Colorado officials say money that helps 18,000 low-income families pay for child care could run out by Jan. 31 if federal officials don’t lift the freeze they’ve imposed on funding for several safety net programs in five Democrat-led states.
If that happens, some children could go without care and some parents would have to stay home from work. State lawmakers could cover such a funding gap temporarily, though Colorado is facing a significant budget crunch.
The Trump administration announced the freeze on $10 billion in child care and social services funding for Colorado, California, Illinois, Minnesota, and New York in a press release Monday.
In letters sent to the two Colorado agencies that run the affected programs, federal officials said they have “reason to believe that the State of Colorado is illicitly providing” benefits funded with federal dollars to “illegal aliens.”
The letters didn’t cite evidence for that claim and a spokesperson for the U.S. Department of Health and Human Services didn’t respond to questions from Chalkbeat about why federal officials are concerned about fraud in Colorado.
Spokespeople from both state departments said by email on Tuesday they’re not aware of any federal fraud investigations focused on the programs affected by the funding freeze.
The five-state funding freeze follows a federal crackdown in Minnesota after a right-wing YouTuber posted a video in late December alleging that Minneapolis child care centers run by Somali residents get federal funds but serve no children. It’s not clear why the other four states have gotten the same treatment as Minnesota, but all have Democratic governors who have clashed with President Donald Trump.
In a New Year’s Eve social media post, Trump called Colorado Gov. Jared Polis “the Scumbag Governor” and said Polis and another Colorado official should “rot in hell” for mistreating Tina Peters, a Trump supporter and former Mesa County clerk who’s serving a nine-year prison sentence for orchestrating a plot to breach election systems.
The federal freeze will affect three main funding streams in Colorado that together bring in about $317 million a year. They include $138 million for the Colorado Department of Early Childhood for child care subsidies for low-income families and a few other programs.
The subsidy program, known as the Colorado Child Care Assistance program, helps cover the cost of care for more than 27,000 children so parents can work or take classes. It’s mostly funded by the federal government with smaller contributions from states and counties.
The other two frozen funding streams go to the Colorado Department of Human Services and pay for Temporary Assistance for Needy Families, or TANF, and other programs.
In the letter to the Colorado Department of Early Childhood, federal officials outlined new fiscal requirements the state will have to follow before the funding freeze is lifted. They include attendance documentation — without names or other personal identifiers — for children in the child care subsidy program.
A state fact sheet issued in response to the funding freeze said funding for the child care subsidy program would be depleted by Jan. 31. It also outlined several measures already in place to prevent fraud or waste, including state audits, monthly case reviews by county officials, and efforts to recover funds if improper payments are made.
The state said it is exploring “all options, including legal avenues” to keep the frozen funding flowing.
Six Democratic state lawmakers, most in leadership positions, released a statement Tuesday afternoon calling the funding freeze a callous move that will make life more expensive for working families.
“We stand ready to work with Governor Polis and partners in our federal delegation to resist this lawless effort to freeze funding, and we sincerely hope that our Republican colleagues will put politics aside, get serious about making life in Colorado more affordable, and put families first,” the statement said in part.
The statement was from Speaker of the House Julie McCluskie; Senate President James Coleman; House Majority Leader Monica Duran; Senate Majority Leader Robert Rodriguez; Rep. Emily Sirota; and Sen. Judy Amabile.
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As the leaves begin to turn across Central Ohio and your students head back to campus in the fall each year, we often focus on the excitement of the new semester — the football games, the homecoming dance, and the bright futures ahead. But as financial planners, we also know that life can change in an instant.
A few years ago, I witnessed a tragedy that hit close to home. A local family was suddenly upended when a father — the sole breadwinner of the household — passed away unexpectedly during his son’s sophomore year of college.
The family was left reeling, navigating a dual crisis: the emotional weight of their loss and the financial reality of how to keep their son in school.
The Silent Hero: A Proactive FAFSA filing
While the family’s previous income level had originally disqualified them from receiving need-based aid, they had made one critical, proactive decision: they filed the FAFSA earlier that year.
Because that document was already on file, the university didn’t have to start from scratch. They had a baseline — a “before” and “after” snapshot of the family’s reality. This allowed the school to move swiftly, recalculating the student’s eligibility in real-time.
The “Angel” in the Financial Aid Office – A Lifeline in Record Time
When the tragedy struck, a compassionate financial aid administrator stepped in. Because the FAFSA was already on file, the university had an immediate baseline. They collected additional information, of course, but they didn’t have to wait for new tax returns or start from scratch.
Within just a few weeks, the university awarded the student an additional$8,000 per semester. That grant allowed the son to stay in school, providing a sense of stability when everything else felt like it was falling apart. It was the difference between the student dropping out or taking on a mountain of debt.
What is a “Special Circumstance Appeal”?
In the world of higher education, the story above is a perfect example of what is known as a Special Circumstance Appeal (sometimes called “Professional Judgment”).
Many families believe that once a financial aid package is set, it’s written in stone. In reality, financial aid offices have the authority to adjust your aid if your current financial reality no longer matches the “prior-prior” tax year data used on the FAFSA.
