📣 UPDATE: Senate Proposal Released (June 30, 2025)

Last updated: Monday, June 30, 2025 at 11:00 AM PT

Heads up, college parents—this isn’t just DC drama. If you’ve been following the saga of the “One Big Beautiful Bill,” here’s your Senate update—specifically focused on what it means for your student’s college costs. After a weekend of political wrangling and last-minute revisions, most of the higher ed provisions stayed in the mix—just with a few softened edges. Here’s what families should be watching right now:

🔍 What’s in the Bill (Senate Edition)

📊 Endowment Tax (Now Tiered): The 21% flat tax from the House is out. The Senate is going with a tiered approach: top-tier universities (think Harvard, Stanford, Princeton) could see up to 8%, mid-range schools around 4%, and smaller colleges would stay at the current 1.4%. Schools with under 3,000 students? Still exempt.

Supporters say this encourages elite schools to spend more of their endowments on current students. Critics say it’s a political jab at “elite liberal universities.” Some schools are offering to spend 5% of their endowments annually in exchange for a lower tax rate.

💵 Pell Grant Changes: Just like the House version, students will need to complete 30 credit hours per year (that’s typically 15 per semester) to qualify for full Pell Grant aid. Students attending school less than half-time would lose access to Pell altogether.

🔸 Loan Overhaul: The Senate still plans to eliminate subsidized undergraduate loans and tighten PLUS rules. They've capped Parent PLUS at $65,000 per student (down from uncapped), which may sound high, but note that a school like USC costs nearly $100K/year. The Grad PLUS program is also being phased out. Exact student borrowing limits haven’t been fully detailed yet.

⚖️ No More Risk-Sharing Proposal: The House wanted to penalize colleges if too many of their students defaulted. The Senate dropped that. Instead, they’re pushing for more federal reporting on things like graduate income and average student debt.

⚠️ Why Families Are Worried

✂️ Pell Grant Cuts: Analysts say over half of current Pell recipients—especially working adults, part-time students, and many community college attendees—could lose eligibility under the new 30-credit rule. This change could effectively eliminate Pell aid for thousands of students who attend college part-time due to work or family responsibilities.

📉 Barriers for Nontraditional Students: Not everyone can swing 15 units a semester. The new rules could unintentionally penalize students who are working jobs, caring for family, or easing back into college.

💸 Impact on Merit Aid: Even at 8%, an endowment tax could pressure big-name schools to cut back on institutional aid. If that happens, the families most likely to feel it aren’t the wealthiest—it’s the ones who make too much for Pell but not enough to write full-tuition checks without blinking.

🧭 What’s Next?

Senators are back at it Monday for a full vote-a-rama (yes, that’s the official term). A final vote could come before the July 4 recess. After that, the bill heads back to the House for reconciliation before landing on the President’s desk.

💬 Final Word

We’ll keep saying it: this bill isn’t just about billion-dollar endowments. It could shift how colleges fund scholarships, how families borrow for school, and who qualifies for critical federal aid.

It’s still early—but now is the time to start thinking about what this might mean for your student, especially if they’re applying this fall or in the next couple of years.

If you want help planning ahead or adjusting your college funding strategy, grab a free call.

What’s Really in the “One Big Beautiful Bill”? A Fair Look at the Pros & Cons

Originally posted: Wednesday, June 19, 2025 at 6:49 PM PT

The House recently passed the “One Big Beautiful Bill” (yes, that’s really what it’s being called)—a sweeping proposal that includes major changes to how higher education is taxed and funded. Depending on how the Senate responds, this bill could reshape how colleges operate and how families pay for school.

🔍 What’s in the Bill?

📊 Endowment Tax Increase: Large university endowments could be taxed at rates up to 21%, up from the current 1.4%, depending on per-student endowment size. (source)

💵 Pell Grant & Loan Changes: Full Pell Grants may only be available to students enrolled in 30 credit hours per year (typically 15 per semester). Some subsidized and PLUS loans could be eliminated.

📚 Loan Risk-Sharing: Colleges with high default rates could be required to repay a portion of federal student loan losses—creating a new incentive for schools to improve student outcomes.

