The big, beautiful bill is bad news for student loans
If the 'big, beautiful bill,' President Donald Trump's signature legislative priority, eventually becomes law, it would gut some social programs that many people rely on. As my colleague Dylan Scott wrote in a thorough explainer, the package, which House Republicans passed last month, could result in millions of people losing their health care because of proposed work requirements on Medicaid.
There's also another part of the bill that really stands out when it comes to how Trump's domestic policy package will hurt low-income families: its overhaul of student loan programs. From changing eligibility requirements for Pell Grants, which help low-income students pay for college, to capping how much money students can borrow to cover the cost of tuition, the legislation would put a college education further out of reach for many Americans.
Within Our Means
A newsletter about ending poverty in America, from correspondent Abdallah Fayyad. Email (required)
Sign Up
By submitting your email, you agree to our Terms and Privacy Notice . This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
These cuts aren't inevitable. The bill still has to pass through the Senate through an expedited process called reconciliation before Trump can sign it into law, and the unfolding (and very public) drama between the president and Elon Musk over the bill makes it unclear how congressional Republicans will proceed. But in the meantime, here's what's at stake:
Pell Grant recipients are in trouble
According to the liberal think tank New America, the lack of publicly available data makes it difficult (or impossible) to analyze the full projected impact of the bill, but numbers from the nonpartisan Congressional Budget Office (CBO) show that more than half of Pell Grant recipients would see a reduction in aid, and at least 10 percent would lose their grants altogether.
That's mainly because of how the bill changes eligibility requirements for Pell Grant recipients. The biggest change would be the number of course credits students have to take in order to remain eligible for the amount of aid they currently get. To receive the maximum Pell Grant of $7,395, students would have to take 30 credit hours each year, up from 24. The number of credits for part-time students would go up from 12 to 15. The bill also eliminates eligibility for students who are considered less than half-time students.
These grants are crucial in helping students from low-income families attend college. In the 2023–2024 academic year, around 6.5 million students received a Pell grant. According to the Washington Post, the vast majority of Pell Grant recipients come from families making less than $60,000 a year, with about two-thirds coming from families earning less than $30,000. Because Pell Grants aren't loans and don't need to be paid back, they make college more affordable to students who otherwise might not be able to access an education beyond their high school diploma. Undermining these grants would ultimately make college — and a future with higher earning potential — out of reach for too many people living in poverty.
While proponents of the bill might argue that the eligibility changes would simply require students to focus more of their time on school, the reality is that many students — especially part-timers — have other responsibilities, including jobs and family, and are unlikely to be able to take on more course work. As a result, the cuts to Pell Grants will likely hurt students who need it most.
The proposed changes are especially worrisome for community colleges, where many part-time students who stand to see their grants reduced are enrolled. According to the American Association of Community Colleges, some 400,000 Pell Grant recipients who attend community colleges might see their aid entirely eliminated.
Other changes in the bill
It's not just Pell Grants that Republicans are targeting with the big, beautiful bill. If the legislation becomes law, students from low- and middle-income families might also see the cost of college actually increase. The bill proposes to eliminate subsidized loans, which don't accrue interest while students are in school.
The bill also imposes a lifetime cap on how much students can borrow, including a limit based on the median cost of a given program. And while capping how much money people can borrow is generally a good idea because higher amounts of debt can drag people down, the proposed limits don't account for varying costs by state or university. Professional programs, including medical school, would be especially difficult to finance, which is why some have been warning that the bill could worsen America's doctor shortage.
Another way these cuts might make college more expensive is that students might turn to private lenders with higher interest rates. As Julie Margetta Morgan, the president of the Century Foundation, recently told me, 'It's not only cutting Pell Grants and the affordability of student loan programs in order to fund tax cuts to the wealthy, but it's also creating a gap where [private lenders] are all too happy to come in.'
So while Musk and Trump argue (at least in part) over whether this bill is cutting enough spending, the reality is the legislation as proposed would already be devastating for many families. And just like the proposed Medicaid cuts, the provisions involving student loans make it clear that the bill's burden will fall on some of the country's most vulnerable people.