New Federal Requirements: The Law is on Your Side
Under the FAFSA Simplification Act (fully implemented for the 2024-2025 and 2025-2026 cycles), the federal government now mandates that every college have a process for “Professional Judgment.”
Colleges are no longer allowed to have a “no-appeal” policy. They are required by law to:
Publicly disclose that students can request an adjustment for special circumstances.
Review every request on a case-by-case basis.
Provide a clear process for families to submit their documentation.
As a reminder, ALWAYS file the FAFSA. Even if you think you make “too much” for aid, filing creates a financial “snapshot” that serves as an insurance policy of sorts if your circumstances change mid-year. And also, keep your records organized. Having easy access to tax returns and financial aid forms allows you (or your advocate) to act swiftly during a crisis.
How the Process Works
If your family experiences a significant financial shift, you don’t need to “wait until next year.” As the story above shows, you should reach out to the college’s financial aid office to request a review as soon as possible. You will typically be asked to:
Write an Appeal Letter: Factual and concise, explaining the change in circumstances. Most schools have a form that you will be required to fill out, or a section of the school’s student portal.
Provide Documentation: Such as termination letters, medical bills, or death certificates.
Complete a Verification: The school will verify your current income to determine a new, more accurate “Student Aid Index.”
What Qualifies? (It’s more than you might think)
While the loss of a parent is a clear catalyst for an appeal, schools can also reconsider your aid for several other reasons:
Job Loss or Significant Income Reduction: A layoff, a forced career change, or even a major reduction in overtime pay.
Unreimbursed Medical Expenses: High out-of-pocket costs (usually exceeding 7.5–11% of your income) that weren’t covered by insurance.
Divorce or Separation: When a household splits after the FAFSA has already been filed.
Natural Disasters: Costs associated with repairing a home or business after a flood, fire, or storm.
One-Time Income Spikes: If a one-time IRA distribution or inheritance artificially inflated your income on your tax return, you can ask for it to be excluded.
Our Role as Your Partners
If there is one thing we know for sure, it is that life is going to throw us curveballs. No one can control the future, but as financial planners, we help prepare for the worst and hope for the best. At Capstone, we don’t just manage portfolios and push paper; we help you navigate these complex life transitions.
If your family is facing a change in circumstances, book a Complimentary College Consultation with me. I can help you gather the necessary documentation and coordinate with financial aid offices to ensure your student’s education stays on track.
Rep. Tim Walberg, the Michigan Republican who chairs the House committee, said the legislation was an answer to waning public trust in postsecondary education.
Andrew Harnik/Getty Images
A House education panel voted Thursday to advance two bills aimed at ensuring that students know more about the price of college and their options to pay for it.
One of the bills, the Student Financial Clarity Act, would require the Education Department to create a universal net price calculator that would give students an estimate of what they might have to pay for a particular program or institution. That legislation, which passed with bipartisan support, would also expand the College Scorecard to include more program-level statistics so students could compare outcomes and costs.
Under the other bill, the College Financial Aid Clarity Act, the Education Department would develop a standardized format for college financial aid offers. Lawmakers on both sides of the aisle have sought for years to improve institutional offer letters—efforts that picked up steam in 2023 after the Government Accountability Office found that most colleges failed to clearly and accurately tell students how much their education would cost.
After the department creates the standard format, colleges that receive federal funding will have to adopt it by July 1, 2029, according to the legislation, which also received bipartisan backing.
The House and Senate education committees have explored the issue of college price transparency in hearings this fall, showing that it’s a priority for key lawmakers. Rep. Tim Walberg, the Michigan Republican who chairs the House committee, framed the legislation as an answer to waning public trust in postsecondary education.
“Too many students face bureaucracy, hidden costs and student debt for programs that don’t deliver a return on investment,” Walberg said. “These bills take important steps to fix that.”
American Council on Education president Ted Mitchell wrote to the committee that a federally mandated financial aid award letter would be difficult to adjust in response to consumer feedback and changes to federal student aid. ACE and others have spearheaded a voluntary effort to improve the letters known as the College Cost Transparency Initiative, which includes about 760 colleges and universities.
“It is also important to note that new requirements regarding financial aid award letters will impose significant administrative, financial, and technical challenges that will divert institutional resources away from student support,” Mitchell wrote.
Democrats generally supported the legislation, though they indicated that they wanted to see more changes that would actually lower the cost of college and hold the Education Department accountable.
Democrats expressed worry that a diminished Education Department wouldn’t be able to implement the changes called for in the legislation. They also pushed for language in the bills that would require the Education Department itself to perform the work. Education Secretary Linda McMahon recently outsourced several grant programs to other federal agencies, raising concerns among Democrats on the committee.
“Based on the secretary’s track record, it wouldn’t surprise me if she’s already devising a way to pass these requirements on to someone else or some other agency,” said Rep. Suzanne Bonamici, an Oregon Democrat.
With the imminent arrival of early-decision results comes a new round of hand-wringing about the admissions practice, which affords students a better chance of getting accepted to their top institution but requires them to commit if admitted.
Critics argue that the practice disadvantages low- and middle-income students, who fear being locked into attending a college before they know if they can afford it—although many colleges with an early-decision option allow students to back out over financial constraints. It also prevents applicants from comparing financial aid offers across multiple institutions.
