HR 8045
Student Loan Interest Elimination Act
Take action
Record your position on this measure.
Sign in to record your position, submit testimony, or contact your legislator.
Sign in to take action- Introduced
- Passed House
- Passed Senate
- To President
- Became Law
Bill overview
This bill, the Student Loan Interest Elimination Act, aims to eliminate interest on existing and new federal student loans, starting July 1, 2026. It establishes the Education Affordability Trust Fund, funded by repaid student loan payments, to cover administrative costs and potentially support a Supplemental Pell Grant Program. The bill also includes provisions for refinancing non-direct student loans into Federal Direct Consolidation Loans and increases annual and aggregate loan limits. New federal student loans made on or after July 1, 2026, will have a 0% interest rate.
Key provisions
- Eliminates interest accrual on existing and new federal student loans starting July 1, 2026.
- Establishes the Education Affordability Trust Fund to cover administrative costs and potentially fund a Supplemental Pell Grant Program.
- Allows refinancing of eligible non-Federal Direct Loans into Federal Direct Consolidation Loans.
- Sets the interest rate for new federal student loans made on or after July 1, 2026, at 0%.
- Increases annual and aggregate loan limits.
- Provides for a loan modification program for eligible Federal Direct Loans.
- Creates a process for the Department of Education to deposit all payments made on federal student loans into the Education Affordability Trust Fund.
- Establishes a 6-member Education Affordability Trust Fund Board to oversee the Trust Fund.
Who is affected
- Students
- Borrowers of federal student loans
- The Department of Education
- Financial institutions holding student loans
Sponsors
Official sponsors from legislative records.
Primary sponsor
Cosponsors
Eleanor Holmes [D-DC-At Large] Norton
Arguments in favor
Reasons to support this legislation.
No arguments in favor have been submitted.
Submit yoursArguments opposed
Reasons to oppose this legislation.
No arguments opposed have been submitted.
Submit yoursRead the latest version inline or switch to a previous version.
119th CONGRESS — 2d Session
H. R. 8045
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Higher Education Act of 1965 to eliminate interest on student loans, establish the Education Affordability Trust Fund, increase annual and aggregate loan limits, and for other purposes.
.Student Loan Interest Elimination Act
The table of contents for this Act is as follows:
Section 451(a) of the Higher Education Act of 1965 (20 U.S.C. 1087a(a)) is amended—
There are hereby made availableand inserting
After using funds available from the Education Affordability Trust Fund in accordance with section 494A, there are hereby made available;
by striking and (2)
and inserting (2)
; and
by inserting ; and (3) to make loans under section 460A(b)
after section 459A
.
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:
The Secretary shall establish and implement, with respect to each borrower of an eligible Federal direct loan, procedures to—
modify, without any action from the borrower, the terms of such loan so that beginning on July 1, 2026, no interest shall accrue on such loan; and
allow the borrower, at any time, to opt out of the loan modification under paragraph (1) for such loan.
allow the borrower, at any time, to opt out of the loan refinancing under subparagraph (A) for such loan.
The Secretary shall make a Federal Direct Consolidation Loan under this subsection, in an amount equal to the sum of the unpaid principal, accrued unpaid interest, and late charges of the eligible non-Federal direct loan.
notwithstanding any other provision of this title, a borrower of a Federal Direct Consolidation Loan made under this subsection may repay such loan under any repayment plan or program described in section 455(d)(1);
Notwithstanding section 455(c), the Secretary may not charge a borrower of a loan made under this subsection an origination fee for such loan.
A loan made under this subsection shall not result in the extension of the duration of the repayment period of the original 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 455(d)(3).
Nothing in this section shall be construed to prevent a borrower of a Federal student loan described in subparagraph (B) or (C) of subsection (d)(2) from consolidating such loans with other loans eligible for consolidation under this section, or to require such a borrower to consolidate such loans with other Federal student loans into a single consolidation loan under this section.
Student Loan Interest Elimination Act
, and on an annual basis thereafter, the Secretary shall submit a report to the authorizing committees that includes—the total number of borrowers whose loans have been modified or refinanced under this section during the preceding year; and
the number of such borrowers who are delinquent in making payments on such a loan.
In this section:
The term eligible Federal direct loan means—
a loan made, insured, or guaranteed under part B, and which is held by the Secretary;
a loan made under part E, and which is held by the Secretary; or
The term eligible non-Federal direct loan means a loan—
made, insured, or guaranteed under part B, and which is not held by the Secretary;
made under part E, and which is not held by the Secretary; or
made under—
The term original loan, used with respect to a Federal Direct Consolidation Loan made under subsection (b), means a loan for which a borrower's liability is discharged by such Federal Direct Consolidation Loan.
