Introduced in House — H.R. 4862

119th CONGRESS

1st Session

H. R. 4862

IN THE HOUSE OF REPRESENTATIVES

August 1, 2025

Mr. Scott of Virginia (for himself, Mr. Subramanyam, Ms. Underwood, Ms. Moore of Wisconsin, and Mr. Thanedar) introduced the following bill; which was referred to the Committee on Education and Workforce, and in addition to the Committee on the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Higher Education Act of 1965 to double the Pell Grant award amount, improve the Public Service Loan Forgiveness program, and reduce interest rates, and for other purposes.

Section 1. Short title

This Act may be cited as the Lowering Obstacles to Achievement Now Act or the LOAN Act.

Sec. 2. Repeal

Subtitles A through F of title VIII of Public Law 119–21 are repealed. The provisions of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) amended by such subtitles are restored and revived as if such subtitles had not been enacted.

Sec. 3. Table of contents

The table of contents of this Act is as follows:

Title I Federal Pell Grants

Sec. 101. Doubling Federal Pell Grants and providing all Federal Pell Grants through mandatory funding

(a) Amount of minimum Federal Pell Grants

Section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) is amended—

(1)

in subsection (a)(2)(F), by striking 10 percent and inserting 5 percent;

(2)

in subsection (b)—

(A)

in paragraph (1)(B)(i), by striking paragraph (5)(A) and inserting paragraph (5);

(B)

by striking paragraph (5) and inserting the following:

(5) Total Maximum Federal Pell Grant
(A) Award year 2026–2027
For award year 2026–2027, the total maximum Federal Pell Grant award shall be $10,000.
(B) Award year 2027–2028
For award year 2027–2028, the total maximum Federal Pell Grant award shall be $11,000.
(C) Award year 2028–2029
For award year 2028–2029, the total maximum Federal Pell Grant award shall be $12,000.
(D) Award year 2029–2030
For award year 2029–2030, the total maximum Federal Pell Grant award shall be $13,000.
(E) Award year 2030–2031
For award year 2030–2031, the total maximum Federal Pell Grant award shall be $14,000.
(F) Award year 2031–2032 and subsequent years
For award year 2031–2032, and each subsequent award year, the total maximum Federal Pell Grant award shall be $14,000—
(i)
increased by the adjustment percentage for the award year for which the amount under this subparagraph is being determined; and
(ii)
rounded to the nearest $50.
(G) Definition of adjustment percentage
In this paragraph, the term adjustment percentage, as applied to an award year, is equal to the percentage increase in the Consumer Price Index, as defined in section 478(f), for the most recent calendar year ending prior to the beginning of the award year.;

(C)

by striking paragraphs (6) and (7) and inserting the following:

(6) Appropriation of funds
There are authorized to be appropriated, and there are appropriated, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary for fiscal year 2026 and each subsequent fiscal year to provide the total maximum Federal Pell Grant for which a student shall be eligible under this section during an award year.; and

(D)

by redesignating paragraphs (8) and (9) as paragraphs (7) and (8), respectively;

(3)

in subsection (d)(5)(B)(ii)—

(A)

in subclause (I)(bb), by striking or after the semicolon;

(B)

in subclause (II)(bb)(CC), by striking the period and inserting ; or; and

(C)

by adding at the end the following:

(III)
during a period for which the student did not receive a loan under this title but for which, if the student had received such a loan, such loan would have been discharged under the circumstances described in subclause (II)(bb)(CC).;

(4)

by striking subsections (g) and (h); and

(5)

by redesignating subsections (i) and (j) as subsections (g) and (h), respectively.

(b) Repeal of scoring requirement

(1) In general

Section 406 of H. Con. Res. 95 (109th Congress) is amended—

(A)

by striking subsection (b); and

(B)

by striking (a) In general.—Upon and inserting the following: Upon.

(2) Effective date

The amendments made by paragraph (1) shall take effect beginning on July 1, 2026.

(c) Student support services

Section 402D(d)(1) of the Higher Education Act of 1965 (20 U.S.C. 1070a–14(d)(1)) is amended by striking the minimum and inserting 10 percent of the maximum.

(d) Scholarship component

Section 404E(d) of the Higher Education Act of 1965 (20 U.S.C. 1070a–25(d)) is amended by striking less than the minimum and inserting less than 10 percent of the maximum.

Sec. 102. Providing increased Federal Pell Grants and other assistance for recipients of means-tested benefits

(a) Increased amount of maximum Federal Pell Grants for students with negative student aid indexes

Section 401(b)(1) of the Higher Education Act of 1965 (20 U.S.C. 1070a(b)(1)), as amended by section 101 of this Act, is amended—

(1)

in subparagraph (A)—

(A)

in the matter preceding clause (i), by striking A student and inserting Except in the case of a student with a student aid index of less than zero, a student;

(B)

by striking clause (i); and

(C)

by redesignating clauses (ii) and (iii) as clauses (i) and (ii), respectively;

(2)

by redesignating subparagraphs (B) through (E) as subparagraphs (C) through (F), respectively;

(3)

by inserting after subparagraph (A) the following:

(B)
A student with a student aid index of less than zero shall be eligible for a Federal Pell Grant award that exceeds the total maximum Federal Pell Grant by an amount equal to the amount by which the student’s student aid index is less than zero.;

(4)

in subparagraph (C), as redesignated by paragraph (2)—

(A)

in the matter preceding clause (i), by striking subparagraph (A) for an academic year, and inserting subparagraph (A), or an increased Federal Pell Grant under subparagraph (B), for an academic year,; and

(B)

in clause (ii), by striking , except that a student aid index of less than zero shall be considered to be zero for the purposes of this clause;

(5)

in subparagraph (D), as redesignated by paragraph (2), by striking (A) or (B) and inserting (A), (B), or (C);

(6)

in subparagraph (E), as redesignated by paragraph (2), by inserting or an increased Federal Pell Grant under subparagraph (B) after subparagraph (A); or

(7)

in subparagraph (F), as redesignated by paragraph (2), by striking or a minimum Federal Pell Grant under subparagraph (C) and inserting an increased Federal Pell Grant under subparagraph (B), or a minimum Federal Pell Grant under subparagraph (D).

(b) Special student aid index rule for recipients of means-Tested benefits

Section 473 of the Higher Education Act of 1965 (20 U.S.C. 1087mm) is amended by adding at the end the following:

(d) Special rule for means-Tested benefit recipients
Notwithstanding subsection (b), for an applicant (or, as applicable, an applicant and spouse, or an applicant’s parents) who, at any time during the previous 24-month period, received a benefit under a means-tested Federal benefit program (or whose parent or spouse received such a benefit, as applicable), the Secretary shall for the purposes of this title consider the student aid index as equal to –$1,500 for the applicant.

Sec. 103. Federal aid eligibility for dreamer students

Section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091) is amended—

(1)

in subsection (a)(5), by inserting , or be a Dreamer student, as defined in subsection (u) after becoming a citizen or permanent resident; and

(2)

by adding at the end the following:

(u) Dreamer students
(1) In general
In this section, the term Dreamer student means an individual who—
(A)
(i)
is not a citizen or national of the United States; and
(ii)
is inadmissible or deportable under the Immigration and Nationality Act (8 U.S.C. 1101 et seq.); and
(B)
(i)
in the case of such an individual who was younger than 18 years of age on the date on which the individual initially entered the United States—
(I)
has earned a high school diploma, the recognized equivalent of such diploma from a secondary school, or a high school equivalency diploma recognized by State law, or is scheduled to complete the requirements for such a diploma or equivalent before the next academic year begins;
(II)
is enrolled at an institution of higher education pursuant to subsection (d);
(III)
has served in the uniformed services (as such term is defined in section 101 of title 10, United States Code) for not less than 2 years and, if discharged, received an honorable discharge;
(IV)
has acquired a degree, certificate, or recognized postsecondary credential from an institution of higher education or area career and technical education school (as such term is defined in section 3 of the Carl D. Perkins Career and Technical Education Act of 2006 (20 U.S.C. 2302)); or
(V)
has completed not less than 2 years in a postsecondary program at an institution of higher education, or area career and technical education school, in the United States and has made satisfactory academic progress, as defined in subsection (c), during such time period; or
(ii)
(I)
is, or at any time was, eligible for a grant of deferred action pursuant to—
(aa)
the memorandum of the Department of Homeland Security entitled Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children issued on June 15, 2012; or
(bb)
the memorandum of the Department of Homeland Security entitled Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children and with Respect to Certain Individuals Who Are the Parents of U.S. Citizens or Permanent Residents issued on November 20, 2014; or
(II)
would have been eligible for such a grant of deferred action if the applicable memorandum described in subclause (I) had been fully in effect since the date on which it was issued.
(2) Hardship exception
The Secretary shall issue regulations that direct when the Department shall waive the age requirement of paragraph (1)(B)(i) for an individual to qualify as a Dreamer student under such paragraph, if the individual demonstrates compelling circumstances, such as economic hardship (as defined in section 435(o)).

Sec. 104. Restoring the total semesters of Federal Pell Grant eligibility

Section 401(d)(5)(A) of the Higher Education Act of 1965 is amended by striking 12 each place the term appears and inserting 18.

Sec. 105. Reducing financial aid penalties from satisfactory academic progress determinations

Section 484(c) of the Higher Education Act of 1965 (20 U.S.C. 1091(c)) is amended to read as follows:

