Signed into federal law in early July, the nearly 900-page package of tax and spending cuts touches many aspects of Connecticut's K-12 and higher education system, from school meals to student loans.
And at a time when large chunks of federal funding are already in jeopardy at Connecticut schools, some state education advocates warn the new law's deep cuts and policy changes could exacerbate challenges for schools and students.
"It's a high-level emergency," said Steven Hernandez, executive director of ConnCAN, a statewide education advocacy organization.
Here are five ways the new law impacts education in Connecticut.
1. School Choice
The passage of the megabill notably marks the creation of the nation's first federal school voucher program, a long-divisive subject in education circles.
It appears to hint at a shift towards private education, said Preston Green, an education professor at the University of Connecticut. "This is the first time the federal government has done this," he said.
The new school choice law creates a $1,700 tax credit for donations made to organizations that award scholarships for K-12 students to attend private schools. Essentially, it gives eligible taxpayers a dollar-for-dollar tax incentive for enrolling their children in private K-12 education.
The provision comes as a victory for school choice advocates, who say that it will help expand educational freedom, while critics warn it hinders public education while diverting funds to private schools.
"Public schools educate the vast majority of children in our country, and taxpayer dollars should support public schools that are open to all students — not private institutions that can select whom they serve," said Kate Dias, president of the Connecticut Education Association, in a statement.
Connecticut already has several laws and programs in place surrounding school choice, allowing students to attend schools in districts outside of their own town of residence, but the new federal program goes further by making available taxpayer-funded vouchers for educational expenses, including private school tuition.
However, each state has the option of whether or not to opt in to the program, according to the legislation.
While it's unclear whether Connecticut will participate, Green's main concern was that the new program could give future momentum to even bigger voucher programs with much larger implications, especially for rural districts already struggling with enrollment and public schools struggling with funding. "I always say, think very carefully about this, because it doesn't end here," he said.
Fran Rabinowitz, executive director of the Connecticut Association of Public School Superintendents, similarly expressed the need for caution. "Public schools are the cornerstone of our democracy, and from what I understand, the states that have school voucher programs ... really significantly, negatively impact public schools," she said. "So I just hope we are very cognizant of that in Connecticut."
2. Student loans
The law overhauls student debt relief efforts, significantly reducing the available options for students to pay back their loans and impacting thousands of borrowers throughout Connecticut.
Before its passage, students had many options when it came to dealing with their student loans. Now, the legislation replaces all existing student loan repayment plans with two separate plans: a standard plan and an income-based repayment plan.
The new spending package is set to increase monthly payments for the average borrower by almost $200, according to a statement by U.S. Rep. Jahana Hayes, the Democrat representing Connecticut's 5th District.
It also eliminates many protections for borrowers facing financial hardship, and could hinder college access and affordability, Hernandez added.
It repeals some Biden-era initiatives, such as the income-driven Saving on a Valuable Education (SAVE) Plan, which was held up in court with repayments on an interest-free pause. The U.S. Department of Education announced that it would be restarting interest accrual for the approximately 7.7 million borrowers enrolled in the SAVE Plan on Aug. 1.
In Connecticut, more than 80,000 borrowers will be affected by that decision, according to the Student Borrower Protection Center. Restarting student loan interest charges will cost Connecticut SAVE borrowers approximately $297 per month in estimated interest charges, or $3,566 per year, according to a Student Borrower Protection Center analysis of Education Department data.
In addition, the new law eliminates the Graduate PLUS loan program, caps annual loan limits for graduate students and professional students, and creates a $200,000 federal student loan limit. It also makes some changes to the Pell Grant program, which millions of low-income students depend on to pay for college. The law creates a new workforce Pell Grant program, and students receiving a scholarship that covers the full cost of attendance will no longer be eligible for additional aid through the program.
3. School meals
One of the most notable funding slashes in the law is to the Supplemental Nutrition Assistance Program (SNAP), which provides food assistance to families who can't otherwise afford groceries and makes kids automatically eligible for free meals at school.
Education advocates say the cuts to SNAP will ultimately trickle down into schools, as eligibility restrictions and additional paperwork requirements could impact children who receive free school meals.
The legislation specifically reduces SNAP and Medicaid eligibility, making fewer children automatically eligible for free school meals, and less schools may enroll in the Community Eligibility Provision, ending universal free meals at some schools, according to the School Nutrition Association.
"Families who lose SNAP eligibility also risk losing access to school meals for their children, and children who are hungry or in need of medical attention do not come to school ready to learn," Dias said. "Our students and their families will suffer because of the harmful provisions in this bill."
Connecticut and other states will bear heavier costs to provide SNAP benefits as a result of the cuts, and must choose whether to continue funding or cut back, which education advocates like Hernandez say is cause for great concern.
"School meals are so incredibly important for children and families that are living in poverty, those SNAP meals, which are for some children, among the few times throughout the week that they actually get to eat," Hernandez said.
4. School budgets
The bill's major cuts to Medicaid, SNAP and other programs could ultimately impact school district budgets, education experts and advocacy groups say.
As the fourth-largest federal funding stream for schools, Medicaid is a significant source of funds for school-based health care, including nursing services, counseling by school psychologists and salaries for school health staff and personnel.
"If Congress cuts Medicaid, states — and school districts — will receive less funding. This will force school districts to raise taxes and reduce or eliminate various programs and services, including non-Medicaid services," according to a March 2025 report on Medicaid and school districts.
In a nationwide survey of school district leaders, 80 percent of respondents anticipated that Medicaid cuts would lead to reductions and layoffs of school health staff and personnel, and 70 percent expected reductions in mental and behavioral health services. That trend would likely persist in Connecticut, as districts across the state are already struggling with tight budgets and staffing shortages.
"These drastic cuts are falling on the most needed services," Hernandez said. "This isn't a handout. These are vital services that districts have had to do more and more with less over the years."
According to the Connecticut Health Foundation, more than 366,000 children in Connecticut have their health care covered by Medicaid.
"When I think of a child not being able to learn because they're not able to focus, because they're undernourished throughout the day, when I think of a child who is unable to come to school because they are ill and don't have the support, either at home to access proper care or at school through a school nurse ... this is really distressing," Hernandez said.
5. Endowment tax
The passage of Trump's so-called "Big, Beautiful Bill" gives the second term president yet another victory in his longtime goal to hit large, private university endowments with taxes and fines.
The new law hikes the university endowment tax to 8 percent for the wealthiest schools, up from 1.4 percent. And with a $41.4 billion endowment, Yale University is among the American universities hit hardest. The increased endowment tax will cost Yale an estimated $280 million in the first year it is in effect, and likely more in subsequent years, according to university officials.
The new law also imposes a 1.4 percent tax for universities with endowments worth at least $500,000 per student, and a 4 percent tax for endowments worth at least $750,000 per student. Under those guidelines, Wesleyan University would also be hit with a new 1.4 percent endowment tax.
At Yale, university officials are already bracing for a budget shortfall by implementing a hiring freeze and preparing other cost-cutting measures.
National education organizations have expressed opposition to the federal endowment tax, citing its adverse effects on an institution's ability to provide high quality services in academics and research, offer financial aid and scholarships, or support its operating budget. Experts have also warned that further cuts to federal funds and budget shortfalls could cause schools to raise tuition.
© 2025 The Middletown Press, Conn. Distributed by Tribune Content Agency, LLC.