Section 455(q)(1) of the Higher Education Act of 1965 (20 U.S.C. 1087e(q)(1)) is amended by adding at the end the following:
For purposes of subparagraph (E), the period of time during which a borrower of a Federal Direct Consolidation Loan made under section 460A(b) has made monthly payments shall be calculated in the manner described in section 493C(f).
Section 493C(a)(2)(B) of the Higher Education Act of 1965 (20 U.S.C. 1098e(a)(2)(B)) is amended by inserting a Federal Direct Consolidation Loan under section 460A, and does not include
after does not include
.
In calculating the period of time during which a borrower of a Federal Direct Consolidation Loan that is made under section 460A(b) has made monthly payments for the purposes of subsection (b)(7), the Secretary shall—
review the borrower’s payment history to identify each component loan of such Federal Direct Consolidation Loan;
for each such component loan—
calculate the weighted factor of the component loan, which shall be the factor that represents the portion of such Federal Direct Consolidation Loan that is attributable to such component loan; and
determine the number of qualifying monthly payments made on such component loan before consolidation;
calculate the number of qualifying monthly payments determined under subparagraph (B)(ii) with respect to a component loan that shall be deemed as qualifying monthly payments made on the Federal Direct Consolidation Loan by multiplying—
the weighted factor of such component loan as determined under subparagraph (B)(i); by
the number of qualifying monthly payments made on such component loan as determined under subparagraph (B)(ii); and
calculate and inform the borrower of the total number of qualifying monthly payments with respect to the component loans of the Federal Direct Consolidation Loan that shall be deemed as qualifying monthly payments made on the refinanced Federal Consolidation Loan, by—
adding together the result of each calculation made under subparagraph (C) with respect to each such component loan; and
rounding the number determined under clause (i) to the nearest whole number.
The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is amended—
shall offer a borrower of a loanand inserting
shall offer a borrower of a Federal Direct Consolidation Loan under section 460A (with respect to the Federal Direct Consolidation Loan under such section only, and without regard to when other loans may have been received), and shall offer a borrower of a loan;
Beginningand inserting
Subject to subparagraph (F), beginning;
A borrower is requiredand inserting
Subject to subparagraph (F), a borrower is required;
in subparagraph (E)(ii)(II), by inserting (excluding such loans under section 460A)
after a Federal Direct Consolidation Loan
; and
by striking the period at the end of item (cc) and inserting a semicolon;
by striking the period at the end of item (dd) and inserting ; or
; and
by adding at the end the following:
Section 455(b)(8) of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)(8)) is amended—
in the paragraph heading, by inserting and before July 1, 2026
after July 1, 2013
;
and before July 1, 2026after
July 1, 2013;
in subparagraph (B), by inserting and before July 1, 2026
after July 1, 2013
;
in subparagraph (C), by inserting and before July 1, 2026
after July 1, 2013
;
in subparagraph (D), by inserting and before July 1, 2026
after July 1, 2013
;
by redesignating subparagraph (F) as subparagraph (G); and
Notwithstanding the preceding subparagraphs of this paragraph, for Federal Direct Unsubsidized Stafford Loans, Federal Direct PLUS Loans, and Federal Direct Consolidation Loans for which the first disbursement is made, or the application is received, on or after July 1, 2026, the applicable rate of interest shall be 0 percent on the unpaid principal balance of the loan.
No new Federal Direct Stafford Loans, as referenced under section 455(a)(2)(A), may be made under this part after June 30, 2026, and no funds are authorized to be appropriated, or may be expended, under this Act or any other Act to make such Federal Direct Stafford Loans for which the first disbursement is after June 30, 2026..
Section 455(a) of the Higher Education Act of 1965 (20 U.S.C. 1087e(a)) is amended—
in paragraph (4)—
and (8)and inserting
, (8), and (9); and
in subparagraph (B), in the matter preceding clause (i), by striking and (8)
and inserting , (8), and (9)
;
in paragraph (6), by striking paragraph (8)
and inserting paragraphs (8) and (9)
; and
Section 401(b) of the Higher Education Act of 1965 (20 U.S.C. 1070a(b)) is amended by adding at the end the following:
award each student that receives a Federal Pell Grant under this subpart for such award year, an additional Federal Pell Grant in an amount that—
bears the same relationship to such excess amount (or such portion) as the amount of the Federal Pell Grant such student receives under this subpart (excluding this paragraph) for such award year bears to the total amount awarded in Federal Pell Grants under this subpart (excluding this paragraph) for such award year; and
may—
exceed the total maximum Federal Pell Grant available for such award year; and
be lower than the minimum Federal Pell Grant (as defined in section (a)(2)(F)) for such award year; and
ensure that—
Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is amended by adding at the end the following:
Trust Fund).
