State Policy Digest | July 2025

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Supporting States to Proactively Prepare for the Widespread Federal Changes to Higher Education and Public Benefits

TICAS has been and will continue to monitor the unpredictable federal climate and its impact on higher education across states, regions, communities, and individuals.

On July 4, 2025, President Trump signed H.R. 1 into law. Our Federal Policy Update section contains more of our in-depth research and analysis on congressional proposals as the final law was being shaped. This section highlights three recent resources we’ve curated for state and local leaders. The common thread among them is the impact on state higher education budgets and how state higher education executive officer (SHEEO) entities may need to modify their operations, processes, and consumer protection policies as a result of these federal changes.

In A Looming Crisis for Public Colleges, a Chronicle Review op-ed, I highlight the potential impacts of the congressional proposals to cut Medicaid and SNAP spending. These cuts are very likely to lead to state budget cuts for higher education, as has been the case when state budgets are squeezed in recent decades. About 37 states finalized their fiscal year budgets by June 30, 2025. Delayed implementation dates by the U.S. Congress and the exact timing of when the looming cuts will materialize for states will become clearer in the months and year ahead, and state leaders should be prepared to review their spending obligations and priorities.

While H.R. 1 revised the original proposed cuts to both Medicaid and SNAP, it still requires states to take on more financial responsibility than current laws and regulations allow.

In An Emerging Threat: States Need to Protect Students from Harmful Short-Term Certificate Programs, TICAS Senior Advisor Chris Madaio raises the alarm about the U.S. Department of Education’s ability to enforce consumer protections against fraud at predatory institutions of higher education, given ongoing staffing changes in the Office of Federal Student Aid (FSA). He makes a strong case and provides practical advice for states to pass legislation and implement enforcement mechanisms to protect their students, particularly from the risks of very short programs offered by predatory schools.

H.R. 1’s inclusion of short-term Pell Grants (effective as of July 1, 2026) will require state and institutional financial aid leaders to assess whether and how this new source of aid for very short programs weaves in with other federal and nonfederal aid programs. Forthcoming from TICAS is state model legislation related to short programs that includes guardrails, data collection, and reporting guidelines for states to consider.

In States Need to Create New Pathways to Nonfederal Aid for Students Who Do Not Complete the FAFSA, I posit whether state and local leaders’ dependence on the FAFSA as the only entry point for nonfederal aid needs to be revisited. State leaders need to ask themselves whether existing processes that require the FAFSA to access state, institutional, and/or promise program funding may become barriers to states’ ability to meet their college access, completion, postsecondary attainment, and workforce development goals.

The final version of H.R. 1 includes an extra $1 billion for FSA to cover administration costs, including servicing the student loan program, to which H.R. 1 makes massive changes.

TICAS has had a presence in California for the past 20 years, Michigan for the past 5 years, and in New York for just over one year. Each team has been actively involved in promoting student-centered policy and advocacy in Sacramento, Lansing, and Albany and we are pleased to share a recap of where things stand in the current legislative and budget year in each respective state.

California

California has a two-year legislative session for 2025-26 and our team has been busy advancing several policy priorities from our 2025 California Playbook. Below are some highlights to date.

A final budget (AB102) includes several wins that TICAS and its coalition partners advocated for, including emergency grant aid, DREAMER resource liaisons, statewide financial aid outreach, and preventing cuts to the California State University and University of California system campuses.

The California team is monitoring several key higher education legislative proposals:

SB323 would open up the California Dream Act Application to all students.
AB313 would give the California Student Aid Commission discretion to modify the application deadline for 30 days in case there are any delays associated with the opening of the Free Application for Federal Student Aid (FAFSA).
SB790 would enter California into a national reciprocity agreement, such as NC-SARA; TICAS has proposed amendments that would bring in key consumer protection laws such as the Student Tuition Recovery Fund (STRF), which are currently not included in the bill.
AB866 would ensure that all student loan servicers are subject to California’s consumer protection laws and enables public prosecutors to enforce the law, prevent misconduct, and protect borrowers.

Michigan

The Michigan Legislature is currently hard at work navigating where budget proposals and the final budget will land for Fiscal Year 2026. While the TICAS MI team awaits remaining budget proposals from the House, the team is closely watching the following legislative budget proposals and policy movement impacting students.

MI House proposed education budgets: There are a few cuts and shifts that impact the supports, navigation, outreach, and equity for student’s postsecondary education exposure, access, and successful completion. The MI team monitors several budgets, four of which have been released in summary form by the House Fiscal Agency (HB 4577, HB4578, HB 4579, and HB 4580).
SB 382 and SB 383 would codify the state’s newest and most lucrative state financial aid program, the Michigan Achievement Scholarship.
SB 233 would permanently lower the age of eligibility from 25 to 21 for the MI Reconnect program, a community college tuition-free pathway for adults.
Other bills focus on continued investments in and streamlining of MI financial aid programs, outreach efforts, and data transparency.

