On July 4, President Trump signed into law a massive legislative package that makes major changes to federal higher education policy and critical programs. This piece explains how the legislation will impact students’ basic needs security, highlighting changes to the Supplemental Nutrition Assistance Program (SNAP) and Medicaid.
The changes to SNAP and Medicaid included in the final reconciliation bill will impact millions of people, including students with low incomes, first generation students, parenting students, and rural students who rely on these programs to meet their basic needs. Without access to these programs, many will be forced to work additional hours to afford nutritious food and quality health care services, resulting in less time to focus on completing their degree or credential, ultimately making their path towards self-sufficiency more difficult. Furthermore, the cuts will put pressure on state budgets, requiring states to make tough decisions to cut benefits, reduce other program spending, or a combination of sorts.
SNAP: Expansion of Work Requirements and Cost Shifts to States
The law narrows SNAP eligibility by increasing the work requirement age from 54 to 64 for able-bodied adults without dependents (ABAWD). SNAP participants with children over 10 would also be subject to work requirements. Currently, individuals with children under 18 are exempt from the ABAWD work requirements. This expansion of work requirements comes at a time when many potentially eligible single parents already do not receive benefits and 28.7% of undergraduate parenting students experience food insecurity.
Additionally, states will now be responsible for a larger portion of administrative program costs. Administrative costs are the costs state agencies rely on to conduct SNAP, such as salaries for agency staff. SNAP is currently administered through a partnership between the federal government and the states, at about a 50/50 share. Beginning in Fiscal Year (FY) 2027, the federal government would decrease their share to 25%, making states responsible for 75% of SNAP administrative program costs.
For the first time in program history, states will also pay a portion of SNAP benefits. Benefits are the allotments that SNAP participants receive to purchase food. The law shifts a portion of SNAP benefit costs to states if they have a payment error rate above 6%. States with higher error rates would contribute more toward SNAP benefits, though their share would be capped at 15%. Cost-sharing begins in FY 2028 with some flexibility in how error rates are determined at the beginning of the implementation period. This is a decrease from the initial House proposal that included cost share thresholds up to 25%. States whose FY 2025 and/or FY 2026 payment error rate is 20% or higher will have until FY 2029 or FY 2030, respectively, to delay the cost-share requirement.
Based on FY24 SNAP payment error rates, 38 states would be responsible for at least 10% of benefit costs. TICAS will publish an updated analysis of SNAP benefit cost shifts in relation to state higher education budgets in the coming weeks.
| SNAP Payment Error Rate | State Share |
|---|---|
| Error rate below 6% | No benefit cost share requirement |
| 6%-8% error rate | State required to pay 5% of SNAP benefits |
| 8%-10% error rate | State required to pay 10% of SNAP benefits |
| 10% or higher error rate | State required to pay 15% of SNAP benefits |
Medicaid: New Community Engagement Requirements and Limitations on Provider Taxes for Health Care Providers
The reconciliation law creates new community engagement requirements for Medicaid enrollees. Able-bodied adults ages 19-64 will soon be subject to work requirements of at least 80 hours a month as a condition of Medicaid eligibility. This provision will take effect on January 1, 2028. Certain populations are exempt from this provision, including parents and caretakers of someone with a disability or a child 14 or younger. Community engagement is defined as work, participation in a work program, community service, or enrollment in an education program. The definition of “enrollment in an education program” is still undetermined. However, up to 14.8 million individuals could lose their coverage with the inclusion of work requirements for Medicaid, which research shows ineffective at improving work participation.
The bill also reduces taxes for health care providers. This provision prohibits all states from increasing health care provider taxes used to fund the state’s share of Medicaid spending. The current maximum rate for states is up to 6%, and the new law would gradually decrease Medicaid expansion states rates by 0.5% annually until it is 3.5% beginning in 2028. The differing treatment of non-expansion and expansion states will likely halt efforts to expand Medicaid in states that have not done so by reducing any financial incentives to expand, effectively limiting health care coverage for individuals below 138% of the federal poverty line (FPL).
Repercussions of Reconciliation on Student Basic Needs Insecurity and State Budgets
The expansion of work requirements and cost shifts to states will result in loss of critical nutrition resources and health care coverage for those who need it most. More than one in five students experience food insecurity. Cutting SNAP will exacerbate this issue, especially for student populations like parenting students who will now be subject to stricter work requirements. New Medicaid work requirements will result in millions losing coverage and will place additional burdens on 3.5 million students enrolled in the program, to access essential health care services. Changes to provider taxes for health care providers will impact the delivery of quality care and limit the ability of people with low incomes to access care, especially those in rural or underserved communities where few providers exist and operate on razor thin margins.
With cuts to SNAP and Medicaid, many will be looking for states to fill the gap, but most state budgets are not equipped to absorb these costs. Historically, states have turned to discretionary programs like higher education to reduce spending in times of economic downturns, making college less affordable and putting postsecondary education out of reach for many. State policymakers should not have to decide between someone losing healthcare, accessing food, or losing access to college, but the “Big Beautiful Bill” is likely to put states in exactly this position. When we place higher education further out of reach, we reduce the opportunity for Americans to rise out of generational poverty and stymy the nation’s economic growth.
