This message was sent to NACAC members on July 7, 2025

Our sector has never faced more complex or urgent challenges, and your association is here to help you make sense of the reconciliation bill signed into law on July 4.

This sweeping legislation enacts major changes to the federal student aid system and imposes new accountability requirements on colleges and universities. Overall, the law restricts opportunity, raises costs, and undermines college access and affordability for millions of students.

At NACAC, we believe education is a public good — a foundational pillar of our democracy, economy, and society. Unfortunately, this new law threatens to put education out of reach for far too many students.

While the final version of the bill is deeply concerning, it is important to acknowledge that it could have been far worse. Thanks to NACAC’s sustained advocacy — and the coordinated efforts of NACAC members and partners across higher education — some of the most harmful provisions were kept out. Our voices made a difference.

As a nonprofit association of high school counselors, college advisors, independent educational consultants, community-based organizations, and college and university admission officers, NACAC’s mission centers on supporting students through the critical transition from secondary to postsecondary education. Our core commitment is to education, and our vision is clear: the transformative power of postsecondary education is accessible to all.

The newly enacted law undermines this vision by restricting opportunity and increasing costs for millions — especially students from low-income families, rural areas, communities of color, and first-generation college backgrounds. At a time when expanding access is more urgent than ever, this legislation instead erects new barriers.

What is changing 

Pell Grant changes: 
The law invests $10.5 billion to address the Pell Grant shortfall. However, starting in 2026, new eligibility restrictions — including the inclusion of foreign income, disqualification based on high Student Aid Index (SAI), and disqualification when non-federal aid covers full cost of attendance — could reduce eligibility or eliminate Pell access for some students.

Student and Parent Loans:
Graduate and professional PLUS loans will be eliminated starting July 1, 2026. New borrowing limits will apply to graduate students and parents, likely pushing more students to private loans or deterring them from pursuing advanced degrees. The aggregate loan limit is now $100,000 for most graduate students and $200,000 for professional students or those pursuing both. Parents can borrow up to $65,000 in total for their dependent student through Federal Direct Parent PLUS loans.

Higher payments and longer debt lifespans for borrowers: 
The bill eliminates existing income-driven repayment plans and will offer only two options: a standard repayment plan (fixed monthly payments over 10-25 years based on principal) and the Repayment Assistance Plan, which traps students into extended repayment terms of 30 years and increases monthly payments, even for borrowers with incomes below the poverty line. The law eliminates economic hardship and unemployment deferments, and newer borrower defense protections for defrauded students and school closures are delayed until 2035. For current borrowers, the repeal of the SAVE, PAYE, and other affordable plans will raise monthly payments by as much as 50 percent.

Workforce Pell Grants: 
A new Workforce Pell Grant program will support short-term career training in high-demand sectors. However, strict outcome requirements, such as high completion and placement rates, may limit the number of qualifying programs and restrict access for students seeking flexible or emerging pathways.

Endowment tax on institutions: 
The new law imposes a tiered excise tax on investment income from private colleges with per-student endowments exceeding $500,000. Tax rates now range from 1.4 percent to 8 percent for institutions with endowments above $2 million per student. This significant financial pressure may reduce funds available for student aid and campus support. As a result, institutions may cut back on scholarships or increase tuition, threatening affordability — particularly for low- and middle-income students who depend on institutional aid.

Delay of Gainful Employment and Transparency Protections: 
The law delays implementation of the Department of Education’s 2023 Gainful Employment and Financial Value Transparency regulations until July 1, 2035. These rules were designed to protect students from career education programs that lead to high debt and low earnings, and to improve transparency through public reporting of program-level outcomes. The delay weakens federal oversight and removes tools that help students and families make informed choices.

New earnings-based accountability rule: 
Beginning July 1, 2026, colleges will lose eligibility for federal aid for any program where the median earnings of graduates fall below the median earnings of all working adults in the same state. This broad rule may lead institutions to eliminate programs in lower-paying but socially vital fields such as education, public service, and the arts, narrowing postsecondary options for students.

Cuts to Medicaid and SNAP compound student hardship: 
Beyond education, the law’s changes to Medicaid and the ACA marketplace are expected to leave 13.7 million people uninsured. As state budgets absorb these changes, public higher education may face new cuts. Simultaneously, reductions to SNAP eligibility and increases in work requirements will harm food-insecure students.

Moving forward 

This legislation undermines the goals our country should pursue: expand educational opportunity, address workforce needs, and reduce inequality.

We remain committed to working with federal leaders to promote evidence-based, student-centered policies that ensure higher education remains within reach for all. Our advocacy efforts will not let up. The road ahead won’t be easy, but together we will steer the organization and our profession with intention and strategy.

Please join us for our next Community Conversation on July 15 to discuss the implications of this bill and the path forward.