Purpose
Create a student-loan system in which borrowers have an affordable path to repayment, borrowers in serious distress can return to good standing, and colleges have greater responsibility for the financial outcomes associated with the programs they offer.
The federal student-loan portfolio was approximately $1.64 trillion in June 2026, with more than 9.3 million recipients in default.
Automatic Affordable Repayment
Every federal borrower would have access to an income-based repayment option.
The payment formula would:
- protect a defined basic living-income allowance;
- use household income and family size;
- establish a modest minimum payment when income permits;
- prevent unpaid interest from causing balances to grow indefinitely for qualifying low-income borrowers;
- provide a clearly defined forgiveness endpoint after sustained repayment.
The existing Repayment Assistance Plan already uses an income-based formula, interest protection, a government principal match, and 30-year forgiveness.
This plan would preserve the basic concept while simplifying administration and making enrollment automatic.
Default Rehabilitation
A one-time federal rehabilitation program would identify borrowers in prolonged default and place them into an affordable repayment arrangement.
After sustained successful payments:
- federal benefits affected by default would be restored where legally appropriate;
- collection penalties would be reduced or eliminated;
- the borrower would receive a standardized path back into good standing.
The objective would be to convert defaulted debt into performing debt rather than allow borrowers to remain permanently trapped in default.
Protection for Low-Income Borrowers
A borrower whose income is below a specified threshold would have a $0 required payment.
The borrower would remain enrolled in the federal system rather than being pushed into delinquency.
Periods of qualifying $0 payments would count toward the applicable forgiveness period.
Limits on Excessive Future Borrowing
For new federal loans, Congress would establish clearer annual and lifetime borrowing limits.
Graduate and professional borrowing would receive particular scrutiny because graduate loans have historically represented a disproportionately important component of the federal government's projected income-driven repayment costs.
Exceptions could be created for programs such as medicine, dentistry, and other fields where unusually high educational costs are associated with clearly documented professional requirements.
Institutional Accountability
Beginning with future cohorts, colleges participating in federal lending would receive annual program-level reports showing:
- median debt;
- completion rates;
- typical earnings;
- repayment performance;
- delinquency and default rates;
- employment outcomes where reliable data are available.
Programs with persistently poor outcomes would face graduated consequences, including additional disclosure requirements and, in extreme cases, restrictions on federal lending eligibility.
Students would retain the right to attend those programs. The objective would be transparency and institutional accountability, not government control over which careers students may pursue.
College Cost Transparency
Every student receiving federal aid would receive a standardized estimate showing:
Total expected cost
− Grants and scholarships
= Expected borrowing
The disclosure would also provide a standardized estimate of the monthly payment under the applicable federal repayment system.
Public-Service and Essential-Occupation Incentives
Congress would maintain targeted debt relief for qualifying public-service employment while simplifying the program.
The system would include:
- automatic employer certification;
- annual electronic verification;
- no requirement that borrowers navigate multiple overlapping programs;
- forgiveness after a clearly defined period of qualifying service.
Fiscal Discipline
Any expansion of forgiveness would include an offsetting mechanism or explicit appropriation.
The legislation would require the Congressional Budget Office to publish both the statutory/FCRA budget estimate and a fair-value estimate.
Aurora Stuski for Congress
Fighting for Berks and Montgomery Counties