YourVoice.Now Summary
Average Household ImpactTransparency & AccountabilitySets interest to 0% on all new and existing federal student loans starting July 2026, replacing subsidized loans with bigger borrowing limits.
Average Household Impact
- Interest rate on all new federal student loans — eliminated (set to 0%) for loans disbursed on or after July 1, 2026
- Interest rate on existing federal Direct Loans — automatically reduced to 0% for all current borrowers without requiring any action
- Eligibility for zero-interest refinancing — extended to FFEL and health-professions borrowers not currently in the Direct Loan system
- Access to income-based repayment forgiveness — preserved for borrowers who refinance, with weighted payment-history credit carried over
- Annual federal student loan limits — increased by CPI inflation adjustment each year starting July 1, 2027
- Availability of subsidized Stafford Loans — eliminated after June 30, 2026 (replaced by higher unsubsidized limits, but removes the in-school interest subsidy for lower-income students)
- Supplemental Pell Grants — added for current recipients when Trust Fund investment returns exceed program costs
Transparency & Accountability
- Annual public reporting — Trust Fund Board required to submit audited financial statements to Congress and post them publicly each year
- Financial disclosure requirements — all Trust Fund Board members and employees must file public ethics disclosures
- Independent audit — Trust Fund subjected to annual independent accounting audit
- Lobbyist and ex-legislator disqualification — bars registered lobbyists and recent congressional members from Trust Fund Board appointments
- Congressional oversight of surplus spending — Secretary must report and testify to Congress within 180 days of using excess Trust Fund earnings
The details
Starting July 1, 2026, the Student Loan Interest Elimination Act sets interest to 0% on all new federal student loans. This covers unsubsidized Stafford, PLUS, and consolidation loans. It also automatically converts all existing federal Direct Loans held by the government to 0% interest, and borrowers don't need to do anything for this to happen. Those with older Federal Family Education Loans (FFEL) or health-professions loans not held by the government could refinance instead. They'd move into a new zero-interest federal consolidation loan, keeping their existing repayment term and forgiveness access. To replace the lost interest revenue, the bill creates the Education Affordability Trust Fund. It collects all loan repayments and invests them in municipal, Treasury, and corporate bonds. Investment returns above a set threshold cover the program's running costs, instead of relying on annual congressional appropriations. A 6-member bipartisan board would govern the fund: the President appoints its members, the Senate confirms them, and no lobbyists or former Members of Congress are allowed. The board must provide full financial disclosures, independent annual audits, and annual public reports to Congress. The bill also eliminates subsidized Stafford Loans, which currently waive interest during school and grace periods, after June 30, 2026. It compensates by raising unsubsidized borrowing limits by the same amount students would have gotten in subsidized loans, with annual inflation adjustments starting in 2027. If the Trust Fund's investment returns exceed program costs, the Secretary of Education could use the surplus two ways. One is supplemental Pell Grants proportional to a student's existing award. The other is competitive college-improvement grants of $600,000 to $1 million, reserved for schools that keep tuition increases under 3% or have endowments below $100 million.
Congressional Summary
Student Loan Interest Elimination ActThis bill eliminates interest on existing and new federal student loans beginning on July 1, 2026. Specifically, for existing federal student loans, the bill directs the Department of Education (ED) to establish and implement procedures to (1) modify the terms of Federal Direct Loans so that beginning on July 1, 2026, no interest shall accrue on such a loan; and (2) allow a borrower to opt out of this loan modification.Additionally, ED must establish and implement procedures to (1) refinance eligible loans that are not Federal Direct Loans (e.g., privately held Federal Family Education Loans and Perkins Loans), and (2) allow a borrower to opt out of this loan refinancing. The bill outlines the terms and conditions of these refinanced loans, including by prohibiting ED from charging origination fees and specifying that no interest shall accrue on these loans.For new federal student loans made on or after July 1, 2026, the bill sets the applicable interest rate at 0%.The bill establishes the Education Affordability Trust Fund. ED must deposit all payments made on federal student loans into this trust fund. The Education Affordability Trust Fund Board, as established by this bill, must transfer the assets from investments of this trust fund to ED to pay for the administrative costs of carrying out federal student loan programs.The bill allows ED to use excess amounts of funds in the trust fund to carry out a Supplemental Pell Grant Program.
Details
- Congress
- 119th
- Chamber
- House
- Status
- summarized
- Action
- Introduced in House
- Action Date
- 2026-03-24
- Date Added
- 2026-06-05
- Source
- Congress.gov →
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