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Reconciliation package reshapes student-aid rules and research funding, speaker warns
Summary
Tom Harnish outlined how the FY26 reconciliation package would change FAFSA asset tests, cap graduate and Parent PLUS borrowing, consolidate repayment plans, create a workforce Pell program with state approval, impose new accountability thresholds, cut Medicaid/SNAP funding with downstream effects, and cap indirect research-cost recovery at 15%, all of which could materially affect institutional budgets and student access.
Tom Harnish, vice president for government relations at the State Higher Education Executive Officers (SHEEO), told Midwestern Higher Education Compact attendees that the FY26 reconciliation package — described as a tax-and-spending measure — contains several provisions that will reshape institutional finance and student access.
FAFSA and asset exemptions: Harnish said the bill restores an exemption on the FAFSA for family farms and small businesses (firms with 100 or fewer employees) and that the exemption is reflected in the new FAFSA; he said the change takes effect in February 2026 and should help students in farm states.
Graduate borrowing and Parent PLUS: He described a major restructuring of graduate borrowing into two categories: a "master's" bucket (roughly $20,500 annually, $100,000 aggregate) and a "professional" bucket (roughly $50,000 annually, $200,000 aggregate). He said Grad PLUS will be phased out for new borrowers starting in 2026. On…
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