On July 4th, President Trump signed H.R. 1, the One Big Beautiful Bill Act, into law. The 330-page act contains provisions that will reshape nearly every sector of the American economy and society. The rushed passage and sweeping scope of H.R. 1 have left many wondering: What’s actually in the bill and how will it affect me?

At Plural, this opacity strikes directly against our mission. From our open data to our AI bill summarizer trained specifically on legislative text, we strongly believe in the power of technology to unlock legislative insights for policy professionals, activists, and citizens alike. With this mission in mind, we are kicking off a series of One Big Beautiful Bill explainers. Each week we will dive into the megabill’s impact in a specific subject area with a text-first approach that pulls impacts directly from the bill. This week we kick off with a look at how the new law will impact American education.

Education is always at the forefront of public policy debates throughout the United States. The issue area is uniquely a core responsibility of local, state, and federal levels of government. At the federal level, the primary mechanism for effecting change is through the various ways in which the federal government finances education. This proved to be the case as we read through H.R. 1, with some of the most significant changes to education policy being directly tied to federal financing. Read on for an analysis of some of the most impactful education provisions within President Trump’s signature legislative package. 

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Saving & Paying for K-12 Education

A Federal “Voucher” Program

“School choice” advocates scored a win in the bill with the implementation of section 70411. The section creates a $1,700 tax credit for donations made to “scholarship granting organizations” (SGOs) which award scholarships for K-12 students to attend private schools. Taxpayers will now be able to effectively redirect up to $1,700 of their tax burden to help fund private K–12 education.

Increased Ability to Use 529 Plans for K-12 Education

H.R. 1 broadens the range of expenses 529 plans can cover in a K-12 setting to include instructional materials, tutoring, dual enrollment costs, and more. The bill also doubles the amount parents are able to withdraw for K-12 expenses from $10,000 to $20,000.  

Saving & Paying for Higher Education

Employer Payments of Student Loans

H.R. 1 makes permanent a provision from the CARES Act that allows employers to provide up to $5,250 in student loan payments as a benefit for employees on a tax-free basis. The law also adds a new provision to tie this cap to inflation so it will rise along with the cost-of-living index.

Use of 529 Plans for Postsecondary Credentialing

In addition to creating more 529 flexibility as it relates to K-12 education, the bill would also allow for 529 withdrawals to pay for “postsecondary credentialing expenses” including licenses and certificates. 

Limitations on Federal Loan Programs

Subtitles B-D of Title VIII overhaul the existing structure of student loan programs available to borrowers today. Notable changes include:

• Places caps on annual and lifetime borrowing for graduate and professional students as well as parents of students. 
• Limits lifetime borrowing for all student loans to just over $250,000.
• Reduces the number of repayment plans available to most borrowers from 12 to 2.
• Limits Pell Grant eligibility to full-time students. 
• Eliminates deferment options that aid borrowers when they are unemployed or facing economic hardship for loans beginning in 2027.

It is likely that these limitations on federal student loans will drive more borrowers towards private options. This is especially true for graduate students and those pursuing medical degrees who generally have to borrow hundreds of thousands of dollars to afford schooling. 

Taxation of Private Institutions of Higher Education

Expansion of the “Endowment Tax”

The bill makes adjustments to section 4968 of the tax code, which applies to the taxation of private college and university endowments. While the existing law includes a flat 1.4% tax rate for eligible institutions, this bill would increase that rate based on the size of the school’s endowment. The bill exempts schools with fewer than 3,000 tuition-paying students from the tax.

Additional Taxation of Excess Compensation at Tax-Exempt Organizations

Section 70416 of the bill amends existing law requiring tax-exempt organizations to pay an excise tax on compensation of their five highest paid employees if they earn more than $1 million annually. The Big Beautiful Bill applies this “excess compensation” tax to all employees earning more than $1 million annually. By removing the limit of the five highest paid employees the bill creates additional tax liability for non-profit institutions of higher education with more than five employees earning in excess of $1 million. 

Spending Cuts that Could Impact Schools

Eliminating Spending to Address Air Pollution at Schools

Section 60005 eliminates unobligated funding that was previously made available to address air pollution at schools. 

Cuts to Medicaid and SNAP

Through the implementation of work requirements and other restrictions, H.R.1 is expected to result in millions of Americans losing access to Medicaid, SNAP, and other social safety net programs. Cuts to these programs don’t just affect families – they threaten school budgets too. Medicaid helps fund school nurses, mental health services, and disability support. SNAP eligibility affects access to school meals, a key part of many students’ daily nutrition. Additionally, these cuts are expected to result in a loss of healthcare and/or food assistance for millions of students, families, and teachers. 

Conclusion

While education wasn’t the main focus of H.R. 1, the wide-ranging bill will have a significant impact on schools and students throughout the country. In effect, the law expands private education support, restricts federal aid for higher education, and weakens school-linked safety nets. Whether you’re a parent, student, or educator, H.R. 1 touches every level of the education system.