Earlier this month, President Trump signed H.R. 1 into law after narrowly clearing both chambers of Congress with final passage in the House on a 218-214 vote. Among other adjustments, the 870-page bill makes the 2017 tax cuts permanent, reduces funding for Medicaid and the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), and phases out many of the clean energy tax incentives included in the Inflation Reduction Act. It also includes several measures that could have significant negative effects on institutions of higher education and on students’ ability to gain access to, and succeed in, a college education.

Here are some provisions related to higher education that are included in the final package:

Student Loans

• The bill terminates the Grad PLUS loan program for both graduate and professional students starting July 1, 2026. Graduate students may borrow $20,500 in direct unsubsidized federal loans annually, while professional students may borrow up to $50,000 annually. The bill imposes a lifetime borrowing cap of $100,000 for graduate students and $200,000 for professional students.
• The bill caps Parent PLUS loans at $20,000 annually and at $65,000 in total.
• The bill imposes a new lifetime federal loan borrowing limit of $257,000 on all students (excluding Parent PLUS loans) starting July 1, 2026.

Student Loan Repayment

• The bill eliminates current income-driven repayment plans by July 1, 2028, including the SAVE Plan introduced by the Biden administration. Borrowers currently enrolled in these plans will be required to switch to one of two new repayment plans between July 2026 and July 2028. The new repayment plans will be available to students starting July 1, 2026.

Pell Grants

• The bill removes Pell Grant eligibility for students receiving non-Title IV external grant aid up to or exceeding the cost of their attendance. This will require “last dollar” Pell scholarship programs to be revamped.
• It also expands Pell eligibility to students enrolled in short-term, accredited workforce training programs.
• The bill provides $12.67 billion in funding to avoid Pell Grant budget shortfalls.

Accountability

• The bill requires institutions of higher education to comply with new accountability measures starting July 1, 2026. The bill blocks federal loans for undergraduate programs if half or more of degree completers from a given program earn less than the median earnings of high school graduates aged 25-34 in the state. It also blocks federal loans for graduate programs if at least half of degree completers earn less than the median earnings of bachelor’s degree holders in the same field and state.

Endowment Taxes and Charitable Giving

• The bill exempts private schools with fewer than 3,000 tuition-paying students from the excise tax on endowments. Religious colleges and those not receiving Title IV aid will also now be subject to the endowment tax. Public universities are not subject to the endowment tax.
• H.R. 1 brings back the expired CARES deduction for non-itemized filers and increases the amount to $1,000 for individuals and $2,000 for married persons filing jointly. The normal substantiation rules apply, and only contributions to public charities that are neither donor-advised funds nor supporting organizations qualify.

Other Tax Measures

• The bill makes permanent the tax-free treatment of a portion of employer-based educational assistance.
• The bill continues to permit access to municipal and private activity bonds, with no new changes for universities in this area.

The Association of Public and Land-Grant Universities (APLU) released an analysis of the bill’s largest impacts on higher education, as well as comparisons of the provisions in the House, Senate, and final packages. APLU previously released a letter in May detailing provisions of concern to higher education, with President Becker stating:

“As the legislative process moves forward, I urge changes to these deeply harmful provisions that will erect barriers in the path of students earning their degrees, drive up student debt, and create highly unusual roles for the U.S. Department of Education relative to state institutions. APLU is eager to be a partner to work together to find balanced solutions to policymakers’ concerns.”

Before the final passage, the Association of American Universities (AAU) issued a statement addressing certain provisions of the bill, including the following excerpt:

“AAU has significant concerns about several provisions of this legislation which would effectively amount to massive tax hikes, hampering universities’ ability to provide essential financial aid making college more affordable for students; educate the workforce America needs to maintain its global economic leadership and national security; and conduct the groundbreaking research required to create new cures, save American lives, and make our country stronger, safer, healthier, and more prosperous in the future.”

With the reconciliation bill out of the way, Congress will now turn its full attention to Fiscal Year 2026 appropriations and a $9 billion-plus rescissions package that seeks to formalize funding cuts made by the Office of Management and Budget and by the Department of Government Efficiency (DOGE). The rescissions package must be passed by July 18 to prevent funds from being spent as appropriated.