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119-s-4114119th CongressWALLET

Student Protection and Success Act

Sponsored By: Senator Shaheen, Jeanne [D-NH]

Introduced

Summary

Ties colleges' federal eligibility to student loan repayment performance. The bill would create a risk-sharing payment system for institutions and a College Opportunity Bonus grant stream that link federal aid and institutional funding to cohort loan repayment rates.

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  • Institutions: Colleges with a cohort repayment rate of 15 percent or less would become ineligible for federal aid programs for that year and the two following years. A formal appeals process would let schools continue participation while appealing but could require a payment if the appeal fails.
  • Students and families: Students at low-repayment institutions could lose access to Pell Grants and federal loans, affecting affordability. Institutions with repayment above 25 percent could earn College Opportunity Bonus grants to expand need-based aid and student services.
  • Funding and accountability: Institutions would face risk-sharing remittances typically equal to 2.0 percent of a defined base, with a cap tied to 2.5 percent of annual revenues and investment returns. The bill would require publication of repayment rates, notices to at-risk institutions, and new reporting definitions for student service spending.

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Bill Overview

Analyzed Economic Effects

3 provisions identified: 1 benefits, 1 costs, 1 mixed.

New rules for low repayment schools

If enacted, the Department of Education would publish each institution's cohort repayment rate starting in fiscal year 2028. A school with a cohort repayment rate of 15% or less would become ineligible for Title IV programs for that year and the two following fiscal years. That loss of eligibility would also bar the school from Pell Grant eligibility, Perkins loans, and student loan insurance. The law would define cohorts (single-year if 30 or more borrowers enter repayment; otherwise combine that year with the prior three years) and count borrowers who are not in default and who cut principal by at least $1 within two years, excluding certain deferments and service-related periods. Institutions could appeal within 30 days and may continue participating while an appeal is pending, but if an appeal fails a school that continued participating must repay loans and related payments made during the appeal.

College grants for Pell students

If enacted, the bill would create College Opportunity Bonus grants beginning in fiscal year 2028 for institutions with cohort repayment rates above 25%. Grants would be funded only from the risk-sharing payments the Department collects. Awards would be set by a formula that equally weighs (1) the number and share of Pell-eligible students, (2) the repayment rate for Pell students, and (3) student service spending as a share of student service resources. Recipients could use funds for extra need-based aid for Pell students, student supports, and accelerated learning. Each award would be capped at 2.5% of an institution's annual revenues and investment returns after excluding auxiliary and hospital revenues. The bill would also define student service expenditures (for example, instruction and IT, excluding marketing and athletics) and require separate reporting of recruitment and marketing, which would feed the award formula.

New fees for colleges with bad repayment

If enacted, institutions in the Direct Loan program would pay an annual risk-sharing fee starting in fiscal year 2028 tied to borrower nonrepayment. The base would use the cohort of loans for borrowers who entered repayment, deferment, or forbearance in the third preceding fiscal year and count borrowers who did not reduce principal by at least $1 in the three years since entry, with the same exclusions used for repayment rates. The statute would reduce the payment base by the average national unemployment rate over the prior three fiscal years times the cohort loan balance. The standard fee would be 2% of the resulting amount, but the fee could not exceed 2.5% of an institution's annual revenues and investment returns after excluding auxiliary and hospital revenues. The Department must notify institutions of hypothetical payment amounts before implementation.

Sponsors & CoSponsors

Sponsor

Shaheen, Jeanne [D-NH]

NH • D

Cosponsors

  • Sen. Young, Todd [R-IN]

    IN • R

    Sponsored 3/17/2026

Roll Call Votes

No roll call votes available for this bill.

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