Higher Education Reform and Opportunity Act
Sponsored By: Representative Roy
Introduced
Summary
Creates a new, limited Federal Direct Simplification Loan program and phases out broader federal student loan and forgiveness authorities. The proposal would also open a state alternative accreditation pathway for Title IV access and expand college transparency and accountability.
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- Students and families: Would replace existing loan products with a simpler federal loan that limits dependent undergraduates to $7,500 per year and $30,000 total, while setting higher caps for independent undergraduates and graduate students.
- Repayment and forgiveness: Would bar loan forgiveness and income-contingent repayment for the new Simplification Loans and tie interest to the 10-year Treasury plus a margin, with caps at 8.25 percent for undergraduate loans and 9.5 percent for graduate loans.
- Colleges and states: Would let states run approved alternative accreditation systems to qualify entities for Title IV, require program-level public reporting on completion and earnings, and impose an annual default-rate fine equal to 15 percent minus the national unemployment rate while providing a $400 Pell graduate credit per eligible graduate.
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Bill Overview
Analyzed Economic Effects
7 provisions identified: 2 benefits, 3 costs, 2 mixed.
No forgiveness or income‑contingent repayment for new loans
For loans made on or after July 1, 2026, this would bar the Secretary from canceling or repaying your balance under the listed forgiveness laws. Income‑contingent repayment would not be available for Federal Direct Simplification Loans. If your first loan for a program was before July 1, 2026, a narrow exception would allow cancellation or repayment of later loans for that same program only during your normal time to finish or for loans made before July 1, 2030, whichever comes first.
New Simplification student loans in 2026
Starting July 1, 2026, this would create Federal Direct Simplification Loans. Each year, the rate would be the 10‑year Treasury high yield plus 2.05% for undergrads or 3.6% for grads, capped at 8.25% and 9.5%. Borrowing limits would be $7,500 per year ($30,000 total) for dependent undergrads; $15,000 per year ($60,000) for independent undergrads; and $18,500 per year ($74,000) for graduate or professional students. Interest would start at disbursement, with 15‑year repayment for undergrad loans and 25‑year repayment for grad loans, starting after 125% of normal program time or 6 months after withdrawal. There would be no origination fee, prepayment would be allowed, and these loans would not qualify for federal forgiveness or income‑contingent repayment.
States could accredit programs for aid
States could set up an alternative accreditation system if the Secretary approves the plan within 30 days. Schools and programs accredited under an approved state system could get federal student aid without meeting some federal accreditation rules. Each plan would last five years, and states would report every three years on completion and enrollment.
Old federal loan options wind down
This bill would phase out most current federal student loans. New borrowers could not get non‑Simplification loans with a first disbursement after June 30, 2026. After September 30, 2030, no funds could be used and no new loans could be made under the old program, except Simplification Loans or as later allowed by Congress.
New fines and Pell credits for colleges
Colleges that take federal aid would pay a yearly fine based on loans not being paid on time. The fine equals (15 minus the national unemployment rate) percent of those outstanding loans. Schools would also get a $400 credit for each graduate who received a Pell Grant that year. The net payment would be the fine minus those credits.
Colleges must post outcomes and debt data
Colleges would have to post yearly program‑level and school‑level results on their websites. They would show aid counts, completion and transfer rates, time to finish, job rates at 2, 4, and 6 years, and median earnings at 5, 10, and 15 years. They would also show average federal loan debt and default or non‑repayment rates. Schools would have to protect student privacy.
Colleges could require counseling, trim aid
Colleges could require you to get loan information or financial counseling before a loan is paid out. The Secretary would also let schools give less than the maximum federal aid if their tuition, room, and board cost less. This could lower some awards but give borrowers more guidance.
Sponsors & CoSponsors
Sponsor
Roy
TX • R
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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