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.

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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