While nothing is finalized, the Student Success and Taxpayer Savings Plan, introduced by House Republicans, signals some significant potential changes to the federal student aid programs.
Many of these proposed changes could take effect as early as the 2026-2027 academic year. Whether you’re a student, a parent, or an educator, understanding these potential shifts can help you plan ahead.
The Student Success and Taxpayer Savings Plan
The new proposal introduced by the House Education Committee aims to fundamentally reshape multiple aspects of federal student aid programs. The bill includes changes to loan limits, repayment plans, and how colleges are held accountable for student loan outcomes. But more than that, it introduces reforms that could alter how federal aid is awarded to students.
Proposed Changes to Federal Student Aid Programs
Make sure to check out our blog from a few days ago which broke down some of the impacts to the federal student loan program. Let's go over some areas where impacts may be felt for students receiving federal student aid.
Redefining the Cost of Attendance
Currently, colleges set their own Cost of Attendance (COA), which includes tuition, fees, housing, food, transportation, and other expenses. Schools calculate this based on local and program-specific estimates. For example, the COA for a big-city college is higher than for one located in a small town.
Under the new proposal, colleges would still develop their COA but would be required to submit this data to the U.S. Department of Education. A new “median cost” figure determined by the Department would then become the uniform COA used to calculate federal Pell Grants and student loan awards (excluding parent PLUS loans).
There are some impacts of this to consider:
- Potential Limitations: The median COA may not reflect the actual expenses for some students, especially in high-cost areas. This could result in students receiving financial aid that doesn’t cover their full costs.
- Shift in Aid Sources: If federal aid doesn’t cover expenses, families may turn to private loans or parent PLUS loans to fill the gap.
- Pressure on Colleges: Schools might feel pressure to keep their costs within the median COA, potentially lowering tuition, and fees over time. However, this change will likely take years to normalize.
Proposed Changes to Pell Grant Eligibility Requirements
The federal Pell Grant serves as a vital lifeline for countless students, particularly those from low-income families. Its flexibility is one of its greatest strengths, as it is currently available to part-time and even less-than-half-time students.
The proposed bill seeks to change the enrollment requirements for Pell Grant eligibility. Currently, to be classified as a full-time student, a student must complete 24 credits per year. The new proposal aims to increase this requirement to 30 credits per year for full-time status.
Historically, Pell Grants have been accessible to students enrolled less than full-time and has been an option for student's enrolled in short-term programs. Yet, under the proposed changes, students would need to complete at least 15 semester hours annually to qualify. This adjustment could significantly limit the grant's availability for part-time students or those enrolled in short-term programs.
New Workforce Pell Grant Program
A new “Workforce Pell Grant” would be introduced for short-term programs (150–600 clock hours over 8–15 weeks) in high-demand industries as determined by the State. These programs must provide stackable credentials aligned with state-defined high-skill or high-wage occupations.
Students enrolled in a program cannot double-dip and receive both types of Pell Grants.
Elimination of Subsidized and Grad PLUS Loans
Currently, subsidized loans and Grad PLUS loans are key components of federal student aid. Subsidized loans don’t accrue interest while students are in school, and Grad PLUS loans help graduate students cover higher education costs.
The bill proposes eliminating both subsidized loans and Grad PLUS loans. This change would require students to borrow all unsubsidized loans which accrue interest immediately, increasing overall cost for borrowers. And without Grad PLUS loans, graduate students may not have enough funding to cover the costs of their program and may need to seek private student loan options.
College Accountability for Loan Outcomes
Currently, schools are held accountable through the Cohort Default Rate (CDR), which measures the percentage of borrowers who default on their loans within three years of entering repayment.
The new proposal would add stricter accountability measures. Schools will face penalties if their graduates have high student loan default rates. Starting in 2027, colleges could be required to reimburse the federal government for a portion of unpaid student loans based on factors like tuition price, graduate earnings, and completion rates.
This could put pressure on schools to reduce costs in order to prevent excessive borrowing for certain programs. However, this may disproportionately impact high-demand fields that typically lead to lower-paying careers, increasing the likelihood of loan defaults. Programs like teaching and social work, which are essential but often less lucrative, could be at risk of being cut by institutions with high tuition fees due to the financial risks associated with their graduates.
The Status of the House Bill
While this bill has passed the House Education Committee, its ultimate fate is uncertain. Experts predict it will pass the House but could face challenges in the Senate. However, as part of a budget reconciliation process, it only requires a simple majority vote for passage.
For now, students enrolling for the 2025–2026 academic year shouldn’t expect major changes. Most of the proposed reforms are geared toward future academic years, giving schools and students time to prepare.
What Students Should Expect
Major changes to federal student aid programs don’t happen overnight, but understanding what’s coming can help students, families, and educators prepare. If this bill passes, it could redefine access to financial aid, the type of loans available, and even how colleges operate.
Now is the time to start planning. Whether you’re a student exploring funding for your education or a school administrator, staying informed is the best way to adapt to these potential shifts.