⚠️ Why Critics Are Alarmed

✂️ Pell Grant Cuts: Some estimates suggest that more than half of Pell recipients could see a reduction in aid—particularly part-time and community college students who may not meet the new credit thresholds.

📉 Access at Risk: New eligibility rules could unintentionally punish students who are working while enrolled or taking care of family—especially adults returning to school.

🧾 Strained University Budgets: Universities rely on endowment earnings to fund scholarships, campus improvements, research, and long-term financial aid strategies. The proposed tax hike could force tough financial decisions.

📊 What Would These Taxes Look Like in Real Numbers?

Here’s what the tax change would mean for three well-known universities:

🧠 Why This Matters for Families

It’s easy to think, “So what? These schools have billions.” But here’s the catch: a significant portion of endowment earnings go toward institutional financial aid—the grants and scholarships schools use to offset tuition, especially for middle- and upper-middle-income families who don’t qualify for federal aid.

If billions of dollars are redirected to pay federal taxes, schools may:

✔️ Reduce merit aid or limit grant funding for incoming students
✔️ Prioritize “full-pay” applicants to balance budgets
✔️ Slow or freeze tuition offsets, program expansion, or aid commitments

The Short of It: Even if your family earns too much to qualify for Pell Grants, this bill could affect how much your student pays for college.

✓ Who Might Actually Benefit

🏠 Affluent Families: Institutions may lean into their higher-income applicant pools if aid resources shrink—those who can pay more may see more seat availability or favorable admissions policies.

💡 Colleges with Low Default Rates: Schools already focused on outcomes and job placement may thrive under the new risk-sharing rules.

💰 Donors and Private Institutions: Certain charitable deduction and tax strategies remain intact, which may create planning opportunities for those funding 529s or making legacy gifts.

🏛 A Bit of a Back-and-Forth on Capitol Hill

While the House version of the bill pushes a steep new tax on endowment earnings (up to 21%), not everyone in Washington is sold on going that far.

The White House has framed the tax as a way to hold “woke, elitist universities” accountable, especially those sitting on multibillion-dollar endowments while tuition keeps climbing.

But some university leaders aren’t just pushing back. They’re proposing a compromise.

A group of top-tier schools, including Princeton, has formed what's called the Learn Alliance and pitched a deal to Congress:

Let us voluntarily increase how much of our endowment we spend each year—especially on financial aid, research, and local impact—in exchange for a lower, flat tax rate on earnings (2.4% or 3.4% instead of 21%).

Princeton’s President, Christopher Eisgruber, put it this way:

“What I hear from Republican members of Congress is a desire to ensure that colleges are using their charitable endowments to support today’s students and researchers rather than saving too much for the future… Those are valid concerns, and this proposal directly addresses them.”

The Learn Alliance argues that their plan would generate at least $30 billion in student-centered spending over 10 years, compared to just $6.7 billion in tax revenue the House’s version would bring in during the same timeframe. Translation? Less taxing, more funding for actual students.

This debate also ties into research from Ithaka S+R, a nonprofit that studies higher ed finance. Their study found that over a five-year span ending in 2023, most schools didn’t meet a 5% annual endowment spending target, even though many now say they’d support it.

🧭 What This Means for Parents (and Why It’s Not All Bad News)

If this compromise gains traction, some families could actually see more institutional aid, not less.

✔️ Schools might increase financial aid distributions to meet a mandatory spending target
✔️ A lower flat tax could reduce the incentive for schools to hoard investment gains
✔️ Families who don’t qualify for federal aid (but still feel the sting of $80K/year tuition) may benefit most

So while the headlines sound dramatic (and they are), this is also shaping up to be one of those rare moments in Congress where negotiation might actually result in something helpful.

Think of it like a giant game of federal tug-of-war:
🎓 On one side, lawmakers want accountability.
📚 On the other, schools want flexibility.
👨‍👩‍👧 And in the middle? Families like yours, wondering if your kid’s dream school just got more—or less—affordable.

💬 Final Thoughts

This isn’t the first bill to shake up higher education—and it won’t be the last. But understanding the moving pieces now gives you a head start in planning your family’s next step.

If you want help navigating how this might affect your student’s aid strategy, book a free call or download one of our updated planning guides.