This story was featured in the Within Our Means newsletter. Sign up here.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
20 minutes ago
- Yahoo
Triumphant in trade talks, Trump and his tariffs still face a challenge in federal court
WASHINGTON (AP) — President Donald Trump has been getting his way on trade, strong-arming the European Union, Japan and other partners to accept once unthinkably high taxes on their exports to the United States. But his radical overhaul of American trade policy, in which he's bypassed Congress to slam big tariffs on most of the world's economies, has not gone unchallenged. He's facing at least seven lawsuits charging that he's overstepped his authority. The plaintiffs want his biggest, boldest tariffs thrown out. And they won Round One. In May, a three-judge panel of the U.S. Court of International Trade, a specialized federal court in New York, ruled that Trump exceeded his powers when he declared a national emergency to plaster taxes — tariffs — on imports from almost every country in the world. In reaching its decision, the court combined two challenges — one by five businesses and one by 12 U.S. states — into a single case. Now it goes on to Round Two. On Thursday, the 11 judges on the U.S. Court of Appeals for the Federal Circuit in Washington, which typically specializes in patent law, are scheduled to hear oral arguments from the Trump administration and from the states and businesses that want his sweeping import taxes struck down. That court earlier allowed the federal government to continue collecting Trump's tariffs as the case works its way through the judicial system. The issues are so weighty — involving the president's power to bypass Congress and impose taxes with huge economic consequences in the United States and abroad — that the case is widely expected to reach the U.S. Supreme Court, regardless of what the appeals court decides. Trump is an unabashed fan of tariffs. He sees the import taxes as an all-purpose economic tool that can bring manufacturing back to the United States, protect American industries, raise revenue to pay for the massive tax cuts in his 'One Big Beautiful Bill,'' pressure countries into bending to his will, even end wars. The U.S. Constitution gives the power to impose taxes — including tariffs — to Congress. But lawmakers have gradually relinquished power over trade policy to the White House. And Trump has made the most of the power vacuum, raising the average U.S. tariff to more than 18%, highest since 1934, according to the Budget Lab at Yale University. At issue in the pending court case is Trump's use of the 1977 International Emergency Economic Powers Act (IEEPA) to impose sweeping tariffs without seeking congressional approval or conducting investigations first. Instead, he asserted the authority to declare a national emergency that justified his import taxes. In February, he cited the illegal flow of drugs and immigrants across the U.S. border to slap tariffs on Canada, China and Mexico. Then on April 2 — 'Liberation Day,'' Trump called it — he invoked IEEPA to announce 'reciprocal'' tariffs of up to 50% on countries with which the United States ran trade deficits and a 10% 'baseline'' tariff on almost everybody else. The emergency he cited was America's long-running trade deficit. Trump later suspended the reciprocal tariffs, but they remain a threat: They could be imposed again Friday on countries that do not pre-empt them by reaching trade agreements with the United States or that receive letters from Trump setting their tariff rates himself. The plaintiffs argue that the emergency power laws does not authorize the use of tariffs. They also note that the trade deficit hardly meets the definition of an 'unusual and extraordinary'' threat that would justify declaring an emergency under the law. The United States, after all, has run trade deficits — in which it buys more from foreign countries than it sells them — for 49 straight years and in good times and bad. The Trump administration argues that courts approved President Richard Nixon's emergency use of tariffs in a 1971 economic crisis. The Nixon administration successfully cited its authority under the 1917 Trading With Enemy Act, which preceded and supplied some of the legal language used in IEEPA. In May, the trade court rejected the argument, ruling that Trump's Liberation Day tariffs 'exceed any authority granted to the President'' under the emergency powers law. 'The president doesn't get to use open-ended grants of authority to do what he wants,'' said Reilly Stephens, senior counsel at the Liberty Justice Center, a libertarian legal group that is representing businesses suing the Trump administration over the tariffs. In the case of the drug trafficking and immigration tariffs on Canada, China and Mexico, the trade court ruled that the levies did not meet IEEPA's requirement that they 'deal with'' the problem they were supposed to address. The court challenge does not cover other Trump tariffs, including levies on foreign steel, aluminum and autos that the president imposed after Commerce Department investigations concluded that those imports were threats to U.S. national security. Nor does it include tariffs that Trump imposed on China in his first term — and President Joe Biden kept — after a government investigation concluded that the Chinese used unfair practices to give their own technology firms an edge over rivals from the United States and other Western countries. Paul Wiseman, The Associated Press Sign in to access your portfolio
Yahoo
20 minutes ago
- Yahoo
We're Lying to Ourselves About Taxes, Spending, and the Debt
