A Louisiana bill would require college students to repay their TOPS (Taylor Opportunity Program for Students) scholarship money if they drop out or lose eligibility. House Bill 385 (PDF File), would apply to students graduating high school during or after the 2025-2026 school year.

Students can lose scholarship eligibility for many reasons, including failure to maintain a cumulative 2.3-2.5 GPA for TOPS Opportunity and a 3.0 GPA for TOPS Performance. Students would also become ineligible if they drop below a 2.0 GPA in any given semester. 

This means, even if you wanted to course correct after one bad semester, you'd be on the hook to repay the scholarship. The bill has cleared a House committee and now heads to the full House for debate.

Why It Matters: TOPS is one of the largest state-funded merit scholarship programs in the country. If this bill becomes law, Louisiana would be the only state requiring students to repay merit scholarship funds they earned in high school. The change could discourage students from enrolling in college altogether, or trap struggling students in programs they want to leave for fear of taking on unexpected debt.

By The Numbers

• $320 million+: Annual taxpayer investment in the TOPS program.
• 13%: Share of TOPS recipients who lose their scholarships each year.
• ~$50 million: Estimated annual cost of scholarships awarded to students who don’t complete their degrees, according to Rep. Bamburg.
• 0: Number of other states that require repayment of merit scholarship funds, per the Patrick F. Taylor Foundation, which works with 22 states on similar programs.

The Fine Print: HB 385 does include exceptions. The Louisiana Board of Regents would define rules for circumstances where repayment would be waived, including parental leave, disability, military service, substance abuse rehabilitation, death of an immediate family member, natural disasters, and “exceptional circumstances.” The bill also authorizes the state to charge interest on unpaid amounts and use all available collection methods. This is very similar to how federal TEACH Grants can turn into loans.

It still needs full House approval and a Senate vote before reaching the governor’s desk.

How This Connects: About one-third of college students drop out without earning a degree, and 41% of dropouts cite money problems as the reason.

For students who do leave, the financial fallout is already significant: federal Return of Title IV Aid rules can require returning a portion of federal Pell grants, and student loan payments kick in six months after withdrawal. Adding a state scholarship clawback on top of existing penalties would make the cost of leaving college even steeper.

For more on what happens when students walk away, see The College Investor’s coverage of the financial impact of dropping out and what happens to financial aid if you drop out.

What Happens Next: The bill heads to a full House vote. If it passes, it moves to the Louisiana Senate. Lawmakers on the committee were already split, and reaction has been mixed, suggesting a contentious floor debate. If signed into law, the repayment requirement would apply starting with the high school class of 2026.

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Students who spend hours applying for private scholarships expect those awards to lower their college costs. But at many schools, winning an outside scholarship triggers a process called scholarship displacement, where the college reduces its own financial aid by the amount of the scholarship, leaving the student no better off financially. 

Faced with that outcome, many students and families ask a reasonable question: Do I actually have to tell my college about this scholarship? The answer is more complicated than most schools let on.

What Federal Law Says About Reporting Scholarships

Despite what some financial aid offices claim, there is no federal law or regulation that requires scholarship recipients to report their private scholarships to their college. This is worth repeating: the federal government does not mandate reporting private outside scholarships.

The Higher Education Act of 1965 does include scholarships in the definition of estimated financial assistance (EFA). Financial need is reduced by EFA when determining eligibility for need-based aid. But the statute’s own language acknowledges that colleges may not know about every scholarship. It refers to “all scholarships, grants, loans, or other assistance known to the institution at the time the determination of the student’s need is made.” That phrasing assumes some scholarships may go unreported.

The Federal Student Aid Handbook, published by the U.S. Department of Education, discusses estimated financial assistance but does not include a requirement for students to report outside scholarships. 

The over-award regulations for campus-based aid (34 CFR 673.5(c)) define estimated financial assistance to include “scholarships, including athletic scholarships,” but again place the burden on the college to account for aid it “can reasonably anticipate” or “otherwise knows about.” The burden is not placed on the student.

The FAFSA currently includes an optional question about scholarships, but it is limited to taxable grants and scholarships already reported to the IRS as income. Its purpose is actually to help the student—it allows taxable scholarships to be subtracted from total income, increasing eligibility for need-based aid. It does not require reporting of untaxed scholarships.

Taxes And Reporting

There is one legitimate reporting requirement involving scholarships, but it runs to the IRS, not your college. Under 26 USC 117, scholarships used for qualified tuition and related expenses (tuition, fees, books, supplies, and equipment) are tax-free. Any portion used for other expenses (such as room and board) is taxable income. 

IRS Publication 970 explains how to report the taxable portion of scholarships on your federal tax return. According to IRS Statistics gathered by The College Investor, $4.43 billion in taxable scholarships was reported by roughly 808,000 taxpayers in 2022.

