By Maria Carrasco, NASFAA Staff Reporter

Now that congressional Republicans have cleared a hurdle over government funding, they can turn their attention back to reconciliation. However, the process’s early stages, with dueling frameworks from the House and Senate, have led to fears among the higher education community. 

Those fears are that the process will result in vital programs facing funding cuts or even elimination should Republicans on the Hill try to mirror White House efforts to unilaterally cut department programs or even dismantle the government agencies themselves.

An Overview of Reconciliation 

Reconciliation is often used when there is a unified government. Now that Republicans currently control the House, the Senate, and the White House, Congress can use the reconciliation process to quickly advance legislation that directly relates to the federal budget. 

Through this process, legislation doesn’t need to meet the normal 60-vote threshold in the Senate. Instead, the reconciliation process only needs a simple majority of 51 votes to be considered and passed by the Senate. The chamber currently has a 53-47 Republican majority. In the House, the process only requires a simple majority of members to pass. The House currently has a 218-213 Republican majority, with four vacancies that will be filled through upcoming special elections.

Some examples of legislation considered under the reconciliation process include the Build Back Better Act, the American Rescue Plan Act of 2021, the Tax Cuts and Jobs Act, and more.

Previous efforts have been incredibly complicated for congressional leaders with Biden’s Build Back Better agenda and President Donald Trump’s effort, during his first term, to partially repeal the Affordable Care Act, which failed to advance. 

Both administrations were able to implement a stand-alone reconciliation package. Biden was able to enact the American Rescue Plan Act of 2021, the third COVID-related piece of legislation, while Trump was able to enact the Tax Cuts and Jobs Act. 

Republicans face a difficult pathway ahead since their majorities in both chambers are significantly narrow. However, both chambers have cleared their first hurdle needed to prepare a reconciliation package, and they were also successful in enacting a spending bill to prevent a government shutdown, indicating that their fiscal agenda could take shape under the streamlined reconciliation process. 

The First Stage of Reconciliation 

The reconciliation process begins with a joint budget resolution that calls for reconciliation agreed to by both the House and Senate. In mid-February, the House adopted a budget resolution that calls for $1.7 trillion in spending cuts and $4.5 trillion in tax cuts, which allows for a $2.8 trillion increase in primary deficits over the 10-year budget window from fiscal year (FY) 2025 to FY 2034. 

Specifically, the resolution directs the House Committee on Education and Workforce to find $330 billion in spending cuts over the 10-year period. This is where Republicans will draft possible cuts to higher education, among other areas. Some programs that may be vulnerable include the Saving on a Valuable Education (SAVE) repayment plan, the Public Service Loan Forgiveness (PSLF) program, and the PLUS loan program. 

At the same time, the Senate Budget Committee has introduced and considered its own budget resolution for FY 2025. The Senate’s resolution would allow for up to $175 billion of new funding for border security and immigration enforcement. It also directs Congressional committees to find at least $4 billion in spending cuts, $1 billion specifically for health, education, and labor programs. 

The Senate’s more narrow approach, adopted by a vote of 52-48, is expected to focus on immigration and military-related spending. Once that process is concluded, the chamber plans to turn to a second reconciliation package that would touch on tax-related provisions.   

Here’s Where Things Currently Stand

The House and Senate Budget committees are now tasked with agreeing to the same budget resolution and developing legislation. The House Ways and Means Committee several weeks ago developed a “menu” document, which lists options to produce savings. 

“As of right now, the reconciliation menu that has been circulating is just a list of ideas that would allow Congress to save money in certain areas,” said Nalia Medina, NASFAA’s assistant director of government relations. “While there are provisions in that document  that we are concerned about, we still do not know if all of those changes will be enacted in the final reconciliation package.”

A key priority for Republicans and the Trump administration is producing savings to pay for an extension of Trump’s Tax Cuts and Jobs Act, which is set to expire on December 31, 2025. House Republicans are looking to tackle tax legislation in their reconciliation bill, while Senate Republicans are currently considering holding those policies for a second package.

Notably, some options include repealing or reducing funding of key higher education initiatives. 

The Association of Public and Land Grant Universities (APLU) created its own document of the House committee’s “menu” with specific higher education programs and initiatives that could be on the chopping block. 

According to Craig Lindwarm, APLU’s senior vice president for governmental affairs, the “menu” proposed by the House Ways and Means Committee of potential cuts has a number of items that would be deeply concerning to students and institutions. 

Specifically, the “menu” proposes possibly repealing the Biden administration’s closed school discharge regulations, repealing the 90/10 rule, amending the need-analysis formula used to calculate federal student aid eligibility, reforming Pell Grants, or repealing the SAVE repayment plan. 

However, reconciliation has some limits. 

One key point is that once the House and Senate release their legislation, it will be subject to certain Senate rules, where provisions can be eliminated should the Senate parliamentarian deem them extraneous to the budget. The parliamentarian’s role, dubbed the “Byrd Rule,” is used to prohibit policies that do not change spending levels or address the debt limit. The Senate can vote to overrule the parliamentarian's ruling, but that requires 60 votes.

Another example of limits placed on the process is that Republicans may not be able to use the repeal of the SAVE repayment plan as a possible savings tool, since the program’s future remains unclear. In February, the 8th Circuit Court of Appeals ruled to uphold its injunction, which continues to block the SAVE plan in its entirety, including the forgiveness provisions. 

If the SAVE program were to be shutdown, the reconciliation plan would need to find savings elsewhere or it would be forced to remove new spending provisions that require an offset. 

The “menu” currently estimates that repealing the SAVE plan would generate $127.3 billion in 10-year savings. 

