At the annual Washington update session at the 2025 EDUCAUSE conference in Nashville, Jon Fansmith, senior vice president for government relations and national engagement at the nonprofit American Council on Education (ACE), walked the conference’s attendees through the latest news and what they can expect in the months to come.
Starting with the reconciliation bill, Fansmith said that while lawmakers often use the reconciliation process to pass signature pieces of legislation like the Affordable Care Act in 2010 and the Tax Cuts and Jobs Act in 2017, the One Big Beautiful Bill Act stands out for its accelerated timeline — drafts started in January and it was signed on July 4 — and its big swings at higher ed.
“The reconciliation bill is probably the single most substantive piece of legislation impacting higher education in about 20 years,” he said.
STUDENT LOANS
The reconciliation bill will result in cuts to the tune of $300 billion over 10 years, Fansmith said, impacting student loans, grants and institutional accountability metrics.
Under the new system, effective July 1, 2026, the current Graduate PLUS loan option is eliminated. Graduate programs are instead divided into two categories: graduate and professional. Professional programs lead to a license, like a medical, veterinary or law license, while graduate programs do not, and these distinctions impact the dollar amount students can borrow.
Fansmith said students in “professional” programs can borrow $50,000 per year for a lifetime total of $200,000. Students in “graduate” programs can borrow $20,500 per year and $100,000 in aggregate. According to the Education Data Initiative, the average total cost of law school is $217,480 and the average total cost of medical school is $228,959. The discrepancy may lead students to the private loan market to cover the difference, he said.
Some students may face even lower borrowing limits based on a proportionality clause in the bill. For example, a graduate student in a professional program enrolled half time could only borrow half of the $20,500 limit, or $10,250.
Fansmith said this proportionality clause does not take into account professions like nursing, where programs are designed for students to get work experience in critical industries while they’re in school. If those students need to pay half their tuition out of pocket or find an alternative loan, “they’ll simply drop out,” he said.
ACCOUNTABILITY
Higher-ed accountability metrics haven’t seen change in almost two decades, Fansmith said. Under the new reconciliation bill, the measurement of alumni earnings starts four years after graduation and gets compared with those of people with lower educational attainment. For bachelor’s and associate’s programs, for example, graduates must earn more than the state average for those with high school education only. For master’s programs, earnings must beat those with bachelor’s degrees, and so on.
If a program does not meet this standard for two years in a three-year period, incoming students will not be eligible for student loans.
“This is a philosophically reasonable argument, right?” Fansmith said. “If you are going to college, you should probably be out-earning somebody who didn't.”
However, he said, this does not account for the fact that some in-demand and important jobs are also not well paid. According to Fansmith, 5 percent of programs fail to meet the standard set by the bill. The programs are often in performing and culinary arts, but also in social work, counseling, education (short of professors) and medicine (short of doctors and nurses).
“Think about librarians, teachers assistants, social workers, school counselors, medical records people, things like that. Overwhelmingly, the programs that fail are clustered in those areas,” he said. “They also all happen to be professions that are in incredible demand everywhere you go in this country. We do not have enough people doing those jobs in part because ... we do not pay very well in those fields.”
Fansmith noted that the reconciliation bill's accountability plan also does not include information on how salary data would be collected and aggregated.
SHUTDOWN
As the government approaches a full month of shutdown, both parties publicly claim they are “winning,” Fansmith said. Meanwhile, impacts are escalating. Roughly 1.4 million federal employees have missed their paychecks, according to recent reporting by NPR, and funding for programs like the Supplemental Nutrition Assistance Program and the Special Supplemental Nutrition Program for Women, Infants, and Children is running dry.
While higher-education institutions historically experience few immediate negative impacts from government shutdowns due to failure to pass appropriations bills, they can see delays in research and federal grant funding and disruptions in services for veterans, international students and student aid, according to ACE.
Fansmith said the culmination of adverse impacts will likely lead to negotiations to end the shutdown in mid November.
“When people feel pain, they get angry. When they get angry, they yell at their members of Congress,” he said. “And then what tends to happen, we’ve seen in other shutdowns, is whoever the public tends to blame for the shutdown feels the heat the most, and they come to the table, making concessions.”
