VSAC tells Appropriations committee federal student-aid changes will reshape assistance; seeks 3% base increase

Scott Giles, president and CEO of the Vermont Student Assistance Corporation, told the House Appropriations Committee on Feb. 3 that major federal changes to student financial aid will reshape borrowing limits and program accountability and that VSAC seeks state support to help Vermont students navigate the transition.

Giles said the reconciliation bill imposed new caps on federal borrowing that will create gaps for some students. "Parents will now only be able to borrow for each student up to $20,000 a year or $25,000 a year, with a student lifetime cap $60,000," he said, and added that graduate- and professional-program caps have also tightened. He warned that the federal definition of "professional" programs—drawn from an older Higher Education Act classification—has left nursing outside the higher professional-borrowing cap, producing controversy and potential gaps in affordability.

Why it matters: VSAC said these federal changes could disadvantage low-income undergraduates, students in high-cost professional programs and graduates of high-credential, lower-paid fields (for example, early childhood education or licensed clinical mental health counselors) if programs fail new federal accountability tests.

Budget request: Giles said VSAC and the governor included a 3% increase to VSAC's base appropriation in the governor's FY27 budget to support core financial-aid programs such as 802 Opportunity and workforce forgivable-loan programs. "VSAC is requesting and the governor included within his budget a 3% increase to our base appropriation," Giles said. He also asked the committee to continue allowing VSAC to use a carve-out of its appropriation for the "aspirations" initiative, requesting an increase in the carve-out from $300,000 to $400,000 in spending authority (not new dollars).

Other program updates: Giles highlighted the Freedom and Unity Scholarship, launched last year with $1.5 million to make tuition and fees at Vermont State University free for eligible households. VSAC asked the committee to increase funding for that program by $812,000 to $2.3 million total to raise the income eligibility threshold from $65,000 to $80,000.

Giles also described VSAC's Award Advisor, a smartphone app that translates confusing financial-aid award letters into plain language and compares net costs across schools. "You can literally snap a picture of your financial aid award letter, and the tool will translate it into common language terms," he said.

Context and scale: VSAC reported Vermont's 529 college-savings plan holds roughly $720 million in assets and that Vermonters withdraw about $60 million annually to support education. Committee members asked about the transition to a new 529 program manager; Giles said the vendor's technology is more user-friendly and about 60% of account holders have activated new credentials.

What comes next: Committee members said they will review VSAC's detailed materials and follow up with questions, and fiscal staff may analyze how the governor's proposed budget and federal grant funds interact. The Joint Fiscal Committee will consider acceptance of a related rural health transformation grant later in the week, which VSAC said will affect timelines for some workforce programs.