So yes, you must report taxable scholarship income to the IRS. But that obligation is separate from reporting a scholarship to your college’s financial aid office.

What Your College Requires (And Why)

While federal law doesn’t require it, many colleges have their own policies requiring students to disclose outside scholarships to the financial aid office. Schools can make this a condition of receiving the college’s own financial aid. Some schools also frame it as a matter of honor code compliance.

Colleges sometimes tell students that federal law requires the disclosure. That framing increases compliance but is misleading. The requirement is institutional, not governmental. Schools enforce these policies because the over-award regulations require them to account for known financial assistance when packaging campus-based aid, Direct Loans, and TEACH Grants. If a college knows about a scholarship, it must factor it in. But the regulations do not require the college to compel students to disclose.

In practice, very few students win so much scholarship money that they would be over-awarded under federal rules. The average unmet need exceeds $10,000, while only 0.9% of undergraduate students receive $10,000 or more in outside scholarships.

In most cases, reductions in institutional grants are driven by college policy, not federal overaward constraints. There is no evidence that federal grants are ever reduced because of overaward restrictions.

How Colleges Find Out

Even if a student chooses not to voluntarily report a scholarship, colleges have several ways of discovering it. Many scholarship providers send checks directly to the school or make them co-payable to the student and the institution.

If a student reports the taxable portion of a scholarship on the FAFSA, the college will see that income. Renewable scholarships from a prior year create an expectation of continued receipt. Some colleges actively monitor scholarship program websites and newspaper announcements. And some scholarships show up on high school transcripts.

In short, the odds of keeping a scholarship hidden from your college are low and attempting to do so could put your institutional aid at risk if the school considers it a policy or honor code violation.

State Laws Are Changing

A growing number of states have passed laws restricting scholarship displacement. Maryland led the way in 2017, making it unlawful for colleges to displace private scholarships unless the total aid package exceeds the cost of attendance or the scholarship provider gives permission. New Jersey followed, limiting displacement to cases where total aid exceeds financial need. Washington passed protections requiring colleges to meet 100% of a student’s unmet need before reducing aid. California banned the practice in late 2022 for low-income students who qualify for Pell Grants or state aid under the California Dream Act.

At the federal level, the bipartisan Helping Students Plan for College Act has been proposed to require colleges to disclose their scholarship displacement policies to both prospective and enrolled students. While it would not ban the practice outright, it would force greater transparency.

How This Can Impact Your Bottom Line

The practical impact of scholarship displacement is straightforward: a student works hard to win a $5,000 private scholarship, reports it to the college, and the school reduces its own institutional aid by $5,000. The student’s out-of-pocket cost doesn’t change at all. This discourages students from applying for scholarships and disproportionately affects low- and middle-income families who rely most heavily on institutional aid.

Some schools handle displacement more favorably by first reducing student loans and work-study before touching grants. Others reduce grants dollar-for-dollar. The policy varies by institution, and most schools don’t prominently disclose their approach. Before applying for outside scholarships, families should ask the financial aid office directly: “If my student wins a private scholarship, how will it affect their existing aid package?”

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The big picture: Fidelity Investments is expanding its list of ETFs subject to a $100 purchase fee, growing from roughly 27 funds to more than 120. The updated list takes effect June 1, 2026, and targets ETF issuers that do not pay Fidelity a direct, asset-based fee to support platform availability.

Why it matters: The fee structure has drawn accusations of a “pay to play” model. If an ETF issuer doesn’t have an agreement with Fidelity, the $100 service charge gets passed directly to the investor on each purchase. That forces smaller fund managers into a choice: pay Fidelity or watch their investors absorb the cost.

By The Numbers

• $100: Maximum service fee per ETF purchase
• ~27 ETFs: Original list as of November 3, 2025
• 120+ ETFs: Expanded list effective June 1, 2026
• 40+ funds: From Roundhill alone, the single largest issuer on the list
• 12 funds: From Kurv, including popular yield premium strategy ETFs tied to Apple, Tesla, Google, and others

What they’re saying: The expansion has sparked sharp criticism from prominent voices in the ETF industry. Investor and fund manager Meb Faber called the fee structure “gross.” Others have described it as a “pay to play” model. On social media, critics argue that the arrangement forces fund managers to either pay Fidelity or hurt their own investors with fees.

The other side: The vast majority of ETF trades at Fidelity remain commission-free. The $100 fee applies only to a small subset of funds from issuers that don’t participate in revenue-sharing agreements. Some defenders note that these are mostly niche, low-volume products with higher operational costs, and that Fidelity still provides access to them rather than delisting entirely. Many of these issuers have reportedly been in discussions with Fidelity to resolve the fee for their funds.