“Because there is so much uncertainty, families with high incomes are more likely to choose early decision and therefore benefit from its more favorable odds. It’s the perfect tool for maximizing revenues at schools positioned as luxury products, with price tags to match,” wrote Daniel Currell, a former deputy under secretary and senior adviser at the Department of Education from 2018 to 2021, in a New York Times op-ed published Wednesday that argued for the end of early decision. Indeed, Common App data about the fall 2021 freshman class showed that students from the wealthiest ZIP codes were twice as likely to apply early decision.
But despite the criticisms, some institutions are aiming to make the practice more equitable. A handful of small liberal arts colleges have introduced initiatives in recent years to allow students to preview their financial aid offers before they decide whether or not to apply early, which admissions leaders say they hope will make lower-income students feel more comfortable taking the leap.
Reed College, a selective liberal arts college in Oregon, began offering early-decision aid reviews this year, which allow early-decision applicants to request and view their full financial aid packages before they receive an actual decision from the university. Just like an official aid offer, the preview is calculated by financial aid staff using the College Scholarship Service profile.
If they aren’t entirely comfortable with the amount of aid they’re set to receive—or they’d rather compare offers from other institutions—they can drop their application down into the early-action pool.
“I just think that this anxiety that people have over not getting the best financial deal for their family has been a barrier for people saying, ‘This is my first-choice school and I want to do everything I can to increase my chances for admission,’” said Milyon Trulove, vice president and dean of admission and financial aid at Reed.
Early financial aid offers are among the various steps institutions have taken in recent years to improve cost transparency and, in many cases, show students that their institutions are affordable. Others include improved cost estimators and campaigns offering free tuition for families under a particular income limit. Institutions hope that such innovations will help prevent students from writing off their institutions—particularly selective institutions that offer significant aid—due to their sticker prices.
So far, Reed’s reviews appear to be doing a good job of enticing applicants who otherwise might not have applied early; the number of early-decision applicants this year increased 60 percent compared to last admissions cycle. Only one student has opted to switch to early action, which is nonbinding, after receiving their estimated offer.
Similar programs at other institutions have also proven successful. Whitman College in Washington began offering early financial aid guarantees in 2020 to any prospective student who had filled out the Free Application for Federal Student Aid. The initiative wasn’t created specifically to promote early decision, said Adam Miller, vice president for admission and financial aid. But he said he hoped that making it clear to families that Whitman is affordable would also open doors for students interested in applying early decision but nervous about costs.
Early-decision applications haven’t increased at Whitman like they did this year at Reed. But Miller noted that the college’s early-decision applicants are as socioeconomically diverse as the institution’s overall applicant pool, rather than skewing wealthier.
“As we think about these nationwide conversations and the very valid criticism of early decision, we think that our approach allows us to have kind of a win-win,” he said. “We still get the benefit of students who are applying early, [so] that we can start to build our incoming class with some confidence,” while also eliminating financial uncertainty for families.
Last year, the university’s four-person financial aid staff handled 546 requests for early aid guarantees. It’s an extra lift for the tiny office, but, Miller said, 410 of those students ended up applying—“so it’s not like we were doing a lot of extra work for students that we weren’t going to be doing it for anyway.”
Macalester College also launched such a program in 2021. The institution, which typically admits between 35 and 40 percent of its incoming class from early decision, implemented aid previews in conjunction with a number of other steps aimed at improving access, including going test-optional and eliminating its application fee.
“If we have an opportunity to do something that we think might be helpful to an individual student or family, I guess I feel as responsibility as an enrollment manager to try to initiate a new practice or new policy,” said Jeff Allen, vice president for admissions and financial aid at Macalester.
Boosting Cost Transparency
Financial aid experts said they see early financial aid calculations as a good option for institutions hoping to make the early-decision process—and college costs over all—more transparent.
Students should be able to “apply early decision to a school where they know it’s the place for them and they don’t need to be saying, ‘But I need the financial aid so maybe this isn’t a good choice,’” said Jill Desjean, director of policy analysis at the National Association of Student Financial Aid Administrators. “That option should be available to anyone that finds the school where they really feel like they belong via early decision without having to factor in their finances, so any kind of early estimates, accurate early estimates—anything like that is a positive thing.”
She noted that such programs might be too heavy of a lift for institutions receiving massive numbers of applications every year, but also that larger institutions have more resources and staffing to accommodate such requests.
James Murphy, a senior fellow at Class Action, an advocacy organization focused on “reimagining elite higher education,” said that while he sees early aid previews as a positive step toward transparency, they don’t address some of his key concerns about early decision. At many expensive private high schools, he said, nearly every student applies early decision, whereas public high school students often aren’t even aware of the option.
“There’s kind of a culture thing. If you go to Georgetown Prep … everybody’s applying early decision, or most students are applying early decision, unless they’re applying to Harvard or Stanford that don’t have it … When you look at public schools, that’s not nearly as common,” he said. “I think raising awareness of early decision as a viable option for more students is one step that higher education could take to make it a little bit more equitable.”
