Student Loan Interest Elimination Act

Older federal loans held by banks, schools, or other lenders would be paid off and replaced. That includes FFEL, Perkins, and some health-profession loans, and the new loan would keep your old payoff date.

Rolling old loans into one normally sets your forgiveness count back to zero. Here the Department would add up your past payments and tell you the new count.

Today the caps on how much a student can borrow stay flat. From July 1, 2027, they would rise each year with the Consumer Price Index.

The Secretary could hand out extra Pell Grants if the fund earns more than the loan programs cost to run. A bigger regular grant would mean a bigger extra one. Those terms would not count against the limit on how long you can get Pell.

The Education Department would set the rate on federal direct loans made before July 1, 2026 to 0%. It would do this without asking you, and you could opt out at any time.

This covers unsubsidized Stafford loans, PLUS loans, and consolidation loans. The 0% rate would apply to loans first paid out on or after July 1, 2026.

With a subsidized loan, the government pays the interest while you are in school. New ones would stop after June 30, 2026. Students could borrow that same amount as an unsubsidized loan at 0%.

Banks, schools, and other lenders hold some older federal student loans. Each would be paid the full amount still owed, plus unpaid interest and late fees. The government would then own the loan.

Colleges would compete for this money if any is left after the loan programs are paid for. A school can qualify by holding tuition growth under 3%, or by having an endowment under $100 million. For-profit colleges could apply too.

Registered lobbyists could not serve on the trust fund board. Neither could former members of Congress, or anyone who worked for Congress in the past four years.

Board members would have to sell any stake they hold in what the fund invests in, or move it into a blind trust. They could not trade on fund business. They would also file financial reports with the Education Department and Congress.

An outside accountant would check the fund's books every year. The board would send a full report to Congress, the President, and the Treasury within 180 days of the fiscal year's end. It would go on the Education Department's website too.

Today Congress votes each year on the money to run the federal student loan programs. Earnings from the new fund would pay those costs instead, at levels tied to how much the fund holds.

New student aid rules normally go through public talks with schools, students, and lenders. There are also set deadlines for when new rules come out. The Secretary could skip both here.