(c) Satisfactory progress
(1) Definitions
In this subsection:
(A) Appeal
The term appeal means a process by which a student who is not meeting the institution’s satisfactory academic progress standards petitions the institution for reconsideration of the student’s eligibility for assistance under this title.
(B) Financial aid probation
The term financial aid probation means a status assigned by an institution to a student who fails to make satisfactory academic progress and who has appealed and has had eligibility for aid reinstated.
(C) Financial aid warning
The term financial aid warning means a status assigned to a student who fails to make satisfactory academic progress at the end of the semester or equivalent period in which the student first fails to make such progress.
(D) Payment period
The term payment period means the applicable payment period described in section 668.4 of title 34, Code of Federal Regulations, or any successor regulation.
(2) Satisfactory academic progress policy
An institution shall establish a reasonable satisfactory academic progress policy for determining whether an otherwise eligible student is making satisfactory academic progress in the student’s educational program and may receive assistance under this title. The Secretary shall consider the institution’s policy to be reasonable if—
(A)
the policy is at least as strict as the policy the institution applies to a student who is not receiving assistance under this title;
(B)
the policy provides for consistent application of standards to all students, including full-time, part-time, undergraduate, and graduate students, and all educational programs established by the institution;
(C)
(i)
the policy specifies the grade point average that a student must achieve at each evaluation, or if a grade point average is not an appropriate qualitative measure, a comparable assessment measured against a norm; and
(ii)
if a student is enrolled in an educational program of more than 2 academic years, the policy specifies that at the end of the second academic year, the student must have a grade point average of at least a C or its equivalent, or have academic standing consistent with the institution’s requirements for graduation;
(D)
the policy provides for measurement of the student’s progress at each evaluation;
(E)
the policy describes—
(i)
how a student’s grade point average and the pace at which the student progresses toward completion are affected by course incompletes, withdrawals, or repetitions, or transfers of credit from other institutions, including that credit hours from another institution that are accepted toward the student’s educational program are counted as both attempted and completed hours; and
(ii)
how after a student reenrolls after the student’s satisfactory academic progress was reset pursuant to paragraph (3)(B), the student may have any credits that were earned before the student was determined not to be making satisfactory academic progress counted for purposes of determining progress when the student reenrolls, but any attempted hours that were not earned by the student (including incompletes, withdrawn courses, and failed courses) before the student was determined not to be making satisfactory academic progress will not negatively impact the determination of whether the student made satisfactory academic progress after such reset;
(F)
the policy provides that, except as provided in subparagraph (G) with respect to a student placed on financial aid warning or financial aid probation and paragraph (3), a student is no longer eligible to receive assistance under this title if the student has not achieved the required grade point average or who is not making progress toward completion in the student’s educational program—
(i)
at the time of each evaluation with respect to a student who is in an educational program of 2 academic years or less in length; or
(ii)
at the end of the second academic year with respect to a student who is in an educational program of more than 2 academic years in length;
(G)
the policy describes when students will be placed on financial aid warning or financial aid probation, in accordance with paragraph (4), and provides that—
(i)
a student on financial aid warning—
(I)
shall receive assistance under this title for one payment period despite a determination that the student is not making satisfactory academic progress; and
(II)
may be assigned such status without an appeal or other action by the student; and
(ii)
(I)
a student on financial aid probation may receive assistance under this title for one payment period and the institution may require the student to fulfill specific terms and conditions, such as taking a reduced course load or enrolling in specific courses; and
(II)
at the end of such one payment period, the student is required to meet the institution’s satisfactory academic progress standards, or meet the requirements of the academic plan developed by the institution and the student, in order to qualify for continued assistance under this title;
(H)
if the institution permits a student to appeal a determination by the institution that the student is not making satisfactory academic progress, the policy describes—
(i)
how the student may reestablish the student’s eligibility to receive assistance under this title;
(ii)
the basis on which the student may file an appeal, including because of the death of a relative, an injury or illness of the student, or another special circumstance; and
(iii)
information the student is required to submit regarding why the student failed to make satisfactory academic progress, and what has changed in the student’s situation that will allow the student to demonstrate satisfactory academic progress at the next evaluation;
(I)
if the institution does not permit a student to appeal a determination by the institution that the student is not making satisfactory academic progress, the policy describes how the student may reestablish the student’s eligibility to receive assistance under this title;
(J)
the policy provides for notification to students of the results of an evaluation that impacts the student’s eligibility for assistance under this title; and
(K)
the policy does not impose satisfactory progress limitations on need-based institutional aid that are more stringent than the standard applied under this subsection without demonstrating to the Secretary the effectiveness of such limitations on improving student persistence in, and completion of, postsecondary study.
(3) Regaining eligibility
(A) Students who remain in school
Whenever a student fails to meet the eligibility requirements of subsection (a)(2) as a result of the application of this subsection and, subsequent to that failure, the student has academic standing for any grading period consistent with the requirements for staying on track to graduate within 150 percent of the published length of the educational program, as determined by the institution, the student shall again be eligible under subsection (a)(2) for a grant, loan, or work assistance under this title, as long as the student maintains satisfactory academic progress under paragraph (2) beginning on and after the date that the student regains eligibility.
(B) Students who leave school
(i) In general
If a student has not been enrolled in any institution of higher education for the immediately preceding 2 years, any previous failure to meet the eligibility requirements of subsection (a)(2) shall not be used in any determination of eligibility of such student under such subsection. Such student shall, on the date of enrollment subsequent to such 2-year period, have the student's eligibility for a grant, loan, or work assistance under this title reset and be deemed as meeting the requirements described in paragraph (2). Beginning on and after such date, the student's satisfactory academic progress shall be determined in accordance with paragraph (2)(E)(ii).
(ii) Maximum number of resets
A student shall be eligible for a reset of eligibility pursuant to this subparagraph not more than 2 times.
(C) Duties of the Secretary
The Secretary shall—
(i)
send, to each student who failed to meet the eligibility requirements of subsection (a)(2) and who has not regained eligibility for a grant, loan, or work assistance under subparagraph (A), a notice, two years after such failure, that includes—
(I)
a notification that, if the student has not been enrolled in any institution of higher education for the preceding two years and has not received two resets of eligibility under subparagraph (B), the student may use grant, loan, or work assistance under this title for enrollment at any eligible institution, including an institution other than the institution in which the student was previously enrolled;
(II)
a notification that, if the student has remained enrolled, or resumed enrollment, at an institution of higher education, the student may be eligible for a grant, loan, or work assistance under this title subject to the requirements of subparagraph (A);
(III)
information on how many semesters of eligibility for a grant, loan, or work assistance under this title to which the student still has access; and
(IV)
a notification that the student should ask any prospective eligible institution how many of the student’s previously completed credits the student would be able to transfer; and
(ii)
submit an annual report to Congress on the outcomes of students who have received a reset of eligibility pursuant to this paragraph, including—
(I)
the number of students who reenroll in an eligible institution after such reset, disaggregated by race or ethnicity, sex, age, socioeconomic status, and disability status;
(II)
the 250 eligible institutions with the highest numbers of enrolled students receiving grant, loan, or work assistance under this title after such a reset;
(III)
the 250 eligible institutions with the highest share of enrolled students receiving grant, loan, or work assistance under this title after such a reset; and
(IV)
the average completion rate and time to completion for students who reenroll in an eligible institution after such reset, disaggregated by institution.
(4) Evaluation of academic progress
(A) In general
An institution that determines that a student is not making satisfactory academic progress under its policy may disburse funds provided through student financial assistance programs under this title (including work-study programs under subtitle C) to the student in accordance with subparagraphs (B), (C), and (D).
(B) Payment period following not making satisfactory academic progress
For the payment period following the payment period in which a student did not make satisfactory academic progress, the institution shall place the student on financial aid warning and disburse funds under this title to the student.
(C) Payment period following financial aid warning
For the payment period following a payment period during which a student was on financial aid warning, the institution may place the student on financial aid probation, and disburse funds under this title to the student if—
(i)
the institution evaluates the student’s progress and determines that student did not make satisfactory academic progress during the payment period the student was on financial aid warning;
(ii)
the student appeals the determination; and
(iii)
(I)
the institution determines that the student should be able to meet the institution’s satisfactory academic progress standards by the end of the subsequent payment period; or
(II)
the institution develops an academic plan for the student that, if followed, will ensure that the student is able to meet the institution’s satisfactory academic progress standards by a specific point in time.
(D) Payment period following financial aid probation
A student on financial aid probation for a payment period may not receive funds under this title for the subsequent payment period unless the student makes satisfactory academic progress or the institution determines that the student met the requirements specified by the institution in the academic plan for the student developed under subparagraph (C)(iii)(II).
(E) Frequency of academic progress evaluation and communication
(i) In general
Subject to clause (ii), for the purpose of determining whether presently enrolled students are maintaining satisfactory progress, each institution of higher education that enrolls students who receive any grant, loan, or work assistance under this title shall review the progress of such students at the end of each payment period.
(ii) Shorter payment periods
For each institution described in clause (i) that has payment periods that are shorter than on the semester system basis (such as on a quarterly or trimester system basis or by clock hour program or non-term program), such institution shall review the progress of presently enrolled students at the end of each semester or equivalent period of 12 to 18 weeks.
(iii) Financial aid warning
At the end of each payment period (or, in the case of an institution described in clause (ii), at the end of each semester or equivalent period), each institution shall send a financial aid warning to presently enrolled students that do not meet the grade point average requirement described in paragraph (2), or its equivalent or academic standing consistent with the requirements for graduation, as determined by the institution, that informs the students of their risk of being determined to not be maintaining satisfactory progress and therefore losing eligibility for grant, loan, or work assistance under this title and provides information on—
(I)
the specific criteria of the institution’s academic requirements that the student is not meeting and the specific improvements needed to meet the requirements; and
(II)
how to meet with the student’s academic advisor to get the academic support the student needs.
(5) Detailing requirements to students
Each institution of higher education that enrolls students who receive any grant, loan, or work assistance under this title shall detail the institution’s requirements regarding students maintaining satisfactory academic progress—
(A)
to such students before the students begin classes at the institution through a detailed communication that may be separate from a financial aid offer; and
(B)
on the financial aid webpage of the website of the institution.
(6) Consumer testing
The Secretary—
(A)
shall conduct consumer testing to develop exemplary practices and templates—
(i)
to support institutions of higher education in carrying out paragraph (5); and
(ii)
which shall be available as resources for institutions of higher education; and
(B)
shall not require the use of such practices and templates by institutions of higher education.

Sec. 106. Federal Pell Grants for graduate students

Section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) is amended—

(1)

in subsection (b)(8)(A), by inserting or as a postbaccalaureate student in accordance with subsection (d)(1) after as an undergraduate; and

(2)

in subsection (d)—

(A)

by amending paragraph (1) to read as follows:

(1) In general
The period during which a student may receive Federal Pell Grants shall be the period required for the completion of the first undergraduate baccalaureate course of study being pursued by that student at the institution at which the student is in attendance except that—
(A)
any 1-year period during which the student is enrolled in a noncredit or remedial course of study as defined in paragraph (2) shall not be counted for the purpose of this paragraph; and
(B)
the period during which a student may receive Federal Pell Grants shall also include the period required for the completion of the first postbaccalaureate course of study in a case in which—
(i)
the student received a Federal Pell Grant during the period required for the completion of the student’s first undergraduate baccalaureate course of study for at least 1 but fewer than 18 semesters, or the equivalent of at least 1 but fewer than 18 semesters, as determined under paragraph (5);
(ii)
the student would otherwise be eligible for a Federal Pell Grant, but for the completion of such baccalaureate course of study; and
(iii)
the period during which the student receives Federal Pell Grants does not exceed the student’s duration limits under paragraph (5).; and

(B)

in paragraph (2), by striking or certificate and inserting , certificate, or first postbaccalaureate degree.

Title II Amendments to terms and conditions of loans and repayment plans

Part A General terms and conditions

Sec. 201. Subsidized loans for graduate and professional students

Section 455(a)(3) of the Higher Education Act of 1965 (20 U.S.C. 1087e(a)(3)) is amended—

(1)

in subparagraph (A), in the matter preceding clause (i), by striking subparagraph (B) and inserting subparagraphs (B) and (C); and

(2)

by adding at the end the following:

(C) Authority to make interest subsidized loans to graduate and professional students
(i) In general
Beginning on or after July 1, 2026, a graduate or professional student shall be eligible to receive a Federal Direct Stafford loan under this part for a graduate or professional program at a covered institution of higher education.
(ii) Covered institution of higher education
In this subparagraph, the term covered institution of higher education—
(I)
means an institution of higher education defined in section 101 or section 102(a)(1)(C); and
(II)
does not include a graduate medical school, nursing school, or a veterinary school, located outside the United States that does not meet the requirements of section 101(a)(4).

Sec. 202. Repeal of origination fees

Section 455(c)(2) of the Higher Education Act of 1965 (20 U.S.C. 1087e(c)(2)) is amended—

(1)

by striking and at the end of subparagraph (D); and

(2)

by adding at the end the following:

(E)
by substituting 0.0 percent for 4.0 percent with respect to loans for which the first disbursement of principal is made on or after July 1, 2026.

Sec. 203. Prepayment amounts

Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088) is amended by adding at the end the following:

494A. Prepayment amounts
(a) Prepayments authorized
A borrower may pay, without penalty, an amount in excess of the amount due on an outstanding loan made under part B or D, and such excess amount shall be referred to as a prepayment amount for purposes of this subsection. Except as provided in subsection (b) a prepayment amount shall be applied first toward the fees (including any collection costs and authorized late charges) owed by the borrower on such loan, next on outstanding principal, and then on outstanding interest. If the prepayment amount exceeds the monthly payment amount owed on such loan, the due date of the next payment shall be advanced, unless the borrower requests otherwise, and the Secretary shall notify the borrower of such revised due date for the next payment.
(b) Application of prepayment amounts
(1) Borrowers without fee balances
(A) In general
Subject to subparagraph (B), with respect to a borrower who does not owe an outstanding balance of fees (including collection costs and authorized late charges) on any loan made under part B or D, and who makes a prepayment on 2 or more loans made under this part—
(i)
if such loans have different applicable rates of interest, the holder of such loans shall apply the borrower’s prepayment amount, first toward the outstanding balance of principal due on the loan with the highest applicable rate of interest among such loans, next on any fees owed on such loan, and then on outstanding interest owed on such loan; or
(ii)
if such loans have the same applicable rates of interest, the holder of such loans shall apply the borrower’s prepayment amount, first toward the outstanding balance of principal due on the loan with the highest principal balance among such loans, next on any fees on such loan, and then on outstanding interest owed on such loan.
(B) Written exception
A borrower described in subparagraph (A) who does not want prepayment amounts applied in the manner described in clause (i) or (ii) of such subparagraph shall provide to the Secretary, a written request for a different application of prepayment amounts.
(2) Borrowers with fee balances
With respect to a borrower who owes fees (which may include collection costs and authorized late charges) on a loan made under part B or part D, a prepayment amount made by the borrower shall be applied first toward the fees (including any collection costs and authorized late charges) owed by the borrower on such loan, next on outstanding principal, and then on outstanding interest.

Sec. 204. Default requirements

Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088), as amended by the preceding section, is further amended by adding at the end the following:

494B. Default requirements
(a) In general
If a borrower defaults on a loan made under part B or D—
(1)
the entire unpaid balance and accrued interest shall be immediately due and payable; and
(2)
the Secretary shall assess collection charges.
(b) Collection of a defaulted loan
The Secretary may, with respect to a borrower who defaults on a loan made under part B or D—
(1)
take any action authorized by law to collect such loan, including filing a lawsuit against the borrower, reporting the default to nationwide consumer reporting agencies, requesting the Internal Revenue Service to offset the borrower’s Federal income tax refund, and garnishing the borrower’s wages; and
(2)
may designate the Income-Driven Repayment Plan under section 455A(c) for the borrower.

Part B One income-contingent repayment plan and one fixed repayment plan

Sec. 211. Notification to borrowers

(a) In general

Beginning on the date of enactment of this Act, the Secretary of Education, in coordination with the Director of the Consumer Financial Protection Bureau, shall undertake a campaign to alert all borrowers of loans made under part D of title IV of the Higher Education Act of 1965 that they are eligible to change repayment plans and to enroll in one of the following repayment plans:

(1)

The fixed repayment plan under section 455A(b) of the Higher Education Act of 1965, as added by section 212.

(2)

The Income-Driven Repayment plan under section 455A(c) of the Higher Education Act of 1965, as added by section 212.

