The Republican-backed tax and spending bill signed into law by President Donald Trump on Friday has major implications for Maine higher education institutions, from medical school to liberal arts colleges.

The One Big Beautiful Bill Act — which every member of Maine’s congressional delegation voted against — rolls back federal student loan access, eliminates all but two loan repayment programs, adjusts college endowment taxes and creates a new financial aid program for workforce education.

Proponents say the measures will impose accountability on the industry and rein in student debt, while detractors fear it will make higher education less affordable.

Leaders of Maine higher education institutions expressed concern about some of the changes — like the federal student loan cap, which they said will make graduate programs less diverse and accessible — while celebrating others, including an exemption from endowment taxes for small colleges.

STUDENT LOAN LIMITATIONS

A new loan cap included in the bill will set the lifetime borrowing limit at $200,000 for professional degrees like medical school, well below the $300,000 median cost of a medical degree.

At the University of New England, home to Maine’s only medical and dental schools, the cost of attendance is between $300,000 and $370,000 for medical school, and between $230,000 and $300,000 for dental school. Eighty-four percent of UNE’s medical students and 94% of its dental students take out federal loans to pay for their schooling.

“I’m worried what’s going to happen is that medical school will be much more populated by students coming from wealthier families, shutting out students from rural backgrounds, working-class backgrounds, students of more modest means,” UNE President James Herbert said in an interview Wednesday.

The cost of medical school, Herbert said, is relatively fixed because of specialized infrastructure and faculty, and hands-on learning, so the cap is unlikely to drive down the cost of a medical degree. Instead, he said, lower-income students will need to rely on private loans, which are riskier than federal loans, have higher interest rates and need to be paid back as soon as they graduate. That leads medical students to seek out high-paying specialties in wealthy areas, rather than lower-paying primary care specialties in rural areas, where doctors are desperately needed.

“You’re going to be incentivized to be a cardiothoracic surgeon practicing in Boston,” Herbert said, “rather than a family doctor practicing in Caribou.”

Herbert is especially frustrated by the loan cap because medical students have extremely low default rates on loans; they’re highly likely to secure a job after graduation and pay back their loans on time.

He’s also concerned about the bill’s elimination of Grad PLUS loans, a program that helped graduate students cover living expenses outside of tuition. About 75% of UNE graduate students rely on Grad PLUS.

More than 370 students in the state’s public university system, mostly at the University of Southern Maine and the University of Maine School of Law, also receive Grad PLUS loans, according to spokesperson Samantha Warren. She said the loss of that program will hurt low- and middle-income students across the country, but University of Maine System officials are confident that the system will still attract graduate and professional students because its schools are affordable.

Law school loans will also be capped at $200,000, but the average student debt at Maine’s law school is between $70,000 and $80,000 at graduation.

“As the largest provider of master’s- and doctorally prepared professionals in the state, including desperately needed attorneys, engineers, nurses, scientists, social workers and teachers, our system is committed to continuing to expand critical access to relevant advanced degrees, in partnership with Maine employers and other public, nonprofit and governmental organizations — even after this proven federal loan program ends on July 1, 2026,” Warren said in a written statement Wednesday.

ENDOWMENT TAX WOULD SPARE MAINE SCHOOLS

This spring, Maine liberal arts college leaders spoke out against the prospect that the Trump administration would raise endowment taxes. The leaders argued that the funds generated by hiking those taxes would be a drop in the bucket for the federal government while having an outsized negative impact on low-income students, whose financial aid is often funded through endowments.

Under the current system, private schools with at least 500 students and endowments worth $500,000 per student or more are subject to a 1.4% tax on their annual investment income. Versions of the proposals could have raised the tax to as much as 21%.

The final version of Trump’s bill raises that tax under a new tiered endowment tax rate of up to 8% on the wealthiest schools, including Princeton and Yale. Schools in the second tier, like Harvard, Stanford and Notre Dame, will pay a 4% tax on endowment earnings.

However, the final version of the bill exempts any schools with fewer than 3,000 tuition-paying students. That means Bowdoin, Colby and Bates colleges — which hold the three highest endowments in the state — won’t pay any endowment tax. Bowdoin and Colby are among more than 25 small colleges with large endowments that currently pay taxes but will get a break under the new law.

Bowdoin, which pays about $2.1 million each year under the current tax rate, would now be completely exempt and will be able to keep that money beginning in 2026.

The college in Brunswick will keep that savings invested to generate additional revenue over time, which will mostly be used for financial aid, said Matthew Orlando, senior vice president for finance and administration.

“We are deeply grateful to the U.S. Senate and House of Representatives for recognizing that the endowments of small colleges like Bowdoin fund the vast majority of the financial aid that allows low-income and first-generation students to graduate with little or no debt and greater economic mobility,” he said.

Colby also currently pays a 1.4% endowment tax on its annual earnings of about $20 million.

“Over the last decade Colby has increased its financial aid from about $28 million to over $70 million a year  — approximately $8 million of which is scholarship funding for Maine residents — and been consistently ranked as one of the most generous colleges in the country in terms of its financial aid,” the Waterville college said in a statement. “Exempting small colleges like Colby from the tax will help ensure that we can continue to support students and their families by providing an exceptional college experience that is affordable.”

Bates does not currently pay an endowment tax because it does not meet the per-student threshold and won’t be affected by the new taxes because of its enrollment of about 1,800.

“Still, no matter how many students an institution enrolls, taxing endowments is not good policy,” said Geoff Swift, Bates’ vice president for finance and administration. “While the taxed universities will feel the impact most acutely — it will stress their economics — indirect impacts will eventually reach other colleges, some of which might not have the resources to weather it.”

WORKFORCE PELL GRANTS

As the bill went through Congress, all eyes in higher education were on proposed changes to Pell grants, the federal financial aid program for low-income students. Measures proposed in the House would have slashed Pell eligibility for millions of part-time students, generating broad opposition from community colleges, where many students would have become ineligible. But to the relief of Maine higher education leaders, those measures were taken out of the final version of the bill.

However, one provision that remained in the bill creates new Pell grants for short-term workforce training programs. David Daigler, president of the Maine Community College System, celebrated the news, saying that those programs will support students who want to study the growing number of short-term courses in trades, health care, education and hospitality available at the state’s community colleges.

“We’ve vastly expanded our short-term workforce training programs in recent years, and these high-quality, job-focused short-term programs are incredibly effective and popular,” Daigler said in a written statement. “I can’t tell you how many graduates say these weeks-long programs allowed them to go from having a minimum wage job with inconsistent hours to a stable salaried career-track position with vacation time and health insurance, often for the first time in that person’s life. That’s an incredible shift in circumstances.”