad PLUS loan program, which will force graduate students to find more expensive, less-regulated private loans. It removes much of the federal safety net in the student loan repayment process. It adds significant strain to state higher education budgets. And, in a sloppy attempt at increasing education accountability, it penalizes colleges that offer students degrees in important but lower-earning professions.
“In all likelihood, it's going to impact low-income people who are seeking a higher education because it will make it more difficult for them to be able to make ends meet and find a way to finance their education,” explained Jason Altmire, president of Career Education Colleges and Universities, the national trade association representing trade schools and for-profit institutions.
But Beth Akers, a senior fellow at the conservative think tank the American Enterprise Institute which wrote a blueprint for many of the reform components, called it “a really big step for accountability for institutions.” And the act does include a very reasonable accountability measure that requires schools to prove that their graduates earn more than an adult with only a high school diploma in their state. If the graduates fail to meet the earnings standards in two out of three years, the school will lose access to federally subsidized Direct Student Loans for future students in those degree programs.
The idea has widespread support. Proponents say the earnings test will discourage degree programs from loading students with debt they will likely never repay. But it also could discourage students in working families from even applying for school, as Jon Fansmith, senior vice president for government relations at the American Council on Education, explained on a recent podcast.
The change was wedged into the budget reconciliation act with too little deliberation and even less debate. For starters, the formula is inherently unequal. Women’s colleges, historically Black universities and institutions that primarily serve minority populations could be disproportionately affected because their graduates are more likely to be hurt by discriminatory wage practices.
The act also disincentivizes schools from offering degrees in fields where the wages are traditionally low, but where the law requires licensure or even an advanced degree, such as health care, teaching, libraries, social work or cosmetology. Students will be forced to find more expensive, less-regulated private loans.
Expect public colleges — which serve an estimated 80% of all college students — to feel the pain first. States will face billion-dollar holes in their budgets as a result of the law’s massive cuts to state-run programs like Medicaid and SNAP. States often cut higher education funding when budgets are tight and public colleges can raise tuition and generate their own revenue, unlike K-12 schools, Altmire told me.
For decades, there has been a bipartisan debate over how the federal government should ensure that money going into colleges, universities and trade schools results in what’s best for students. Conservatives have long wanted more emphasis on a market-driven, self-pay model that encourages students to make prudent decisions about their futures.
And if properly designed, the reforms in the reconciliation bill might have been a justifiable attempt at streamlining the federal government’s role in education. But the changes would have had to be accompanied by an accessible student-lending program and increases in grants and scholarships to make up for shrinking pools of federally subsidized loans.
The bill offered none of that. Instead, Republicans couldn’t get past their extremist obsession with punishing academia and decided to raise the tax on university endowments from 1.4% to 8%. Now, charitable contributions intended for student scholarships and academic research will be going to the federal government. Students will get less.
The education package does include one bright spot. The Senate expanded Pell Grants, the federal assistance for higher education that goes to the nation’s poorest families, allowing them to qualify for short-term job-training programs and community colleges.
The president “has talked about expanding support for apprenticeships in the trades — think about welding, truck driving, cosmetology, culinary, nursing, the Allied Health Professions, aviation, auto technicians, H-vac, things like that,’’ Altmire told me.
So far, however, that’s just been talk. Meanwhile, many schools that train doctors, nurses and lawyers are “very concerned” that the new cap on federal loans will dissuade people from going into those fields, Altmire added, especially if they come from lower-income backgrounds.
Congress keeps forgetting that by 2031,72% of all jobs in the US are expected to require some form of postsecondary education or training. Instead of using government to pry open the door to economic opportunity, lawmakers decided to use government to slam that door shut.
For a century, the US has improved its global competitiveness by cultivating a higher education system that creates a talented and skilled workforce. As vast as the US higher education system is, however, it has fallen short. Costs are soaring, public trust is declining, and universities aren’t meeting the needs of high-impact professions like engineering, which must recruit talent from other countries because the US is not producing enough graduates. On top of these concerns, the prospect of rising college costs — and a shrinking earnings premium for degree-holders — has many high school students rejecting the traditional four-year pathways and increasingly turning to trade schools for their future careers.
