The Shifting Landscape of Student Financial Aid
Dr. Sarah A. Outland
The recently passed “One Big Beautiful Bill Act” (OBBBA) has been getting a lot of airtime lately. Designed as a budget reconciliation package, it has far reaching implications for most Americans. However, for students these impacts are significant, especially for those who are not born into a financial safety net.
For financially vulnerable students like the ones we support at Last Mile, there are several items in OBBBA we are anticipating to have an impact on our awardees:
48% of Last Mile Students are receiving a Pell Grant. 48% of Last Mile awardees are receiving a Pell Grant*. In the last 50 years, the percentage of tuition covered by Pell Grants has fallen dramatically. Where they previously covered 90% of a public education in the 1970s, they now cover closer to 25%1. For most students, this isn’t coming close to supporting their entire degree, and odds are they are already juggling working hours alongside coursework. This is the case for 28% of Last Mile awardees who work 15 or more hours a week
Increased credit hour requirement for Pell Grant recipients. Students receiving Pell Grants will see a shift from a required 12 credit hours to 15. This is a significant change for any student, and an especially big shift for students who may also rely on working part-time jobs to fund college payments, housing, food, or other essential needs. We anticipate this displacing $2,250 in wages to students each semester.
Elimination of part-time Pell eligibility. For students who complete their degrees part time, often juggling parenting or other financial obligations, this financial support will be entirely removed from the table of financial aid offerings.
Immediate interest accrual on student loans. Historically student loans don’t begin accumulating interest for a student until they graduate or withdraw from their programs. Now, in the four-to-six years (or more) a student might spend completing their degree, or continuing their education into a graduate degree, interest will begin adding up on day one. We estimate this will add $5,300 to student loan burdens.
Stricter work requirements to qualify for SNAP benefits. The Supplemental Nutrition Assistance Program (SNAP) helps low-income students access food. Previously students only needed to be approved for federal work study to qualify for SNAP, without a required monthly threshold. With a new requirement of 20 hours worked per week, these students run the risk of overtaxing their schedules (given those 15 required credit hours) or failing to qualify for food benefits. For students pushed off of SNAP due to these changes, this will remove approximately $3,500 in basic need support.
These shifts intensify the challenges confronting financially vulnerable students. For a student who is not fortunate enough to be born into a financial safety net, earning a college degree is about to become even more challenging.
We already know what works: abundant, dignified, and timely financial support. Last Mile students are giving it everything they’ve got to finish and earn their degrees. A first-generation / low-income student earning a degree benefits us all. The impact of completing a degree leads to increased earnings of $32,500 more in a Last Mile student’s first year after graduation, compared to a peer with no – or an incomplete – degree. This can lead to an additional $567k in personal wealth over time, as well as a decrease in reliance on public assistance programs of $857k over 45 years. While the OBBB cuts may provide some short-term savings to the social safety net, in the long-term we all lose out when we stop investing in students.
In the meantime, we’ll continue providing financial awards to make the education ecosystem more equitable for all students until we create a world in which Last Mile is no longer needed. While we continue to chip away at the system, we’re gearing up for increased demand due to the new OBBB shifts.
60% of Last Mile awardees are always or sometimes worried about getting enough food. For many of these students, the benefits that make sure they don’t go hungry while they’re earning their degrees will be eliminated. Data as of July 30, 2025
* Data as of July 2025
1 Brand, J. E. (2023). Overcoming the odds: The benefits of completing college for unlikely graduates. Russell Sage Foundation.