(b) Campaign activities

The campaign shall include the following activities:

(1)

Developing consumer information materials about the opportunity to change repayment plans and to enroll in one of the repayment plans described in paragraphs (1) and (2) of subsection (a).

(2)

Requiring servicers of loans made under part D of title IV of the Higher Education Act of 1965 to provide such consumer information to borrowers in a manner determined appropriate by the Secretary.

Sec. 212. New repayment plans

(a) Sunset of repayment plans available before July 1, 2026

Section 455(d)(1) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)(1)) is amended, in the matter preceding subparagraph (A), by inserting , before July 1, 2026 after may choose.

(b) Repayment plans available on and after July 1, 2026

Part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by inserting after section 455 the following:

455A. Repayment plans available on and after July 1, 2026
(a) Repayment plans for loans made on or after July 1, 2026
(1) Sunset of repayment plans available before July 1, 2026
Paragraphs (1) through (5) of section 455(d) shall only apply to loans made under this part before July 1, 2026.
(2) Prohibitions
The Secretary may not, for any loan made under this part on or after July 1, 2026—
(A)
authorize a borrower of such a loan to repay such loan pursuant to a repayment plan that is not described in paragraph (3); or
(B)
carry out or modify a repayment plan that is not described in such paragraph.
(3) Design and selection
Notwithstanding section 455(d), beginning on July 1, 2026, the Secretary shall offer a borrower of a loan made under this part on or after such date (including a Federal Direct Stafford Loan, a Federal Direct PLUS Loan (including such a loan made on behalf of a dependent student), a Federal Direct Consolidation Loan (including such a loan that discharged the liability on a Federal Direct PLUS Loan made on behalf of a dependent student), and a Federal Direct Unsubsidized Stafford Loan) two plans for repayment of such loan in accordance with subsection (d), including principal and interest on the loan. The borrower shall be entitled to accelerate, without penalty, repayment on the borrower’s loan under this part. The borrower may choose—
(A)
a fixed repayment plan under subsection (b); or
(B)
the Income-Driven Repayment Plan under subsection (c).
(4) Selection by Secretary
If a borrower of a loan made under this part on or after July 1, 2026, does not select a repayment plan described in paragraph (3), the Secretary shall provide the borrower with the fixed repayment plan described in subsection (b).
(5) Selection available for each new loan
Each time a borrower receives a new loan made under this part on or after July 1, 2026, the borrower may select either the fixed repayment plan under subsection (b) or the Income-Driven Repayment Plan under subsection (c), which shall apply to all such loans of the borrower in accordance with paragraph (6).
(6) Same repayment plan required
(A) Loans made on or after July 1, 2026
All loans made to a borrower under this part on or after July 1, 2026, must be repaid together under the same repayment plan.
(B) Loans made before and on or after July 1, 2026
A borrower with a loan made under this part before July 1, 2026, and with a loan made on or after July 1, 2026, (including a Federal Direct PLUS loan made on behalf of a dependent student made before, on, or after such date) may repay such loans on different repayment plans, provided that—
(i)
all such loans made on or after July 1, 2026, are repaid under the same repayment plan in accordance with subparagraph (A); and
(ii)
all such loans made before July 1, 2026, are repaid under the repayment plan that the borrower was enrolled in with respect to each such loan on June 30, 2026.
(7) Permissible changes of repayment plan
(A) Change from fixed repayment plan
A borrower may change the borrower’s selection of a fixed repayment plan under subsection (b), or the Secretary’s selection of such plan for the borrower under paragraph (4), as applicable, to the Income-Driven Repayment Plan under subsection (c) at any time.
(B) Change from the Income-Driven Repayment Plan
A borrower may change the borrower’s selection of the Income-Driven Repayment Plan under subsection (c) to a fixed repayment plan under subsection (b), provided that the required fixed monthly payment amount of the borrower under such plan is determined based on—
(i)
the total amount of the outstanding principal and interest and fees on the loans of the borrower to be repaid under such fixed plan, as of the date on which the borrower’s change in selection takes effect;
(ii)
the interest rates on such loans; and
(iii)
the applicable repayment period determined under subsection (b)(2).
(8) Treatment of borrowers with loans made before July 1, 2026
With respect to an outstanding loan made under this part (including a Federal Direct PLUS loan made on behalf of a dependent student) before July 1, 2026, a borrower with such a loan—
(A)
shall not be eligible to change the borrower’s selection of a repayment plan under paragraph (1) of section 455(d), or the Secretary’s selection of a plan for the borrower under paragraph (2) of such section, as applicable, to another repayment plan under such paragraph (1) on or after July 1, 2026;
(B)
may, at any time, change the borrower’s selection of a repayment plan to a repayment plan described in paragraph (3); and
(C)
upon changing the borrower’s selection of a repayment plan in accordance with subparagraph (B), shall make any such subsequent change in selection in accordance with paragraphs (6) and (7).
(b) Fixed repayment plan
(1) In general
The fixed repayment plan made available to borrowers in accordance with this section shall be a repayment plan consistent with subsection (a)(1) of section 455 and section 428(b)(9)(A)(i), except as expressly provided in this subsection, with a fixed annual repayment amount paid over a fixed period of time. Except as provided in paragraph (3), the required fixed monthly payment amount of a borrower shall be determined based on the total amount of the outstanding principal and interest of the Federal Direct Loans of the borrower to be repaid pursuant to such plan, the interest rates on such loans, and the applicable repayment period determined under this subsection.
(2) Applicable repayment period
(A) Direct loans other than consolidation loans
The applicable repayment period of a Federal Direct loan under this part, other than a Federal Direct Consolidation Loan, shall be 10 years.
(B) Direct consolidation loans
The applicable repayment period for a Federal Direct Consolidation loan made on or after July 1, 2026, repaid pursuant to a fixed repayment plan with a total outstanding amount of principal and interest on all of the borrower’s Federal Direct Loans, including such Consolidation loan (as of the day before entering repayment on such Consolidation loan) is—
(i)
less than $7,500, shall be 10 years;
(ii)
equal to or greater than $7,500 but less than $10,000, shall be 12 years;
(iii)
equal to or greater than $10,000 but less than $20,000, shall be 15 years;
(iv)
equal to or greater than $20,000 but less than $40,000, shall be 20 years;
(v)
equal to or greater than $40,000 but less than $60,000, shall be 25 years; and
(vi)
equal to or greater than $60,000, shall be 30 years.
(C) Minimum period
No fixed repayment plan may require a borrower to repay a loan in less than 10 years unless the borrower, during the 6 months immediately preceding the start of the repayment period, specifically requests that repayment be made over a shorter period.
(3) Minimum monthly payment
The minimum monthly payment amount of a borrower under a fixed repayment plan shall be $50 per month, except that the final payment of the borrower pursuant to such plan may be less than $50.
(4) Periods of deferment and forbearance
The fixed repayment plan period applicable to a borrower shall not include periods when the borrower is in authorized deferment or forbearance.
(5) Adjustments for variable interest rates
The number of payments or the fixed monthly repayment amount may be adjusted to reflect changes in the variable interest rate identified in section 685.202(a) of title 34, Code of Federal Regulations (as in effect on July 1, 2026).
(c) Income-Driven Repayment Plan
(1) Terms and conditions
Notwithstanding any other provision of this Act, beginning on July 1, 2026, the Secretary shall carry out an income-contingent repayment plan, to be known as the Income-Driven Repayment Plan, that shall have the following terms and conditions:
(A)
A borrower of any loan made under this part may elect to have the borrower’s total monthly payment amount owed for all of the loans of the borrower made under this part that are repaid under the Income-Driven Repayment Plan not exceed the applicable monthly payment of the borrower.
(B)
The Secretary shall apply the borrower’s applicable monthly payment first towards principal due, next toward any fees due on the loan, and then toward the interest due on the loan.
(C)
In the case of an applicable monthly payment that does not fully cover the amount of interest that has accrued on the borrower’s loans for the month to which such applicable monthly payment applies, the Secretary shall not charge such remaining interest to the borrower and such remaining interest shall not be capitalized.
(D)
The Secretary shall have the discretion to determine—
(i)
how a borrower’s applicable monthly payment is applied to each outstanding loan of the borrower repayed under the Income-Driven Repayment Plan; and
(ii)
the amount of principal, fees, and interest due on each outstanding loan of the borrower repayed under the Income-Driven Repayment Plan.
(E)
The Secretary shall cancel any outstanding balance of principal and interest due on all loans of the borrower repaid under the Income-Driven Repayment Plan by a borrower, without the need for an application or other documentation from the borrower, on the earlier of—
(i)
in the case of a borrower who does not have at least one outstanding loan under this part attributable to a graduate or professional course of study, the date that the borrower has made 240 qualifying payments over a period of at least 20 years;
(ii)
in the case of a borrower who has at least one outstanding loan under this part attributable to a graduate or professional course of study, the date that the borrower has made 300 qualifying payments over a period of at least 25 years; or
(iii)
the date that the borrower has made—
(I)
in the case of a borrower with a total original balance of principal due on all such loans that is equal to or less than $12,000, 120 qualifying payments over a period of at least 10 years; or
(II)
in the case of a borrower with a total original balance of principal due on all such loans that is greater than $12,000—
(aa)
120 qualifying payments over a period of at least 10 years; plus
(bb)
for each increment of $1 to $1,000 above $12,499 of such total original principal balance, 12 additional qualifying payments over a period of at least 1 year.
(2) Annual income verification
(A) In general
The procedures established by the Secretary under section 455(e)(8) shall apply for annually determining the borrower’s eligibility for the Income-Driven Repayment Plan, including verification of a borrower’s annual income and the annual amount due on the total amount of loans eligible to be repaid under this subsection, and such other procedures as are necessary to effectively implement the Income-Driven Repayment Plan. With respect to carrying out section 494(a)(2) for the Income-Driven Repayment Plan, an individual may elect to opt out of the disclosures required under section 494(a)(2)(A)(ii) in accordance with the procedures established under 455(e)(8).
(B) Additional procedures
In addition to carrying out the procedures described in subparagraph (A), the Secretary shall establish and implement—
(i)
in the case that the Secretary receives the return information disclosed under section 6103(l)(13) of the Internal Revenue Code of 1986, pursuant to approval provided under section 494, to determine the repayment obligation of the borrower but is unable to determine the repayment obligation of the borrower, procedures to require the borrower to provide such information as the Secretary may require to determine such repayment obligation under the Income-Driven Repayment Plan; and
(ii)
such other procedures as are necessary to implement effectively the Income- Driven Repayment Plan.
(C) Reconsideration
(i) In general
In the case that a borrower believes that the annual repayment obligation of the borrower determined pursuant to this paragraph is not reflective of the borrower’s income or family size, the borrower may request that the Secretary recalculate such annual repayment obligation. Such request shall include documentation of income or family size not based on tax information to account for a decrease in income since the borrower last filed a tax return, the borrower’s separation from a spouse with whom the borrower had previously filed a joint tax return, the birth or impending birth of a child, or other comparable circumstances.
(ii) Adjustment to repayment obligation
If the Secretary determines that the annual repayment obligation of the borrower determined pursuant to this paragraph is not reflective of the borrower’s income or family size based on a request described in clause (i), the Secretary shall adjust the annual repayment obligation of the borrower as determined appropriate by the Secretary and in a manner consistent with this subsection.
(D) Forbearance
In the case that a borrower provides information or documentation pursuant to subparagraph (B)(i) or subparagraph (C)(i), the Secretary shall grant the borrower administrative forbearance for a period of up to 60 days in order for the Secretary to collect and process such information or documentation.
(3) Repayment disclosure
After the Secretary obtains sufficient information to calculate a borrower’s annual repayment obligation under the Income-Driven Repayment Plan pursuant to paragraph (2) and not later than 3 months before any payments in accordance with such annual repayment obligation are due, the Secretary shall provide to the borrower a repayment disclosure that—
(A)
specifies the borrower’s applicable monthly payment amount;
(B)
explains how such applicable monthly payment amount was calculated;
(C)
informs the borrower of the terms and conditions of the Income-Driven Repayment Plan; and
(D)
informs the borrower of how to contact the Secretary if the calculated applicable monthly payment amount is not reflective of the borrower’s current income or family size.
(4) Failure to provide information
In the case that the Secretary requires information from the borrower to determine the annual repayment obligation of the borrower and the borrower does not provide the necessary information to the Secretary in accordance with the procedures described in paragraph (2), the Secretary shall remove the borrower from the Income-Driven Repayment Plan and provide the borrower with the fixed repayment plan described in subsection (b).
(5) Treatment of consolidation loans
With respect to cancelling any outstanding balance of principal and interest due on all loans of the borrower repaid under the Income-Driven Repayment Plan pursuant to paragraph (1)(E), the Secretary shall—
(A)
for a borrower with an outstanding Federal Direct Consolidation Loan that discharges the liability on loans with more than one period of qualifying payments, determine the number of qualifying payments made towards such Direct Consolidation Loan based on the weighted average of the number of qualifying payments made on each such discharged loan.
(B)
for a borrower with an outstanding joint consolidation loan that is separated into individual Federal Direct Consolidation Loans, determine the number of qualifying payments made towards each such separated loan based on the number of qualifying payments that the borrower made prior to the separation.
(6) Definitions
In this subsection:
(A) Applicable monthly payment
(i) In general
The term applicable monthly payment means, when used with respect to a borrower and except as provided in clause (ii), the amount equal to—
(I)
$0 for the portion of the borrower’s income (and the borrower’s spouse’s income, if applicable) that is less than or equal to 225 percent of the poverty line applicable to the borrower’s family size (as determined under section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2))); plus
(II)
in the case of a borrower with an outstanding loan made under this part for an undergraduate program of study, 5 percent of the portion of the borrower’s income (and the borrower’s spouse’s income, if applicable) that is greater than 225 percent of the poverty line applicable to the borrower’s family size (as determined under section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2))), prorated by the percentage that is the result of dividing—
(aa)
the borrower’s total outstanding balance of loans that is attributable to loans made under this part for an undergraduate program of study, determined at the time the borrower enters into repayment for such loans; by
(bb)
the result of dividing—
(AA)
the borrower’s total outstanding balance of loans made under this part, determined at the time the borrower enters into repayment for such loans; by
(BB)
12; plus
(III)
in the case of a borrower with an outstanding loan made under this part not described in subclause (II), 10 percent of the portion of the borrower’s income (and the borrower’s spouse’s income, if applicable) that is greater than 225 percent of the poverty line applicable to the borrower’s family size (as determined under section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2))), prorated by the percentage that is the result of dividing—
(aa)
the difference between—
(AA)
the borrower’s total outstanding balance of loans made under this part, determined at the time the borrower enters into repayment for such loans; and
(BB)
the balance of loans subject to subclause (II); by
(bb)
the result of dividing—
(AA)
the borrower’s total outstanding balance of loans made under this part, determined at the time the borrower enters into repayment for such loans; by
(BB)
12.
(ii) Adjustments to applicable monthly payment
Notwithstanding clause (i), the applicable monthly payment of a borrower shall be—
(I)
in the case that the amount calculated for such borrower pursuant to clause (i) is less than $5, $0;
(II)
in the case that the amount calculated for such borrower pursuant to clause (i) is greater than $5 but less than $10, $10; or
(III)
in the case of a married borrower who is not an exempted borrower, the amount resulting by multiplying—
(aa)
the amount calculated for such borrower pursuant to clause (i); by
(bb)
the result of dividing—
(AA)
the outstanding balance of principal and interest due on all loans of the borrower made under this part; by
(BB)
the sum of the amount described in subitem (AA) plus the outstanding balance of principal and interest due on all loans of the borrower’s spouse made under this part.
(B) Income
The term income, when used with respect to a borrower, means—
(i)
the borrower’s (and the borrower’s spouse, if applicable) adjusted gross income as reported to the Internal Revenue Service; or
(ii)
the amount calculated based on alternative documentation of all forms of taxable income received by the borrower (and the borrower’s spouse, if applicable) and provided to the Secretary.
(C) Adjusted gross income
The term adjusted gross income, when used with respect to a borrower, means—
(i)
in the case of an exempted borrower, the borrower’s adjusted gross income (as such term is defined in section 62 of the Internal Revenue Code of 1986) of such borrower for the most recent taxable year; and
(ii)
in the case of a married borrower who is not an exempted borrower, the sum of the adjusted gross income (as such term is defined in section 62 of the Internal Revenue Code of 1986) of the borrower and of the borrower’s spouse for the most recent taxable year.
(D) Exempted borrower
The term exempted borrower means a borrower—
(i)
who is unmarried;
(ii)
who is married and files a Federal income tax return separately from the borrower’s spouse; or
(iii)
who is married, files a Federal income tax return jointly with the borrower’s spouse, and certifies at the time the borrower applies for a repayment plan or submits information for annual income verification that—
(I)
the borrower is separated from the borrower’s spouse; or
(II)
the borrower is unable to reasonably assess the income of the borrower’s spouse.
(E) Qualifying payment
The term qualifying payment, when used with respect to a borrower, means any of the following:
(i)
An applicable monthly payment.
(ii)
A monthly payment made under the fixed repayment plan described in subsection (b).
(iii)
A monthly payment made under a repayment plan described in paragraph (1) of section 455(d).
(iv)
A payment under a repayment plan with payments that are as least as much as they would have been under a standard repayment plan for a term of 10 years consistent with subsection (a)(1) of section 455 and section 428(b)(9)(A)(i), except that, in the case of a borrower who was moved by the Secretary to such a repayment plan due to the borrower’s failure to submit information for annual income verification or their failure to provide other necessary information, no more than 12 payments made under such a repayment plan may be counted as qualifying payments.
(v)
A forbearance or deferment of an applicable monthly payment otherwise due under the Income-Driven Repayment Plan pursuant to any of the following:
(I)
Cancer treatment deferment under section 455(f)(3), section 428(b)(1)(M)(v), or section 427(a)(2)(C)(iv).
(II)
Rehabilitation training program deferment under section 455(f)(2)(A)(ii), section 428(b)(1)(M)(i)(II), or section 427(a)(2)(C)(i)(II).
(III)
Deferment relating to a period of unemployment under section 455(f)(2)(B) or section 428(b)(1)(M)(ii).
(IV)
Deferment due to an economic hardship described in section 435(o), section 428(b)(1)(M)(iv), or section 427(a)(2)(C)(iii).
(V)
Deferment provided in connection with services in the Peace Corps.
(VI)
Military service deferment under section 455(f)(2)(C) or section 428(b)(1)(M)(iii).
(VII)
Post-active-duty student deferment under section 493D.
(VIII)
Forbearance provided under section 428(c)(3)(A)(i)(III) on or after July 1, 2024, because the borrower is serving in a national service position for which the borrower receives a national service educational award under the National and Community Service Trust Act of 1993 (42 U.S.C. 12501 et seq.).
(IX)
National Guard Duty forbearance under section 682.211(h)(2)(iii) or section 685.205(a)(7) of title 34, Code of Federal Regulations (or successor regulations), on or after July 1, 2024.
(X)
Department of Defense student loan repayment program forbearance under section 428(c)(3)(A)(i)(IV) on or after July 1, 2024.
(XI)
Administrative forbearance or mandatory administrative forbearance under section 428(c)(3)(D) or section 428H(e)(7) on or after July 1, 2024.
(XII)
Forbearance granted by the Secretary while the Secretary determines whether the borrower is eligible for the Secretary to discharge the borrower’s liability on a loan due to the borrower’s bankruptcy.
(vi)
A payment for any month in which the borrower was in a period of deferment or forbearance not described in clause (iv) (other than an in-school deferment) if such payment—
(I)
is made not later than 3 years after such period of deferment or forbearance ended; and
(II)
is equal to or greater than the applicable monthly payment of the borrower.