“Right now, there are many different options that Republicans are considering, many of which would have adverse impact to students and institutions,” Lindwarm said. “Ultimately, APLU would hope that as they weigh all the various options, they make decisions that prioritize higher education and find alternative ways to pay for the extensions of the Tax Cuts and Jobs Act.”

Lindwarm noted that several parts of Rep. Virginia Foxx’s (R-N.C.) College Cost Reduction Act (CCRA) may show up in a Republican reconciliation bill. The legislation was introduced in the previous 118th Congress, and did not make it to the House or Senate floor for a vote. However, the CCRA may get a second chance with this year’s Congress.

In the Republican proposed “menu,” one potential savings provision is the establishment of institutional risk-sharing requirements for federal loans. This comes from the CCRA, which specifically included a provision that institutional risk-sharing is a condition for participation in the Direct Loan Program. Under the CCRA, institutions would be required to remit annual payments to the Department of Education (ED) for a percentage of the non-repayment balance of a cohort of borrowers.

In its “menu,” Republican lawmakers also noted that these risk-sharing payments would be the main source of funding for the Promoting Real Opportunities to Maximize Investments and Savings in Education (PROMISE) grants, which would be made available to eligible institutions in order to help improve affordability and promote post-secondary completion for students. In the CCRA, the PROMISE grant program would replace FSEOG and LEAP programs. 

According to the “menu,” establishing these risk-sharing payments would generate $18.1 billion in 10 years. However, there are questions about whether the Senate parliamentarian would allow this risk-sharing provision to be added to the reconciliation legislation. 

Another part of the CCRA that could impact reconciliation is the elimination of the PLUS loan programs. In the CCRA, the Graduate PLUS and Parent PLUS loan programs would be eliminated and subsequently replaced by a Pell “Plus” program. The Republican “menu” specifically noted that eliminating Graduate and Parent PLUS Loan programs could take effect for new borrowers beginning on July 1, 2025, and would eliminate the program altogether by 2028. The Republican menu does not list an estimated amount of savings with this proposal. 

There are other federal student aid programs that could be impacted by a reconciliation bill – such as the federal Pell Grant program and the Public Service Loan Forgiveness (PSLF) program. 

Specifically, as the “menu” notes, Republicans may opt to reform the Pell Grant program – such as capping grants at the median cost of attendance, or expanding Pell Grant eligibility to short-term credential programs. The “menu” does not note the estimated savings of reforming the Pell Grant program. 

During the last Congressional session, legislation for short-term Pell Grants was introduced but did not get voted on the House or Senate floor. 

However, there are currently significant concerns over Pell Grant funding following recent projections from the Congressional Budget Office (CBO) indicating that the program could face a funding shortfall of about $2.7 billion in fiscal year (FY) 2025. By the end of FY 2026, the budget shortfall could be nearly $10 billion.

Recently, NASFAA and other members of the Student Aid Alliance, sent a letter to top congressional appropriators, calling on the lawmakers to protect and maintain funding for federal student aid programs in FY 2026, including the Pell Grant program.

The Public Service Loan Forgiveness (PSLF) may also be reformed as a part of the budget process. Under the “menu,” a reconciliation bill could allow the Committee on Education and Workforce to limit eligibility for the program. Already, the Trump administration has directed ED to make changes to the program and rescind eligibility from organizations engaged in “illegal activities.”

What Are the Next Steps in the Reconciliation Timeline?

So far, the House and Senate Budget committees have yet to release their legislation with specifics on what programs or initiatives may be on the chopping block or agree to a budget resolution that could be agreed to by both chambers. 

While Congress did avoid a government shutdown and postponed their next deadline for spending bills, including ED’s funding levels, until September 30, they now must begin coordinating between their House and Senate colleagues. Republicans could embark on a large reconciliation package, take on a more narrow framework, or find some compromise. 

Still, it is unclear whether both chambers have come to an agreement on a timeframe.

According to recent reports, there are still some significant gaps between House and Senate Republicans. While House Speaker Mike Johnson (R-La.) has been pushing to have the process wrapped up by Memorial Day, some Senators have floated August as a possible deadline.

In the coming weeks, both chambers will need to come to an agreement on a single budget resolution that can be approved by both chambers so that relevant committees can then begin to detail where spending cuts will be made.

Recent reports indicate that both chambers aim to reach an agreement on a budget resolution by April 11. This would allow Republicans to draft the spending plan with specific funding levels. 

If the reconciliation process is not entirely wrapped up by September 30, the process will need to start over due to the change of the fiscal year, which will require the budget resolutions to be redrafted and adjusted to reflect the upcoming budgetary period. The Senate parliamentarian has previously advised that a set of reconciliation instructions does not remain usable after the end of the fiscal year that they address, said Molly Reynolds, senior fellow of Governance Studies at Brookings.

Reynolds noted that if Congress does lose an opportunity to pass a reconciliation bill in FY 2025, they could still have another chance in FY 2026 and 2027, using instructions from the respective year.

In March, House Republican leadership and committee chairs – including Rep. Tim Walberg (R-Mich.), chair of the House Education and Workforce Committee – released a joint statement on their commitment to pass a reconciliation bill that “secures our border, keeps taxes low for families and job creators, grows our economy, restores American energy dominance, brings back peace through strength, and makes government more efficient and more accountable to the American people.”

“We took the first step to accomplish that by passing a budget resolution weeks ago, and we look forward to the Senate joining us in this commitment to ensure we enact President Trump’s full agenda as quickly as possible,” the lawmakers said in a joint statement. “The American people gave us a mandate and we must act on it. We encourage our Senate colleagues to take up the House budget resolution when they return to Washington.”

Stay tuned to Today’s News for more updates on the reconciliation process.

Publication Date: 4/1/2025

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.