He also noted that some institutions admit over half of their incoming classes from early-decision applicants, which dramatically lowers the chances for regular-admission applicants to be admitted.
“The New York Times had that op-ed about banning it. That’s not going to happen. Colleges will fight so hard to make that not happen,” he said. But, he said, “what I would love to see is caps” on the percentage of students that can be admitted early decision.
One of the most common questions we hear from parents and students at The College Planning Center is: “Will financial aid cover summer classes?”
The honest answer is: 👉 Yes, financial aid can cover summer classes—but not always.
Whether financial aid for summer classes is available depends on:
How much aid the student has already used in fall and spring
How the college structures its academic year
Whether the summer classes count toward the degree
The student’s academic standing (especially SAP)
In this guide, we’ll walk through when financial aid covers summer classes, common myths, real-life student stories, and the steps families should take before signing up.
The #1 Misconception About Summer Financial Aid
A huge source of confusion is this assumption:
“FAFSA automatically gives us new aid for summer.”
This leads to questions like:
Does financial aid cover summer classes the same way it does fall and spring?
Will my fall financial aid cover my summer classes if I already used it during the year?
Can you get financial aid for summer classes without submitting anything extra?
Most families don’t realize:
Summer aid usually comes from the same academic year’s funds, not a brand-new pool.
Summer is often attached to the prior academic year, not treated as a fresh start.
Federal loans do not “refresh” for summer—annual limits still apply.
Colleges do not all treat summer the same. Each school sets its own policies.
This is why families are often surprised when they ask, “Will my financial aid cover summer classes?” and the answer is “maybe—depending on what’s left.”
Who We See Taking Summer Classes (and Why It Matters for Aid)
At The College Planning Center, we most often advise:
Rising high school juniors and seniors taking dual-enrollment summer classes
College freshmen and sophomores who need to catch up, boost GPA, or stay on track
Students changing majors who must complete prerequisite courses quickly
Transfer students trying to finish missing credits before enrolling at a new school
Students targeting competitive programs (nursing, engineering, education, etc.)
Students trying to graduate early and reduce overall tuition and housing costs
Our recommendations always depend on:
Academic readiness
Financial aid eligibility (including summer)
Long-term college goals
When a family asks us, “Can you get financial aid for summer classes in this situation?”, we don’t just check one box—we look at the entire academic and financial picture.
What Types of Financial Aid Can Cover Summer Classes?
So, does financial aid cover summer classes at all? In many cases, yes—but with limits.
Depending on the school and student, financial aid for summer classes may come from:
1. Federal Aid (FAFSA-Based)
Pell Grants – If the student is Pell-eligible and hasn’t used their full annual amount, some may be available for summer.
Federal Direct Loans – If the student has not used their full annual loan limit in fall and spring, remaining eligibility may be applied to summer.
This is often the real answer behind “Will my financial aid cover summer classes?” It depends on what’s left in the federal aid bucket.
2. Institutional Aid
Some colleges offer:
Summer scholarships or tuition discounts for students who stay on track in their major
Limited institutional grants for summer enrollment
Policies vary widely, so you must ask each school directly.
3. State Aid & Private Scholarships
State grants or scholarships sometimes apply to summer—but not always.
Private scholarships may or may not allow funds to be used in summer; this depends on the scholarship rules.
4. Work-Study
Some schools offer summer work-study positions, but slots are often limited and may require separate applications.
Real-Life Example: When Summer Aid Was Approved
Student A – Rising Sophomore at Clemson University
Question they came in with: “Can you get financial aid for summer classes if you still have some loans left?”
Situation: Student A had worked with The College Planning Center through high school. Strong merit scholarships (thanks to improved SAT scores and a standout application) reduced how much they needed to borrow.
Summer Goal: Take two summer courses to stay ahead in their major.
Why Summer Aid Was Approved:
They did not use their full federal loan eligibility in fall and spring.
The summer classes were degree-applicable, which is required for federal aid.
They were meeting SAP (Satisfactory Academic Progress) with strong grades.
Outcome:
The college approved:
A portion of their remaining federal loans for summer
A small amount of institutional scholarship aid tied to their major progress
How CPC Helped:
Confirmed remaining loan eligibility
Verified that selected classes counted toward the degree
Compared the cost of taking those courses in summer vs. fall
In this case, the answer to “Will financial aid cover summer classes?” was a clear yes—because funds and eligibility were still available.
Real-Life Example: When Summer Aid Wasn’t Available
Student B – First-Year at University of South Carolina
Question their family asked: “Will my fall financial aid cover my summer classes if we already used everything we were offered?”
Situation: Student B had some merit aid but needed maximum federal loans during the year to cover tuition and housing.
Summer Goal: Take a required math class in summer to get back on track.
Why Summer Aid Was Denied:
They had no remaining federal loan eligibility for that academic year.
Their merit scholarship applied to fall and spring only.
Their academic record triggered a SAP review, temporarily blocking federal aid eligibility.
Outcome:
The financial aid office denied summer aid.
The student delayed the class until fall and focused on academic recovery.
How CPC Helped:
Guided the family through a SAP appeal
Created a study and support plan
Restructured the fall course load to protect future aid
Here, the honest answer to “Does financial aid cover summer classes?” was no—because the student had already used up the year’s resources and lost eligibility temporarily.