Sec. 213. Maximum repayment period for income-contingent repayment and income-based repayment

(a) ICR

Section 455(e)(7)(B) of the Higher Education Act of 1965 (20 U.S.C. 1087e(e)(7)(B)) is further amended—

(1)

by striking or at the end of clause (iv);

(2)

by striking the period at the end of clause (v) and inserting a semicolon; and

(3)

by adding at the end the following:

(vi)
makes payments under the Income-Driven Repayment Plan under section 455A(c); or
(vii)
makes payments under the fixed repayment plan under section 455A(b);

(b) IBR

Section 493C(b)(7)(B) of the Higher Education Act of 1965 (20 U.S.C. 1098e(b)(7)(B)) is amended—

(1)

in clause (iv), by striking or;

(2)

in clause (v), by adding or at the end; and

(3)

by adding at the end the following:

(vi)
makes payments under the Income-Driven Repayment Plan under section 455A(c); or
(vii)
makes payments under the fixed repayment plan under 455A(b);

Sec. 214. Borrowers ineligible for loans

(a) Ineligible borrowers

Section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091) is amended—

(1)

in subsection (a)(6), by striking if the and inserting if, in accordance with subsection (u), the; and

(2)

by adding at the end the following:

(u) Ineligible borrowers
(1) In general
The Secretary determines that a borrower is ineligible pursuant to subsection (a)(6) if, at the time the loan was made and without the knowledge of the institution of higher education or the Secretary, the borrower (or the student on whose behalf a parent borrowed) provided false or erroneous information, has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining funds under this title, or took actions that caused the borrower or student—
(A)
to receive a loan for which the borrower is wholly or partially ineligible;
(B)
to receive interest benefits for which the borrower was ineligible; or
(C)
to receive loan proceeds for a period of enrollment for which the borrower was not eligible.
(2) Demand letter
(A) In general
If the Secretary makes the determination described in paragraph (1), the Secretary shall send an ineligible borrower a demand letter that requires that, within 30 days from the date the letter is mailed, the borrower repay any principal amount for which the borrower is ineligible and any accrued interest, including interest subsidized by the Secretary, through the previous quarter.
(B) Default
If a borrower fails to comply with the demand letter described in paragraph (2), the borrower shall be in default on the entire loan.
(3) Prohibition on consolidation
A borrower may not consolidate a loan under this part for which the borrower is wholly or partially ineligible.

Part C Automatic enrollment in the Income-Driven Repayment Plan for certain borrowers

Sec. 221. Notification and automatic enrollment procedures for borrowers who are delinquent on loans

Section 455(d) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)), as amended by this Act, is further amended by adding at the end the following:

(6) Notification and automatic enrollment procedures for borrowers who are delinquent on loans
(A) Authority to obtain income information
The Secretary shall establish and implement, with respect to any borrower described in subparagraph (B), procedures to—
(i)
use return information of the borrower (and the borrower's spouse, if applicable) disclosed under section 6103(l)(13) of the Internal Revenue Code of 1986, pursuant to approval provided under section 494, to determine the income and family size of the borrower (and the borrower's spouse, if applicable) without further action by the borrower;
(ii)
allow the borrower (or the spouse of the borrower), at any time, to opt out of disclosure under such section 6103(l)(13) and instead provide such information as the Secretary may require to determine the income and family size of the borrower (and the borrower's spouse, if applicable); and
(iii)
provide the borrower with an opportunity to update the return information so disclosed before the determination of the income and family size of the borrower for purposes of this paragraph.
(B) Borrower notification
With respect to each borrower of a loan made under this part who is not repaying such loan pursuant to the Income-Driven Repayment Plan under section 455A(c), who is at least 31 days delinquent on such loan, and who has not been subject to the procedures under this paragraph for such loan in the preceding 62 days, the Secretary shall, as soon as practicable after such 31-day delinquency, provide to the borrower the following:
(i)
Notification that the borrower is at least 31 days delinquent on at least 1 loan made under this part, and a description of all delinquent covered loans, nondelinquent covered loans, and noncovered loans of the borrower.
(ii)
A brief description of the repayment plans for which the borrower is eligible and the covered loans and noncovered loans of the borrower that may be eligible for such plans, based on information available to the Secretary.
(iii)
The amount of monthly payments for the covered and noncovered loans under each repayment plan identified under clause (ii), based on information available to the Secretary, including, if the income information of the borrower is available to the Secretary under subparagraph (A), the income, family size, tax filing status, and tax year information on which each such monthly payment is based.
(iv)
Clear and simple instructions on how to select the repayment plans.
(v)
An explanation that the Secretary shall take the actions under subparagraph (C) with respect to such borrower, if—
(I)
the borrower is 80 days delinquent on 1 or more loans made under this part and has not selected the Income-Driven Repayment Plan under section 455A(c) for borrower’s loans made under this part; and
(II)
in the case of such a borrower whose existing repayment plan for the borrower’s loans made under this part is not such Income-Driven Repayment Plan, the monthly payments under such existing repayment plan are higher than such monthly payments would be under such Income-Driven Repayment Plan.
(vi)
Instructions on updating the information of the borrower obtained under subparagraph (A).
(C) Secretary’s selection of a plan
With respect to each borrower described in subparagraph (B)(v) who has not selected the Income-Driven Repayment Plan under section 455A(c) for the borrower’s loans made under this part that are delinquent and who is at least 80 days delinquent on such a loan, the Secretary shall, as soon as practicable—
(i)
enroll the borrower in such Income-Driven Repayment Plan; and
(ii)
authorize the borrower to change the Secretary’s selection of the Income-Driven Repayment Plan to the fixed-repayment plan under section 455A(b), as long as such selection is made in accordance with paragraphs (6) and (7) of section 455A(a).

