In the Media
Vice President of Legal & Compliance, Ardeo
An Overview of the College Cost Reduction Act, the “Big Beautiful Bill,” and the Budget Reconciliation Process
Change is coming for college admissions. Dramatic change. It will re-shape how students and their families evaluate schools, and alter the way school admissions offices function: how they attract students; how they compete with other institutions for those students; if federal grants and student loans are available; the way each degree program will be judged based on student outcomes; and how those judgments impacts every school that accepts federal financial aid.
The legislative process is not yet complete, but the remaining uncertainty about the scope of this change is in the details. There should be no mistake that change will happen; it will happen quickly; and schools that begin preparing for it now have the opportunity to position themselves at a meaningful advantage over their competitors – in an environment that will be ever more challenging. This article provides an overview about the College Cost Reduction Act (CCRA), its role in the provisions outlined in the House budget proposal, and the budget reconciliation process.
The College Cost Reduction Act (CCRA)
The principal source of these oncoming changes is a federal bill called the College Cost Reduction Act (CCRA). The CCRA was originally introduced in January 2024 by Representative Virginia Foxx (R-NC) but did not become law. After the federal elections in November 2024, key provisions outlined in the CCRA have made their way into the “One Big Beautiful Bill” (more on that later in the post).
Outlined below are details of the CCRA as they appeared in the House version of the “Big Beautiful Bill.”
Provisions in the CRRA were intended to create greater public transparency into the costs and benefits of a college degree, and to provide incentives for schools to hold the line on tuition prices (and even reduce them). They would revise the rules for Pell Grants, and for federal student loans and their repayment. Lastly, the provisions would establish a new set of rewards for schools that offer degree programs with a positive “return on investment” for students … and financial penalties for programs that fail this test.
These key provisions of the CCRA, as outlined in the House proposal, would apply to every degree program at every college and university that participates in federal financial aid:
The Risk-Sharing Framework
- Beginning immediately, the U.S. Department of Education would require schools to keep and report annually several financial metrics intended to compare the cost of each degree program it offers with the post-college earnings of students who enrolled in the program. These metrics would include the overall cost of the program (including tuition and fees), student persistence and completion rates, and the time students require to complete the program.
- The Department of Education also would immediately begin collecting its own annual sets of data, including the post-program earnings of each student and, for each student with federal loans, the loan repayment performance of that student (timeliness in paying scheduled installments, and the degree to which installments are paid in full, partially, or missed).
- The Department of Education would use this data to calculate, for each degree program at each institution, if and to what extent the institution owes the federal government a “reimbursement” payment for each given year. These “reimbursement” payments are intended to “make colleges accountable” for the programs they offer – by introducing an annual, public judgment as to the cost-worthiness of each program, and a financial penalty for programs that do not measure up:
- The amount of the “reimbursement” (or “accountability” payment) would be based on the “non-repayment balance of each cohort” in each degree program: a formula that takes into account the cost of each program, the post-study earnings of students in that program compared to the average earnings of those who did not attend college, and the track record of students in repaying their student loans on time and in full.
- The first invoices for these payments due will be issued in the 2028-2029 award year, based on data from the 2027-2028 award year – which will, in turn, rely on cost and earnings data from students who enrolled in the 2024-2025 cohort and earlier.
- The invoices must be paid within 90 days; schools that do not pay on time would be subject to escalating penalties, including: late fees, loss of Pell Grants, and a minimum 10-year exclusion from all federal financial aid.
- Also beginning in the 2028-2029 award year, the Department of Education would make available “Promise Grants,” a monetary reward to schools that offer any degree programs with a “maximum total price guarantee” (a maximum amount of tuition and fees to be charged for completion of the program). These annual Promise Grants would be based on a formula that takes into account post-program student earnings and the number of lower-income students in the program, and would be worth up to $5,000 per student-borrower in each award year.
