Eliminating Student Loan Interest and Establishing Income-Based Rates for New Loans.
This act eliminates interest accrual on most existing federal student loans starting July 1, 2024, significantly reducing the total repayment burden for current borrowers. It establishes a new tiered interest rate system (0% to 4%) for future loans based on the borrower's income relative to the area median income, aiming to improve affordability. The legislation also increases loan limits and creates a Trust Fund to manage repayments and potentially fund supplemental Pell Grants.
Key points
Interest will stop accruing on most existing federal student loans (Federal Direct Loans) beginning July 1, 2024.
Borrowers with older, non-Direct federal loans can refinance them into new, zero-interest federal consolidation loans.
New student loans (starting July 2024) will feature income-dependent interest rates ranging from 0% (for lower incomes) up to 4% (for higher incomes).
Annual and aggregate limits on the amount students can borrow are increased and will be adjusted annually for inflation.
An Education Affordability Trust Fund is established, funded by loan repayments, with excess profits potentially funding Supplemental Federal Pell Grants.
Expired
Citizen Poll