Sec. 222. Notification and automatic enrollment procedures for borrowers who are rehabilitating defaulted loans

Section 455(d) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)), as amended by this Act, is further amended by adding at the end the following:

(7) Notification and automatic enrollment procedures for borrowers who are rehabilitating defaulted loans
(A) Authority to obtain income information
The Secretary shall establish and implement, with respect to any borrower who is rehabilitating a loan made under this part pursuant to section 428F(d), procedures to—
(i)
use return information of the borrower (and the borrower's spouse, if applicable) disclosed section 6103(l)(13) of the Internal Revenue Code of 1986, pursuant to approval provided under section 494, to obtain such information as is reasonably necessary regarding the income and family size of the borrower (and the borrower's spouse, if applicable);
(ii)
allow the borrower (or the spouse of the borrower), at any time, to opt out of disclosure under such section 6103(l)(13) and instead provide such information as the Secretary may require to obtain such information; and
(iii)
provide the borrower with an opportunity to update the return information so disclosed before the determination of income and family size of the borrower (and the borrower's spouse, if applicable) for purposes of this paragraph.
(B) Borrower notification
Not later than 30 days after a borrower makes the 6th payment required on such loan pursuant to section 428F(d), the Secretary shall notify the borrower of the process under subparagraph (C) with respect to such loan.
(C) Secretary’s selection of plan
With respect to each borrower who has made the 9th payment required on such loan pursuant to section 428F(d), the Secretary shall, as soon as practicable after such payment, carry out the procedures described in paragraph (6)(C) with respect to such loan.

Sec. 223. Covered loan and non-covered loan defined

Section 455(d) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)), as amended by this Act, is further amended by adding at the end the following:

(8) Definitions
In this subsection:
(A) Covered loan
The term covered loan means—
(i)
a loan made under this part;
(ii)
a loan purchased under section 459A; or
(iii)
a loan that has been assigned to the Secretary under subsection (c)(8) or (j)(3)(B) of section 428, or subsection (a)(1)(A)(ii) or (a)(1)(G) of section 428F.
(B) Noncovered loan
The term noncovered loan means a loan made, insured, or guaranteed under this title that is not a covered loan.

Sec. 224. Automatic recertification of income for income-driven repayment plans

(a) Income-Contingent repayment plans

Section 455(e)(8)(A) of the Higher Education Act of 1965 (20 U.S.C. 1087e(e)(8)(A)) is amended—

(1)

by striking and at the end of clause (ii);

(2)

by redesignating clause (iii) as clause (iv);

(3)

in clause (iv) (as so redesignated), by striking the period at the end and inserting ; and; and

(4)

by inserting after clause (ii), the following:

(iii)
in the case of a borrower who has selected to repay a loan made under this part pursuant to an income contingent repayment plan that defines discretionary income in such a manner that the borrower would have a calculated monthly payment equal to $0, not require the borrower to provide the Secretary the information described in clause (i) or (ii), and ensure that the borrower will have a calculated monthly payment of $0; and

(b) Income-Based repayment plans

Section 493C(c)(2)(B) of the Higher Education Act of 1965 (20 U.S.C. 1098e(c)(2)(B)) is amended by striking any loan made under part D (other than an excepted PLUS loan or excepted consolidation loan) and inserting any covered loan (as defined in section 455(d)(8)).

Sec. 225. Procedure and requirement for requesting tax return information from the IRS

Section 494(a) of the Higher Education Act of 1965 (20 U.S.C. 1098h(a)) is amended—

(1)

in paragraph (2)—

(A)

in subparagraph (A), in the matter preceding clause (i), by striking a loan under part D and inserting a covered loan (as defined in section 455(d)(8); and

(B)

in subparagraph (B), by striking a loan under part D and inserting a covered loan (as defined in section 455(d)(8)); and

(2)

by adding at the end the following:

(4) Loan delinquency and rehabilitation
(A) Borrowers delinquent on loans
In the case of an individual who is a borrower of a loan made under this part and who is at least 31 days delinquent on such loan, the Secretary, with respect to such individual and any spouse of such individual, shall—
(i)
provide to such individuals the notification described in paragraph (1)(A)(i); and
(ii)
require, as a condition of eligibility for the notification and automatic enrollment procedures under section 455(d)(6), that such individuals—
(I)
affirmatively approve the disclosure described in paragraph (1)(A)(i) and agree that such approval shall serve as an ongoing approval of such disclosure until the date on which the individual elects to opt out of such disclosure under section 455(d)(6)(A)(ii); or
(II)
provide such information as the Secretary may require to carry out the procedures under section 455(d)(6) with respect to such individual.
(B) Loan rehabilitation
In the case of any written or electronic application by an individual for the rehabilitation of a loan made under this part pursuant to section 428F(d), the Secretary, with respect to such individual and any spouse of such individual, shall—
(i)
provide to such individuals the notification described in paragraph (1)(A)(i); and
(ii)
require, as a condition of eligibility for loan rehabilitation pursuant to section 428F(a), that such individuals—
(I)
affirmatively approve the disclosure described in paragraph (1)(A)(i) and agree that such approval shall serve as an ongoing approval of such disclosure until the date on which the individual elects to opt out of such disclosure under section 455(d)(7)(A)(ii); or
(II)
provide such information as the Secretary may require to carry out the procedures under section 455(d)(7) with respect to such individual.

Part D Streamlining Public Service Loan Forgiveness

Sec. 231. Amendments to terms and conditions of public service loan forgiveness

(a) Number of monthly payments

Paragraph (1) of section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)) is amended—

(1)

in the matter preceding subparagraph (A), by striking a borrower who and inserting a borrower;

(2)

by amending subparagraph (A) to read as follows:

(A)
who—
(i)
has made 96 qualifying monthly payments on the eligible Federal Direct Loan after October 1, 2007; and
(ii)
has been employed in a public service job during the period in which the borrower makes each of the 96 qualifying monthly payments; and; and

(3)

by amending subparagraph (B) to read as follows:

(B)
without regard to the employment status of the borrower at the time of such cancellation.

(b) Redesignations

Section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)) is further amended by redesignating paragraphs (2), (3), and (4), as paragraphs (3), (6), and (7), respectively.

(c) Monthly payments

Section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)) is further amended—

(1)

by inserting after paragraph (1), as so amended, the following:

(2) Monthly payments
(A) Qualifying monthly payments
For the purpose of determining under paragraph (1) the number of qualifying monthly payments made by a borrower on an eligible Federal Direct Loan, the Secretary shall consider the borrower to have made a qualifying monthly payment for each month that—
(i)
the borrower pays (as a lump sum or in multiple installments) an amount that is not less than the monthly payment amount due on the eligible Federal Direct Loan pursuant to any one or a combination of the following—
(I)
payments under an income-based repayment plan under section 493C;
(II)
payments under a standard repayment plan under subsection (d)(1)(A), based on a 10-year repayment period;
(III)
monthly payments under a repayment plan under subsection (d)(1) or (g) of not less than the monthly amount calculated under subsection (d)(1)(A), based on a 10-year repayment period;
(IV)
payments under an income contingent repayment plan under subsection (d)(1)(D);
(V)
payments under the Income-Driven Repayment Plan under section 455A(c); or
(VI)
payments under the fixed repayment plan under section 455A(b); or
(ii)
in lieu of a payment described in clause (i), the borrower is in one of the following periods of deferment or forbearance—
(I)
cancer treatment deferment under section 427(a)(2)(C)(iv), 428(b)(1)(M)(v), or 455(f)(3);
(II)
rehabilitation training program deferment under section 427(a)(2)(C)(i)(II), 428(b)(1)(M)(i)(II), or 455(f)(2)(A)(ii);
(III)
military service deferment under section 428(b)(1)(M)(iii) or 455(f)(2)(C);
(IV)
unemployment deferment under section 427(a)(2)(C)(ii), 428(b)(1)(M)(ii), 428B(d)(1)(A)(i), or 455(f)(2)(B);
(V)
deferment due to an economic hardship described in section 427(a)(2)(C)(iii), section 428(b)(1)(M)(iv), section 428B(d)(1)(A)(i), section 435(o), or section 455(f)(2)(D);
(VI)
Peace Corps service deferment under section 682.210(b)(2)(ii) or 682.210(k) of title 34, Code of Federal Regulations (or successor regulations), as made applicable to Direct Loan borrowers under section 685.204(j) of such title 34;
(VII)
post-active-duty student deferment under section 493D;
(VIII)
AmeriCorps forbearance under section 428(c)(3)(A)(i)(III);
(IX)
National Guard Duty forbearance under section 682.211(h)(2)(iii) or 685.205(a)(7) of title 34, Code of Federal Regulations (or successor regulations);
(X)
Department of Defense student loan repayment program forbearance under section 428(c)(3)(A)(i)(IV);
(XI)
administrative forbearance or mandatory administrative forbearance under section 428(c)(3)(D) or 428H(e)(7); or
(XII)
student loan debt burden forbearance under section 428(c)(3)(A)(i)(II).
(B) Prepayments
(i) In general
Subject to clause (ii), if, for any month, a borrower makes a qualifying monthly payment on an eligible Federal Direct Loan in an amount that exceeds the monthly payment amount due on such loan for such month, the Secretary shall—
(I)
if the excess amount is less than the monthly payment amount due for the subsequent month on such loan, apply the excess amount toward the monthly payment amount due for such subsequent month;
(II)
if the excess amount is equal to the monthly payment amount due for the subsequent month on such loan, treat the excess amount as the monthly payment for such subsequent month;
(III)
if the excess amount is greater than the monthly payment amount due for the subsequent month on such loan, but less than the total monthly payment amounts due for the 2 subsequent months on such loan—
(aa)
treat the portion of the excess amount that covers the monthly payment amount due for the subsequent month as the monthly payment for such subsequent month; and
(bb)
apply the remainder of the excess amount toward the monthly payment amount due for the second subsequent month;
(IV)
if the excess amount is equal to or greater than the monthly payment amount due for the 2 subsequent months on such loan, but less than the total monthly payment amounts due for the 3 subsequent months on such loan—
(aa)
treat the portion of the excess amount that covers the monthly payment amounts due for the subsequent month and the second subsequent month as the monthly payments for such months; and
(bb)
apply any remainder of such excess amount toward the monthly payment amount due for the third subsequent month;
(V)
if the excess amount is equal to the monthly payment amounts due for the 3 subsequent months on such loan, treat the excess amount as the monthly payments for such months;
(VI)
if the excess amount is greater than the monthly payment amounts due for the 3 subsequent months on such loan—
(aa)
treat the portion of the excess amount that covers the monthly payment amounts due for the 3 subsequent months as the monthly payments for such months; and
(bb)
apply any remainder of such excess amount to the principal balance of the eligible Federal Direct loan; and
(VII)
notwithstanding subclauses (I) through (VI), if the borrower has a monthly payment amount due on such loan for such month that is equal to $0, apply any excess amount for such month to the principal balance of the eligible Federal Direct loan.
(ii) Alternative application
Prior to or at the time of making a payment that exceeds the monthly payment amount due on an eligible Federal Direct Loan for such month, a borrower may request that any excess amount for such month be applied to the principal balance of an eligible Federal Direct loan in lieu of such excess amount being applied in accordance with clause (i).
(C) Buyback payment process
(i) In general
The Secretary shall establish a buyback payment process under which a qualified borrower of an eligible Federal Direct Loan may make a buyback payment in order to have eligible months of the borrower’s public service employment period during which the borrower did not make a qualifying monthly payment on such loan be treated as if the borrower had made a qualifying monthly payment on such loan.
(ii) Qualified borrower
A borrower is a qualified borrower for the purposes of making a buyback payment in accordance with this subparagraph if the borrower—
(I)
has an eligible Federal Direct Loan that is not in default;
(II)
has been employed in a public service job for not less than a 96 month employment period, but during such employment period has made fewer than 96 qualifying monthly payments on an eligible Federal Direct Loan; and
(III)
requests to make a buyback payment in accordance with this subparagraph.
(iii) Eligible month
For the purposes of this subparagraph, an eligible month means a month during which a qualified borrower was employed in a public service job, was not in an in-school deferment or grace period, and did not make a qualifying monthly payment on an eligible Federal Direct Loan for such month—
(I)
because the borrower made a monthly payment on such eligible Federal Direct Loan pursuant to a repayment plan that is not a qualifying repayment plan;
(II)
because the borrower was in a period of deferment or forbearance other than a period described in clause (ii) of subparagraph (A); or
(III)
for another reason determined appropriate by the Secretary.
(iv) Buyback payment requirements
A buyback payment made in accordance with this subparagraph—
(I)
shall be made by a qualified borrower as a lump sum payment amount, and in an amount that equals the total amount the borrower would have paid in qualifying monthly payments on the eligible Federal Direct Loan for all eligible months the borrower is requesting to buyback, pursuant to a qualifying repayment plan applicable to the borrower, in accordance with section 685.219(g)(6) of title 34, Code of Federal Regulations (as such section is in effect on the date of enactment of this paragraph) or any other relevant regulations in effect on such date;
(II)
may not be made with respect to an eligible Federal Direct Loan that has been paid off, discharged, or cancelled; and
(III)
with respect to an eligible Federal Direct Loan that is a consolidation loan, may not be used to buyback eligible months that occurred before the date of the consolidation of such loan.
(D) Hold harmless against retroactive determinations
For purposes of determining under paragraph (1) the number of qualifying monthly payments made by a borrower, any payment or period of deferment or forbearance that is determined to be a qualifying monthly payment may not, at a later time, be determined not to be a qualifying monthly payment.; and

(2)

in paragraph (6), as redesignated by subsection (b), by adding at the end the following:

(C) Qualifying repayment plan
The term qualifying repayment plan means any of the repayment plans listed in clause (i) of paragraph (2)(A).