Common Pitfalls That Block Financial Aid for Summer Classes
We see the same problems over and over when families ask, “Why won’t my financial aid cover summer classes?”
1. Using 100% of Loan Funds in Fall and Spring
If a student maxes out their annual loan limit during the regular school year, there may be nothing left to apply toward summer.
2. Dropping Below Half-Time Enrollment
Many forms of aid require students to enroll at least half-time. If a student drops a class or withdraws, they can fall below half-time and lose summer aid they were counting on.
3. SAP (Satisfactory Academic Progress) Problems
Low GPA, too many withdrawals, or not completing enough credits can all cause SAP issues. If SAP isn’t met, even summer aid may be blocked.
4. Assuming Scholarships Automatically Apply in Summer
Most merit scholarships are fall/spring only, even if the letter doesn’t say “no summer” in big bold letters.
5. Taking Classes That Don’t Count Toward the Degree
Federal aid usually only covers degree-applicable courses. Random electives or “extra” classes may not qualify.
6. Missing the Summer Aid Request Deadline
Some colleges require:
A separate summer aid application, or
An earlier priority deadline
Missing this can turn a possible yes into a no.
When Are Summer Classes Financially Wise?
At The College Planning Center, we take a balanced, realistic approach. We don’t just ask, “Can you get financial aid for summer classes?” We ask:
“Does it make academic and financial sense for your student?”
Summer Classes Are Often Worth It When They:
Help a student graduate early, reducing an entire semester of tuition, housing, and fees
Protect or restore FAFSA eligibility by maintaining or improving SAP
Make a major change possible without delaying graduation
Improve GPA for selective programs
Reduce fall/spring overload, decreasing burnout and grade risk
Summer Classes May Not Be Wise When:
The student has no remaining aid and summer would mean high out-of-pocket costs
Tuition per credit is significantly higher in summer
The classes don’t count toward the degree
The student is struggling academically and needs a break more than another course
The Education Department and its Office of Federal Student Aid typically hold a conference the first week of December each year.
Photo illustration by Justin Morrison/Inside Higher Ed | Caiaimage/Chris Ryan/iStock/Getty Images
Each year during the first week of December, the Department of Education has historically hosted the Federal Student Aid Training Conference to provide university administrators with updated education on regulations and technical systems. That hasn’t happened this year.
Now, many financial aid experts are expressing their frustrations on social media, attributing the lapse to the Trump administration’s majorreductions in force and calling it a shortsighted mistake.
“There is no conference. That’s what happens when you fire many of the staff who organized and conducted the training,” Byron Scott, a retired FSA staff member, wrote on LinkedIn. “Perhaps in ‘returning’ this Department of Education function to the states—where [it] never was—the Department forgot to tell the states about this new responsibility.”
Department officials have neither announced the event’s cancellation nor clarified whether and when it might take place. The conference website, where logistical information is traditionally posted, only says, “Information coming soon.”
One senior department official who spoke with Inside Higher Ed on the condition of anonymity said the conference is slated to occur in person in March.
“The announcement was queued up but the shutdown got in the way,” the source wrote in a text message. “I think the plan [will be released] in the coming days.”
An Education Department spokesperson did not respond to questions about the March date but blamed any delay on the government shutdown.
“The Democrats shut down the government for 43 days, and as you can imagine, planning a conference is not an exempted activity,” the spokesperson said. “We’ll have more updates on this in the coming weeks.”
If the conference is eventually held in person, it would be the first time since the COVID-19 pandemic broke out in 2020.
The senior department official said they hope that “returning the conference to in-person will make the wait worth it.”
But Heidi Kovalick, director of financial aid at Rowan University, responded to Scott’s LinkedIn post saying that right now is “a critical time.”
Financial aid officers have a lot to adapt to; the One Big Beautiful Bill Act mandated major changes to the student loan system, and the department issued regulations outlining new standards for Public Service Loan Forgiveness, among other significant shifts since Trump took office.
“Fin[ancial] aid administrators really need to hear from the experts,” Kovalick wrote. “Of course as others have mentioned, [it’s] kind of hard when they have been forced out. We miss you all.”
Regardless of whether staffing shortages or the government shutdown played a role in the delay, Melanie Storey, president of the National Association of Student Financial Aid Administrators, said one of her greatest concerns is the tight timeline financial aid officers will face if the department does reschedule the conference for spring.
“Truthfully, March is pretty soon—three months away. Institutional budgets are tight. People are going to have to book flights and hotels, and you know that that can be expensive,” she said. Still, the NASFAA president applauded the department for its effort to return the conference to an in-person event.
“The last few were virtual, which had mixed reviews. The sessions had to be prerecorded. They weren’t always as timely. And there wasn’t an opportunity for interaction. But those are all the things that financial aid professionals prioritize,” she said. “If March is when they can do it, well, we’ll be happy to see it in March.”