What’s on the list: The expanded roster (PDF File) includes funds from Roundhill (WeeklyPay ETFs, Magnificent Seven ETFs, Bitcoin and Ether covered call funds), Kurv (yield premium strategy ETFs, precious metals income funds), Inspire (faith-based ETFs), Hedgeye, Rareview, WEBs (defined volatility sector ETFs), Cyber Hornet (crypto-blend strategy ETFs), and several small specialty issuers.

Notable additions include YBTC (Roundhill Bitcoin Covered Call Strategy ETF), KGLD (Kurv Gold Enhanced Income ETF), MAGS (Roundhill Magnificent Seven ETF), and QDTE (Roundhill Innovation-100 0DTE Covered Call Strategy ETF).

Keep in mind: This does not affect the vast majority of ETFs. If you buy funds from major issuers like Vanguard, iShares (BlackRock), SPDR (State Street), Schwab, or Invesco, nothing changes. Fidelity still offers thousands of commission-free ETFs. The fee only hits a narrow slice of smaller, specialty issuers. Before purchasing any ETF on Fidelity, check the order preview screen — it will disclose the service fee before you confirm the trade.

What to watch: Keep an eye on competitors like Schwab or Robinhood to see if they adopt similar fee structures or use this as a marketing advantage. Also, see if more issuers negotiate revenue-sharing deals with Fidelity to get off the list. And finally, watch out whether frustrated customers follow through on threats to move their accounts to other brokers.

How this connects: The College Investor currently ranks Fidelity as the #1 online stock broker for 2026, largely because of its commission-free pricing, $0 account minimums, and broad fund selection. The full Fidelity review notes that Fidelity offers over 3,400 no-transaction-fee mutual funds and is the only broker offering 0% expense ratio index funds. This ETF service fee expansion is worth monitoring, but it doesn’t change Fidelity’s core value proposition for investors who stick to mainstream ETFs and index funds.

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What’s happening: Senator Mark Kelly (D-AZ) and 29 Democratic colleagues introduced the Keep Public Funds in Public Schools Act, a bill that would repeal the Education Freedom Tax Credit (EFTC) — the federal school choice tax credit signed into law last summer as part of the One Big Beautiful Bill Act. 

Why it matters: The EFTC is the first federal law that could expand school choice to families in all 50 states. It provides a dollar-for-dollar tax credit of up to $1,700 for individual donations to scholarship granting organizations (SGOs), set to take effect in 2027. Twenty-nine states have already opted in. The repeal bill, backed by 163 national and state organizations, sets up a major fight over the future of K-12 education funding before the first scholarship dollar is distributed.

By The Numbers

• $25.9 billion: The Joint Committee on Taxation’s 10-year cost estimate for the EFTC.
• $1,700: Maximum individual tax credit for donations to SGOs under the EFTC.
• 29: States that have already opted in to the program.
• 30: Democratic senators backing the repeal bill.

The details: The bill would strike Section 25F of the Internal Revenue Code and the associated income exclusion under Section 139K, effective for taxable years ending after December 31, 2026 — just before the new tax credit takes effect. Kelly pointed to Arizona’s own Empowerment Scholarship Accounts as a warning, citing reports of over $10 million in taxpayer funds spent on banned purchases, including gift cards and luxury hotel stays. The bill is cosponsored by senators including Bernie Sanders, Chuck Schumer, Elizabeth Warren, and John Fetterman, and endorsed by the National Education Association, American Federation of Teachers, Save Our Schools Arizona, and the National Center for Learning Disabilities.

The other side: School choice advocacy group American Federation for Children (AFC) Chief State Strategy Officer Ryan Cantrell called the repeal effort “misguided,” saying the EFTC “empowers taxpayers and families to direct K-12 education dollars where they see fit.” AFC noted that 29 states have already embraced the program and called school choice “wildly popular and here to stay.” 

What’s next: The bill faces long odds given Republican control of both chambers of Congress. But it signals that the EFTC will remain a political flashpoint heading into 2027 implementation. The real battle may come during future budget negotiations, where Democrats could push to defund or cap the program.

How this connects: The College Investor has previously covered the Education Freedom Tax Credit in detail, including eligibility requirements and implementation timelines. Eligible students must come from households earning no more than 300% of the area’s median gross income, and states must complete administrative steps before 2027 for SGOs to begin distributing scholarships. Whether the repeal effort gains traction or not, families in participating states should continue monitoring their state’s opt-in status and SGO approval process.

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The U.S. Department of Education is moving forward with a proposed rule that would strip federal student loan eligibility from college programs that consistently fail to boost graduates' earnings above what they'd make without the degree.

The 394-page Notice of Proposed Rulemaking (PDF File) represents the final piece of the Trump Administration's overhaul of student aid under the One Big Beautiful Bill Act (OBBBA).

