In the last post, we covered H.R. 1 of 2025 (the Big Beautiful Bill), which, in Title III, proposes major changes to Federal student aid programs. The changes in Title III take effect on July 1, 2026, and apply to award year 2026–27 and subsequent years. It’s now in the Senate for consideration.
Title III consists of Subtitles A through G covering different aspects of changes to education policy. In this post, we focus on Subtitle A, Student Eligibility, Subtitle B, Loan Limits, and Subtitle D, Pell Grants.
Title III represents a significant overhaul of the student loan system in a move to improve access, transparency, and accountability in loan programs. The bill introduces significant amendments to the Higher Education Act (HCA) of 1965, including the establishment of a 90-day window during which borrowers must verify their citizenship or nationality.
One of the most noteworthy changes in Title III is the introduction of borrowing caps that set annual loan limits at the national median college Cost of Attendance (COA) rather than at the COA of an individual college.
Pell Grants
Title III raises the Pell Grant ceiling for academic years 2026-27 and beyond, improving the financial outlook for low-income students. The HCA has been revised to cover the Pell Grant shortfall to the tune of $2.17 billion for academic year 2025-26, $5.35 billion for academic year 2026-27, and $3.743 billion for academic year 2027-28. This will be followed by an allocation of $1.23 billion for each subsequent academic year.
The bill proposes changes to Pell Grant eligibility by increasing the full-time enrollment minimum to 15 credit hours and eliminating funding for students enrolled less than half-time. Critics argue that this change will disproportionately harm low-income students, forcing some to take out more loans or drop out of part-time college enrollment.
Student Debt Levels
Student debt has become more and more burdensome in recent years. Many people advocate reforms that will mitigate excessive borrowing. Under the changes, students and parents will have their maximum Federal borrowing potential reduced. For undergraduates, the lifetime loan limit will be $50,000. Parent PLUS loans, heretofore uncapped, will be capped at $50,000 per parent across all of their children. Graduate PLUS loans, which have also been uncapped, will be eliminated entirely. Graduate borrowers will be limited to $100,000 in Federal loans for graduate programs and $150,000 for professional programs, including law and medicine.
College Enrollment and Perceptual Problems
Title III changes are set to take effect on July 1, 2026, a time during which college enrollment’s current downward trend will persist along with the declining perception of the value of a college degree. Following the steep drop in enrollment caused by the pandemic, colleges regained much of the decline. In 2025, enrollment rose by 3.2% compared to the previous year, with undergraduate enrollment growing by 3.5%. However, this figure is still 2.4% below the pre-pandemic level of 2019-20. Nationally, colleges experienced a 15% decline in enrollment from 2010 to 2020, before the pandemic.
According to the Pew Research Center, only 25% of Americans now believe that a bachelor’s degree is crucial for securing a good job. This decline in perceived value is reflected in the decreasing proportion of high school graduates opting for immediate college enrollment, which dropped from 70% in 2016 to 62% in 2022. The long-anticipated demographic drop in college-age students that began this year will further exacerbate the downward trend in college enrollment.
Reactions of Policymakers
The reaction of policymakers has varied as expected across the political spectrum. Some supporters of the bill favor measures like the proposed limitations on student loan borrowing amounts and changes to student loan repayment plans, seeing them as reforms necessary to control costs and promote fiscal responsibility. The bill includes provisions aimed at strengthening workforce development programs and enhancing career readiness, which supporters see as valuable investments in the nation’s future. Provisions that increase the accountability of colleges via a loan risk-sharing requirement are viewed positively by supporters seeking to improve educational quality and efficiency.
Conversely, critics of Title III caution that the reliance on private borrowing may lead to a reduction in government oversight, which could compromise educational quality. In addition, the bill eliminates subsidized loans for undergraduate students and restricts Parent PLUS loans, increasing borrowing costs for low-income students and forming a new impediment to degree completion. The bill also terminates Grad PLUS loans, a critical funding source for graduate students, particularly at Minority-Serving Institutions (MSI’s).
Opposition to Title III
College-access advocates criticize changes in Title III that they feel will exacerbate existing demographic disparities in enrollment. Historically underserved populations, including racial minorities and economically disadvantaged students, are expected to encounter another deterrent to equal college access due to, among other things, low credit ratings in private borrowing. As more and more students turn to private loans, the risk of degree noncompletion and loan default will increase. This is expected to be problematic in fields such as teaching and nursing, which require college degrees but offer only modest salaries.
A controversial aspect of Title III is the expected growth of the private lending model. Supporters argue that replacing the current government-as-lender model with private lending would reduce inefficiencies and cause students to clarify their goals. However, similar initiatives have faced resistance in the past due to the higher risk associated with private borrowing, particularly for economically disadvantaged students. Furthermore, the bill singles out MSIs for tougher scrutiny by tying loan volume to their graduation or transfer rates, which critics argue is unfair and burdensome.
In summary, the Title III provisions of H.R. 1 of 2025 are being criticized by some for their potential to increase the cost of college, limit student aid eligibility, reduce financial aid options, and impose new burdens on colleges. The changes are seen as obstacles to equality of access to college for low-income students.
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