Two decades ago, Uncle Sam offered a helping hand for college graduates who desired careers that required advanced degrees by establishing a loan program known as Grad PLUS. That hand has now been withdrawn. Also known as Direct PLUS loans, this program allowed students to borrow beyond the $20,500 limit available through direct unsubsidized loans to cover their full cost of attendance. With the One Big Beautiful Bill Act signed into law last summer, Grad PLUS loans will no longer be an option for prospective graduate students after July 2026.
The question of whether colleges and universities raise their tuition prices as the availability of federal aid increases has been a hotly debated topic for more than four decades, with contradictory findings. One recent study found that institutions increased their tuition prices after the creation of Grad PLUS, and determined that the funds did not increase access (or completion) for graduate education in general or for underrepresented groups in particular. These findings echo previous studies that also support a positive relationship between government aid and college prices. In contrast, other studies and analyses at the undergraduate level, as well as for graduate business, medical and law programs, have found little evidence of nonprofit institutions increasing tuition in relation to government subsidies. (The for-profit sector is another story.)
In any case, the elimination of Grad PLUS is a new reality that incoming graduate students will have to face. Now, students in master’s and doctoral programs will only be able to borrow up to $20,500 annually (with a maximum of $100,000). Students in professional degree programs, like law and medicine, will have a higher cap of $50,000 annually (up to $200,000 total). Additionally, the maximum amount students can borrow from the federal government for their undergraduate and graduate studies combined is $257,500. Students who borrow beyond any of these limits annually will have to turn to private loans to finance the remaining costs, which are less accessible for low-income students (who have less credit) and often come with higher interest rates.
The specific impact of these new limits on students is not yet known, but if we look at data for borrowers from previous years, we see potential impacts. In 2019–20, approximately 38 percent of all graduate borrowers borrowed beyond these caps, according to an analysis by Jobs for the Future. When disaggregated by degree type, 41 percent of graduate borrowers pursuing master’s degrees, 37 percent pursuing Ph.D. degrees and 25 percent pursuing professional degrees borrowed beyond the loan caps set by OBBBA.
A recent analysis published by American University’s Postsecondary Education & Economics Research Center shows potential impacts not just by graduate degree type but also by specific field of study. For professional degrees (with the higher loan cap), more than half of borrowers for chiropractic, medicine, osteopathy and dentistry programs borrowed more than $200,000 for their degrees in recent years. Among the master’s programs reviewed, half or more of borrowers in programs including audiology/speech pathology, public health, nursing and school and mental health counseling, to name a few, borrowed beyond the new limits.
Based on these analyses, it is clear that many prospective graduate students will be impacted by the new loan caps, at least in the short term. The rationale for these loan caps is that graduate programs will lower their costs to make graduate education more affordable, although it is doubtful that colleges will decrease the costs of graduate programs within just a year. It should be noted that many students do not borrow at all to obtain their degrees. In 2019–20, approximately 40 percent of full-time domestic students enrolled in master’s degrees did not borrow.
For programs that attract students from high-income backgrounds (usually selective elite institutions), what incentive is there to decrease costs if enough students can pay out of pocket? For instance, between 2014 and 2019, medical school matriculants from high-income backgrounds (over $200,000) increased substantially. The number of students attending law schools from wealthy backgrounds has also increased in the past couple of decades, particularly at selective elite institutions. Graduate education, at least at elite schools, has become less accessible for many low-income students.
Without financial support, options for low-income students will become even more limited. These students will largely be relegated to less selective public universities, and the more elite private schools will become even less economically diverse than they already are. Financial aid offices will become the de facto second admissions office. Using Massachusetts as an example, our analysis found that the annual cost of attendance exceeded the annual loan limit of $50,000 in the case of every accredited law and medical school in the state, with the gap between the cost of attendance and the limit ranging from about $5,600 in the case of the lone public law school (the University of Massachusetts at Dartmouth), and $33,000 in the case of the only public medical school option (University of Massachusetts Chan), to as high as $71,000 for Harvard Law School and $64,000 for Harvard Medical School.
Amounts calculated based on current advertised rates for first-time (entering), full-time students enrolled in daytime, nine-month and on-campus programs.
Amounts calculated based on advertised rates for first-time (entering), full-time students enrolled in daytime, 10-month and on-campus programs.
This simple analysis, of course, does not take into account any institutional grants or scholarships students may be awarded, but those funds vary by institutional budgets.
What happens when a deserving medical school applicant gains admission and a financial aid offer, only to realize that they still have a balance of $40,000 after institutional and federal aid is applied? For students to turn to private lenders, they will likely need either good credit and a substantial income or a cosigner, which may not be an option for many students from underresourced backgrounds. Almost 93 percent of private student loans given last year had a cosigner. Almost 51 percent of individuals from low/moderate incomes have limited or poor to fair credit. Even if they are lucky to be offered loans, the interest rates will likely be much higher.
With Washington Out, States May Have to Intervene
With the recent federal cuts to Medicaid likely to lead to decreases in state funding for postsecondary education, states may be hesitant to award funds to support students pursuing graduate education—but there are frameworks to help states determine which graduate programs deserve state funding and which type of funding to provide students. Third Way recently produced a framework that categorizes programs by personal return on investment and social value. One possible solution would be to offer accessible loans and state subsidies based on how a state places certain programs in this model.
