Dear Campus Community,
I write to share important information about how the recently passed federal legislation called the "One Big Beautiful Bill Act" will impact higher education. My previous update on this legislation, which President Donald Trump signed into law on July 4, addressed its impact on the endowments of small colleges like Pomona. This update provides more context on that outcome as well as details on other provisions that will affect how students finance their education and how colleges and universities operate.
I recognize that many in our community have understandably serious concerns about various aspects of this comprehensive legislation. My focus here is on the higher education provisions that will directly impact our students and families as members of our College community, as the legislation includes changes to federal student financial aid, institutional accountability measures and the endowment tax. Those details are as follows:
Key Changes to Student Financial Aid
Student Loan Program Changes. Effective July 2026, this legislation
- Eliminates all existing income-driven repayment plans and replaces them with just two options: a standard 10-25 year repayment plan and a new "Repayment Assistance Plan" that will be based on 1-10% of each borrower’s personal adjusted gross income.
- Eliminates Graduate PLUS loans (this change may affect Pomona students’ plans for future graduate study).
- Caps annual Parent PLUS loans at $20,000, with a lifetime limit of $65,000 per student.
Pell Grant Modifications:
- Effective July 2026, students receiving full cost-of-attendance scholarships will no longer be eligible for Pell Grants.
- Effective July 2026, foreign income must now be included in Pell Grant eligibility calculations.
- The legislation provides $12 billion to prevent funding shortfalls in the Pell Grant program over the next two years.
- Importantly, the final legislation does not include proposed restrictions on part-time student eligibility that were in earlier drafts.
New Educational Savings Options:
- The legislation expands qualifying expenses for 529 education savings accounts.
- The legislation also permanently extends the $5,250 exclusion for employer educational benefits.
Institutional Accountability Measures
The legislation establishes what it terms a "do no harm" standard for academic programs. College and university programs will lose federal loan eligibility if, over designated time periods, graduates consistently earn less than relevant benchmarks (the salary benchmarks are the median salary of high school graduates for recipients of undergraduate degrees and the median salary of bachelor's degree graduates for recipients of graduate degrees). As Pomona College graduates earn well above the benchmarks, this provision will not require any changes to our operations.
Endowment Tax Changes
The bill modifies the federal endowment tax structure, with rates of 1.4%, 4% or 8% based on endowment-per-student ratios. For our institution, this change represents positive news: with fewer than 3,000 students, we will no longer be subject to the current 1.4% endowment tax. This important change provides the College’s budget some financial relief in an otherwise challenging policy environment, and most importantly no longer undermines our investment in financial aid. For example, as shared previously, since that tax was introduced in 2017, the cost to Pomona totaled more than $16 million, which is roughly equivalent to 184 full student scholarships.
Collectively the above changes represent the most significant overhaul of federal higher education policy in decades and will have far-reaching effects on the sector. The American Council on Education has warned that these policies could limit access to higher education for low-income students and create financial instability for many institutions. Pomona College remains committed to providing access to education and will continue to practice need-blind admissions and offer exceptional financial aid packages.
As we navigate these changes, the College is committed to preserving our educational mission and supporting our community. In the coming months, we will:
- For Students and Families: Provide detailed guidance about financial aid changes and explore institutional aid options to help bridge gaps in federal support.
- For Faculty: Keep departments informed about potential impacts on undergraduate programs and student post-graduation planning.
- For Staff: Provide training and resources for those directly involved in financial aid administration and student support services.
- Institutional Planning: Conduct scenario planning for enrollment and budget impacts and develop strategies to maintain program quality and accessibility.
- Advocacy: Continue working through higher education associations to advocate for students and institutions during the implementation process.
Our commitment to our students and our educational mission remains unwavering. We will work together as a community to navigate these challenges while maintaining the excellence and accessibility that define our institution.
For related support and resources, we encourage you to review our related FAQs (to access this material, log in to the my.pomona.edu portal) and, as necessary, please use the links below:
- Financial Aid Office: financial.aid@pomona.edu
- International Students: kathy.quispe@pomona.edu
- Faculty and Staff: PomonaHR@pomona.edu
With best wishes,
Gabi
G. Gabrielle Starr
President, Pomona College
Philip and Gertrude McConnell Professor
Departments of English and Neuroscience