Pell Grants and Income-Based Repayments
- Pell Grants would be subject to new restrictions; new borrowing limits would be placed on loans for undergraduate, graduate, and professional degree students ($50,000 undergraduate / $100,000 graduate / $150,000 professional; and an overall $200,000 limit for those with multiple degrees)
- All PLUS loans will be eliminated altogether
- As for student loan repayment, all student-borrowers will be enrolled in either a basic plan with a fixed monthly payment or an income-based repayment plan called RAP; all other current and prior plans (including the recent PAYE and REPAYE) will be eliminated, and their student-borrowers moved into one of the two new plans.
Under the House proposal, it is important to recognize that although many of these provisions would not take effect until the 2028-2029 award year, their actual effect would be immediate, even retroactive: the data used to determine reimbursement payments and Promise Grants will reach back to the 2024-2025 cohort and earlier. In other words: schools are already “on the clock” to be judged based on their cost of tuition, completion rates, graduate earnings, and how well their graduates are keeping up with their student loan repayments.
The “Big Beautiful Bill” and the Budget Reconciliation Process
Media reports regarding the current Congress often refer to the “One Big Beautiful Bill Act,” or the “Big Beautiful Bill.” This phrase refers to President Trump’s preference to sign into law one comprehensive piece of legislation covering multiple subjects on which he campaigned, rather than asking Congress to pass a series of separate laws. The “Big Beautiful Bill” is made possible by a specific procedural rule regarding the federal budget. This rule, called “budget reconciliation,” allows for expedited passage of bills that pertain solely to the expenses or revenues of the federal government: that is, bills can be passed quickly via budget reconciliation, but only if the bills address federal funds.
Accordingly, the components of the “Big Beautiful Bill” are exclusively financial in nature, such as reductions in spending or changes to the tax structure. CCRA provisions are eligible for the budget reconciliation process because they apply to spending federal funds (Pell Grants and Promise Grants) and to raising them (reimbursement payments from schools to the Department of Education, and student loans – which are considered revenue-producing because they include interest).
The process requires the House and the Senate to agree on the final language of the bill. The House sent its version of the Big Beautiful Bill – including provisions modeled on the CCRA – to the Senate on May 22, 2205. There is no deadline by which the language must be finalized. However, the bill is expected to proceed quickly.
To that end, on June 10, 2025, the Senate released its initial comments and revisions to the language passed by the House. The Senate version of the bill proposed modifications to several aspects of the CCRA-inspired provisions, including different Pell Grant and student loan limits, and changes to the penalties to be imposed on schools for degree programs with poor loan repayment metrics. After the Senate passes its version of the bill, the next step in the legislative process is for the House and Senate committees to confer and determine exactly how the final provisions will look in the “Big Beautiful Bill.”
What to Expect When You’re Expecting Change
There are significant differences between the proposals from the House and the Senate – however, both versions share the key goals from the original act – including transparency, price competition, and more stringent institutional accountability for student outcomes.
Even without knowing the details of the final language, both the House and Senate versions approach consensus on several fundamental objectives:
- Putting pressure on schools to maintain or lower tuition prices;
- Reducing the aggregate amount of federal student loans available to students and their families;
- Increasing price-based competition between schools, and providing public, comprehensive data on the “return on investment” on tuition for every degree program;
- Publicly identifying programs and schools that the Department of Education determines do not offer value to students, and which have poor student loan repayment records for their graduates; and
- Penalizing those programs and schools, such as by imposing annual accountability payments (House proposal), or cutting college programs off from federal student loans if program earnings fall below a set threshold (Senate proposal).
Schools can use this knowledge to begin preparing now for the impact of the Big Beautiful Bill – an important strategy, given that whatever the ultimate provisions are, they will create a new series of metrics and publicly available assessments of schools for prospective students and their families, in addition to the prospect of financial penalties and rewards for schools. The data on which those assessments, comparisons, judgments, penalties, and rewards will be based is in large part still to-be-determined … and therefore, still can be positively affected by schools.