(d) Loan cancellation

Paragraph (3) of section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)), as redesignated by subsection (b), is amended to read as follows:

(3) Loan cancellation amount
Upon certification by a borrower of completion of 96 qualifying monthly payments by the borrower, the Secretary shall determine whether the borrower meets each of the requirements of paragraph (1), and—
(A)
if the Secretary determines that the borrower does meet such requirements, cancel the obligation to repay the balance of principal and interest due as of the time of such cancellation on the eligible Federal Direct Loans made to the borrower under this part, without further action by the borrower; or
(B)
if the Secretary determines that the borrower does not meet such requirements, notify the borrower of such determination in accordance with paragraph (4).

(e) Reconsideration process

Section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)), as redesignated by subsection (b), is further amended by inserting after paragraph (3), as so amended, the following:

(4) Initial determination of ineligibility for loan cancellation
In a case in which the Secretary determines that a borrower has not met the requirements of paragraph (1), the Secretary shall—
(A)
notify the borrower that—
(i)
the borrower’s application has been denied, including the basis for such denial;
(ii)
the borrower is in a 90-day forbearance period described in subparagraph (B); and
(iii)
the Secretary will resume collection of the eligible Federal Direct Loans for which the borrower was seeking loan cancellation under this subsection after such 90-day forbearance period, unless the borrower opts to extend such forbearance period under paragraph (5)(A)(ii); and
(B)
grant the borrower a 90-day forbearance period, beginning on the date of the notice described in subparagraph (A) provided to the borrower, and during which—
(i)
payments of principal and interest need not be made on the eligible Federal Direct Loans for which the borrower was seeking loan cancellation under this subsection; and
(ii)
any interest accrued and not paid may not be capitalized.
(5) Reconsideration process
(A) Request for reconsideration
Not later than 90 days after the date of the notice described in paragraph (4)(A) provided to the borrower—
(i)
the borrower may request, on a form approved by the Secretary, that the Secretary reconsider the basis for the Secretary’s denial under paragraph (4)(A)(i); and
(ii)
if the Secretary grants the borrower’s reconsideration request, offer the borrower an extension of the 90-day forbearance period described in paragraph (4)(B), which shall—
(I)
begin on the date of the borrower’s reconsideration request under this subparagraph; and
(II)
end on the date of the notice provided to the borrower under subparagraph (C)(i)(I) of the Secretary’s reconsideration decision.
(B) Consideration of reconsideration request
In evaluating a reconsideration request from a borrower, the Secretary shall consider any relevant evidence or supporting documentation that may assist the Secretary in determining whether the borrower meets each of the requirements of paragraph (1) to qualify for loan cancellation under this subsection.
(C) Decision by the Secretary
(i) In general
Not later than 6 months after receipt of a borrower’s reconsideration request, the Secretary shall—
(I)
notify the borrower of the reconsideration decision and the reason for the Secretary’s determination;
(II)
in a case in which the reconsideration request is granted, adjust the borrower’s number of qualifying monthly payments under paragraph (1) or cancel the loan under paragraph (3); and
(III)
in a case in which the Secretary denies the reconsideration request, with respect to a borrower who agrees to the forbearance extension described in subparagraph (A)(ii), include in the notice provided to the borrower under subclause (I), a reminder that the Secretary will resume collection of the eligible Federal Direct Loans for which the borrower was seeking loan cancellation under this subsection as of the date of such notice.
(ii) Final decision
After the Secretary makes a decision on the borrower’s reconsideration request, the Secretary’s decision is final, and the borrower will not receive additional reconsideration.

Sec. 232. Terms and conditions of employment

(a) Independent contractors

Section 455(m) is further amended by adding at the end the following:

(8) Treatment of independent contractors
For purposes of this subsection, each reference to employment and employed shall be treated as including work as an independent contractor.

(b) Definitions

Paragraph (6) of section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)), as redesignated by section 231(b), is further amended by adding at the end the following:

(D) Full-time
The term full-time means, with respect to a public service job, working 1 or more such jobs—
(i)
a minimum average of 30 hours per week during the period being certified;
(ii)
a minimum of 30 hours per week throughout a contractual or employment period of at least 8 months in a 12-month period; and
(iii)
with respect to an individual who is in nontenure track employment at an institution of higher education, the equivalent of 30 hours per week as determined by multiplying each credit or contact hour taught by such individual per week by a number to be determined by the Secretary.
(E) Independent contractor
The term independent contractor means an individual who is not an employee and who is working in a public service job in a position or providing services which, under applicable State law, cannot be filled or provided by an employee of the public service job.

Sec. 233. Online portal and database of public service jobs

Section 455(m) of the Higher Education Act of 1965 is further amended by adding at the end the following:

(9) Online portal and database of public service jobs
(A) Online portal
(i) Borrowers
The Secretary shall establish an online portal that provides to borrowers of eligible Federal Direct Loans the following information:
(I)
Instructions on how to access the database established under subparagraph (B) so that the borrower can determine whether the borrower is employed in a public service job.
(II)
An identification of the loans of the borrower that are eligible Federal Direct Loans, and an identification of the qualifying repayment plans for which such eligible Federal Direct Loans qualify.
(III)
With respect to each such eligible Federal Direct Loan—
(aa)
the number of qualifying monthly payments the borrower has made in accordance with paragraph (1); and
(bb)
the estimated number of qualifying monthly payments under such paragraph remaining on such loan before the borrower may be eligible for loan cancellation under this subsection.
(IV)
With respect to each loan of the borrower that is not eligible for loan cancellation under paragraph (3) of this subsection, an explanation of why the loan is not so eligible and instructions on how what, if anything, the borrower may do to make the loan so eligible.
(V)
Instructions for the submission of any forms associated with such loan cancellation, and an ability for the borrower to use the portal to electronically sign and submit such forms.
(VI)
In a case in which a borrower submits to the Secretary an application for loan cancellation under this subsection that is denied by the Secretary—
(aa)
a notice of such denial that meets each of the requirements of paragraph (4)(A), including an explanation of the 90-day forbearance period;
(bb)
a form that meets each of the requirements of paragraph (5)(A), which the borrower may use to request reconsideration of such denial, including accepting an extension of the 90-day forbearance period; and
(cc)
a notice of the Secretary’s reconsideration decision, which meets each of the requirements of paragraph (5)(C).
(VII)
An explanation of the buyback payment process described in paragraph (2)(C), and a form to request such a buyback, including the eligible months for which the borrower may request a buyback, and the amount that the borrower would be required to pay for such buyback.
(VIII)
An explanation of how consolidating one or more Direct Loans into a Direct Consolidation Loan, including a Direct PLUS Loan made to a parent borrower, will affect the number of qualifying monthly payments attributed to the borrower.
(ii) Appropriate contacts
The Secretary shall ensure that an appropriate contact for a public service job of a borrower has the option to electronically sign and submit any forms associated with loan cancellation under paragraph (3) of this subsection.
(iii) Information
The Secretary shall ensure that any information provided through the online portal described in this subparagraph contains up-to-date information.
(B) Database of public service jobs
(i) In general
The Secretary, in consultation with the Secretary of Labor, shall establish and regularly update a database that lists public service jobs.
(ii) Public availability
The database established under clause (i) shall be made available on a publicly accessible website of the Department of Education in an easily searchable format.

Sec. 234. Treatment of consolidated and refinanced loans

Section 455(m)(2) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)(2)), as amended by the preceding provisions of this Act, is further amended by inserting after subparagraph (D) the following:

(E) Determination of number of qualifying monthly payments for consolidation loans
With respect to determining the number of qualifying monthly payments for a borrower seeking loan forgiveness under this subsection who consolidates one or more Direct Loans into a Direct Consolidation Loan, including a Direct PLUS Loan made to a parent borrower, the Secretary shall use the weighted average of the payments the borrower made on the Direct Loans prior to consolidating that met the criteria under this subsection.

Sec. 235. Loan forgiveness for teachers

(a) In general

The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is further amended—

(1)

in section 428J(g)(2) (20 U.S.C. 1078–10(g)(2))—

(A)

in subparagraph (A), by inserting or after the semicolon at the end;

(B)

by striking subparagraph (B); and

(C)

by redesignating subparagraph (C) as subparagraph (B); and

(2)

in section 460(g)(2) (20 U.S.C. 1087j(g)(2))—

(A)

in subparagraph (A), by inserting or after the semicolon at the end;

(B)

by striking subparagraph (B); and

(C)

by redesignating subparagraph (C) as subparagraph (B).

(b) Conforming amendment

Section 455(m)(7) of the Higher Education Act of 1965, as redesignated by section 231(b) of this Act, is amended by striking section 428J, 428K, 428L, or 460 and inserting section 428K or 428L.

Sec. 236. GAO study on data matching agreements for public service loan forgiveness

(a) In general

The Comptroller General of the United States shall conduct a study on the feasibility of establishing data matching agreements for public service loan forgiveness under section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)) that would allow a borrower to forego requesting certification of employment from the appropriate contact for the public service job of the borrower. The study shall include an examination of the Department of Education and the Department of Defense’s progress towards automatic data matching for military and veteran borrowers.

(b) Report

Not later than 1 year after the date of enactment of this Act, the Comptroller General shall submit a report to the Committee on Education and Workforce of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate containing the findings and recommendations resulting from the study required under subsection (a).

(c) Cooperation

The head of each relevant Federal agency, including the Secretary of Education, Secretary of Defense, and Commissioner of Internal Revenue, shall cooperate with the Comptroller General to facilitate the completion of the study required under subsection (a).

Part E Support for Borrowers in Default

Sec. 241. Removal of record of default

Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088 et seq.), as amended by this Act, is further amended by adding at the end the following:

494C. Removal of record of default
Upon repaying in full the amount due on a defaulted loan made, insured, or guaranteed under this title, the Secretary, guaranty agency, or other holder of the loan shall request any consumer reporting agency to which the Secretary, guaranty agency, or holder, as applicable, reported the default of the loan, to remove any adverse item of information relating to such loan from the borrower's credit history.

Sec. 242. Removal of record of default from credit history upon loan consolidation

Section 455(g) of the Higher Education Act of 1965 (20 U.S.C. 1087e(g)) is amended by adding at the end the following:

(3) Consumer reporting agencies
Upon obtaining a Federal Direct Consolidation Loan that discharges the liability on a defaulted loan made, insured, or guaranteed under this title, the Secretary, guaranty agency, or other holder of the loan shall request any consumer reporting agency to which the Secretary, guaranty agency or holder, as applicable, reported the default of the loan, to remove any adverse item of information relating to such loan from the borrower’s credit history.

Sec. 243. Default reduction program

Section 428F of the Higher Education Act of 1965 (20 U.S.C. 1078–6(a)) is amended by adding at the end the following:

