Students and families faced a wave of updates this week touching financial aid, student loan repayment, admissions strategy, and federal support for colleges serving underrepresented communities. Here are the developments worth knowing.
Here’s a quick look at the most important developments shaping higher education and student finances this week for December 12, 2025.
🎓 Headlines at a Glance
- FAFSA will now display a “lower earnings” alert for certain colleges.
- SAVE repayment plan is officially over but borrowers still wait on final answers.
- Selective colleges expand efforts to enroll more low-income students.
- New federal draft rules outline how Workforce Pell Grants would function.
More than 100 Texas colleges face steep HSI funding losses.
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1. FAFSA Adds ‘Lower Earnings’ Alert for Certain Colleges
The U.S. Department of Education has added a “lower earnings” indicator to the FAFSA beginning this month. Students listing colleges where graduates typically earn less than U.S. adults with only a high school diploma will now see a warning after submitting the form.
Roughly 23% of institutions fall under this designation, based on federal earnings data. Here's what that can look like:
Supporters say it gives families clearer information about financial outcomes before choosing a school. Some institutions, however, argue the measure lacks context for specialized programs or regional labor markets.
➡️ Impact: A new layer of transparency may help applicants compare cost against expected earnings — especially important for programs with higher borrowing needs. Check out The College Investor's College ROI Calculator to supplement this.
2. SAVE Repayment Plan Moves Toward Final Phase-Out Under Legal Settlement
A proposed settlement between the U.S. Department of Education and several Republican-led states would formally end the SAVE repayment plan, closing the door to new enrollees and shifting existing participants into other repayment structures if approved by the court.
SAVE has already been paused for over a year, and borrowers have been encouraged to change plans now for months.
However, 7 million borrowers are still waiting in forbearance for final guidelines and timing.
➡️ Impact: Monthly payments could rise, forgiveness timelines may stretch longer, and budgeting will become more uncertain for households depending on SAVE to manage debt.
3. Selective Colleges Push for Greater Economic Diversity
In the wake of the Supreme Court’s ruling on affirmative action, many top colleges are intensifying recruitment of low- and moderate-income students. Princeton, Yale, MIT, Duke, and others report higher numbers of applicants and admits from lower-income backgrounds, often tied to expanded tuition-free guarantees based on family income.
Despite these gains, institutions say they are still struggling to maintain racial diversity using economic-based strategies alone.
➡️ Impact: Students from lower-income households may see more pathways into selective institutions, though competition remains high and the broader diversity landscape continues to shift.
4. Education Department Releases Draft Rules for Workforce Pell Grants
The Department of Education published draft language (PDF File) outlining how Workforce Pell Grants (authorized under the One Big Beautiful Bill Act) would operate. The proposal details how institutions must calculate Pell awards when students receive outside grants, and sets early guardrails for which programs qualify as eligible workforce training programs.
Stakeholders will continue negotiating program definitions, reporting expectations, and safeguards.
➡️ Impact: If finalized, these rules would influence how Pell helps cover short-duration training tied to career advancement, affecting out-of-pocket costs and program access for working adults and job-seekers.
5. Texas Colleges Lose $64 Million in Federal HSI Funding
More than 100 Texas colleges and universities have lost access to Title V funding for Hispanic-Serving Institutions, totaling an estimated $64 million in cuts this year. The halt in funding follows legal challenges related to federal support for race-linked institutional categories.
Colleges report the cuts are already affecting academic advising, tutoring centers, mentoring programs, and student-success initiatives that disproportionately benefit first-generation and underrepresented students.
➡️ Impact: Losing Title V support may force institutions to reduce or reorganize services that help close equity gaps — raising the risk of lower retention and higher borrowing needs among affected students.
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FAQs
What is the new "lower earnings" alert on the FAFSA and what does it indicate for students?
The alert highlights when reported income drops significantly compared to prior years, helping schools review eligibility for additional financial aid.
What is the current status of the SAVE student loan repayment plan and how will its phase-out affect borrowers?
The SAVE plan is being phased out following legal and regulatory changes, requiring borrowers to transition to alternative repayment options.
How are selective colleges working to increase economic diversity in their admissions processes?
Some institutions are expanding need-based aid, adjusting recruitment strategies, and modifying admissions practices to attract students from broader economic backgrounds.
What do the new draft rules for Workforce Pell Grants outline, and who might be impacted?
Proposed rules aim to expand Pell Grant eligibility to short-term workforce training programs, potentially benefiting students pursuing career-focused education.
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.