Student Protection and Success Act

Colleges lose federal aid in 2028 if too few past students pay down loans — and all pay on unpaid ones.

More about this bill

Federal student aid could end at colleges where few former students pay down their loans. The new test starts in 2028. A school would fail it when 15 percent or fewer of its borrowers cut their loan balance. Even a one-dollar cut counts. Borrowers have until the end of their second year in repayment. A school that fails would lose federal student loans and Pell Grants for three years. If you attend one, you would have to pay another way or move to a new school. Schools could appeal within 30 days. Borrowers still in school, in the military, or in volunteer service would not count in the score. Colleges would also owe a yearly payment on loans their former students are not paying down. First, an amount tied to the national jobless rate is subtracted from those unpaid balances. The payment is 2 percent of what remains. No school would pay more than 2.5 percent of its yearly revenue. That money would fund a new grant program for colleges with repayment rates above 25 percent. Those schools could spend the grants on more need-based aid, stronger student support, or faster paths to a degree. The Education Department would have to publish every college's repayment rate. It would also warn schools at risk of losing aid before the 2028 start date. A report to Congress on how schools can lift repayment would be due within six months. Federal education data would add what colleges spend directly on students, counted apart from marketing, recruiting, and sports.