By Catherine Brown, Senior Director, Policy and Advocacy, Louisa Woodhouse, Senior Associate, Policy and Advocacy, and MorraLee Keller, Senior Consultant
Reading time: Nine minutes
The House Committee on Education & the Workforce’s reconciliation proposal, released yesterday, was the first volley in what’s certain to be a lengthy
legislative process. The proposal is long and complicated and we will work to unpack it for you with additional analysis and updates. But we wanted to quickly bring to your attention one concerning change to the maximum Pell Grant.
This bill increases the number of credits per semester required for students to receive a maximum Pell Grant from 12 to 15. This change would result in a $1,479 cut to the maximum Pell Grant of $7,395 for any student
taking 12 credits, approximately a quarter of Pell recipients. Those students’ Pell award would drop to $5,916 if this bill is enacted. This proposal takes effect during the 2025-26 school year and continues for the 10 subsequent years, changing the
value of student aid offers made throughout this year.
While there is evidence that students who take 15 credits per semester complete a degree faster than those who do not, millions of students are unable to do so due
to work or caregiving obligations, or because taking 15 credits is too heavy a load, especially in their first semester as they adjust to college.
The National College Attainment Network (NCAN) strongly supports initiatives to decrease time to completion, but we are concerned that at risk students who are more likely to work and need additional time to finish their coursework will be put at a disadvantage
due to this proposal. Evidence shows that every additional $1,000 in need-based aid increases the likelihood of
enrollment and completion of a postsecondary degree.
Impact
Flat Rate Institutions: Most BA-granting colleges and universities treat 12 to 15 credits as a full-time college course load and charge what is called a “flat rate” to any student taking 12 credits or more. That means if a student is
taking 12 or more credits, they can receive a maximum Pell Grant. Students attending institutions of higher education with this pricing structure will now have to take three additional credits to receive a maximum Pell. Those students who are unable
to take three additional credits, often amounting to an additional course per semester, will see their Pell Grant reduced under this proposal, and their unmet need increase by $1,479. Given the other financial pressures faced by colleges
and universities at this time, it is unlikely they will be able to increase institutional aid for all the students in this category, and many students will likely have to borrow to meet the increased cost.
Per-Credit Institutions: Most community colleges and many state colleges and universities charge per course credit rather than a flat rate, and this proposal will also decrease the amount of Pell those students can receive if enacted.
Currently, each maximum Pell student receives $308.10 per credit if they are taking 12 credits. If 15 credits per semester becomes the new requirement to receive a maximum Pell Grant, students will receive $246.50 per credit – a $61.62 cut per credit.
While the bill says that it is changing the yearly requirement for receiving a maximum Pell, and that winter and summer courses will count towards the 30 credits, Pell is disbursed by semester, and specific requirements must be met to advance a student
to the following semester and enable them to receive federal financial aid. The House proposal translates into a requirement that each student takes 15 credit hours per semester to receive a maximum Pell.
It's worth noting that this proposal leaves no room for students to change majors, transfer, or take a reduced course load to manage through a difficult time or particularly demanding semester. If a Pell recipient drops one class, they will see their
grant decrease or receive a withdrawal on their transcript. The proposal also does not reward students who take more than 15 credits, which would be a logical addition if the policy intent is to increase attainment.
Other Changes
In addition to the changes to the maximum Pell Grant, this bill makes sweeping changes to many aspects of higher education financing. Read more in the table below:
Issue/Provision
Proposed Law
Current Law
Pell Grants
Changes required credit hours and definition of full-time for maximum Pell receipt
Increases enrollment requirements for maximum Pell eligibility to 15 credits/semester. (This will be a cut of $1,479 per year for students previously taking 12 credits. We estimate this will impact around a quarter of Pell recipients,
based on enrollment data.)
Defines full-time enrollment as 30 credits per year.
Excludes students enrolled less than half time from Pell eligibility.
Provides maximum Pell eligibility for students enrolled in 12 credits per semester.
Defines 24 credits per academic year as full-time enrollment.
Maintains Pell eligibility for students enrolled for fewer than 12 credit hours per semester.
Excludes people with high assets and low income from Pell eligibility
Excludes students with a calculated student aid index (SAI) greater than or equal to twice the maximum Pell Grant from Pell eligibility.
Provides minimum Pell eligibility ($740) for students whose parental adjusted gross income (AGI) matches the current minimum Pell poverty table for each academic year, regardless of the size of their calculated SAI. (Typically, students
with a SAI of more than ~$6,700 are not eligible for Pell unless their parental income meets the poverty table minimum.)
