A sweeping Republican domestic policy bill, signed into law this week, could reshape how students pay for college — and how universities operate — for years to come. With new caps on student loans, higher taxes on wealthy colleges, and expanded Pell Grant use for short-term training, the bill is already drawing sharp reactions from education leaders who fear it could make higher education less affordable and less diverse.
New Limits on Student Loans
One of the biggest changes? The bill now caps how much graduate students can borrow through federal loans:
- Up to $100,000 for a master’s degree
- Up to $200,000 for doctoral, medical, or professional degrees
Republicans say these limits will help tackle rising tuition costs and massive graduate school debt, which averages more than $240,000 for medical students alone. They argue that unlimited federal loans have allowed schools to keep hiking fees unchecked.
But higher education groups warn this could push students into the private loan market, which lacks federal protections like Public Service Loan Forgiveness. Critics say the caps could shut the door for students wanting to be doctors, lawyers, or researchers — fields that already struggle with talent shortages.
The law also phases out Grad PLUS loans, which millions of students rely on to fund advanced degrees.
Degrees Now Tied to Graduate Salaries
Another new rule aims to hold colleges accountable for poor outcomes. Under the bill, a program can lose federal loan eligibility if its graduates fail to meet certain income thresholds. Supporters say this will stop students from piling up debt for degrees that don’t lead to good jobs.
But education leaders say this approach ignores the fact that not every career is about a big paycheck. Social workers, artists, teachers, and public service workers could be affected, they warn — jobs society needs but that rarely come with six-figure salaries.
“You don’t pursue social work to get rich,” said Jon Fansmith, of the American Council on Education. “This bill doesn’t leave room for nuance.”
Ivy League Endowments Face Bigger Taxes
Former President Trump’s long-running promise to go after wealthy schools is also a big part of this bill. In 2017, Congress slapped a 1.4% tax on colleges with endowments of $500,000 or more per student — mostly affecting Ivy League schools like Harvard and Princeton.
Now, that tax jumps to 8% on investment income for schools with endowments of $2 million or more per student. The idea is to force elite schools to use more of their money on student aid instead of stockpiling cash.
Universities say this will hurt, not help, students. Most colleges pull around 5% of their endowment each year to fund scholarships, professorships, and campus improvements. Higher taxes mean less money for financial aid, critics argue, and the Treasury’s share will be small compared to the trillions added to the national debt under the wider spending plan.
Notably, small schools like Hillsdale College, which lobbied hard, are exempt from the new tax if they enroll fewer than 3,000 students.
Pell Grants Expand to Short-Term Training
There is one area where the bill finds common ground. In a bipartisan move, the Pell Grant program — which millions of low-income students depend on — can now be used for short-term job training programs.
From cloud-computing credentials to forklift driver certifications, students can use Pell Grants for nondegree work-training that helps them land better jobs quickly. Community colleges called this change a win for workers looking to upskill without committing to a full college degree.
An earlier push to expand Pell Grants to unaccredited programs was blocked in the Senate.
What Happens Now?
Supporters of the bill say these measures will rein in college debt and hold wealthy universities accountable. But critics — including college presidents and student advocates — warn it could make a degree harder to get and deepen inequality.
In the bigger picture, the bill shows the Trump administration’s education agenda goes well beyond the Ivy League. From cutting research grants to curbing support for international students, the White House has made it clear it wants universities to do more with less.
One thing’s for sure: students planning to borrow for grad school, families counting on generous financial aid, and colleges dependent on endowment income will all feel the impact.
Disclaimer: This article is based on the latest details of the new domestic policy bill and expert statements. Students should speak with financial aid offices to understand how these changes may affect them.
