LOAN Act
Sponsored By: Representative Scott (VA)
Introduced
Summary
Doubles the Federal Pell Grant by setting new maximum awards that start at $10,000 in 2026–27 and rise to $14,000 by 2031 and then index to CPI. It would also remake student loan rules by creating two repayment paths, expanding forgiveness and refinancing, and eliminating interest capitalization.
Show full summary
- Students and families would see bigger Pell awards and broader eligibility. The bill treats recent means-tested-benefit recipients as having a Student Aid Index of −$1,500 and restores Pell up to 18 semesters while allowing certain first postbaccalaureate grants.
- Borrowers would get two main repayment choices: a 10-year Fixed Repayment Plan or a codified Income-Driven Repayment Plan. Fixed plans set a $50 minimum monthly payment and new loan rates tied to Treasury yields with a 5.0% floor for loans made on or after July 1, 2026, plus a Secretary-run refinancing program for older loans and an end to interest capitalization.
- Public servants and people in default would get major changes to forgiveness and rehab. Public Service Loan Forgiveness would require 96 qualifying payments and would count many IDR payments and deferments, expand qualifying employment to independent contractors, add automatic enrollment and a borrower portal, and create a default reduction and rehabilitation framework.
Your PRIA Score
Personalized for You
How does this bill affect your finances?
Sign up for a PRIA Policy Scan to see your personalized alignment score for this bill and every other piece of legislation we track. We analyze your financial profile against policy provisions to show you exactly what matters to your wallet.
Bill Overview
Analyzed Economic Effects
10 provisions identified: 7 benefits, 1 costs, 2 mixed.
Bigger Pell Grants and longer eligibility
If enacted, the Pell Grant maximum would rise to $10,000 in 2026–2027 and reach $14,000 in 2030–2031. From 2031–2032 on, it would go up each year with inflation and round to the nearest $50. Pell eligibility would grow from 12 to 18 semesters. Students with a negative SAI could get more than the maximum by that negative amount. If you or your family got a means‑tested federal benefit in the last 24 months, your SAI would be set to −$1,500, which could boost your aid.
More loan forgiveness for public service
If enacted, public service workers could earn forgiveness after 96 qualifying months, down from 120. More repayment plans, plus some deferments and forbearances, could count toward the 96 months. Full‑time public service would mean about 30 hours a week. Certain independent contractor work for public service could also count under state law rules. The Department would build an online portal to track your progress and help fix issues.
Refinance student loans at lower rates
You would be able to refinance older federal loans into a new federal loan. If you consolidate, your new rate could be the weighted average or 5.0%, whichever is lower. Interest would only accrue on the share equal to unpaid principal, not on capitalized interest or fees. Many private loans disbursed before July 1, 2026 could also be refinanced into a federal loan if you have been current for six months and meet other rules. Refinanced private loans would get a Treasury‑based fixed rate but might not qualify for some service‑related repayment or forgiveness programs.
Stronger consequences if you default
If enacted, a default would make your full balance and interest due right away. The Department could add collection charges, sue, report to credit bureaus, take tax refunds, or garnish wages. The Department could also place you in an income‑driven plan.
Help for late payments and default
If you are 31 days late, the Department would use your tax data (unless you opt out) to show lower payment options. If you are 80 days late and would pay less on an income‑driven plan, the Department would enroll you unless you choose otherwise. To leave default, you could make 9 affordable payments in 10 months, with a $5 monthly floor. Wage garnishment could be suspended after five qualifying payments. After full repayment, consolidation, or rehabilitation, the Department would ask credit bureaus to remove the default from your report.
Less interest growth and clearer payments
If enacted, unpaid interest generally would not be added to your balance in several situations, like after forbearance or when a loan is assigned or reissued. While in forbearance, lenders would contact you at least every 180 days to explain interest and your choices. You could make extra payments without penalty. Extra money would go to fees first, then the highest‑rate principal, unless you ask otherwise.
Lower rates and no loan fees
Starting July 1, 2026, new federal student loans would have a fixed rate set each June 1 at the lower of the 10‑year Treasury rate or 5.0%. New consolidation loans would be the weighted average or 5.0%, whichever is lower, and would only charge interest on the portion equal to unpaid principal. Origination fees on new loans would be 0% instead of 4%, lowering upfront costs.
Subsidized loans for graduate students
Starting July 1, 2026, graduate and professional students at covered U.S. schools could get subsidized Stafford loans. Some foreign medical, nursing, or veterinary programs would be excluded if they do not meet U.S. requirements. Subsidized loans do not charge interest while you are in certain in‑school or deferment periods.
Stronger academic progress rules for aid
Schools that take federal aid would need clear, consistent academic progress rules. You would have to meet measurable GPA and pace standards. In programs longer than two years, you would need at least a C average by the end of year two. If you stop college for two years, past failures could not be used to block regaining eligibility. Appeals, warnings, and probation would follow standard rules.
Two repayment options for new loans
For loans first made on or after July 1, 2026, you would choose a fixed plan or an income‑driven plan. If you do not choose, you would be placed in the fixed plan. The fixed plan is generally 10 years; consolidation loans would run 10 to 30 years based on balance tiers. The fixed plan would have a $50 minimum monthly payment.
Sponsors & CoSponsors
Sponsor
Scott (VA)
VA • D
Cosponsors
Castro (TX)
TX • D
Sponsored 9/8/2025
Subramanyam
VA • D
Sponsored 8/1/2025
Underwood
IL • D
Sponsored 8/1/2025
Moore (WI)
WI • D
Sponsored 8/1/2025
Thanedar
MI • D
Sponsored 8/1/2025
McClellan
VA • D
Sponsored 8/26/2025
Carson
IN • D
Sponsored 8/26/2025
Davis (IL)
IL • D
Sponsored 9/8/2025
Ansari
AZ • D
Sponsored 9/8/2025
Fields
LA • D
Sponsored 9/8/2025
Garamendi
CA • D
Sponsored 9/8/2025
Bonamici
OR • D
Sponsored 9/8/2025
Williams (GA)
GA • D
Sponsored 9/8/2025
Wilson (FL)
FL • D
Sponsored 9/8/2025
Del. Norton, Eleanor Holmes [D-DC-At Large]
DC • D
Sponsored 9/8/2025
Tonko
NY • D
Sponsored 9/8/2025
Kennedy (NY)
NY • D
Sponsored 9/9/2025
Evans (PA)
PA • D
Sponsored 9/11/2025
Chu
CA • D
Sponsored 11/18/2025
Walkinshaw
VA • D
Sponsored 11/20/2025
Grijalva
AZ • D
Sponsored 11/20/2025
Adams
NC • D
Sponsored 12/3/2025
Green, Al (TX)
TX • D
Sponsored 2/24/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.govTake It Personal
Get Your Personalized Policy View
Start a Free Government Policy Watch to see how policy affects your household, then upgrade to PRIA Full Coverage for year-round monitoring.
Already have an account? Sign in