A Message from Chancellor Tony Frank

Colleagues,

All of you know how difficult it has been to keep pace with the numerous federal changes (and subsequent court actions and administration responses) that are impacting higher education. CSU System leadership remains actively engaged with our Congressional delegation, professional organizations, and governmental affairs teams in on-going discussions around student aid, as well as research funding, and indirect cost recoveries associated with our research mission. We’re following closely the State of Tennessee’s challenge to the law that underpins Hispanic Serving Institutions such as CSU Pueblo.  Funding for any number of access-oriented programs (including the TRIO programs) remains in doubt, and there are a lot of on-going and complex dynamics in all of these conversations.

The list of federally funded efforts that have slowed without a clear indication of the path forward remains uncomfortably long. And on July 4, the President signed into law the One Big Beautiful Budget Act (“OBBBA”) – a massive fiscal reconciliation package (~887 pages) that combines sweeping tax reforms and large-scale spending cuts with non-traditional fiscal changes that will impact America’s higher-education system.

The purpose of this communication is to offer you a summary of what we know to date about OBBBA’s impact on CSU System campuses. You are welcome to post, share or use this information as you see fit in your communications. And of course, we will share updates as we have them.

Higher education related areas of OBBBA can generally be broken down into four categories.

1. Loan program changes
   1. The Grad PLUS program, a federal student loan program that helps graduate and professional students finance their education, has been eliminated. Graduate and professional student borrowing is now capped at $20,500 per year, with a $100,000 total lifetime cap for graduate-level programs. For professional students (law, medicine), the cap is $50,000 annually, with a $200,000 lifetime limit.
   2. Parent PLUS loans now have a $65,000 lifetime cap, down from near-unlimited borrowing.
   3. These changes are effective July 1, 2026.
2. Loan repayment changes
   1. OBBBA streamlines repayment into just two options, a Standard Plan with fixed monthly payments over 10–25 years or the Repayment Assistance Plan (RAP, a new, income-based plan charging 1–10% of income with a $10 minimum) for borrowers with new loans made on/after July 1, 2026.
   2. Deferment for unemployment or economic hardship has been eliminated for borrowers with new loans made on/after July 1, 2027.
3. Accountability & Pell Grant Expansion
   1. Colleges/programs whose graduates earn less than the state median high school graduate may lose access to federal loans, introducing earning-based eligibility to federal grants. Data from Colorado Commission on Higher Education’s recent accountability formula indicates that this is unlikely to impact CSUS institutions substantially, although specific programs may be impacted in a limited number of cases. How this might impact the institution as a whole remains unclear.
   2. Pell Grant eligibility now includes short-term workforce training (under 8 weeks), excluding unaccredited providers.
4. Endowment Tax & Institutional Impact
   1. OBBBA applies a new, tiered tax on university endowments, now 4% for institutions with endowments that are $750,000 to $2 million per student and 8% for institutions with endowments exceeding $2 million per student (up from 1.4% flat for all institutions). Given CSUS institutional endowment numbers per student, this change should not impact us.

Taken together, critics worry that these changes will limit access to higher education and possibly drive a resurgence in higher-cost private loans. There’s no doubt that this will represent additional federal reporting for our institutions. On the other hand, supporters of OBBBA’s higher-ed changes argue that these are modest reforms that simplify the loan system, limit inflation, increase public accountability, and bolster workforce training.

The institutions of our System and the State of Colorado maintain robust, non-federally funded student financial aid programs, including generous philanthropic support. We’ll continue to work at the federal level to maintain access funding in any and all forms. Will the OBBBA changes stress those systems? That seems likely. Do they leave us without resources? Absolutely not. And herein lies a major challenge for us – the need to communicate effectively with current and potential students that financial aid to higher education has not vanished and applying to college is still very much worth their time. I know our staff in all our financial aid offices are ready to assist in whatever ways they can to help assure the doors of educational access remain open to all. That is a commitment we all share – it has always been, and remains, a core piece of our CSU System mission.

As always, let me know if you have questions or suggestions. 

Thanks for all your efforts to manage and communicate around these challenging situations.

– tony

Tony Frank, Chancellor
CSU System