Check out some of the MI team’s priorities for Fiscal Year 2026 here.

New York

New York’s legislature meets January to June but may return for a special session later in the year. Bills must be sent to the governor by the end of the calendar year and acted upon within ten days from the date a bill is sent.

New York Governor Kathy Hochul signed the 2025-26 Enacted New York State Budget on May 8, 2025. The budget:

Creates the New York State Opportunity Promise Scholarship, which provides funding for tuition, fees, books, and supplies for students between the ages of 25 and 55 to pursue degrees at state community colleges in high-demand fields. TICAS has developed recommendations to strengthen the implementation of this new program.
Includes $12 million in first-time dedicated funding for Advancing Success in Associate Pathways (ASAP) and Advancing Completion through Engagement (ACE) programs for the State University of New York (SUNY), $8 million in continued funding for ASAP and ACE for the City University of New York (CUNY), and continued funding for the Education Opportunity Program (EOP). ASAP, ACE, and EOP provide students with academic, financial, and personal support to succeed in college.
Increases the Excelsior Scholarship award to equal the resident tuition rate at SUNY.

Higher education-related policy changes include:

Adding requirements to the standard financial aid award letter to include the net cost of college and loan repayment options (A3464/S4200);
A requirement that private nonprofit postsecondary institutions that service student loans report aggregate data to the New York State Department of Financial Services, similar to other student loan servicers (A8067/S7752A); and
An expansion of the state’s basic consumer protection statute to ban unfair and abusive practices that gives the Office of the Attorney General enforcement authority, but leaves individual students without legal recourse for unfair and abusive practices (A8427/S8416).

The New York team is making progress towards its 2025 Policy Priorities, and there’s more to come as we continue to build a strong foundation, develop relationships, and work in coalition with advocates statewide to support students, borrowers, and state residents in future years.

2025 Federal Reconciliation Process

The 2025 federal reconciliation budget process spanned roughly two months and President Trump signed H.R. 1 into law on July 4, 2025.

To keep up with the rapid pace of this process that introduces significant changes to numerous federal safety net programs, taxes, and education, TICAS created a 2025 Federal Reconciliation Hub to feature our real-time research and analysis, highlight the work of our advocacy partners, and provide a one-stop resource to help guide congressional debates as we worked to prevent and mitigate any harms to students, taxpayers, state residents, and borrowers. The resources analyze the various proposals, identify those who might be most impacted by the proposed changes, and the implementation challenges associated with the proposals. Read our summary blog of the higher education provisions in H.R. 1.

President Trump’s Skinny Budget for 2025-26

On May 2, the White House Office of Management and Budget released the President’s Fiscal Year 2026 “skinny budget,” proposing massive cuts of $163 billion to non-defense programs. These programs include the Federal TRIO Programs, Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), the Supplemental Educational Opportunity Grant (SEOG), the Fund for the Improvement of Postsecondary Education (FIPSE), and Child Care Access Means Parents in School (CCAMPIS).

Among the cuts, TRIO and GEAR UP face near elimination, depriving students from families with low incomes, first generation college students, and students with disabilities of critical support services at institutions that promote achievement throughout the educational pipeline. Our TRIO and GEAR UP blog provides data and analysis of these programs intended to support secondary, postsecondary, and adult students toward educational achievement.

SEOG helps to fill the college affordability gap for low-income undergraduate students when the Pell Grant and other grant aid does not cover the total cost of attendance. Our SEOG blog breaks down the false and misleading claims the budget makes about SEOG as well as the importance of the program in helping students with low incomes enroll and stay enrolled in school.

FIPSE has historically served as the federal government’s primary innovation engine for postsecondary education, providing institutions with funds to test and scale solutions tailored to their student populations. These investments play a unique federal role as the nation works to improve student achievement, learning outcomes, and higher education’s return on public investment. It is both appropriate and essential for the federal government to identify, support, and scale effective practices across the country. Programs like CCAMPIS extend this role by improving learning and completion outcomes for student parents. Our FIPSE and CCAMPIS blog explores the President’s FY26 budget proposal to eliminate these two evidence-based and evidence-building college completion efforts.

Federal Advocacy & Coalition Update

TICAS and its federal advocacy partners have been meeting with federal policymakers and staffers as they worked to dramatically reshape higher education and public benefits policies nationwide.

Throughout this period, we: