Debt Bomb: New Bill Aims to Make Colleges Pay for Worthless Degrees

What Happened

President Trump is backing a major bill that strives to reshape how higher education gets funded, as well as who’s held accountable when students rack up debt for degrees that don’t pay off. The proposal is included in the ‘Big Beautiful Bill’ and targets colleges that churn out underpaid or unemployed graduates.

Under this plan, universities would reimburse the federal government when student borrowers default or when graduates fail to earn a minimum income threshold. The bill is already gaining traction in Congress. If passed, it would apply hard financial pressure on schools to improve outcomes or lower tuition for low-return degrees.

Why It Matters

For decades, colleges have had zero financial responsibility when students take on colossal loans and end up with low-paying jobs, or no job at all. As of June 2024, Americans collectively owed around $1.6 trillion in student loans, which is 42% more than what they owed only a decade earlier. The risk of taking out massive loans at a young age has been entirely shouldered by students and taxpayers.

This bill would shake things up by ensuring that the universities now have skin in the game on defaulted loans. According to the Pew Research Center, young college graduates with student loans tend to struggle financially at far higher rates than those without. And while those with college degrees still out earn their counterparts that don’t hold degrees, about one-third of college graduates with outstanding debt believe their degree wasn’t worth it. 

What makes this different from earlier accountability efforts is its precision. Rather than judge a college broadly, the bill measures outcomes by individual degree program and location. This means expensive, low-ROI programs like certain gender studies or media degrees could suddenly become financial liabilities for colleges.

 How It Affects You

For prospective students or the parents of prospective students, your college options could shift dramatically. Expect schools to start scrapping or scaling down programs that consistently leave grads broke. There also might be far more transparency on real-world earnings data tied to majors.

For those already in school, institutions may try to steer students toward majors with better financial outlooks or cut financial aid for programs that fail the value test. On the upside, tuition might drop in certain departments as colleges try to avoid paying penalties.

Taxpayers stand to benefit as well. Instead of debating on whether to forgive loans in an endless cycle, the bill puts the burden on the institutions that created the debt problem. Over time this could save billions.

If passed, this policy will change the landscape of higher education as we know it. At its core, the bill stands to force colleges to rethink which degrees are worth offering and which ones just aren’t worth the cost.