Having extended most of the 2017 Tax Cuts and Jobs Act and added even more tax breaks, Congress is once again punting on the central fiscal question of our time: What kind of government do Americans want seriously enough to pay for? Yes, the "Big Beautiful Bill" avoided a massive tax increase and includes pro-growth reforms. It also adds to the debt—by how much is debatable—and that's before we get to the budgetary reckoning of Social Security and Medicare's impending insolvency. Against that backdrop, it's infuriating to see a $9 billion rescission package—one drop in the deficit bucket—met with cries of bloody murder. The same can be said of the apocalyptic discourse surrounding the Big Beautiful Bill's reduction in Medicaid spending. In spite of the cuts, the program is projected to grow drastically over the next 10 years. In fact, the reforms barely scratch the surface considering its enormous growth under former President Joe Biden. Maybe we wouldn't keep operating this way—pretending like minor trims are major reforms while refusing to tackle demographic and entitlement time bombs ticking beneath our feet—if we stayed focused on the question of what, considering the cost, we're willing to pay for. Otherwise, it's too easy to continue committing a generational injustice toward our children and grandchildren. That's because all the benefits and subsidies that we're unwilling to pay for will eventually have to be paid for in the future with higher taxes, inflation, or both. That's morally and economically reprehensible. Admitting we have a problem is hard. Fixing it is even harder, especially when politicians obscure costs and fail to recognize the following realities. First, growing the economy can, of course, be part of the solution. It creates more and better opportunities, raising incomes and tax revenue without raising tax rates—the rising tide that can lift many fiscal boats. But when we're this far underwater, short of a miracle produced by an energy and artificial intelligence revolution, growth alone simply won't be enough. Raising taxes on the rich will fall short too. Despite another round of loud calls to do so, like those now emanating from the New York City mayoral campaign, remember: The federal tax code is already highly progressive. Here's something else that should be common knowledge: Higher tax rates do not automatically translate to more tax revenue. Not even close. Federal revenues have consistently hovered around 17 percent to 18 percent of gross domestic product (GDP) for more than 50 years—through periods of high tax rates, low tax rates, and every combination of deductions, exemptions, and credits in between. This remarkable stability is no fluke. It reflects a basic reality of human behavior: When tax rates go up, people don't simply continue what they've been doing and hand over more money. They work less, take compensation in nontaxable forms, delay selling assets, move to lower-tax jurisdictions, or increase tax-avoidance strategies. Meanwhile, higher rates reduce incentives to invest, hire, and create or expand businesses, slowing growth and undermining the very revenue gains legislators expect. It's why economic literature shows that fiscal-adjustment packages made mostly of tax increases usually fail to reduce the debt-to-GDP ratio. Real-world responses mean that higher tax rates rarely generate what static models predict as we bear the costs of less work, less innovation, and less productivity leading to fewer opportunities for everyone, rich or poor. If the underlying structure of the system doesn't change, no amount of rate fiddling will sustainably result in more than 17-18 percent in tax collections. Political dynamics guarantee further disappointment. When Congress raises taxes on one group, it often turns around and cuts taxes elsewhere to offset the backlash. Then, when the government does manage to collect extra revenue—through windfall-profits taxes, inflation causing taxpayers to creep into higher brackets, or a booming economy—that money rarely goes toward deficit reduction. It gets spent, and then some. It's long past time to shift the conversation away from whether tax cuts should be "paid for." Instead, ask what level of spending we truly want with the money we truly have. I suspect that most people aren't willing to pay the taxes required to fund everything our current government does, and that more would feel this way if they understood our tax-collection limitations. That points toward the need to cut spending on, among other things, corporate welfare, economically distorting subsidies, flashy infrastructure gimmicks, and Social Security and Medicare. Until we align Congress' promises with what we're willing and able to fund, we'll continue down this dangerous path of illusion, denial, and intergenerational theft—as we cope with economic decline. COPYRIGHT 2025 The post We're Lying to Ourselves About Taxes, Spending, and the Debt appeared first on Solve the daily Crossword
Yahoo
20 minutes ago
- Yahoo
'Are You F**king Kidding Me?': Desi Lydic Slaps Trump Over 1 Burning Failure
'Daily Show' correspondent Desi Lydic on Wednesday slammed President Donald Trump over his State Department's plans to destroy $9.7 million of taxpayer-funded contraceptives intended for women in low-income countries. The U.S. looks to spend $167,000 to burn the birth control — most of which reportedly doesn't expire for several years and sits in a warehouse in Belgium — rather than deliver it to crisis zones and refugee camps after his administration dismantled the U.S. Agency for International Development (USAID). 'Are you fucking kidding me?' Lydic said. She later added, 'At least sell it. You're Donald Trump, just slap your name on it, call them 'Trump Cooter Shooters' and rake in enough cash to pay down the national debt! I don't know, figure it out!' Lydic — who joked that the State Department's target is 'something very close' to her cervix — proceeded to advise Americans to start 'stocking up on birth control now' given the administration's plans. 'Personally, I always have at least seven to nine IUDs implanted at all times,' she quipped. 'You never know when the girl in the next stall is going to need one.' Check out more of Lydic's Wednesday monologue on 'The Daily Show.' Related... 'Daily Show' Uncovers The Brutal Reason Behind Trump's Scotland Trip 'None Of That F**king Matters': Sam Bee Nails A Brutal Truth Of Colbert's Cancellation Stephen Colbert's Audience Erupts Over MAGA Lawmaker's Bonkers Plan To Honor Trump