(d) Default reduction program
Notwithstanding subsection (a), beginning on July 1, 2026, with respect to a defaulted loan made, insured, or guaranteed under this part or part D, the following shall apply:
(1) Rehabilitation authorized
(A) In general
Such a defaulted loan (other than a loan described in subparagraph (B)) shall be rehabilitated if the borrower makes 9 voluntary, reasonable and affordable monthly payments within 20 days of the due date during 10 consecutive months. The Secretary determines the amount of a borrower’s reasonable and affordable payment on the basis of a borrower’s total financial circumstances.
(B) Ineligible loans
A defaulted loan may not be eligible for rehabilitation under this subsection if—
(i)
a judgment has been obtained on such loan; or
(ii)
such loan has been obtained by fraud for which the borrower has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining financial assistance under this title.
(C) Limitation on borrower
A borrower may obtain the benefits available under this subsection with respect to rehabilitating a loan not more than two times per loan.
(D) Limitation on the Secretary
During the rehabilitation period described in this paragraph, the Secretary shall limit contact with the borrower on the loan being rehabilitated to collection activities that are required by law or regulation and to communications that support the rehabilitation.
(2) Determination of reasonable and affordable payment
(A) In general
Subject to subparagraphs (A) through (H), the Secretary shall consider the borrower’s reasonable and affordable payment amount to be an amount equal to the minimum payment required under the Income-Driven Repayment Plan, except that if such amount is less than $5, the borrower’s monthly payment shall be $5.
(B) Documentation requirement
The Secretary may calculate the payment amount based on information provided orally by the borrower or the borrower’s representative and provide the borrower with a rehabilitation agreement using that amount. The Secretary requires the borrower to provide documentation to confirm the borrower’s adjusted gross income and family size. If the borrower does not provide the Secretary with any documentation requested by the Secretary to calculate or confirm the reasonable and affordable payment amount within a reasonable time deadline set by the Secretary, the rehabilitation agreement provided is null and void. A borrower may request that the monthly payment amount be adjusted due to a change in the borrower’s total financial circumstances only upon providing the documentation specified in paragraph (3).
(C) Prohibitions
For purposes of subparagraph (A), a reasonable and affordable payment amount shall not—
(i)
be a required minimum loan payment amount if the Secretary determines that a smaller amount is reasonable and affordable;
(ii)
a percentage of the borrower’s total loan balance; or
(iii)
based on other criteria unrelated to the borrower’s total financial circumstances.
(D) Rehabilitation payment agreement
(i) In general
Not later than 15 business days of the Secretary’s determination of the borrower’s loan rehabilitation payment amount, the Secretary shall provide the borrower with a written rehabilitation agreement which shall include—
(I)
the borrower’s reasonable and affordable payment amount, a prominent statement that the borrower may object orally or in writing to the reasonable and affordable payment amount with the method and timeframe for raising such an objection;
(II)
a statement that the rehabilitation is null and void if the borrower does not provide the documentation required to calculate the reasonable and affordable payment amount;
(III)
an explanation of any other terms and conditions applicable to the required series of payments that must be made; and
(IV)
information on the effects of having the loans rehabilitated.
(ii) Acceptance by the borrower
To accept the agreement, the borrower shall sign and return the agreement or accept the agreement electronically under a process provided by the Secretary.
(iii) Prohibition
The Secretary may not impose any other conditions unrelated to the amount or timing of the rehabilitation payments in the rehabilitation agreement.
(E) Statement confirming reasonable and affordable payment amount
The Secretary shall provide the borrower with a written statement that—
(i)
confirms the borrower’s reasonable and affordable payment amount, as determined by the Secretary;
(ii)
explains any other terms and conditions applicable to the required series of payments that shall be made before the borrower’s account can be rehabilitated;
(iii)
informs the borrower that the borrower may object to the terms and conditions of the rehabilitation agreement; and
(iv)
explains the method and timeframe for objecting to the terms and conditions of the rehabilitation agreement.
(F) Objection by borrower
If the borrower objects to the monthly payment amount described in the statement under subparagraph (E), the Secretary shall recalculate the payment based solely on information provided on a form approved by the Secretary and, if requested, supporting documentation from the borrower and other sources, and shall consider each of the following:
(i)
The borrower’s, and if applicable, the spouse’s current disposable income, including public assistance payments, and other income received by the borrower and the spouse, such as welfare benefits, Social Security benefits, Supplemental Security Income, and workers’ compensation. Spousal income is not considered if the spouse does not contribute to the borrower’s household income.
(ii)
Family size.
(iii)
Reasonable and necessary expenses, which shall include—
(I)
Food.
(II)
Housing.
(III)
Utilities.
(IV)
Basic communication expenses.
(V)
Necessary medical and dental costs.
(VI)
Necessary insurance costs.
(VII)
Transportation costs.
(VIII)
Dependent care and other work-related expenses.
(IX)
Legally required child and spousal support.
(X)
Other student loan payments for loans made, insured, or guaranteed under this title, or any other Federal law.
(XI)
Other expenses approved by the Secretary.
(G) New rehabilitation agreement
The Secretary shall provide the borrower with a new written rehabilitation agreement confirming the borrower’s recalculated reasonable and affordable payment amount. To accept the agreement, the borrower must sign and return the agreement or accept the agreement electronically under a process provided by the Secretary.
(H) Change in circumstances
A borrower may request that the monthly payment amount be adjusted due to a change in the borrower’s total financial circumstances only upon providing the documentation specified in subparagraph (F).
(3) Administrative wage garnishment
(A) In general
If a borrower’s loan is being collected by administrative wage garnishment while the borrower is also making monthly payments on the same loan under a loan rehabilitation agreement, the Secretary shall continue collecting the loan by administrative wage garnishment until the borrower makes five qualifying monthly payments under the rehabilitation agreement, unless the Secretary is otherwise precluded from doing so.
(B) Suspension
After the borrower makes the fifth qualifying monthly payment, the Secretary, unless otherwise directed by the borrower, suspends the garnishment order issued to the borrower’s employer.
(C) Limitation
A borrower may only obtain the benefit of a suspension of administrative wage garnishment while also attempting to rehabilitate a defaulted loan once.
(4) Instruction to consumer reporting agency
If a defaulted loan is rehabilitated, the Secretary shall instruct any consumer reporting agency to which the default was reported to remove the default, and any adverse item of information relating to such loan, from the borrower’s credit history.
(e) Removal from default
Beginning on July 1, 2026, the Secretary shall not consider a borrower in default on a loan if—
(1)
the borrower provides information necessary to calculate a payment under an income-contingent or income-based repayment plan under this part or;
(2)
the payment calculated pursuant to such a repayment plan is $0; and
(3)
the income information used to calculate such payment covers the date on which the loan defaulted.

Title III Interest Capitalization

Sec. 301. Elimination of interest capitalization

(a) Federal PLUS loans

Section 428B(d)(2) of the Higher Education Act of 1965 (20 U.S.C. 1078–2(d)(2)) is amended to read as follows:

(2) No capitalization of interest
Interest on loans made under this section for which payments of principal are deferred pursuant to paragraph (1) shall be paid by the borrower and shall not be capitalized.

(b) Federal consolidation loans deferrals

Section 428C(b)(4)(C)(ii)(III) of the Higher Education Act of 1965 (20 U.S.C. 1078–3(b)(4)(C)(III)) is amended by striking or capitalized,.

(c) Default reduction program

Section 428F(a)(1)(E) of such Act of 1965 (20 U.S.C. 1078–6(a)(1)(E)) is amended to read as follows:

(E) Duties upon assignment
With respect to a loan assigned under subparagraph (A)(ii)—
(i)
the guaranty agency shall add to the principal and interest outstanding at the time of the assignment of such loan an amount equal to the amount described in subparagraph (D)(i)(II)(aa);
(ii)
the Secretary shall pay the guaranty agency, for deposit in the agency’s Operating Fund established pursuant to section 422B, an amount equal to the amount added to the principal and interest outstanding at the time of the assignment in accordance with clause (i);
(iii)
for a loan assigned on or after the date of enactment of the LOAN Act, the interest outstanding at the time of the assignment of such loan, and any interest accruing after such time, shall not be capitalized; and
(iv)
beginning on the date of enactment of LOAN Act, interest shall only accrue on the percentage of such a loan that is equal to—
(I)
the amount of the outstanding principal on the original loan on the date it was assigned; divided by
(II)
the total amount of such assigned loan, including interest outstanding at the time of the assignment of such loan and the amount added by the guaranty agency in accordance with clause (i), on the date such loan was assigned.

(d) Loan limits for Unsubsidized Stafford Loans

Section 428H(d)(5) of the Higher Education Act of 1965 (20 U.S.C. 1078–8(d)(5)) is amended by inserting before the date of enactment of the LOAN Act after Interest capitalized.

(e) Unsubsidized Stafford loans for middle income borrowers

Section 428H(e)(2) of the Higher Education Act of 1965 (20 U.S.C. 1078–8(e)(2)) is amended—

(1)

in the header, by striking Capitalization and inserting No capitalization;

(2)

in subparagraph (A), in the matter before clause (i), by striking , if agreed upon by the borrower and the lender and all that follows through clause (ii)(IV) and inserting be paid by the borrower and shall not be capitalized.;

(3)

by striking subparagraph (B); and

(4)

by redesignating subparagraph (C) as subparagraph (B).

(f) Income contingent repayment

Section 455(e)(5) of the Higher Education Act of 1965 (20 U.S.C. 1087e(e)(5)) is amended by striking the last sentence and inserting No interest may be capitalized on such loan on or after the date of the enactment of the LOAN Act, and the Secretary shall promulgate regulations with respect to the treatment of accrued interest that is not capitalized.

(g) Deferment and forbearance

(1) In general

Section 455(f) of the Higher Education Act of 1965 (20 U.S.C. 1087e(f)) is amended—

(A)

in the subsection heading, by inserting at the end the following: and forbearance;

(B)

in subparagraph (B), by striking capitalized or; and

(C)

by adding at the end the following:

(6) Forbearance
At the expiration of a period of forbearance, interest shall not be capitalized on any loans made under this part.

(2) Application of amendment

The amendments made by paragraph (1) shall apply to any deferment or forbearance period in effect on the date of enactment of this Act, or any deferment or forbearance period beginning on or after such date of enactment.

(h) Income-Based Repayment program

Section 493C(b)(3) of the Higher Education Act of 1965 (20 U.S.C. 1098e(b)(3)) is amended to read as follows:

(3)
on subsidized loans, any interest due and not paid under paragraph (2) shall be paid by the Secretary for a period of not more than 3 years after the date of the borrower’s election under paragraph (1), except that such period shall not include any period during which the borrower is in deferment due to an economic hardship described in section 435(o);

(i) Notes and insurance certificates in Combined Payment plans

Section 485A(f) of the Higher Education Act of 1965 (20 U.S.C. 1092a(f)) is amended by adding at the end the following new paragraph:

(3) Treatment of interest
Not withstanding paragraphs (1) and (2), beginning on the date of enactment of the LOAN Act, interest on a loan reissued under subsection (e) shall not be capitalized, and interest shall only accrue on the percentage of such reissued loan that is equal to—
(A)
the amount of the outstanding principal on the original loan on the date it was reissued; divided by
(B)
the total amount of such reissued loan on the date such loan was reissued.

Sec. 302. Elimination of disclosure requirements relating to capitalization

(a) Insurance Program Agreements To Qualify Loans for Interest Subsidies

Section 428(b)(1)(Y) of the Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(Y)) is amended—

(1)

in clause (i)(IV), by inserting and after the semicolon;

(2)

in clause (ii), by striking ; and and inserting a period; and

(3)

by striking clause (iii).

(b) Forbearance

Section 428(c)(3)(C) of such Act of 1965 (20 U.S.C. 1078(c)(3)(C)) is amended—

(1)

in clause (ii), by inserting and after the semicolon; and

(2)

by striking clauses (iii) and (iv) and inserting the following:

(iii)
the lender shall contact the borrower not less often than once every 180 days during the period of forbearance to inform the borrower of—
(I)
the amount of unpaid principal and the amount of interest that has accrued since the last statement of such amounts provided to the borrower by the lender;
(II)
the fact that interest will accrue on the loan for the period of forbearance;
(III)
the responsibility of the borrower to pay the interest that has accrued; and
(IV)
the borrower’s option to discontinue the forbearance at any time; and

(c) Required Disclosure Before Disbursement

Section 433(a) of the Higher Education Act of 1965 (20 U.S.C. 1083(a)) is amended—

(1)

by amending paragraph (6) to read as follows:

(6)
for loans made under section 428H or to a student borrower under section 428B, an explanation that the borrower has the option to pay the interest that accrues on the loan while the borrower is a student at an institution of higher education;; and

(2)

in paragraph (7)—

(A)

in subparagraph (A), by inserting and after the semicolon;

(B)

by striking subparagraph (B); and

(C)

by redesignating subparagraph (C) as subparagraph (B).

(d) Required disclosure before repayment

Section 433(b)(3) of the Higher Education Act of 1965 (20 U.S.C. 1083(b)(3)) is amended by striking (including, if applicable, the estimated amount of interest to be capitalized).

(e) Special Disclosure Rules on PLUS Loans and Unsubsidized Loans

Section 433(d) of the Higher Education Act of 1965 (20 U.S.C. 1083(d)) is amended—

(1)

in the matter preceding paragraph (1)—

(A)

by striking resulting from capitalization of interest; and

(B)

by striking borrower of— and inserting borrower of paying the interest as the interest accrues.; and

(2)

by striking paragraphs (1) and (2).

(f) Disclosure Required prior to Perkins repayment

Section 463A(b)(3) of the Higher Education Act of 1965 (20 U.S.C. 1087cc–1(b)(3)) is amended by striking (including, if applicable, the estimated amount of interest to be capitalized).

(g) Departmental Publication of Descriptions of Assistance Programs

Section 485(d)(1) of the Higher Education Act of 1965 (20 U.S.C. 1092(d)(1)) is amended by striking , including the increase in debt that results from capitalization of interest.

(h) Information To be provided during Entrance Counseling for Borrowers

Section 485(l)(2)(C) of the Higher Education Act of 1965 (20 U.S.C. 1092(l)(2)) is amended by striking and is capitalized.

Title IV Interest Rates

Sec. 401. Interest rate provisions for new Federal student loans on or after July 1, 2026

Section 455(b) of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)) is amended—

(1)

in paragraph (8)—

(A)

in the paragraph heading, by inserting , and before July 1, 2026 before the period; and

(B)

by inserting and before July 1, 2026, after July 1, 2013, each place it appears;

(2)

by redesignating paragraphs (9) and (10) as paragraphs (10) and (11), respectively; and

(3)

by inserting after paragraph (8) the following new paragraph:

(9) Interest rate provisions for new loans on or after July 1, 2026
(A) Rate for FDSL, FDUSL, and PLUS loans
Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, and Federal Direct PLUS Loans, for which the first disbursement is made on or after July 1, 2026, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of—
(i)
a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1; or
(ii)
5.0 percent.
(B) Consolidation loans
Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation Loan for which the application is received on or after July 1, 2026, shall—
(i)
bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the lesser of—
(I)
the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent; or
(II)
5.0 percent; and
(ii)
only accrue interest on the percentage of such Federal Direct Consolidation Loan that is equal to—
(I)
the amount of the sum of the unpaid principal on the loans consolidated; divided by
(II)
the total amount of such Federal Direct Consolidation Loan.
(C) Consultation
The Secretary shall determine the applicable rate of interest under this paragraph after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(D) Fixed rate
The applicable rate of interest determined under this paragraph for a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, a Federal Direct PLUS Loan, or a Federal Direct Consolidation Loan shall be fixed for the period of the loan.

