In just six months, the Trump administration and Republican-controlled Congress have brought lasting change – and enormous unpredictability – to federal education policy.
The U.S. Department of Education, under Secretary Linda McMahon, has cut roughly half its staff. It is also withholding nearly $7 billion in grant funding to school districts – for before- and after-school programs, teacher training, services for English language learners and more – while that funding undergoes further review.
At the same time, Republicans' "One Big Beautiful Bill," which President Trump signed into law on July 4, imposes a host of new obligations on the scaled-down department.
Here's what to know about the changes students, K-12 schools and colleges can expect now that the legislation is officially law:
- K-12 school vouchers are going national (sort of)
- Medicaid changes and K-12 schools
- Cuts to food assistance would also impact school meals
- An increase to the Child Tax Credit
- Big changes to federal student loans
- Changes to Pell Grants for low-income college students
- An accountability earnings test for colleges
- A higher tax on college endowments
K-12 school vouchers are going national (sort of)
The final bill includes a first-of-its-kind federal school voucher program.
The program uses the federal tax code to offer vouchers that students can use to attend private secular or religious schools as well as for qualifying education expenses.
"Parents should decide where their kids go to school. This bill helps them do that," Sen. Bill Cassidy, R-La., said in a statement after the House approved the Senate's changes.
The Senate changed the original House proposal, now requiring states to opt into the program, therefore keeping it from becoming a truly national program. Blue states where vouchers have little support may not participate, and even in more conservative states, support is mixed – voters recently rejected school voucher ballot measures in Kentucky and Nebraska.
That may be, in part, due to concerns that voucher programs can sap local public schools of resources, because when students leave a public school system, they take funding with them.
"This isn't just a policy failure—it is a moral disgrace," Becky Pringle, president of the National Education Association, the nation's largest teachers union, said in a statement. "Trump and congressional Republicans undermined our public schools and every student in them."
The new federal program will reward people who make charitable donations to what are known as Scholarship Granting Organizations (SGOs). Their reward: a dollar-for-dollar tax credit.
The SGO would then distribute the donated money in the form of scholarships for students to use on a range of expenses, including tuition, books and certain homeschooling costs.
Unlike some of the country's earliest, smaller voucher programs, this federal version won't be limited to lower-income families. Instead, it will be available to households earning at or below 300% of a given area's median gross income. So, in an area of the country where the median gross income is $75,000, any child in a household earning less than $225,000 could qualify.
The cost of a program like this is hard to measure, especially with the opt-in caveat leaving states to decide if they will participate. However, the nonpartisan Joint Committee on Taxation estimates the vouchers could cost the federal government almost $26 billion in lost tax revenue over the next decade.
Medicaid changes and K-12 schools
More than 37 million children are enrolled in either Medicaid or the Children's Health Insurance Program (CHIP), a federal program that provides affordable health insurance to pregnant mothers and children who live just above Medicaid's poverty threshold.
The "One Big Beautiful Bill" introduces strict eligibility requirements for Medicaid including more frequent eligibility verification and a first-ever national work requirement, though parents of children age 13 and younger are exempt.
It also cuts federal health spending by about $1 trillion over a decade, according to the nonpartisan Congressional Budget Office (CBO).
As NPR has previously reported, state experiments with work requirements have been plagued with administrative issues, such as eligible enrollees' losing coverage over paperwork problems and budget overruns.
How will all this impact K-12 students?
"When there's more red tape, we know that it's harder for families," Joan Alker, head of Georgetown University's Center for Children and Families, told NPR before the bill passed.
The CBO estimates nearly 12 million people will lose their health coverage as a result of the changes in the final bill.
Medicaid is also the fourth largest source of funding for K-12 schools, according to the School Superintendents Association (AASA). Schools receive money to help provide services for low-income students enrolled in Medicaid or CHIP as well as for students with disabilities.
In a survey published earlier this year, AASA asked over 1,000 school district leaders from all 50 states and the District of Columbia how they use Medicaid funds. The vast majority of districts (86%) said Medicaid funds support salaries for school health staff such as nurses, psychologists, occupational and physical therapists and speech-language pathologists. More than half said Medicaid helps fund mental and behavioral health services in school districts.
When asked how their districts would cope with the loss of funds, 80% of respondents predicted layoffs of school health staff and more than half anticipated a reduction in services and resources for students.
Cuts to food assistance would also affect eligibility for free school meals
Supplemental Nutrition Assistance Program (SNAP), which, according to the U.S. Department of Agriculture, helps pay for groceries for more than 15 million children in the U.S., will also undergo significant changes in the coming years.
