Reconciliation Advocacy Center

WHERE WE ARE NOW 
(Week of July 7)

On July 4, President Trump signed into law his tax cut and spending package, ending the months-long budget reconciliation process. Here are NAICU's overview, summary of key provisions affecting higher education, and a series of Frequently Asked Questions.

While this legislation contains harmful cuts to federal higher education programs, it is significantly improved from earlier House and Senate proposals. Congress preserved billions of dollars in tax benefits that help students and families save and pay for college, including the expansion of IRC Sec. 127, employer-provided education assistance. The most punitive elements of the House’s accountability framework, including the proposed institutional risk-sharing scheme, were not included in the final bill. And, the undergraduate lending programs, including the in-school interest subsidy for undergraduates, were protected.

Additionally, while some modest adjustments to Pell Grant eligibility were included, the program was spared from far deeper and more damaging cuts. Importantly, the overall Pell shortfall was addressed, preserving the long-term stability of the program.

However, there are negative policy outcomes, including significant cuts to the federal graduate lending programs, the expansion of the endowment tax, and the creation of a new federal accountability metric.

Senate

• On July 1, the Senate approved its version of a reconciliation bill by a 51-50 vote, with Vice President Vance casting the tie-breaking tally.

House of Representatives

• On July 3, by a 218-214 margin, the House passed the Senate’s budget reconciliation legislation.