Tax cuts, Medicaid restrictions and immigration enforcement funding are among the hallmarks of the latest version of the budget reconciliation bill, formally known as the “One Big Beautiful Bill.” But the legislation also contains proposals that could significantly reshape the higher education landscape, change how some Oregon students pay for college, and how graduates pay back their student loans.

On Tuesday, Senate Republicans narrowly passed their version of the budget reconciliation bill. The bill next heads back to the House, where Republican leaders are hoping to pass the legislation as is so it can reach President Trump by his July 4 deadline.

Higher education leaders in the state say the bill includes some wins, like a boost in funding for Pell Grants. But other provisions, like a proposal to eliminate some federal loans for graduate students, are a cause for concern.

“Our primary focus is on potential changes to the Pell Grant, given the critical role it plays in creating affordability and access, especially for low and middle-income Oregonians,” said Executive Director of the Higher Education Coordinating Commission Ben Cannon.

Pell Grants are the federal government’s largest form of financial aid for low-income students seeking a post-secondary education. Federal data analyzed by the Education Data Initiative from the 2022-2023 school year showed that six million students across the country were awarded the grant, including more than 77,000 Oregonians.

Both the Senate and House agreed to infuse the financial aid program with an additional $10.5 billion. The boost is intended to stabilize the program as it faces a projected funding deficit of $2.7 million for next school year.

Lawmakers in both houses also pushed through a plan to expand Pell Grant eligibility to students in short-term job training programs. This effort, known as Workforce Pell, has previously received bipartisan support.

The previous House version of the budget bill contained far-reaching provisions to Pell Grants that gave many higher education advocates heart palpitations. Most notably, legislators in the House had considered redefining full-time and half-time students, calling for students to increase their credit loads to be eligible for the grant.

More than 37,000 college students in Oregon would have seen their Pell Grant awards curtailed or completely taken away by this proposed change, according to estimates from the higher education nonprofit American Council on Education.

That provision would have had an outsized impact on community college students, who are more likely to attend school at less than full-time in order to manage jobs and families.

Portland Community College, the state’s largest higher education institution, which serves more than 50,000 students, projected that the proposed credit level requirements would have reduced Pell awards to 9,200 students by about $9.7 million.

“We expected a potential 25% loss in student eligibility if the house language went through,” said PCC financial aid director Peter Goss.

Chemeketa Community College’s financial aid director Rob Hoffman said the proposed Pell eligibility requirements would have had a dire impact on students and the community at large.

“If fewer students get Pell, then fewer students will go to college, which means fewer students getting good jobs and good salaries,” Hoffman said.

For now, higher education leaders are breathing a sigh of relief that this specific proposal did not pass muster in the Senate.

Portland State University’s Vice President of Enrollment Management Chuck Knepfle hopes the House’s plan to overhaul Pell won’t deter students from applying to the Free Application for Federal Student Aid, or FAFSA.

“Apply for the FAFSA regardless. It can’t hurt,” said Knepfle. “Right now we don’t think there will be significant changes to the Pell Grant. It doesn’t feel like that’s on the horizon.”

In lieu of stricter Pell eligibility, the Senate version of the budget bill includes a proposal to eliminate the Grad PLUS loan program. This form of financial aid allows students to borrow up to the full cost of attendance for a graduate program. It covers not just tuition and fees, but also housing and food expenses.

Knepfle said Grad PLUS loans are an important funding mechanism for graduate students across the country. Graduate students are currently capped at borrowing $20,500 a school year.

“The Graduate PLUS loan is what a whole lot of students use to borrow if $20,500 per year isn’t enough. And for a lot of grad programs, it’s not,” said Knepfle. “If students need to borrow more, they’re gonna be forced into the private loan market.”

Last school year, PSU enrolled more than 4,500 graduate students. About 400 of those students used a Grad PLUS loan.

Getting rid of this program and privatizing student loans is among the priorities listed in Project 2025, the influential conservative playbook published by The Heritage Foundation in 2023.

Student borrower advocates say private lenders are predatory. The loans often have higher interest rates and lack borrower protections that federal student loans have, such as income-driven repayment plans and loan forgiveness programs.

Some of those federal protections for student loan borrowers are chipped away in the Senate budget proposal. The bill limits borrowers’ ability to pause student loan payments due to unemployment or financial hardship, eliminates a Biden-era repayment plan that made payments more affordable and extends payment plans from 20 years to 30.

There are currently more than 530,000 people with federal student loan debt in Oregon who owe more than $23 billion to the federal government, according to the nonprofit Student Borrower Protection Center.

The proposed cuts to Medicaid and the Supplemental Nutrition Assistance Program could also have downstream effects on Oregon’s college students. The cuts would not only erode students’ access to healthcare and food stamps, it would also force states to spend more to backfill those social services.

“And where those dollars come from is very much up in the air,” said Cannon. “Historically, when states balance budgets, higher education has often been on the receiving end of cuts.”

That’s already playing out in Oregon, as public universities and colleges saw flattening state support in this year’s legislative session.

Lawmakers in Congress are racing to meet a self-imposed July 4 deadline for the reconciliation bill. It’s unclear if the latest version of the budget bill will see any more changes over the next few days. But big changes to higher education appear all but certain as Congress finalizes the bill.

“It’s going to be a little bit of a nail-biter to see what version survives the reconciliation process,” said Goss. “In any case, even the worst case scenarios, we’ll still have funding for students. The question is: Is it sufficient?”

News Source : https://www.opb.org/article/2025/07/01/senate-reconciliation-bill-oregon-college-graduate-students-loan-borrowers/