The "One Big Beautiful Bill" shrinks the number of people who are exempt from SNAP's work requirements. Katie Bergh, a senior policy analyst for food assistance at the Center on Budget and Policy Priorities, told NPR before the bill passed, "research has repeatedly shown that [work requirements don't] increase people's employment. It doesn't increase their earnings. It just cuts people off of SNAP and leaves them hungry."
When children lose access to SNAP benefits, they also lose their automatic enrollment in free meals at school.
The new law will cut about $186 billion from SNAP over 10 years, according to the CBO. Bergh's organization estimates, "about 1 million children would see food assistance to their families cut substantially or terminated."
For the first time in the history of SNAP, the federal government is also shifting some of the cost on to states.
Whether this shift in funding, from the federal government onto states, is a good idea is "debatable," Kevin Corinth, who studies poverty and safety net programs at the conservative-leaning American Enterprise Institute (AEI), told NPR before the bill passed. Though he pointed to one potential upside: It could force states to have "more skin in the game."
One potential downside, according to CBO, is that some states "would modify benefits or eligibility or possibly leave [SNAP] altogether because of the increased costs."
An increase to the Child Tax Credit
The "One Big Beautiful Bill" comes with a modest tax credit increase for parents. The Child Tax Credit, now capped at $2,000 per child, will rise to $2,200. However, it requires at least one parent and all qualifying children to provide valid Social Security numbers.
And, as with the current Child Tax Credit, this expansion would only be available to families earning enough income to qualify and hence unavailable to low- and moderate-income families.
What to know about big changes to federal student loans
The law will press the reset button on federal student loan policy.
For graduate students, new loan limits will make it harder for lower- and middle-income borrowers to attend pricier graduate programs. The old grad PLUS program, which allowed students to borrow up to the cost of their graduate school program, will be shuttered on July 1, 2026. After that, graduate students' borrowing will be capped at $20,500 a year with a lifetime graduate school loan limit of $100,000, a big drop from the previous cap of $138,500.
Borrowers working toward a professional graduate degree (i.e. medical or law school) will have their borrowing capped at $50,000 a year, and their lifetime cap increased from $138,500 to $200,000.
Parents and caregivers who use PLUS loans to help students pay for college will also see new loan limits. They will be capped at $20,000 a year and, in aggregate, at $65,000 per child.
The law also sets a new lifetime borrowing limit, for undergraduate and graduate loans, at $257,500 per person.
Republicans agreed to make big changes to repayment plans too, phasing out most of them, including the generous, Biden-era SAVE plan.
After July 1, 2026, new borrowers will have just two repayment options: 1.) A new income-based plan that requires borrowers to pay at least $10 a month and offers loan cancellation after 30 years of repayment, or 2) a new standard repayment plan with fixed monthly payments over 10-25 years – the larger the debt, the longer the repayment window.
Older and current borrowers will have a few more choices, at least for the time being, which will no doubt stir confusion among borrowers and the loan servicing companies that have to make sense of all these changes. You can find a more detailed explanation of those here.
Changes to Pell Grants for low-income college students
The bill expands Pell Grants, which help low-income students pay for college, to include job-training programs, which is a win for community colleges which offer a variety of certificate programs. It also tweaks eligibility for all Pell recipients: Starting in July 2026, students who have a full-ride scholarship will no longer be eligible to receive Pell Grants. The bill also fully funds the existing Pell Grant shortfall.
An accountability earnings test for colleges
To incentivize colleges to provide a good return on investment, the bill connects schools' access to federal student loans to how much their graduates earn.
If an undergraduate program fails the earnings test – which means their students earn less than someone with a high school diploma – it could lose access to federal loans. One analysis shows this would have the most impact on two-year associate degree programs, though federal data shows community college students are less reliant on federal student loans.
The measure follows in the footsteps of a similar regulation known as the gainful employment rule which was developed by the Obama administration and reissued under Biden.
The final version of this new accountability policy doesn't go as far as the House version did – that draft included a risk-sharing plan where colleges would pay a penalty based on the federal loan debt their students fail to repay.
A higher tax on college endowments
Colleges with endowments will now be taxed at a higher rate.
The bill raises the tax rate from 1.4% to as high as 8%, depending on the college's endowment.
The endowment of Harvard University, which is currently fighting multiple legal battles against the Trump administration, totals more than $52 billion. Based on the new law's formula, that puts Harvard in the highest endowment tax bracket, for institutions with an endowment of more than $2 million per domestic student.
There is a carveout for small private colleges: Institutions with fewer than 3,000 students are exempted from the tax. The previous exemption was 500 students.
Edited by: Nicole Cohen
Copyright 2025 NPR
