Officials and higher education experts said the One Big Beautiful Bill’s changes to federal student loan borrowing rules and its increased accountability measures will likely affect GW, but universities need additional federal guidance to fully understand the potential impact on enrollment and revenue.
Higher education experts have said the full impact of the bill’s multiple provisions affecting higher education like financial aid caps, a new “earnings test” and expanded tax on endowments are still yet to be revealed, with some stressing it is likely the provisions will face legal challenges and may be walked back by Congress or the Trump administration. University spokesperson Kathleen Fackelmann said the full impact of the legislation on students and higher education as a whole will become clearer once it is further analyzed and implementation guidance is released.
“The full impact of the law on students and institutions will become clearer as the legislation is further analyzed and implementation guidance is released, although H.R.1 is not expected to change GW’s endowment tax status,” Fackelmann said in an email.
The bill was officially signed into law by President Donald Trump on July 4 after narrowly passing both chambers of Congress. The bill is President Donald Trump’s landmark domestic legislation focused on extending and expanding his 2017 tax cuts, while cutting certain Medicaid funding with most provisions impacting higher education currently set to go into effect on July 1, 2026.
The bill implements borrowing caps for students across higher education. Students will face a lifetime borrowing cap of $257,500 for federal student loans, with lower specific caps put into place for students in graduate and professional programs. The Parent PLUS program, which allowed parents to borrow up to the full cost of attendance for their dependent undergraduates, will now be capped at $20,000 per year with a lifetime cap of $65,000.
The bill also places a maximum cap on the total amount of money students can borrow from federal student loans. Graduate students can only borrow up to $20,500 a year, with a lifetime maximum of $100,000. For professional students, including law and medical students, the yearly cap is $50,000, with a lifetime cap at $200,000.
The Grad PLUS program, which allowed students to borrow up to the full cost of their graduate programs minus any financial aid, will also be completely phased out next year.
Since 2008, undergraduate federal loan caps have ranged from $5,500 to $7,500 per year, with lifetime limits set at $31,000 for dependent and $57,500 for independent students. Since 2006, graduate students have been limited to $20,500 annually with a $138,500 lifetime cap, while Parent PLUS and Grad PLUS loans allowed borrowing up to the full cost of attendance.
Fackelmann said GW “remains committed” to supporting students through a variety of financial aid offerings. She said the elimination of the Grad PLUS loans and other caps on federal financial aid could create challenges for students.
She said officials will continue to provide updates when they become available, adding students should continue to apply for financial aid as usual and seek guidance from the GW financial assistance team.
“Providing an affordable, accessible and high-quality education will always be a priority here at GW,” Fackelmann said.
Gregory Wolniak, an affiliated faculty member at Northwestern University’s School of Education and Social Policy, said the impact of the bill’s provisions on federal student loans for graduate students will be felt differently across higher education, adding that universities with more resources will be better equipped to adapt to the impacts.
“It’s really hard to say in blanket terms what institutions generally could do,” Wolniak said. “Those with more resources will be able to mitigate the effects felt by students. Less financially well situated institutions will just not have those kinds of resources at their disposal.”
Wolniak said the bill’s impact on higher education will not immediately be felt, emphasizing it may take a year or so before the full impacts are seen while the policies are implemented.
Judith Scott-Clayton, a professor of economics and education at Columbia University, said she is uneasy about the graduate student loan caps because it can limit access to postgraduate education.
She said if the current caps go into effect next year, it’s likely the private student loan market will see a resurgence, after being bailed out as a result of the Great Recession. She added she does not know how institutions and students will be able to adapt to these changes before they go into effect next year, and if they see a resurgence, they should have more federal oversight.
Scott-Clayton said prior to the Great Recession, the private student loan market faced multiple problems, including some instances where some private student loan firms gave kickbacks to higher education institutions to direct students toward specific private student loan providers.
“I think if it came roaring back in, hopefully there would be oversight to protect students against the bad behavior that can resolve,” Scott-Clayton said.
Scott-Clayton said she is concerned about how the bill’s “earnings test” for higher education programs will work, especially under the planned dismantling of the Department of Education. On Monday, the Supreme Court ruled Trump can continue with his planned dismantling of the Department, allowing for more than 1,300 workers to be fired.
The earnings test will measure whether graduates from a specific institution or program earn more money than an adult with just a high school diploma. If an institution fails the test, they will be cut off from federal student loans.
“The Department has to do a lot of work with institutions and institutions have to do a lot of work with the Department, data exchanges and making sure that everything is being calculated in the right way and transferred at the right times,” Scott-Clayton said.
Daniel Sparks, a postdoctoral fellow at the University of Pennsylvania, said the increased tax on university endowments will have a negative impact on certain aspects of university spending, like financial aid, that universities traditionally supported.
“So really, at the end of the day, a tax on those funds is just less money for institutions to be able to use toward the things they’ve been using them over the past few decades,” Sparks said.
Taxes on endowments is a relatively new issue facing universities, with a 1.4 percent tax levied on a small number of university endowments during the first Trump administration in 2017. This time around, the tax rate has been increased for universities with a large endowment per student ratio.
The ratio will only factor in the total number of domestic students enrolled at a specific institution. This will increase the ratio for institutions with a high percentage of international students, like Columbia.
While GW’s endowment stands at $2.7 billion, GW had 25,374 domestic students enrolled in 2024, making the endowment to student ratio about $106,000, well below the minimum to be taxed.
Sparks said while the tax will impact universities, most institutions facing the tax hike are “very well off.”
“I think it’s really kind of more of a political point that the administration is trying to make, rather than one that’s going to physically cause a lot of strain to those particular institutions,” Sparks said.
