The Senate voted on Tuesday to pass a significant domestic policy package that aims to reshape the federal student lending ecosystem and postpone certain major higher education regulations. Vice President JD Vance cast the decisive tie-breaking vote, allowing the bill to advance with a narrow margin of 51-50, leveraging the reconciliation process to sidestep the standard requirement of 60 votes needed to overcome a filibuster.
Next, the House and Senate will need to reconcile their differing versions of the legislation before it can be sent to President Donald Trump’s desk. This could present challenges, as the two proposals share some common elements, like extending tax cuts and funding for Republican priorities such as immigration enforcement. However, they diverge significantly when it comes to higher education policies.
A key focus of the Senate bill centers on accountability for college programs. Notably, it seeks to restrict student loan eligibility for institutions whose graduates fail to meet specified income benchmarks. For undergraduate programs, at least 50% of graduates must exceed the earnings of typical high school diploma holders in their state. Graduate programs face similar earnings requirements, essential for maintaining access to federal loans. Programs that fail to meet these criteria in two out of three consecutive years would lose their federal student loan eligibility.
Additionally, the Senate bill proposes substantial changes to the federal student loan framework, including the termination of Grad PLUS loans and capping borrowing limits for graduate students at $100,000, with a $200,000 cap for those in professional fields. Parent PLUS loans would also be limited to $65,000. Furthermore, starting in July 2026, borrowers would have access to only two repayment plans—a standard and an income-driven one with loan balances forgiven after 30 years.
The bill also modifies Pell Grant funding, allowing it to be applied towards short-term programs lasting between eight and fifteen weeks. However, a previously included provision to extend these grants to unaccredited providers was removed following scrutiny. Enhanced funding is intended to address expected shortfalls, although students who hold scholarships covering their full tuition costs would lose their eligibility for Pell Grants.
Another critical aspect is a revision to the tax on endowments for wealthy private nonprofit colleges. The new bill introduces a tiered approach, raising the tax based on endowment assets per student, while exempting smaller institutions from this tax if they have fewer than 3,000 tuition-paying students.
Finally, while the original bill proposed a permanent rollback of certain Biden-era regulations concerning borrower defenses and closed school discharges, the passed version opts to delay these rules for a decade. Federal courts have already placed blocks on these regulations, and the U.S. Supreme Court plans to review them in the future.
This legislative push signals a potential shift towards more stringent accountability in higher education funding and the student loan system, which could ultimately create a more responsible lending environment for future students. The changes may lead to improved outcomes for graduates, as colleges will need to ensure their programs offer real value to their students to maintain access to vital funding.