OBBB passed, but key federal decisions for community colleges are still ahead

The passage of the One Big Beautiful Bill (OBBB) represents a significant moment in federal higher education policy, but community college leaders are still piecing together what it means for their institutions. For the leaders and staff working every day to expand access, keep students enrolled, and help graduates find good jobs, this legislation includes meaningful wins, practical trade-offs, and a few looming risks that will not be resolved until the 2026 federal budget is finalized.

In this post, I’ll outline what has already changed for two-year institutions and their students, and what to keep in mind as the federal budget debate continues.

4 key OBBB decisions that impact community colleges

1. No changes were made to Pell Grant credit requirements

One of the most important updates is that the final version of the OBBB removed the proposal to raise the minimum credit requirement for Pell Grant eligibility. Earlier drafts would have required students to take at least 15 credits per semester to qualify for the full Pell amount. That change could have disqualified thousands of community college students, many of whom attend part-time while balancing work and family responsibilities.

Instead, the traditional full-time and half-time definitions remain in place. Students can continue receiving Pell Grants while enrolling at the pace that works best for them. For many colleges, this is a significant win for access and affordability.

2. Workforce Pell expands access to short-term, high-return programs

Another major development is the official inclusion of Workforce Pell. Under the new rules, students can use Pell Grants to enroll in short-term, high-value training programs that prepare students for high-skill, high-wage, or in-demand industries. This provision comes at a time of rapid growth in technical-focused community college enrollment and could play a key role in attracting adult learners and working professionals seeking flexible, fast-track training options.

Community colleges are especially well-positioned to benefit since many already offer programs in skilled trades, health care, information technology, and other essential sectors. Workforce Pell is planned to go into effect beginning July 1, 2026, although it is possible the implementation date could be delayed.

3. Accountability-based earnings test passes in place of proposed institutional risk-sharing system

Initial versions of the legislation included strict risk-sharing rules that would have made institutions financially responsible for a portion of unpaid federal student loans. That proposal did not make it into the final bill, which is positive news for community colleges that serve vulnerable student populations and often operate with limited financial reserves.

Instead, the final accountability measures focus on graduate earnings. Programs must now show that their graduates earn enough to justify the cost of the credential. There is some flexibility, including adjustments for local job markets. If a program does not meet the earnings benchmark, it may eventually lose access to federal student loans. This approach gives colleges time to monitor and improve programs before facing more serious consequences.

4. Pell over-awarding rules will be tighter

One trade-off in the OBBB is a new restriction on Pell over-awarding. Students whose cost of attendance is already fully covered by non-federal grant aid like scholarships or employer-paid training can no longer receive additional Pell Grant funds on top of that aid.

While this change will not affect every student, it may impact those who use multiple forms of funding to make college affordable and use their Pell refunds to offset the cost of books, transportation, and childcare. Colleges need to prepare to communicate these changes to students and may want to investigate ways to help fund non-tuition-related expenses.

What’s still outstanding in the 2026 federal budget:

If these proposals are enacted, the result would be a substantial increase in financial strain for the very students that community colleges aim to serve. Until the budget is finalized, colleges should prepare for multiple scenarios, advocate for continued support, and keep students informed about the potential impact.

How community colleges can prepare

Even with ongoing uncertainty, there are concrete steps colleges can take to protect students and stay ahead of potential disruptions:

• Communicate clearly with students. Help students understand how possible funding changes could affect their aid and options. Navigate360’s communication campaigns and AI Content Creation Agent make communication with students fast and easy.
• Strengthen partnerships with local employers. Align Workforce Pell-eligible programs with regional labor market needs so students graduate into real job opportunities.
• Track and share outcomes. Document graduate earnings and career pathways to demonstrate program value and maintain federal eligibility. Edify, EAB’s data management platform for higher ed, helps community colleges bring together data from across systems into one centralized location, making it easier to evaluate program performance and understand how graduates are doing in the workforce.
• Engage in advocacy. Share your college’s story and impact with policymakers. Community colleges offer one of the strongest returns on public investment, and that message must be shared consistently and clearly.

While community colleges have seen some recent wins, it remains critical to keep a close eye on developments in the federal budget. EAB can support your institution in navigating these changes through:

• EAB’s Federal Policy Status Index, a regularly updated resource that tracks key legislative developments affecting higher education
• Navigate360’s student success tools, including early alerts, communication campaigns, progress reports, and intervention data to support students who may be impacted by changes to financial aid
• Edify’s data warehousing and visualization capabilities, which help colleges monitor program outcomes and adapt quickly to evolving accountability requirements.