The proposal arrives as the federal student loan portfolio approaches $1.7 trillion, and it would for the first time apply a uniform earnings accountability standard to programs at every type of institution: public universities, private nonprofits, and for-profit colleges.

"The Trump Administration's proposed accountability framework is grounded in common sense: if postsecondary education programs do not leave graduates better off, taxpayers should not subsidize them," said Under Secretary of Education Nicholas Kent in a statement.

According to a recent analysis by Preston Cooper at the American Enterprise Institute (AEI), 95% of all programs would pass this new test.

How The New Earnings Test Works

For undergraduate programs, the Department compares the median earnings of graduates (measured four years after completion) against the median earnings of working adults aged 25-34 with only a high school diploma in the state where the school is located. If fewer than 50% of students come from that state, national data is used instead.

For graduate programs, the comparison group shifts to working adults aged 25-34 with only a bachelor's degree. The earnings threshold is the lowest of three benchmarks: 

1. Bachelor's holders in the same state, or
2. Bachelor's holders in the same field of study (at the 2-digit or 4-digit CIP code level) in the same state, or
3. Bachelor's holders in the same field nationally

The earnings data comes from the IRS: wages, self-employment income, and other earned income as reported on tax returns. 

Programs need at least 30 completers (expandable through cohort aggregation) and at least 16 matched earnings records for the test to be calculated. A program passes if its median graduate earnings equal or exceed the threshold. It fails if earnings fall below it.

What Happens When Programs Fail

A program is classified as a "low-earning outcome program" if it fails the earnings premium test in two out of any three consecutive years. Once classified, the program loses eligibility for federal Direct Loans but not necessarily Pell Grants or other Title IV aid, at least initially.

The period of ineligibility is two years. After that period, a school can seek to re-establish the program's eligibility but only if the program has not continued to fail the earnings test in either of the two most recent award years.

Schools are also blocked from gaming the system by shutting down a failing program and restarting a nearly identical one. Under the proposed rule, an institution cannot establish Direct Loan eligibility for any program sharing the same 4-digit CIP code and overlapping occupational classification (SOC) codes as a program that lost eligibility.

There is one other option for schools: the "orderly program closure" option. If a program fails the earnings test in a single year but hasn't yet been classified as a low-earning outcome program, the school can voluntarily agree to wind down the program over the lesser of three years or the program's full-time duration. During that time, the program keeps Direct Loan access so current students can finish, but the school must stop admitting new students immediately and inform students of their options to transfer.

When Pell Grants Are Also At Risk

While individual programs initially lose only Direct Loan access, the rule includes a broader institutional trigger. If more than half of a school's Title IV students or more than half of its Title IV funding comes from low-earning outcome programs in two out of three consecutive years, the Department would place the institution on provisional status and all of its low-earning outcome programs would lose eligibility for all Title IV aid, including Pell Grants.

This provision is designed to address situations where failing programs aren't isolated issues but reflect a systemic problem at the institution. In practice, this means that students at affected schools could lose access not just to federal loans but to grant aid as well.

Warnings And Transparency Requirements

Schools are required to warn both prospective and currently enrolled students when a program is at risk of losing Direct Loan eligibility. These warnings must be updated if a student re-enrolls more than 12 months after receiving a previous warning.

The rule also adds new Pell Grant disclosure requirements. Institutions must inform Pell-eligible students of their remaining lifetime Pell Grant eligibility and explain that any Pell funds used in a failing program still count against that lifetime limit.

The Department is also expanding its Student Tuition and Transparency System (STATS), which will require institutions to report program-level data including tuition, fees, and financial aid details. This data will feed public-facing disclosures about net program costs and earnings outcomes.

The American Enterprise Institute (AEI) has also put together a dataset that you can search and see if your school is at risk. Check out the data here.

What This Means For Families

For families evaluating college programs right now, this rule won't take effect immediately. 

The Department will calculate the first round of performance data in early 2027 and the second in early 2028. Because two consecutive failing years are required, the earliest a program can lose student loan eligibility is the 2028-29 academic year.

The public comment period runs through May 20, 2026, and the Department could make changes before finalizing. That said, the AHEAD negotiated rulemaking committee reached full consensus on the regulatory text, which suggests the framework is unlikely to change substantially.

When it does take effect, the practical impact will depend on what program a student is enrolled in and at what type of school. While 95% of programs are expected to pass, there's a big gap between eligible certificate programs vs. graduate programs.

The rule also creates a strong incentive for schools to either improve underperforming programs or shut them down.

That's good news for future students who might otherwise enroll in a program with poor earnings outcomes. But it could create disruption for students currently enrolled in programs that end up on the chopping block.

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