Sec. 402. Refinancing FFEL and Federal Direct Loans

Part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by adding at the end the following:

460A. Refinancing FFEL and Federal Direct Loans
(a) In general
The Secretary shall establish a program under which the Secretary, upon the receipt of an application from a qualified borrower, makes a loan under this part, in accordance with the provisions of this section, in order to permit the borrower to obtain the interest rate provided under subsection (c).
(b) Refinancing Direct loans
(1) Federal direct loans
Upon application of a qualified borrower, the Secretary shall repay a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, a Federal Direct PLUS Loan, or a Federal Direct Consolidation Loan of the qualified borrower, for which the first disbursement was made, or the application for the consolidation loan was received, before July 1, 2026, with the proceeds of a refinanced Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, a Federal Direct PLUS Loan, or a Federal Direct Consolidation Loan, respectively, issued to the borrower in an amount equal to the sum of the unpaid principal, accrued unpaid interest, and late charges of the original loan.
(2) Refinancing FFEL program loans as refinanced Federal Direct Loans
Upon application of a qualified borrower for any loan that was made, insured, or guaranteed under part B and for which the first disbursement was made, or the application for the consolidation loan was received, before July 1, 2010, the Secretary shall make a loan under this part, in an amount equal to the sum of the unpaid principal, accrued unpaid interest, and late charges of the original loan to the borrower in accordance with the following:
(A)
The Secretary shall pay the proceeds of such loan to the eligible lender of the loan made, insured, or guaranteed under part B, in order to discharge the borrower from any remaining obligation to the lender with respect to the original loan.
(B)
A loan made under this section that was originally—
(i)
a loan originally made, insured, or guaranteed under section 428 shall be a Federal Direct Stafford Loan;
(ii)
a loan originally made, insured, or guaranteed under section 428B shall be a Federal Direct PLUS Loan;
(iii)
a loan originally made, insured, or guaranteed under section 428H shall be a Federal Direct Unsubsidized Stafford Loan; and
(iv)
a loan originally made, insured, or guaranteed under section 428C shall be a Federal Direct Consolidation Loan.
(C)
The interest rate for each loan made by the Secretary under this paragraph shall be the rate provided under subsection (c).
(c) Interest rates
(1) In general
The interest rate for the refinanced Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, Federal Direct PLUS Loans, and Federal Direct Consolidation Loans, shall be a rate equal to—
(A)
in any case where the original loan was a loan under section 428, 428B, 428H, a Federal Direct Stafford loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct PLUS Loan, a rate equal to the interest rate determined under section 455(b)(9)(A) for the date on which the refinanced loan is made; and
(B)
in any case where the original loan was a loan under section 428C or a Federal Direct Consolidation Loan, a rate calculated in accordance with paragraph (2).
(2) Interest rates for consolidation loans
(A) Method of calculation
In order to determine the interest rate for any refinanced Federal Direct Consolidation Loan under paragraph (1)(B), the Secretary shall—
(i)
determine each of the component loans that were originally consolidated in the loan under section 428C or the Federal Direct Consolidation Loan, and calculate the proportion of the unpaid principal balance of the loan under section 428C or the Federal Direct Consolidation Loan that each component loan represents;
(ii)
use the proportions determined in accordance with clause (i) and the interest rate applicable for each component loan, as determined under subparagraph (B), to calculate the weighted average of the interest rates on the loans consolidated into the loan under section 428C or the Federal Direct Consolidation Loan; and
(iii)
make the applicable interest rate for the refinanced Federal Direct Consolidation Loan the lesser of—
(I)
the weighted average calculated under clause (ii); or
(II)
5.0 percent.
(B) Interest rates for component loans
The interest rates for the component loans of a loan made under section 428C or a Federal Direct Consolidation Loan shall be the following:
(i)
The interest rate for any loan under section 428, 428B, 428H, Federal Direct Stafford Loan, Federal Direct Unsubsidized Stafford Loan, or Federal Direct PLUS Loan shall be a rate equal to the lesser of—
(I)
the interest rate determined under section 455(b)(9)(A) for the date on which the component loan is made; or
(II)
the original interest rate of the component loan.
(ii)
The interest rate for any component loan that is a loan under section 428C or a Federal Direct Consolidation Loan shall be the lesser of—
(I)
the weighted average of the interest rates that would apply under this subparagraph for each loan comprising the component consolidation loan; or
(II)
5 percent.
(iii)
The interest rate for any eligible loan that is a component of a loan made under section 428C or a Federal Direct Consolidation Loan and is not described in clauses (i) or (ii) shall be the lesser of—
(I)
the interest rate on the original component loan; or
(II)
5 percent.
(3) Fixed rate
The applicable rate of interest determined under paragraph (1) for a refinanced loan under this section shall be fixed for the period of the loan.
(4) Capitalized interest and fees excluded
With respect to a refinanced loan under this section, interest shall only accrue on the percentage of such refinanced loan that is equal to—
(A)
the amount of the unpaid principal of the original loan, or in the case of a refinanced Federal Direct Consolidation Loan, the sum of the unpaid principal of all the component loans, comprising the refinanced loan; divided by
(B)
the total amount of such refinanced loan.
(d) Terms and conditions of loans
(1) In general
A loan that is refinanced under this section shall have the same terms and conditions as the original loan, except as otherwise provided in this section.
(2) No automatic extension of repayment period
Refinancing a loan under this section shall not result in the extension of the duration of the repayment period of the loan, and the borrower shall retain the same repayment term that was in effect on the original loan. Nothing in this paragraph shall be construed to prevent a borrower from electing a different repayment plan at any time in accordance with section 455A(a).
(e) Definition of qualified borrower
For purposes of this section, the term qualified borrower means a borrower—
(1)
of a loan under this part or part B for which the first disbursement was made, or the application for a consolidation loan was received, before July 1, 2026; and
(2)
who has one or more loans described in paragraph (1) or (2) of subsection (b) with an interest rate that exceeds 5 percent.
(f) Notification to borrowers
The Secretary, in coordination with the Director of the Bureau of Consumer Financial Protection, shall undertake a campaign to alert borrowers of loans that are eligible for refinancing under this section that the borrowers are eligible to apply for such refinancing. The campaign shall include the following activities:
(1)
Developing consumer information materials about the availability of Federal student loan refinancing.
(2)
Requiring servicers of loans under this part or part B to provide such consumer information to borrowers in a manner determined appropriate by the Secretary, in consultation with the Director of the Bureau of Consumer Financial Protection.

Sec. 403. Refinancing private student loans

Part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.), as amended by section 402, is further amended by adding at the end the following:

460B. Federal Direct Refinanced Private Loan program
(a) Definitions
In this section:
(1) Eligible private education loan
The term eligible private education loan means a private education loan, as defined in section 140(a) of the Truth in Lending Act (15 U.S.C. 1650(a)), that—
(A)
was disbursed to the borrower before July 1, 2026; and
(B)
was for the borrower’s own postsecondary educational expenses for an eligible program at an institution of higher education participating in the loan program under this part, as of the date that the loan was disbursed.
(2) Federal direct refinanced private loan
The term Federal Direct Refinanced Private Loan means a loan issued under subsection (b)(1).
(3) Private educational lender
The term private educational lender has the meaning given the term in section 140(a) of the Truth in Lending Act (15 U.S.C. 1650(a)).
(4) Qualified borrower
The term qualified borrower means an individual who—
(A)
has an eligible private education loan;
(B)
has been current on payments on the eligible private education loan for the 6 months prior to the date of the qualified borrower’s application for refinancing under this section, and is in good standing on the loan at the time of such application;
(C)
is not in default on the eligible private education loan or on any loan made, insured, or guaranteed under this part or part B or E; and
(D)
meets the eligibility requirements described in subsection (b)(2).
(b) Program authorized
(1) In general
The Secretary, in consultation with the Secretary of the Treasury, shall carry out a program under which the Secretary, upon application by a qualified borrower who has an eligible private education loan, shall issue such borrower a loan under this part in accordance with the following:
(A)
The loan issued under this program shall be in an amount equal to the sum of the unpaid principal, accrued unpaid interest, and late charges of the private education loan.
(B)
The Secretary shall pay the proceeds of the loan issued under this program to the private educational lender of the private education loan, in order to discharge the qualified borrower from any remaining obligation to the lender with respect to the original loan.
(C)
The Secretary shall require that the qualified borrower undergo loan counseling that provides all of the relevant information and counseling required under section 485(l)(2) before the loan is refinanced in accordance with this section, and before the proceeds of such loan are paid to the private educational lender.
(D)
The Secretary shall issue the loan as a Federal Direct Refinanced Private Loan, which shall have the same terms, conditions, and benefits as a Federal Direct Unsubsidized Stafford Loan, except as otherwise provided in this section.
(E)
The interest rate for each loan made by the Secretary under this section shall be the rate provided under subsection (c).
(2) Borrower eligibility
The Secretary, in consultation with the Secretary of the Treasury and the Director of the Consumer Financial Protection Bureau, shall establish eligibility requirements—
(A)
to ensure eligibility only for borrowers in good standing;
(B)
to minimize inequities between Federal Direct Refinanced Private Loans and other Federal student loans;
(C)
to preclude windfall profits for private educational lenders; and
(D)
to ensure full access to the program authorized in this subsection for borrowers with private loans who otherwise meet the criteria established in accordance with subparagraph (A).
(c) Interest rate
(1) In general
The interest rate for a Federal Direct Refinanced Private Loan is a rate equal to the interest rate determined under section 455(b)(9)(A) for the date on which the refinanced private loan is made.
(2) Fixed rate
The interest rate determined under this subsection for a Federal Direct Refinanced Private Loan shall be fixed for the period of the loan.
(3) Capitalized interest and fees excluded
With respect to a Federal Direct Refinanced Private Loan under this section, interest shall only accrue on the percentage of such Refinanced Private Loan that is equal to—
(A)
the amount of the unpaid principal of the original loan comprising the Refinanced Private Loan on the date such original loan was refinanced; divided by
(B)
the total amount of such Refinanced Private Loan.
(d) No inclusion in aggregate limits
The amount of a Federal Direct Refinanced Private Loan, or a Federal Direct Consolidated Loan to the extent such loan was used to repay a Federal Direct Refinanced Private Loan, shall not be included in calculating a borrower’s annual or aggregate loan limits under section 428 or 428H.
(e) No eligibility for service-Related repayment
A Federal Direct Refinanced Private Loan, or any Federal Direct Consolidation Loan to the extent such loan was used to repay a Federal Direct Refinanced Private Loan, shall not be eligible for any loan repayment or loan forgiveness program under section 428K, 428L, or 460 or for the loan cancellation repayment plan for public service employees under section 455(m).
(f) Private educational lender reporting requirement
(1) Reporting required
The Secretary, in consultation with the Secretary of the Treasury and the Director of the Bureau of Consumer Financial Protection, shall establish a requirement that, in order to allow for an assessment of the private education loan market, private educational lenders report the data described in paragraph (2) to—
(A)
the Secretary;
(B)
the Secretary of the Treasury;
(C)
the Director of the Consumer Financial Protection Bureau;
(D)
the Committee on Education and Workforce of the House of Representatives;
(E)
the Committee on Financial Services of the House of Representatives;
(F)
the Senate Committee on Health, Education, Labor, and Pensions; and
(G)
the Senate Committee on Banking, Housing, and Urban Affairs.
(2) Contents of reporting
The data that private educational lenders shall report in accordance with paragraph (1) shall include each of the following about private education loans (as defined in section 140(a) of the Truth in Lending Act (15 U.S.C. 1650(a))):
(A)
The total amount of private education loan debt the lender holds.
(B)
The total number of private education loan borrowers the lender serves.
(C)
The average interest rate on the outstanding private education loan debt held by the lender.
(D)
The proportion of private education loan borrowers who are in default on a loan held by the lender.
(E)
The proportion of the outstanding private education loan volume held by the lender that is in default.
(F)
The proportions of outstanding private education loan borrowers who are 30, 60, and 90 days delinquent.
(G)
The proportions of outstanding private education loan volume that is 30, 60, and 90 days delinquent.
(g) Notification to borrowers
The Secretary, in coordination with the Secretary of the Treasury and the Director of the Consumer Financial Protection Bureau, shall undertake a campaign to alert borrowers about the availability of private student loan refinancing under this section.