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News and Updates About Federal Financial Aid & the FAFSA: Students | Practitioners

For Practitioners: News and Updates About Federal Financial Aid & the FAFSA

Updated as of 9/3/25

What is the status of FAFSA and financial aid right now?

The FAFSA is open and financial aid programs continue to exist. We encourage students to continue with their FAFSA and state financial aid forms. The FAFSA for the 2026-27 school year opened on September 23, 2025. For more information about the changes to the FAFSA for the 26-27 school year, check out uAspire’s blog post.

What is the “One Big Beautiful Bill Act”?

President Trump signed the “One Big Beautiful Bill Act”. This bill was passed along party lines by the Republicans using a process called reconciliation which allows certain revenue and spending policies to be passed by a simple majority. The bill cuts revenue by $4.5 trillion over the next ten years by making income tax cuts passed in 2017 permanent. The Congressional Budget Office predicts a $3.4 trillion increase in the deficit over ten years. The bill cuts $3.5 trillion in spending cuts over ten years, mostly targeting federal social programs.

The bill makes changes to the student loan program, student loan repayment options, types of programs eligible for the Pell Grant, financial aid eligibility calculations, and higher education institution accountability rules. The bill also impacts healthcare, nutrition benefits, immigration enforcement, and other government programs. For a full analysis of the impact on financial aid, check out uAspire’s recent blog post.

What is happening with Public Service Loan Forgiveness?

On March 7, President Trump signed executive order “Restoring Public Service Loan Forgiveness". The PSLF program was created through bipartisan legislation in Congress and signed into law by then-President George W. Bush in 2007. People who borrow Federal Direct Loans who work for a qualified employer can have the remainder of their loans canceled after they make 10 years of payments (120 qualifying payments). Qualified employers include:

  • US-based government at any level (federal, state, local, or tribal), including the military

  • Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code

  • Other not-for-profit organizations that devote the majority of their time to providing specific qualifying public services.

Staff of for-profit organizations, labor unions, and partisan political organizations are not eligible for PSLF.

The Executive Order directs the Secretary of Education to revise the regulations that spell out the details of the Public Service Loan Forgiveness Program so employers that do certain activities do not count as qualifying employers. The EO lists out the specific activities including “aiding and abetting violations of 8 U.S.C. 1325 or other Federal immigration laws” and  “the trafficking of children to so-called transgender sanctuary States for purposes of emancipation from their lawful parents, in violation of applicable law.

There is no immediate effect or change to PSLF. The Department is working on regulations to implement this executive order. ED posted proposed regulations on the Federal Register on August 18. Members of the public can give feedback until September 17. However, current federal law clearly states that any 501(c)(3) nonprofit is a qualifying employer for PSLF. Several education organizations, including the National College Attainment Network, have stated that this change would not be legal. We expect there will be lawsuits if the Department attempts to roll out these regulations.

SAVE plan loans to begin accruing interest

Borrowers enrolled in the Saving on a Valuable Education (SAVE) repayment plan are now accruing interest on their loan balances, as of August 1. This ends borrowers’ interest-free forbearance period. NASFAA has a write-up about this. 

What is happening to borrowers whose student loans are in default?

The Office of Federal Student Aid (FSA) has resumed collections of its defaulted federal student loans. Technically, a borrower is considered in default when they have entered repayment and then fail to make a loan payment for at least 270 days. This does not apply to students who have taken out a loan and repayment has not yet started because they are still enrolled or are in their grace period. People can check the status of their student loans by logging into StudentAid.gov. The online dashboard shows how much debt they owe and to whom, their monthly payment amount, and if they are in default or not. 

Borrowers in default should go to the Default Resolution Group website to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. This NPR article has more information.

IRS and DHS Data Sharing

On Monday, April 7, the Department of Homeland Security and the Internal Revenue Service signed a memorandum of understanding. The agreement means the IRS will share tax information about some immigrants without legal status in response to requests US Immigration and Customs Enforcement. The agreement was announced in a court filing as part of a lawsuit filed in March challenging the legality of the IRS sharing tax information with other agencies. 

The agreement establishes that ICE officers can ask the IRS for information about immigrants who have final orders of removal or are under criminal investigation, including for failing to leave the country after 90 days. This is a substantial change in how IRS data are used. Previously, IRS policy encouraged immigrants to pay taxes, and assured undocumented taxpayers that their information is confidential. This NPR article has more information.

Data and DDX

The data-sharing agreement between ICE and the IRS does not grant access to FAFSA data. It's important to note that FAFSA data is distinct from the information maintained by the IRS.

To our understanding, this data-sharing agreement will not impact the use of the Direct Data Exchange (DDX) on the FAFSA. Granting consent for the use of the DDX does not present any additional risk of information exposure.

uAspire suggests these resources provided by immigration policy experts.

Explainers:

State-specific lists of immigration law and service providers

General legal rights resource regarding if one is stopped, arrested, or detained:

Are student loans moving?

On Friday, March 21, when President Trump signed the executive order dismantling the Department of Education, he said he has decided that the student loan program will move to the Small Business Administration. This is a separate agency from the Department of Education. However, specifics of a plan to move the loan program have not been announced. The loan program has not moved. Furthermore, current law says the Office of Federal Student Aid (FSA) is the administrator of the student loan portfolio. It is not clear how these responsibilities could be legally moved without a vote of Congress. We do not know if the student loan program will ultimately be moved. If it is, we expect there would be an additional lawsuit against it.

What is happening with the Department of Education?

On March 20, President Trump signed an executive order (EO) calling for closing the Department of Education. The Department was created by Congress and cannot be closed without a vote by Congress. Congress would need to vote to eliminate the Department of Education or federal financial aid, and the President cannot do this alone. There has been long-standing support for the Pell Grant by Republicans and Democrats, so we do not expect them to vote to eliminate the FAFSA and financial aid. 

On 3/11/25, the Department of Education fired 1,315 employees, resulting in the Department reducing staff by 50%. The President can reduce staff without eliminating the Department. We have concerns that with fewer staff, the Department will not be as well equipped to administer its programs. We will continue to monitor this situation and advocate to our federal representatives about the importance of funding staff to administer federal financial aid.

Do students who have already completed the FAFSA need to update their answer to the gender question?

As of 2/14/25, the gender question on the FAFSA has been updated to comply with the Trump Administration’s Executive Order recognizing only “male” and “female”.  The question now requires students to choose either male or female, while previously the options included “nonbinary” and “prefer not to answer”.

The FSA announcement advises that students who previously answered this question on the FAFSA do not have to go back and make changes.  Students who answered the previous version of the question with ‘nonbinary’ or ‘prefer not to answer’ will be prompted to answer it again only if they need to make a correction to the FAFSA for any other reason.  The demographic questions are for informational purposes only and do not affect eligibility for federal student aid.