For programs that lead to high ROI and social value—for example, dentistry—states that are facing a shortage of dentists could offer accessible (and lower than market rate) loans in exchange for working in certain geographic areas in that state. Providing low-interest loans instead of grants would make sense for this category because dentists are more likely to have high enough earnings (postresidency) that they can repay their loans. Certain localities have set up zero-interest loans for students pursuing specific industries, such as a San Diego County program for aspiring behavioral health professionals (a type of pay-it-forward program).
Some states, such as Pennsylvania, do have loan repayment programs for certain health occupations in exchange for working in specific areas of their states. Offering this solution without providing accessible loans will only benefit students who come from wealthier families, as they are more likely to have good enough credit or relationships with creditworthy cosigners to access private loans in the first place.
For programs that are high in social value but low in personal ROI, such as teaching or social work, if a state determines this is an area of need, they can offer grants to lower the cost of attending these programs and minimize the amount of loans students will have to take out, in exchange for service in these fields for a specific period of time. Offering accessible, low-interest loans to students pursuing these careers could still be an option, but should be secondary, or supplemental to, grants.
In line with recommendations from a jointly authored report from the American Enterprise Institute, EducationCounsel and the Century Foundation, states can offer grants to graduate students who demonstrate financial need, in addition to targeted grant aid for certain programs. Already, certain states, such as Maryland, New Mexico, Virginia and Washington, offer grant aid to graduate students in specific fields or based on financial need. Massachusetts also offers a tuition waiver to incentivize students to enroll in graduate programs at its public universities.
Unfortunately, I was unable to find a single repository of state aid specifically for graduate students from various states. The closest I could find was a report released by the National Association of State Student Grant and Aid Programs for the 2023–24 academic year with data on state-funded expenditures for both undergraduate and graduate student aid. The report shows that only a handful of states allocated more than a million dollars to need-based graduate aid (Arizona, Colorado, Maryland, Minnesota, New Jersey, Texas and Virginia), but does not specify for which programs, nor does it detail how aid is awarded and to which institutions.
The Education Finance Council also maintains a list of nonprofit loan providers in different states that offer lower-interest or more accessible loans, many of which are state-administered, such as the Massachusetts Educational Financing Authority. States that already administer conditional loans, scholarships, grants or loan forgiveness programs at the undergraduate level should consider expanding these programs to high- demand industries that require postbaccalaureate credentials if they have not already.
What Can Institutions Do?
Institutions are the closest to students, and they can play a role as well. Beyond offering need-based grants/scholarships to lower the cost of attendance, institutions can also guide students in the lending process, such as by publishing preferred lenders on financial aid websites. These lenders should have a good reputation with borrowers and offer low interest rates. Examples of institutions that advertise preferred lenders include Baylor University, the University of Iowa and the University of Central Missouri.
Institutions with more financial resources can either directly partner with lenders to offer lower fixed interest rates through risk sharing or provide loans themselves. Harvard Law School makes loans available to graduate students through a partnership with the Harvard Federal Credit Union. Some private loan providers looking to get into the graduate lending space are now in conversations with institutions about developing new risk-sharing models.
Many occupations that typically require graduate degrees, such as teaching, nursing and medicine, will face steep shortages in the coming years. States should align aid programs with current and future workforce shortages, determine which graduate programs will exceed federal loan caps and by how much, offer targeted grants for high-social-value but low-earning fields where costs exceed caps, and provide below-market or zero-interest (and accessible) loans for high-social-value, high-earning fields.
Institutions must act urgently by partnering with accessible, ethical lenders; increasing need-based aid for students who need it most; and protecting students from predatory options. At the very least, institutions can advertise the upcoming student loan changes on their websites. With OBBBA loan caps, Washington is stepping back. Will states and institutions be able to step forward and lead the way in preserving access and promoting economic mobility? Only 2026 will tell.
Josh Farris is research and policy specialist and Derrick Young Jr. is cofounder and executive director at Leadership Brainery, a nonprofit organization focused on improving access to graduate education for students from limited-access backgrounds.
Many college students struggle to pay for college and living expenses, which can threaten their ability to remain enrolled and graduate.
A 2025 Student Voice survey by Inside Higher Ed and Generation Lab found that 42 percent of students identified financial constraints as the biggest challenge to their academic success, followed by the need to work while attending school. This was particularly true for students over 25 and those attending a two-year or public institution.
An unexpected cost can be detrimental to a student’s retention; one-third of Student Voice respondents indicated that an unplanned expense of $1,000 or less would threaten their ability to stay in college. A Trellis Strategies survey found that 56 percent of students would have trouble obtaining $500 in cash or credit to meet an unexpected expense.
However, nearly two in three Student Voice respondents indicated they’re unsure whether their college offers emergency aid, and only 5 percent said they had access to emergency aid.
During a session at Student Success US 2025, hosted last week by Inside Higher Ed and Times Higher Education in Atlanta, Georgia, Bryan Ashton, Trellis’s chief strategy and growth officer, outlined some of the challenges colleges and universities face in building awareness and capacity regarding emergency aid resources for students.
What it is: Emergency aid can be administered in four different ways: a one-time disbursement, completion aid, emergency support resources and cash transfers, Ashton said.
