Students and parents are juggling rising college costs, legal uncertainty, and new signals from the federal government — all at the same time. This week’s top stories reflect that tension: warnings about institutional stability, a legal challenge that could upend aid for undocumented students, and renewed movement on student loan forgiveness.
Here’s a quick look at the most important developments shaping higher education and student finances this week for November 28, 2025.
🎓 Headlines at a Glance
- Credit rating agency Moody's keeps a “negative outlook” on U.S. colleges for 2026.
- California’s in-state financial aid for undocumented students faces a legal challenge from the federal government.
- U.S. Department of Education resumes processing student loan forgiveness applications.
- California State Treasurer Fiona Ma was on the The College Investor Audio Show talking about saving for education.
San Diego State University, San Diego, CA
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1. Moody’s Keeps A Negative Outlook On Higher Education
Credit rating agency Moody’s reaffirmed its negative outlook for the higher education sector in 2026, warning that rising costs, demographic headwinds and shrinking enrollment could squeeze many institutions’ finances.
The report projects that revenue growth for colleges will slow, while expense growth may outpace income - especially for smaller or less-selective institutions. Debt-heavy schools and those reliant on tuition may face pressure to cut costs, scale back programs, or raise tuition for remaining students.
➡️ Impact: As colleges scramble to stabilize finances, some may raise net costs, reduce course offerings, or tighten admissions - potentially limiting choices, increasing competition, or changing the value proposition of certain degrees.
2. Legal Fight Over Financial Aid for Undocumented Students in California
The federal government filed a lawsuit (PDF File) challenging California policies that gives in-state tuition and state financial aid to undocumented students who meet residency or high school attendance requirements. The challenge targets financial aid schemes used by public colleges and universities in the state.
If successful, the case could end in-state tuition for many undocumented and mixed-status students — potentially forcing them to pay higher out-of-state tuition, lose access to state grants, or abandon college altogether.
➡️ Impact: For undocumented students or those from mixed-status households, college affordability may suddenly change. Families should monitor the case’s progress closely and consider backup plans, including community colleges.
3. Student Loan Forgiveness Processing Resumes at Department of Education
The U.S. Department of Education has restarted processing student loan forgiveness and discharge requests, meaning borrowers eligible under income-driven repayment for loan forgiveness may start to see their loans cancelled.
We've been seeing many stories of success across Reddit and other social media platforms.
➡️ Impact: This is great news for student loan borrowers that have reached their 240 or 300 payment count milestones. This is a positive development, especially in light of the upcoming changes to taxability for student loan forgiveness.
4. California Treasurer Fiona Ma Makes the Case for 529s, CalKIDS, and CalABLE
In a new episode of The College Investor podcast, California State Treasurer Fiona Ma and CalABLE Executive Director Thomas Martin break down how three state programs (ScholarShare 529, CalKIDS, and CalABLE) are meant to help families save for education and long-term financial security.
Ma explains how ScholarShare 529 can be used for college and other qualified education expenses, how CalKIDS automatically seeds many children’s accounts with state money, while Martin talks about how CalABLE lets people with disabilities save and invest without losing key benefits.
Treasurer Ma also signals that her office is pushing for a potential state tax deduction or credit for 529 contributions - a change that could nudge more middle-income families to save regularly.
➡️ Impact: These programs offer “free money” and tax advantages that many residents still overlook. For California families, combining CalKIDS seed money, ongoing 529 contributions, and CalABLE where relevant can reduce future borrowing and make college and disability-related expenses more manageable.
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Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.