Degrees Not Debt Act of 2025

Bill Number

H.R. 5675

Origin Chamber

House

Congress

119th Congress, Session 1

Policy Area

Education

Status

Introduced

Latest Action

2025-10-03: Referred to the House Committee on Education and Workforce.

Last Updated

2025-12-11T15:45:14Z

AI-Generated Summary

Purpose

The "Degrees Not Debt Act of 2025" aims to make higher education more affordable by increasing the maximum amount of Federal Pell Grants, which are need-based financial aid awards provided by the U.S. government to low-income undergraduate students to help cover college costs.

Key Provisions

• Maximum Grant Amount for Specific Years: For the 2026-2027 and 2027-2028 academic years, the total maximum Federal Pell Grant per student is set at $14,800. This amount is then reduced by whatever maximum grant level is specified in the most recent federal budget law (appropriation act) for that year.
• Adjustment for Later Years: Starting with the 2028-2029 academic year and beyond, the maximum grant begins at $14,800 and is increased annually by the "annual adjustment percentage," which reflects the estimated change in the Consumer Price Index (CPI—a measure of inflation based on the cost of goods and services). The adjusted amount is then reduced by the maximum specified in the applicable federal budget law.
• New Definition: The bill adds a definition for "annual adjustment percentage" to the Higher Education Act of 1965, tying it to CPI changes for the calendar year before the academic year in question, as calculated by the Secretary of Education.
• Effective Date: The changes take effect on July 1, 2026, and apply to all academic years starting on or after that date.

Significant Changes to Existing Law

• Amendment to Grant Calculation: This revises Section 401(b)(5)(A) of the Higher Education Act of 1965 (the main law governing federal student aid) by establishing a higher fixed starting maximum ($14,800) for initial years and introducing an inflation-based adjustment mechanism for future years. Previously, the maximum was set annually through budget appropriations without a statutory floor or automatic CPI linkage.
• Addition to Definitions: It updates Section 401(a)(2) by adding the new term "annual adjustment percentage," which formalizes how inflation is factored into grant amounts, ensuring they keep pace with rising costs over time.

Potential Impacts

• On Citizens (Students): Eligible low-income students could receive up to $14,800 in Pell Grants annually (subject to budget caps), potentially covering more tuition, fees, and living expenses, which may reduce reliance on loans and overall student debt.
• On Government Agencies: The U.S. Department of Education would need to implement the new calculation and adjustment processes, possibly increasing administrative workload. This could lead to higher federal spending on Pell Grants, estimated in billions annually depending on enrollment and appropriations, affecting the national budget.
• On Higher Education: Colleges and universities might see increased enrollment from low-income students due to better aid availability, but they could face pressure if federal funding does not fully match the statutory maximums.
• On International Relations: No direct impacts, as this is a domestic education funding measure.

Main Stakeholders Affected

• Students and Families: Primarily low- and moderate-income undergraduates who qualify for Pell Grants based on financial need.
• Educational Institutions: Public and private colleges, community colleges, and universities that rely on federal aid to attract and support students.
• Federal Government: The Department of Education (for administration) and Congress (for appropriations), as well as taxpayers funding the program.
• Advocacy Groups: Organizations focused on education access and affordability, such as student aid nonprofits.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: The bill strengthens the statutory framework for Pell Grants by embedding a higher baseline and inflation protection into law, reducing dependence on variable annual appropriations. This could lead to future legal challenges if budget shortfalls prevent full funding, potentially requiring court interpretations of the "reduced by" clause.
• Constitutional Implications: Relies on Congress's spending power under Article I, Section 8 of the U.S. Constitution, with no apparent conflicts; it promotes equal access to education without infringing on state rights or individual liberties.
• Political Implications: Positions higher education affordability as a priority, potentially influencing debates on federal spending and income inequality. If enacted, it could set a precedent for indexing other aid programs to inflation, affecting bipartisan negotiations on education budgets.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Carbajal, Salud O. [D-CA-24]

Recent Actions

• 2025-10-03: Referred to the House Committee on Education and Workforce.
• 2025-10-03: Introduced in House
• 2025-10-03: Introduced in House

Bill Versions

• Degrees Not Debt Act of 2025 — issued 2025-10-03 — PDF (3 pages)