The first is the most traditional understanding of emergency aid, in which a student needs financial assistance to meet an unexpected cost such as a flat tire, medical bill or broken laptop.
Completion aid is delivered most often to students a few credits shy of graduating to ensure they’re able to finish their credential, with the understanding that it provides incremental revenue to the institution.
In some cases, institutions don’t provide funding directly to the student but help address financial insecurity through just-in-time resources, including housing vouchers or partnerships with social services.
And, increasingly, emergency aid comes in the form of regular cash transfers. One example is for student caregivers or parenting students who may be paying for childcare. “We transfer an amount of money to them every month that isn’t necessarily for childcare, but it’s earmarked to help offset expenses related to increased cost of attendance that a student’s having [to pay],” Ashton explained.
During the COVID-19 pandemic, many campuses distributed emergency aid to students using dollars from the Higher Education Emergency Relief Fund (HEERF), which proved largely successful in promoting student persistence.
Analysis of HEERF distribution showed the dollars helped over 18 million students remain enrolled, with 90 percent of institutions crediting the funding for aiding at-risk students in making progress toward their degree. A review of HEERF distributions at Southern New Hampshire University found that students were statistically more likely to stay enrolled if they received HEERF dollars, compared to their peers who didn’t.
Pandemic aid for colleges and universities has since ended, but many campuses continue to provide small grants to address students’ immediate financial needs, often relying on philanthropic donations.
Best practices: Ashton offered some practical insights and takeaways for colleges and universities looking to improve their emergency aid practices on campus.
Create a clearly defined approval process. One of the challenges with HEERF was that colleges had various implementation models for how the money was dispersed, where it was housed and when students would become eligible for funds, Ashton said. As a result, some colleges dispersed aid within days of getting the funds, whereas others waited until the last second. Colleges should establish clear and consistent policies for fund distribution and eligibility to ensure maximum reach and impact, he said.
Build a support network. Staff should connect emergency aid to other available resources, which can create a more holistic look at student financial well-being. “It shouldn’t just be that the student gets $500 but it also should be, are we looking at that student for public benefit eligibility?” Ashton said. “Are we looking at that student for housing and security risks? Are we looking at other things that we can try to match and mirror as part of that process?” Creating a centralized physical hub on campus can be one way to do this.
Quickly disperse funds. If the student is in a true emergency, providing funding before they leave higher education should be a top priority. “We don’t want that student talking to two or three committees, regurgitating a story, reliving trauma … that they’re not waiting a week for someone to make the payment,” Ashton said. One way to do this is for the institution to directly pay the claim, such as for a healthcare cost.
Leverage student stories. HEERF established a clear precedent for the role emergency aid plays in student retention, and colleges and universities should amplify that fact to advance fundraising, Ashton said. “There’s a really strong narrative around the desire to keep that student in school.”
Empower faculty and staff. Student Voice data shows that a majority of college students are unaware of emergency aid resources available on campus. Increasing awareness among student-facing campus members, including faculty and staff, can help close this gap.
A new report from the Century Foundation found that state and institutional grant aid too often flows to higher-income students who don’t need it, while low-income students continue to struggle with unmet need.
The analysis, released Thursday, shows that more than half of students from the top income quartile, 56 percent, receive grants that surpass their financial need, compared to a mere 0.2 percent of students from the bottom income quartile. That means that top income quartile students were 280 times more likely to receive grants that exceeded their level of need than their lowest income peers. The share of white students that receive grants beyond their needs (19 percent) far exceeds the share of Black of Hispanic students who receive such grants (5 percent).
Part of the issue is that the share of state grants that are merit-based jumped 17 percentage points between 1982 and now, according to the report. Over all, about 10 percent of grant aid—at least $10 billion annually in state and institutional aid—exceeds students’ financial need.
The analysis also found that state grants disproportionately go to students at highly selective public colleges versus students at open-admission public four-year institutions—$3,693 and $842 on average, respectively. And at four-year public colleges over all, students with an Expected Family Contribution of zero were less likely than students with higher EFCs to receive aid from their institution.
“What people think about as a pillar of the financial aid system in higher education has become a windfall for wealthy students that leaves working families paying the bill for tuition increases,” Peter Granville, the report’s author and a fellow at the Century Foundation, said in a news release.
One month ago, Republicans chose to shut down the government rather than protect our healthcare. Now, by refusing to process SNAP benefits for November, they’ve put 42 million working families at risk of going hungry or being forced deeper into debt just to put food on the table.
Most of us aren’t in debt because we live beyond our means — we’re in debt because we’ve been denied the means to live. This is especially true for SNAP recipients, most of whom are workers being paid starvation wages by greedy employers, or tenants being squeezed every month by predatory landlords. SNAP is a lifeline for people trapped in an economic system that’s designed to work against us, which is exactly why they’re trying to destroy it.
Authoritarianism thrives on silence and complicity. We refuse to give in.This weekend, organizers across the country are mobilizing a mass effort to connect people with existing mutual aid networks. If you are on SNAP and are not sure where to look for help, get plugged into your local mutual aid network to get your needs met and organize to help others meet theirs.
