The Senate has passed its final version of the One Big Beautiful Bill Act (OBBBA) by a vote of 51-50, with Vice President Vance casting the tie breaking vote. This concludes a high-stakes legislative process that began in late April just as AACS kicked off our Hill Day. The bill now heads back to the House, which must pass the Senate’s version without changes to avoid further delays in order to meet the White House’s July 4 deadline. While the outcome in the House is presently uncertain, the Senate’s passage signals that this sweeping legislation is growing ever more likely to reach President Trump’s desk for signature. The version of the bill that just passed the Senate has been tweaked considerably since late last week. Our initial review is based on the most recent, public version of the legislation. We will provide further updates if Senate Republican leadership made additional changes during the final steps of the process. Key Wins for Career Education In a significant victory for AACS and the broader career education sector, the Senate-passed version of OBBBA includes several provisions that reflect months of advocacy and negotiation. - No Tax on Tips: A major win for our community, the bill includes a new federal income tax deduction for tipped workers. This means that tips earned by hairstylists, estheticians, and other beauty professionals will no longer be subject to federal income tax, up to a cap of $25,000 annually. The benefit phases out for individuals earning over $150,000 or couples earning over $300,000. This version does not include the tip tax deduction. While payroll and state taxes still apply, this provision is expected to increase take-home pay for thousands of beauty professionals.
- Subsidized Loans Remain: The Senate did not include the House’s proposed elimination of subsidized federal student loans and did not include caps on undergraduate borrowing.
- Pell Grant Expansion: Pell Grant eligibility remains largely intact and will now be extended to accredited shorter-term programs.
- Delay of Borrower Defense & Closed School Discharge Rules: The Biden-era borrower defense to repayment and closed school discharge rules will be delayed for 10 years, providing regulatory relief for institutions concerned about retroactive liabilities.
Provisions with Operational Impact for Career Education While the bill includes many positive changes, some provisions will require the promulgation of potentially complex new regulations and careful operational planning for schools. - Do No Harm Accountability Framework: A new institutional accountability system will tie access to federal aid to earnings. While we expect that this will not apply to certificate programs based on the statutory text, it will be important for the AACS community to work closely with the Trump Administration on the development of forthcoming regulations.
- Gainful Employment Remains: The Senate did not remove the statutory authority for gainful employment or 90/10, as had been proposed in the House. Given the similarities between Do No Harm and Gainful Employment, it will be critical for AACS to continue our efforts to challenge gainful employment in court as well to advocate for ED to rescind the Biden-era gainful employment regulations to avoid duplicative and contradictory accountability systems.
What Didn’t Make It Several concerning provisions from the House version were removed or revised in the Senate. - No caps on borrowing based on median program cost.
- No institutional risk-sharing framework, which could have imposed significant financial penalties on schools.
- No major restrictions on Pell Grant eligibility for non-traditional students.
AACS Government Relations has been actively engaged with lawmakers and coalition partners throughout this process. While we did not get everything that we wanted in the legislation, this is an important legislative milestone for our community. Many of these successes are thanks to our members and your tireless outreach to our elected officials. In the coming weeks and months, AACS will coordinate with member schools to assess operational impacts and will work closely with the Trump Administration on implementation. This legislation represents the most significant overhaul of federal education policy in nearly two decades. AACS will continue to advocate for fair, equitable treatment of career education and ensure our members are prepared for the road ahead. | 