The Trust Fund Board shall transfer the assets from the investments of the Trust Fund to the Secretary of Education, to pay for the administrative costs of the Department of Education in making loans under part D, including loans under section 460A(b), to all eligible students (and the eligible parents of such students) in attendance at participating institutions of higher education selected by the Secretary, to enable such students to pursue their courses of study at such institutions, in the following amounts:
for the Postsecondary Student Success Program authorized under part B of title VII and for which the Department issued a notice inviting applications in the Federal Register on August 12, 2022 (87 Fed. Reg. 49811 et seq.), except that, notwithstanding the terms and condition of such program described in the notice—
the average cost of tuition to attend such institution for the 3 most recent academic years has not increased by more than 3 percent;
Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is further amended by adding at the end the following:
Education Affordability Trust Fund(referred to in this section as the
Trust Fund).
Board).
No individual required to register as a lobbyist under section 4 of the Lobbying Disclosure Act of 1995 (2 U.S.C. 1603) may be appointed to, or serve on, the Board.
No member of the Board may hold or may have held the position of Member of the House of Representatives or Senator, may hold the position of officer or employee of the House of Representatives, Senate, or instrumentality or other entity of the legislative branch, or may have held such a position within 4 years of the date of appointment.
With respect to the 2 individuals appointed to fill terms ending at the same time, neither individual may begin serving as a member of the Board until both have been appointed and confirmed by the Senate.
An individual may only serve as a member of the Board for a maximum of 2 terms.
The initial members of the Board shall be appointed no later than 90 days after the date of enactment of this section.
Each member of the Board shall serve as the Chair of the Board during the final year of the term for which the member is appointed.
The Board shall meet no less than once per quarter.
The fund manager appointed under subsection (c) shall attend not less than 2 meetings of the Board each year, to discuss forecasting and current investment performance.
The Board shall appoint independent fund managers from among individuals who have met such ethics vetting requirements as the Board may establish.
retain independent advisers to assist it in the formulation and adoption of its investment guidelines;
pay the administrative expenses of the Trust Fund from the assets in the Trust Fund; and
for the exclusive purpose of—
providing zero-interest Federal student loans to existing and future borrowers; and
defraying reasonable expenses of administering the functions of the Trust Fund;
with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;
by diversifying investments so as to minimize the risk of large losses and to avoid disproportionate influence over a particular industry or firm, unless under the circumstances it is clearly prudent not to do so; and
in accordance with Trust Fund governing documents and instruments insofar as such documents and instruments are consistent with this Act.
deal with the assets of the Trust Fund in the member’s own interest or for the member’s own account;
in an individual or in any other capacity act in any transaction involving the assets of the Trust Fund on behalf of a party (or represent a party) whose interests are adverse to the interests of the Trust Fund or the interests of borrowers; or
receive any consideration for the member’s own personal account from any party dealing with the assets of the Trust Fund.
The Board shall annually engage an independent qualified public accountant to audit the financial statements of the Trust Fund.
The Board shall submit an annual management report to the Secretary of Education, the Secretary of the Treasury, the President, and the Congress not later than 180 days after the end of each fiscal year, including—
a statement of financial position, including the total amount in the Trust Fund;
a statement of operations;
a statement of cash flows;
a breakdown of the investments made by the Trust Fund, including by type;
a statement on internal accounting and administrative control systems;
the report resulting from an audit of the financial statements of the Trust Fund conducted under subparagraph (A); and
any other comments and information necessary to inform the Congress about the operations and financial condition of the Trust Fund.
The Board shall make each report required under this subparagraph available to the public, including on the website of the Department of Education.
Each Member and employee of the Board shall file with the Secretary of Education and appropriate committees of Congress financial disclosure reports that comply with the requirements under subchapter I of chapter 131 of title 5, United States Code.
The fund managers shall invest the amounts in the Trust Fund in bonds that consist of the following:
Other Federal bonds.
The investments of the Trust Fund shall consist—
at least 80 percent of investments rated at least A3 or A- by Moody’s, S&P, or Fitch Ratings;
at least 60 percent of investments rated at least Aa1 or AA+ by Moody’s, S&P, or Fitch Ratings; and
at least 40 percent of investments rated at least Aaa or AAA by Moody’s, S&P, or Fitch Ratings.
The investments of the Trust Fund shall be diversified to minimize the risk of large losses and to avoid disproportionate influence over a particular region, industry, or firm, unless under the circumstances it is clearly prudent not to do so.
In carrying out the amendments made by titles I, II, and III, the Secretary of Education may waive the application of—
the master calendar requirements under section 482 of the Higher Education Act of 1965 (20 U.S.C. 1089); and
negotiated rulemaking under section 492 of the Higher Education Act of 1965 (20 U.S.C. 1098a).