But rather than strengthen four-year schools to target these shortcomings and boost trade schools to meet rising demand, the tax-cuts-and-spending law slashed $300 billion from the higher education system and made college less accessible for anyone who receives a scholarship or a loan to cover the cost — which is to say, most people.
Starting next year, the act caps government-backed student loans at $65,000 per student, which will hurt Black and Latino families, who rely on them most. It eliminates the Grad PLUS loan program, which will force graduate students to find more expensive, less-regulated private loans. It removes much of the federal safety net in the student loan repayment process. It adds significant strain to state higher education budgets. And, in a sloppy attempt at increasing education accountability, it penalizes colleges that offer students degrees in important but lower-earning professions.
“In all likelihood, it's going to impact low-income people who are seeking a higher education because it will make it more difficult for them to be able to make ends meet and find a way to finance their education,” explained Jason Altmire, president of Career Education Colleges and Universities, the national trade association representing trade schools and for-profit institutions.
But Beth Akers, a senior fellow at the conservative think tank the American Enterprise Institute which wrote a blueprint for many of the reform components, called it “a really big step for accountability for institutions.” And the act does include a very reasonable accountability measure that requires schools to prove that their graduates earn more than an adult with only a high school diploma in their state. If the graduates fail to meet the earnings standards in two out of three years, the school will lose access to federally subsidized Direct Student Loans for future students in those degree programs.
The idea has widespread support. Proponents say the earnings test will discourage degree programs from loading students with debt they will likely never repay. But it also could discourage students in working families from even applying for school, as Jon Fansmith, senior vice president for government relations at the American Council on Education, explained on a recent podcast.
The change was wedged into the budget reconciliation act with too little deliberation and even less debate. For starters, the formula is inherently unequal. Women’s colleges, historically Black universities and institutions that primarily serve minority populations could be disproportionately affected because their graduates are more likely to be hurt by discriminatory wage practices.
The act also disincentivizes schools from offering degrees in fields where the wages are traditionally low, but where the law requires licensure or even an advanced degree, such as health care, teaching, libraries, social work or cosmetology. Students will be forced to find more expensive, less-regulated private loans.
Expect public colleges — which serve an estimated 80% of all college students — to feel the pain first. States will face billion-dollar holes in their budgets as a result of the law’s massive cuts to state-run programs like Medicaid and SNAP. States often cut higher education funding when budgets are tight and public colleges can raise tuition and generate their own revenue, unlike K-12 schools, Altmire told me.
For decades, there has been a bipartisan debate over how the federal government should ensure that money going into colleges, universities and trade schools results in what’s best for students. Conservatives have long wanted more emphasis on a market-driven, self-pay model that encourages students to make prudent decisions about their futures.
And if properly designed, the reforms in the reconciliation bill might have been a justifiable attempt at streamlining the federal government’s role in education. But the changes would have had to be accompanied by an accessible student-lending program and increases in grants and scholarships to make up for shrinking pools of federally subsidized loans.
The bill offered none of that. Instead, Republicans couldn’t get past their extremist obsession with punishing academia and decided to raise the tax on university endowments from 1.4% to 8%. Now, charitable contributions intended for student scholarships and academic research will be going to the federal government. Students will get less.
The education package does include one bright spot. The Senate expanded Pell Grants, the federal assistance for higher education that goes to the nation’s poorest families, allowing them to qualify for short-term job-training programs and community colleges.
The president “has talked about expanding support for apprenticeships in the trades — think about welding, truck driving, cosmetology, culinary, nursing, the Allied Health Professions, aviation, auto technicians, H-vac, things like that,’’ Altmire told me.
So far, however, that’s just been talk. Meanwhile, many schools that train doctors, nurses and lawyers are “very concerned” that the new cap on federal loans will dissuade people from going into those fields, Altmire added, especially if they come from lower-income backgrounds.
Congress keeps forgetting that by 2031,72% of all jobs in the US are expected to require some form of postsecondary education or training. Instead of using government to pry open the door to economic opportunity, lawmakers decided to use government to slam that door shut.
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