Implements Workforce Pell
Establishes a Workforce Pell program with stringent program quality requirements: Students enrolled less than half-time are eligible; program duration must fall between eight-15 weeks; the completion rate for the program must be at
least 70%; and students will have to verify financial need.
Does not include a Workforce Pell program, but students can apply the Pell award to certain Title IV-eligible credential programs.
Addresses the Pell shortfall
Provides an infusion of $10 billion in federal funds over the next 10 fiscal years, designed to avoid the Pell shortfall estimated by the Congressional Budget Office projections.
The Pell Grant shortfall is projected to reach $2.7 billion by the end of Fiscal Year (FY) 25 and $10 billion by the end of FY26.
Loans
Eliminates subsidized and Grad PLUS loans; changes Parent PLUS requirements
Eliminates new subsidized loans for all undergraduate students starting with award year 2026-27, except for presently enrolled students.
Eliminates all new Grad PLUS loans, starting with award year 2026-27, except for presently enrolled students.
Requires undergraduate students to exhaust their unsubsidized loans before parents can utilize Parent PLUS to cover the remaining cost of attendance, and sets an aggregate limit for Parent PLUS loans of $50,000.
Sets maximum subsidized loan amounts of up to $3,500, $4,500, or $5,500, based on students’ class year.
Allows graduate students to borrow Grad PLUS loans up to the annual cost of attendance, excluding any other financial aid awarded.
Allows parents to borrow PLUS loans up to the cost of attendance for their student and does not include borrow requirements for students.
Establishes loan maximums
Permits undergraduate students to borrow only up to the median cost of their program of study, annually, and establishes a loan maximum of $50,000 in aggregate.
Permits graduate and professional students to borrow up to the median cost of their program of study, annually, and establishes a loan maximum of $100,000 in aggregate for graduate students, or $150,000 in aggregate for professional
students. These sums account for any amounts borrowed as an undergraduate.
Adjusts loan maximums proportionally for less than full-time enrollment.
Limits student borrowing to $200,000 in aggregate.
Sets loan limits for students with appropriate financial need of up to $5,500, $6,500, or $7,500, annually, based on class year, with an aggregate maximum of $31,000.
Does not set an annual loan limit for graduate students.
Does not set an aggregate loan maximum for combined undergraduate and graduate borrowing.
Implements changes to loan repayment
Creates two repayment plans: a standard loan repayment plan, and a Repayment Assistance Plan (RAP) which would require a $10 minimum monthly payment, and forgiveness after 360 monthly payments (30 years).
Transfers those on Income-Contingent Repayment to standard loan repayment plan.
Includes multiple repayment options (Income-Based Repayment, Income-Driven Repayment, and Pay As You Earn) with time-based loan forgiveness, after 20 or 25 years of consistent, on-time payments.
Excludes medical and dental residencies from Public Service Loan Forgiveness (PSLF)
Excludes medical or dental internships and residencies from counting towards time accrued for PSLF. Instead, allows those serving in medical or dental internships or residencies four years of interest-free forbearance.
Includes hours accrued through medical and dental internships in calculations for PSLF.
Sunsets economic hardship deferment
Establishes that any loans after July 1, 2025, will not be eligible for deferment, and that for any loans after July 1, 2025, forbearance may not exceed nine months within a 24-month period.
Allows students incurring economic hardship to apply for a deferment of up to one year.
Allows borrowers to be in forbearance for up to 12 months at a time, for a total of four years.
Implements institutional risk sharing
Requires institutions participating in the Direct Student Loan Program make annual payments to the US Department of Education based on the “non-repayment” balance of borrower cohorts, starting for loans made on or after July 1, 2027.
Does not include a “risk-sharing” requirement for institutions of higher education.
Additional Provisions
Establishes institutional PROMISE Grants
Provides grants to institutions who meet the “maximum price guarantee” requirements, with flexible use, to support students from low-income backgrounds with degree completion.
Does not include a PROMISE Grant offered to institutions
Establishes a median cost for programs of study
Determines a median cost of college, effective July 1, 2026, for programs of study, based on the cost of attendance across all institutions offering that program for the preceding award year.
Uses the median cost of college to determine students’ eligibility for federal student aid programs.
Allows for federal aid to be awarded up to the total cost of attendance
Restores farm and small business exemptions in SAI Calculation
Restores exemptions for family farms and small businesses with less than 100 employees in SAI calculation
Requires that the net value of family farms and small businesses with less than 100 employees be used in the SAI calculation.
Restricts federal student aid eligibility for certain non-citizens
Limits the aid eligibility of certain non-citizens that are presently eligible to receive federal aid.
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