Our Wishlist for Higher Ed Reform
Now that Congress has resolved the government shutdown, attention is turning to what comes next. For Republicans, that likely means early planning for a second round of reconciliation—call it Reconciliation 2.0.
We should first acknowledge how much lawmakers accomplished in the first reconciliation effort. The “One Big Beautiful Bill” introduced long-overdue accountability in higher education, finally tying colleges’ access to federal student aid to whether their graduates achieve reasonable financial outcomes. The bill also set reasonable limits on student loans, particularly at the graduate level. Those were major steps forward—ones we admire and have advocated for years.
Still, there’s more work to do. Policy reform through reconciliation isn’t a blank slate. Only provisions with budgetary implications can be included, though recent history has allowed a liberal interpretation of that rule. Within those limits, there’s still room for meaningful higher-education reform.
At the top of our wish list is a small but important revision to the accountability system created in the first bill. The current rule focuses solely on earnings, applying a single dollar threshold that ignores the cost of the program as the gatekeeper to federal student loan dollars. As we said, that was a tremendous innovation that alone will protect students and taxpayers alike. But we see room for improvement.
Congress should refine the rule by incorporating price alongside earnings. In addition to judging programs on an absolute earnings level, programs should be evaluated on a ratio—earnings relative to cost. A clean starting point would be ensuring that graduates’ earnings above a benchmark are sufficient to recoup what they paid for their degrees within ten years.
That design could be adjusted, but the principle is simple: accountability should reflect both sides of the value equation—what students get and what they pay.
If a college charges too much relative to what its graduates earn, it has two options: help graduates earn more, or—more likely—lower prices. Lower-cost programs could preserve access to aid by keeping prices in line with outcomes, even if their graduates earn less in absolute terms. That’s the dynamic policymakers should want to encourage.
This approach would make accountability fairer to programs that serve low-income students or train workers for essential but modest-paying occupations such as teaching or nursing. They could remain eligible for aid by maintaining affordability rather than inflating prices. Conversely, high-cost programs with weak outcomes would face sharper consequences.
Crucially, this reform fits squarely within reconciliation’s boundaries: it directly affects eligibility for federal loan dollars, one of the largest components of the federal budget.
Congress should also address one of the worst-designed lending programs on the books: Parent PLUS loans. Created to help families bridge the gap between what colleges charge and what students can borrow, Parent PLUS has instead become a driver of both tuition inflation and household hardship. Colleges know parents can borrow nearly unlimited amounts, so they raise prices. Meanwhile, too many middle- and low-income families take on high-interest debts they can never repay, under pressure from the narrative that a college degree is an essential part of the American dream. The result is a quiet financial crisis among older Americans who borrowed not for themselves but for their children. Eliminating Parent PLUS would protect families, slow tuition growth, and refocus aid on programs that deliver genuine value.
A third reform would rethink when students are first allowed to borrow. Congress should bar first-year undergraduates from taking out student loans altogether. Freshman aid packages should consist exclusively of grants—funded in part by institutions—while loans could become available in the second year and beyond. Only students who demonstrate the ability to complete college-level work would gain access to borrowing. That change would make “trying” college a less risky venture for students, families, and taxpayers alike.
Together, these three steps—adding price to accountability metrics, ending Parent PLUS loans, and delaying borrowing until the second year—would push the federal aid system toward a more rational and sustainable design. They’d encourage affordability, protect families from excessive debt, and ensure that taxpayer dollars flow only to programs with measurable value.
Republicans could present these ideas as fiscal responsibility: stopping wasteful spending and curbing reckless lending. Democrats could highlight their equity benefits: fairer accountability rules and protections for vulnerable borrowers. There’s room for both principle and pragmatism here.
Reconciliation is never easy, and these are heavy lifts. But they’re worth it. If Congress could deliver even one of them, it would make the next academic year—and the next budget cycle—look a lot brighter for students, families, and taxpayers alike.
