Washington Insights & Highlights January 23rd

House of Representatives Passes Budget Reconciliation Package

In the early hours this morning, the U.S. House of Representatives passed the Budget Reconciliation package titled the “One Big Beautiful Bill,” by a vote of 215-214. The reconciliation package includes provisions that impact the graduate education community, including a provision that eliminates the Graduate PLUS loan program effective July 1, 2026. The package also includes federal borrowing caps of $100,000 for graduate programs, $150,000 for professional programs, and a $200,000 lifetime cap across all federal loans.

Additionally, the budget reconciliation package caps federal aid, including loans, based on the national median cost of attendance by field of study and a risk-sharing provision requiring institutions with high student borrower default rates to reimburse the federal government and imposes penalties on schools with high rates of graduate non-completion.

The legislation proposes permanent tax-free treatment of employer student loan repayments under Section 127, indexing the $5,250 cap to inflation, and restructuring the excise tax on net investment income for certain private universities.

Following the passage of the reconciliation package, House Education and Workforce Chairman Tim Walberg (R-MI), made the following remarks, “Today we cleared a huge hurdle, and we are one step closer to delivering on our promise to the American people to cut government waste. It’s time we stopped asking taxpayers to foot the bill for our broken student loan system that has left borrowers in trillions of dollars of debt and has caused college costs to balloon. It’s time we stopped asking a factory worker in Michigan or a rancher in Texas to subsidize the student debt of a lawyer in Manhattan. I urge my colleagues in the Senate to end the status quo and get this bill to the President’s desk.”

For detailed information about the education portion of the reconciliation package, please read the following documents: (1) fact sheet; (2) bill text; (3) section-by-section summary; and the CBO estimate.

The House-passed budget reconciliation package will now be sent to the U.S. Senate for consideration, where several policy provisions are expected to face stiff opposition by senators from both parties.

Prior to the passage of the budget reconciliation package, the higher education community sent a letter to the House Leadership to express our opposition to the bill and specifically the education-related provisions.

Secretary McMahon Defends Cuts to the U.S. Department of Education

On Wednesday, May 21, U.S. Secretary of Education Linda McMahon testified before the House Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, following President Donald Trump’s release of his Fiscal Year 2026 “skinny budget.”  Secretary McMahon stated the agency’s goal is to make “education better, fairer, and more accountable by ending federal overreach,” as she defended proposed cuts to the Department of Education. Secretary McMahon also clarified that she would only close the Department if Congress passed legislation authorizing the closure of the agency.

While Secretary McMahon’s testimony primarily focused on K-12 education, she did mention issues such as, college affordability, accountability, and student loan repayments. Secretary McMahon said that the Department has “begun a wholesale reform of higher education regulations through the negotiated rulemaking process to promote competition and innovation while ensuring institutions meet rigorous standards. Colleges must be transparent and accountable to students so they can ascertain whether a particular program will yield a good return on investment. Matching college costs with career outcomes and high-paying jobs will ensure that the student loan portfolio does not slip into mass non-payment again in the future.”

As mentioned in previous CGS publications, the President’s skinny budget proposes steep cuts to Federal Work-Study, Graduate Assistance in Areas of National Need (GAANN), Child Care Access Means Parents in School (CCAMPIS), and other higher education programs.

For more information about the President’s Skinny Budget, please read the CGS Programs of Interest document.

Updated: NSF Pauses Implementation of 15-Percent Indirect Cost Cap

On May 19, the National Science Foundation (NSF) updated its NSF Priorities webpage. In the Q&A section of the webpage (Question #30), the agency notes that it has paused implementation of the 15-percent indirect cost rate until June 13, 2025. Effective May 19, 2025, the agency has reverted to issuing awards according to the institution’s negotiated rates. Please pay special attention to questions and answers for #30-#34.

 ICE Issues Deportation Warnings to OPT Students

On May 16, U.S. Immigration and Customs Enforcement (ICE) issued letters to international students on Optional Practical Training (OPT) visas, notifying them that failure to report their employment status within 15 days could result in SEVIS record termination and potential deportation proceedings. This follows a new policy expanding ICE’s authority to terminate student visa status in the SEVIS system. Under existing regulations, students on OPT visas are allowed 90 days of unemployment every 12 months before falling out of compliance.

For more information on recent ICE action concerning OPT, you may want to read today’s PIE news article.

U.S. Department of Education Looks to Preserve GE/FVT

On May 16, the U.S. Department of Education submitted a legal filing defending its Gainful Employment (GE) and Financial Value Transparency (FVT) regulations against a lawsuit brought by the American Association of Cosmetology Schools and others. The Department asserts that these rules are within its statutory authority and are essential for ensuring that federal student aid supports educational programs leading to viable career outcomes. Below are key items from the legal filing:

• The Department argues that the GE and FVT regulations are grounded in its mandate to ensure that federal student aid is used for programs that lead to gainful employment, stating that “‘gainful’ means profitable.”
• In multiple occurrences surrounding FVT, the Department stated that “students and families deserve to know whether the programs they are considering are likely to lead to financial success.”

CGS has developed a webpage with key provisions around GE and FVT and deadlines for institutions.