Nine months after Congress passed the One Big Beautiful Bill Act, researchers and state officials are raising alarms about how deep federal cuts to Medicaid and SNAP are straining state budgets — and what that means for public higher education funding. Inside Higher Ed reported on April 21, 2026 that state budget pressures from the OBBBA could lead to significant cuts in higher education appropriations, with community colleges especially exposed.

When the federal government reduces what it sends to states, states make choices about what to cut. And historically, higher education is one of the first places state legislatures look.

That pattern is playing out again now, nine months after President Trump signed the One Big Beautiful Bill Act into law on July 4, 2025.

What the OBBBA Cut — and Why It Matters for Your Tuition

The OBBBA included some of the largest reductions to federal social programs in modern history. Two cuts are driving state budget stress:

SNAP food assistance: The OBBBA cut approximately $187 billion from the Supplemental Nutrition Assistance Program, representing roughly 20% of federal SNAP funding — the largest single cut to the program in its history.1 Starting in fiscal year 2027, states must cover 75% of SNAP administrative costs, up from the current 50%. Starting in fiscal year 2028, states will also begin paying for SNAP benefits themselves, tied to their program error rates.1

Medicaid: The OBBBA reduced Medicaid by nearly $1 trillion. An estimated 16 million Americans could lose health coverage as a result, with states absorbing additional costs as they try to manage the transition.2

For state budgets, these two cuts create a compounding problem: federal dollars disappear while state obligations either stay the same or increase. Money must come from somewhere.

47% — of community college revenue comes from state and local appropriations, according to Inside Higher Ed — making two-year schools especially vulnerable to state budget cuts.

The Higher Education Funding Danger Zone

Inside Higher Ed reported on April 21, 2026 that researchers and policy analysts warn "colleges and universities could suffer as states move to compensate for lost SNAP and Medicaid funding."3

The numbers explain why. For four-year public universities, state and local appropriations make up about 21% of total revenue. For community colleges, that figure is 47%.3

That means two-year schools are more than twice as dependent on state budgets as four-year universities. If state legislatures cut higher education to offset OBBBA-related costs, community college students — disproportionately lower-income, first-generation, and adult learners — absorb the deepest blow.

What Happened in 2008 — and Why It Matters Now

The last time states faced major budget shortfalls that hit higher education hard was the 2008 recession. The comparison is instructive.

During that period, state-level funding cuts to higher education averaged more than 23%. In response, tuition rates increased by approximately 18% nationally.3

The mechanism is simple: when a public university loses $10 million in state appropriations, it has a few options — cut programs, reduce staff, or charge students more. In most cases, it does some combination of all three, with tuition increases carrying much of the weight.

Several states are already in budget stress. Colorado convened a special legislative session in August 2025 to close a $750 million budget shortfall. Nebraska projects a $360 million gap in fiscal year 2027 and a $300 million gap in fiscal year 2028. These gaps exist before states absorb the full cost of OBBBA-related SNAP and Medicaid shifts, which phase in through FY2028.

Which Students Are Most at Risk

Current community college students face the highest exposure. If state appropriations drop, community colleges have limited ability to raise tuition — their students are often the most price-sensitive in higher education. Service cuts, staffing reductions, and program eliminations become more likely.

Students planning to enroll at state schools in 2027 or 2028 may face higher sticker prices than current tuition levels suggest. The full weight of SNAP cost-sharing shifts to states starting in FY2028.

Students in states already facing budget pressure — like Colorado and Nebraska — are in a more urgent position. If your state is running a significant deficit, the probability of higher education funding cuts in the next legislative session increases.

Checking college tuition by state now gives you a baseline. Watching your state's budget news over the next 6–12 months will tell you whether that baseline is holding.

What You Can Do About It

Build your scholarship pipeline. Merit scholarships and institutional grants are not immune to budget pressure, but external scholarships are entirely insulated from state funding decisions. Our 2026 scholarship strategy guide walks through how to find scholarships most students overlook.

Compare net prices, not sticker prices. Schools with strong financial aid programs — including many private colleges with large endowments — may offer a net price that competes with a rising public university sticker price. Run every school through the net price calculator.

Consider locking in multi-year tuition guarantees. Some public universities offer guaranteed tuition rates that don't increase for four years. If your target school offers this option, it can protect you from tuition hikes that state budget pressure produces.

Know your average annual college cost before committing to a school. If that number rises by 5–10% over your first two years, understanding your financial cushion in advance lets you plan, not panic.

If you are choosing between an in-state public university and an out-of-state or private school, run the numbers on both. A private school that offers significant merit aid may end up cheaper than a public university that raises tuition by 15% over four years in response to state budget cuts. The sticker price is not the price you pay.

The Broader Picture

The OBBBA's state-level budget effects are not immediate — they phase in over several fiscal years. That gives students and families some runway to prepare. But the direction is clear: states will face harder choices about higher education spending starting in 2027 and continuing through the rest of the decade.

For students at schools with historically lower tuition, the question is whether that advantage holds if state funding shrinks. For students at community colleges, the stakes are higher and more immediate.

The Inside Higher Ed reporting from April 21 framed it directly: researchers are "still trying to clarify the toll" — meaning the full impact is not yet known.3 That uncertainty is itself a reason to plan conservatively on college costs rather than assuming current tuition levels will hold through graduation.

Footnotes

  1. Food Research & Action Center (FRAC). (2026). State Fiscal Impacts of H.R. 1 and Considerations to Navigate Challenges. https://frac.org/blog/state-fiscal-impacts-of-h-r-1-and-considerations-to-navigate-challenges ↩ ↩2

  2. Center for American Progress. (2026). The Implementation Timeline of the One Big Beautiful Bill Act. https://www.americanprogress.org/article/the-implementation-timeline-of-the-one-big-beautiful-bill-act/ ↩

  3. Fain, P. (2026, April 21). States Grapple With Effects of OBBBA Cuts on Higher Ed. Inside Higher Ed. https://www.insidehighered.com/news/government/state-policy/2026/04/21/states-grapple-effects-obbba-cuts-higher-ed ↩ ↩2 ↩3 ↩4