This week, the House Education and Workforce Committee released its proposal as a part of the Congressional “budget reconciliation” process which contains more than $350 billion in cuts to federal student aid programs, including new restrictions on Pell Grants for low-income students, elimination of student loan interest subsidies, and strict limits on the ability of students to finance their degree program.
The House’s reconciliation bill will have irreversible and devastating consequences on the ability of students and families to meet their needs and finance their education. It proposes sweeping financial aid cuts that will disproportionately harm students in community colleges as well as parenting students, working students, and those who already struggle with the rising cost of living.
This bill will make it harder to finance an undergraduate or graduate education for the millions of students who already experience basic needs insecurity. It also makes our already-complicated system of federal financial aid more complex, by creating unworkable, constantly-changing limits on aid that would be impossible for students and colleges to manage.
Bryce McKibben
Senior Director of Policy & Advocacy at The Hope Center for Student Basic Needs
Across the country, students and families are reeling from the high prices of everyday goods and the rising price of higher education. The Hope Center’s most recent Student Basic Needs Survey finds that nearly 3-in-5 students, including 70% of Pell Grant recipients, face food or housing insecurity. Students often struggle to access an overly complex web of public benefits and campus supports due to eligibility restrictions, administrative burdens, or insufficient outreach, making federal financial aid all the more important for student success.
Yet, the House bill would make dramatic changes to the way students can access and use Title IV aid. Among the most concerning provisions, the House proposes:
Cutting Pell Grants by increasing the number of credits required to meet the definition of full-time enrollment for Pell Grant eligibility. Currently, students taking 12 credits per semester are considered full-time, making them eligible to receive a full Pell Grant. The House bill would suddenly increase this threshold to 30 credits per year on a semester system (15 credits per semester or equivalent), forcing students to take additional courses or risk seeing their Pell Grant awards cut by potentially thousands of dollars. For students already juggling work and school, parenting students, caretakers, and individuals facing financial burdens or health challenges, this policy will create a system of impossible choices and lead to many students dropping out of college altogether. Today, 26% of Pell recipients have dependent children, 54% work 20 hours per week or more, and 21% work at more than one job while going to school. One estimate projects this policy would lead to a $1,500 cut for about a quarter of Pell Grant recipients. Complete College America calculates that raising the enrollment threshold would negatively affect 1.1 million students currently taking 12-14 credits.
Eliminating Pell Grants for less than-half-time students. The bill would cut off access to students who are attending school less than “half-time”—usually working adults who are enrolled in one or two courses while they juggle family and work responsibilities. Federal data show that 14% of all students receiving Pell Grants are enrolled less than half-time at some point during the academic year, including nearly a quarter (23.4%) of all community college students who receive Pell. With more than 6.7 million students receiving Pell Grants annually, this provision alone could cut off access to more than 912,000 low-income students attending college.
Eliminating subsidized student loans for low- and middle-income students, and creating new “caps” on aid for students attending higher-cost programs. The bill would end subsidized federal loans, which allow undergraduate students with financial need to take out loans without accruing interest while they are enrolled in school (and for six months after leaving). In its place, students would be required to take on higher-cost unsubsidized loans up to a certain cap, determined by the median cost of attendance of the degree program in which they are enrolled. Since these caps would be individualized for each student and could change each academic year, students would have no idea the aid for which they might be eligible. In addition, by definition, students in half of all programs would see a net reduction in their ability to take out federal financial aid for higher education, forcing them to work longer hours, reduce their course load (which, under the bill, could impact their Pell Grant eligibility), seek out risky alternative financing including private loans, or end their educational journeys altogether.
Elsewhere, the bill would eliminate the ability of student loan borrowers near the federal poverty line to make $0 payments under income-driven repayment, increasing the likelihood that more borrowers will default on a student loan, be subject to draconian collection tactics, and lose future eligibility for financial aid.
All of these changes occur against the backdrop of mass layoffs and attacks on the staffing of the U.S. Department of Education, leaving the agency unequipped to administer the grant and loan programs that exist now, let alone the changes proposed in this bill. The bill is also being offered as the Pell Grant program faces a looming shortfall of more than $10 billion in the next year alone. While the bill adds modest funding to reduce the shortfall, it leaves billions unaddressed in FY 2026 and beyond, setting the stage for even more possible cuts to the Pell Grant program later this year. In addition, the bill would spend new money by repealing accountability guardrails, loosening rules on for-profit colleges, and opening student aid to largely untested short-term programs without any quality metrics, all of which increase costs for the Pell Grant program.
In the coming weeks, many House committees are assembling their pieces of the larger $5.8 trillion bill to cut federal programs and extend the 2017 tax cuts and preparing to send the bill to the House floor. The framework calls for cutting $880 billion from the Medicaid program, including new work requirements that are inherently difficult for students to meet if they focus on their coursework. There is also a target to cut $230 billion from the Supplemental Nutrition Assistance Program (SNAP) by reducing the ability for SNAP benefits to keep up with rising food costs and inflation.
Cuts to Medicaid and SNAP will also shift costs onto states, which will likely then turn to tuition increases and budget cuts for public higher education and state-based financial aid. On tax policy, there have also been proposals to dramatically scale back tax credits and benefits for students and families in higher education, which reduces their ability to afford college.
As Congress continues to move forward with the reconciliation process, The Hope Center for Student Basic Needs will be working alongside our partners to ensure that lawmakers invest in students, rather than cut the very programs that make college more affordable, help families manage the rising costs of living and college attendance, and put higher education within reach. A student-centered reconciliation package would expand grant aid, make our student loan program less complicated and punitive, reduce the cost of higher education, and ensure students have access to all the supports they need to thrive. This bill unfortunately fails on each of these fronts.