The higher education landscape is shifting dramatically, and it’s shifting fast. So much has happened in the first few months of the second Trump administration — from sweeping changes under the One Big Beautiful Bill Act (OBBBA) to executive orders targeting student aid, research funding, and civil rights enforcement — that it can be hard for state policymakers, school leaders, and advocates to separate the signal from the noise, let alone know how to take action in response to these changes. Our latest memo on federal higher education policy is a no-nonsense primer offering pragmatic guidance to state leaders working to serve students across the country and keep institutions of higher education (IHEs) stable.
We sat down with two of the memo’s authors — Bellwether Senior Analyst Christine Dickason and Partner Nick Lee — to spotlight the biggest takeaways and hear practical advice on what states should do next.
Bellwether: This memo covers a lot, from funding cuts to new eligibility rules to research slowdowns. Can you talk about which of these changes will have the fastest and most tangible impact on students?
Christine Dickason: Students are already feeling the impact of cuts to the U.S. Department of Education’s Office of Federal Student Aid. When students previously had questions about federal loans, they were able to get help from career experts, but those former employees have been replaced by chatbots with reports indicating increased confusion and inaccurate information. Regional student aid offices historically funded by the federal government have also been cut, which means that more students are turning to IHEs to understand student aid. Higher ed administrators and those that work in federal student aid already have high levels of burnout and turnover, so I imagine that’s going to increase as more students need help and don’t know where else to turn.
And that’s just in the short run. The longer-term impacts to students will come in July 2026, when OBBBA provisions go into effect. Those include limits on how much students can borrow in their lifetimes and the elimination of Graduate PLUS loans. Those changes are likely to push more students to the private loan market, which tends to offer fewer protections for borrowers.
Nick Lee: That’s right. Private loans offer fewer protections, especially around flexibility when a student can’t make a payment. Also, if I’m a private lender, there are two typical ways I mitigate my risk: I either set a higher interest rate, or I set strict credit requirements. So now, we’re facing a situation in which private banks aren’t going to lend to students with lower credit scores, which creates an upfront access problem, or they’ll give them a higher interest rate, which creates a back-end affordability problem.
CD: One potential bright spot in changes to federal higher ed policy is the expansion of the Pell Grant into the new Workforce Pell, which could allow more people to access credentials that might lead to a stronger workforce and create more upward economic mobility. But the details will be important here, so I’ll be watching to see how rulemaking around this plays out.
NL: Leaders in the U.S. Department of Education, IHEs, and states will have a lot to do in a very short amount of time to make Workforce Pell work.
Bellwether: OBBBA and the administration’s fiscal year (FY) 2026 budget proposals are dense. Can you translate into real-life terms what they might mean for an average college student?
CD: It’s hard to identify who the average student is. More than one-third of undergrads are now over the age of 25, so the image of the “traditional college student” doesn’t really exist anymore. What I can say is that changes to the social safety net will impact a lot of college students. Three-and-a-half million college students rely on Medicaid, so those students may lose access to their health care. More than one-quarter of college students also experience food insecurity and many of them rely on the Supplemental Nutrition Assistance Program (SNAP) to put food on the table. Both of these changes could have significant impacts on students’ abilities to learn.
Bellwether: What are some of the ways IHEs have been impacted by recent federal policy changes?
CD: IHEs are facing a number of challenges that are impacting their ability to serve students and their bottom line, which are highly interrelated. Federal cuts to research funding are critical, because research is a main driver of institutional financial stability. As a result, IHEs are already reducing services and programs for students.
IHEs are also going to need to build new structures to comply with the soon-to-be implemented earnings tests, in which undergraduate programs could lose federal aid eligibility if their graduates earn less than the median adult with a high school diploma. It’s challenging in a tightening fiscal environment, and I bet we’ll see a reduction in programs for schools that fail the earnings test because they’ll lose access to federal support.
Bellwether: You outline seven key actions states can take to support the higher education system and the students it serves. If a state could only tackle two or three of them this year, which would you choose first — and why?
CD: Although we’d love states to consider all seven, strengthening data infrastructure and building technical capacity are necessities. Students, families, and policymakers need access to accurate information to make informed decisions, and strong data systems will be essential to comply with new accountability requirements coming next year under OBBBA. Wraparound supports are also on my mind as I think about all the cuts to the social safety net that students rely on.
NL: I agree that wraparound supports will be important, particularly when it comes to Workforce Pell. The idea is that Workforce Pell theoretically gives states more discretion to design and define these programs so that students have more choice, but you need to actually provide people with guidance on how to choose.
Students are navigating myriad options when figuring out what they want to do: everything from an eight-week commercial driver’s license program to a two-year certificate to a dual enrollment class. But it creates a lot more potential risk if students can go down a path that isn’t right for them. States need to invest in advising support, not just in traditional educational settings, but also within American Job Centers and other community-based settings, so that prospective students are getting informed help in making these high-stakes decisions.
Bellwether: Do you have a real-world example of a state that’s already taking action? What are they doing well?
CD: New York’s CUNY ASAP is an evidence-based program that helps students stay enrolled and graduate from the New York City-wide school system. Ten thousand students will have access to the program by next year. Michigan created a College Student Basic Needs Task Force last year and just released its report with recommendations. Some states have also laid solid foundations that will help them in this environment, like Kentucky, which has a robust data infrastructure. And New Jersey and Pennsylvania expanded the definition of who can receive SNAP, which is a great step to ensure that students are not food insecure.
NL: I think many states are still figuring out how to respond, especially as they consider how to fill funding gaps left by federal cuts. Since Medicaid, K-12, and higher ed are among the largest items in state budgets, leaders are waiting to see what the downstream effects are going to look like. If history is a good predictor, higher ed is going to have to figure out how to do more with less in the near term, and potentially in the long term, too.
Bellwether: If you could sit down with every state higher ed chief tomorrow, what would be your top piece of advice?
CD: With the federal role in higher education shrinking in the foreseeable future, states must step up to ensure that students have access to high-quality and affordable postsecondary options and can complete their programs successfully and pursue a viable career pathway. This is good for individuals and states alike — for economic mobility and a strong workforce along with general knowledge and an informed and active voting base. State actions alone can’t undo or completely shield IHEs and students from what’s happening at the federal level, but they can provide a level of stabilization that’s important in uncertain times.
NL: This is not a “this too shall pass” moment. This is an opportunity for higher ed leaders to do things differently — things they’ve always wanted to do but felt like they couldn’t. As higher ed gets more expensive to produce every year, that might mean looking at delivery models and cost structures more closely — both to leverage technological improvements and to be more responsive to rapidly changing student preferences. This can ensure that students will have a higher return on investment when it comes to their postgraduate outcomes. There’s a demand for this kind of accountability: Enrollment is dropping because the system is either not producing what students want, at an affordable price point, or most likely, both. This is a chance for leaders to be more responsive to student needs, and they shouldn’t squander it.