RULEMAKING
The U.S. Department of Education (ED) is responsible for translating legislation, like the changes in student loans, into regulations for schools to follow before July 1, 2026. The translation process, called negotiated rulemaking, brings representatives of public and private institutions, community colleges, taxpayers and other entities together to try to reach agreement on how the law should be implemented.
However, Fansmith said, if the group is unable to reach consensus, ED is free to write the regulations how they see fit.
“If you can think of a loophole to that process that benefits the Department of Education — like, say, putting somebody as one of the stakeholders on the committee who will absolutely not agree with the other eight or 12 or 15 stakeholders and guarantee they won't ever reach consensus — you figured out what the Biden administration did, the Trump administration did, and the Obama administration did to get to write the regulations they wanted, regardless of the feedback of all these groups," he said.
The bigger issue for institutions, Fansmith said, is the timeline. The process involves drafting regulations, reviewing internally, allowing 30 days for public comment, reading and responding to every comment before issuing a final draft, then receiving White House approval.
With the government shutdown and these time-consuming aspects of the rulemaking process yet to begin, schools likely will not know key rules impacting financial aid until late spring 2026, after students have applied for aid. The Free Application for Federal Student Aid application opened Oct. 1, and Fansmith said most aid packages will be finalized by the end of April.
“They are setting themselves up for disaster,” Fansmith said.
INTERNATIONAL STUDENTS AND SCHOLARS
The Trump administration’s harder line on international enrollment could further strain universities in tight financial times. The State Department confirmed in August that more than 6,000 student visas had already been revoked this year, some tied to political speech.
Universities also see disproportionately harsh impacts from raised fees for H-1B visas. Petition costs for H-1B visas, reserved for educated workers in skilled industries, including researchers, rose from a few thousand dollars (depending on the size of the employer) to $100,000 as of Sept. 21.
While there is a countrywide cap on the number of H-1B visas issued each year, with employers competing in a lottery system to receive them, institutions of higher education are exempt from the cap. The College and University Professional Association for Human Resources estimated in September that, of the 1.4 million higher-ed faculty in the U.S., about 40,600 use H-1B visas.
“We are one of the largest users of the H-1B process, and certainly when you think about where your institution's finances are right now, the idea of hiring somebody for a $2,000 visa fee versus a $100,000 visa fee will make a significant difference,” he said. “For schools with big budgets, big staff, they might have two or three people they can afford to do this for if it holds up, but certainly not at 30 or 40 they would have otherwise brought.”
The result is a chilling effect on international students’ desire to attend American universities, with the Association of International Educators anticipating a 15 percent drop in international student enrollment, Fansmith said.
The decline in enrollment would have a significant impact not only on tuition income for colleges but on regional economies, according to the nonprofit think tank Brookings Institution.
COMPACT FOR HIGHER EDUCATION
In October, the Trump administration invited nine universities to join a Compact for Academic Excellence in Higher Education, which ties favorable treatment in federal research funding to a set of 10 institutional commitments. They include a five-year tuition freeze, free tuition for hard sciences at universities with large endowments and caps on international enrollment — no more than 15 percent overall and no more than 5 percent from any one country.
This would result in major demographic shifts. According to the most recent data from the National Center for Education Statistics, 25 percent of international students in the 2022-23 school year were from India and 27 percent were from China.
Other provisions cover admissions, hiring and political stances, asking participating schools not to consider non-measurable criteria in hiring and admissions, except in the case of religious and single-sex institutions, to draft policies of institutional neutrality and revise governance to prevent hostility against conservative ideas.
So far, the compact has seen official rejections from seven of the nine: the Massachusetts Institute of Technology, Brown University, the University of Pennsylvania, the University of Southern California, the University of Virginia, Dartmouth College and the University of Arizona, in that order.
Vanderbilt University did not accept or reject, but wants to provide feedback. The University of Texas, Austin, has yet to publicly respond.
The New College of Florida announced Oct. 27 it would like to be the first institution to accept Trump’s invitation to the compact, which he extended to the higher-ed community more broadly via Truth Social following the rejections.
Despite the barrage of declinations, Fansmith said, the administration “has not given a lot of inclination to moderating the terms.”
With so much happening at the federal level for higher education, Fansmith said the only certainty is uncertainty: “I don’t know that anybody can predict entirely what they’ll do.”
