[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4862 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 4862
To amend the Higher Education Act of 1965 to double the Pell Grant
award amount, improve the Public Service Loan Forgiveness program, and
reduce interest rates, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
August 1, 2025
Mr. Scott of Virginia (for himself, Mr. Subramanyam, Ms. Underwood, Ms.
Moore of Wisconsin, and Mr. Thanedar) introduced the following bill;
which was referred to the Committee on Education and Workforce, and in
addition to the Committee on the Budget, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To amend the Higher Education Act of 1965 to double the Pell Grant
award amount, improve the Public Service Loan Forgiveness program, and
reduce interest rates, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Lowering Obstacles to Achievement
Now Act'' or the ``LOAN Act''.
SEC. 2. REPEAL.
Subtitles A through F of title VIII of Public Law 119-21 are
repealed. The provisions of the Higher Education Act of 1965 (20 U.S.C.
1001 et seq.) amended by such subtitles are restored and revived as if
such subtitles had not been enacted.
SEC. 3. TABLE OF CONTENTS.
The table of contents of this Act is as follows:
Sec. 1. Short title.
Sec. 2. Repeal.
Sec. 3. Table of contents.
TITLE I--FEDERAL PELL GRANTS
Sec. 101. Doubling Federal Pell Grants and providing all Federal Pell
Grants through mandatory funding.
Sec. 102. Providing increased Federal Pell Grants and other assistance
for recipients of means-tested benefits.
Sec. 103. Federal aid eligibility for dreamer students.
Sec. 104. Restoring the total semesters of Federal Pell Grant
eligibility.
Sec. 105. Reducing financial aid penalties from satisfactory academic
progress determinations.
Sec. 106. Federal Pell Grants for graduate students.
TITLE II--AMENDMENTS TO TERMS AND CONDITIONS OF LOANS AND REPAYMENT
PLANS
Part A--General Terms and Conditions
Sec. 201. Subsidized loans for graduate and professional students.
Sec. 202. Repeal of origination fees.
Sec. 203. Prepayment amounts.
Sec. 204. Default requirements.
Part B--One Income-Contingent Repayment Plan and One Fixed Repayment
Plan
Sec. 211. Notification to borrowers.
Sec. 212. New repayment plans.
Sec. 213. Maximum repayment period for income-contingent repayment and
income-based repayment.
Sec. 214. Borrowers ineligible for loans.
Part C--Automatic Enrollment in the Income-Driven Repayment Plan for
Certain Borrowers
Sec. 221. Notification and automatic enrollment procedures for
borrowers who are delinquent on loans.
Sec. 222. Notification and automatic enrollment procedures for
borrowers who are rehabilitating defaulted
loans.
Sec. 223. Covered loan and non-covered loan defined.
Sec. 224. Automatic recertification of income for income-driven
repayment plans.
Sec. 225. Procedure and requirement for requesting tax return
information from the IRS.
Part D--Streamlining Public Service Loan Forgiveness
Sec. 231. Amendments to terms and conditions of public service loan
forgiveness.
Sec. 232. Terms and conditions of employment.
Sec. 233. Online portal and database of public service jobs.
Sec. 234. Treatment of consolidated and refinanced loans.
Sec. 235. Loan forgiveness for teachers.
Sec. 236. GAO study on data matching agreements for public service loan
forgiveness.
Part E--Support for Borrowers in Default
Sec. 241. Removal of record of default.
Sec. 242. Removal of record of default from credit history upon loan
consolidation.
Sec. 243. Default reduction program.
TITLE III--INTEREST CAPITALIZATION
Sec. 301. Elimination of interest capitalization.
Sec. 302. Elimination of disclosure requirements relating to
capitalization.
TITLE IV--INTEREST RATES
Sec. 401. Interest rate provisions for new Federal student loans on or
after July 1, 2026.
Sec. 402. Refinancing FFEL and Federal Direct Loans.
Sec. 403. Refinancing private student loans.
TITLE I--FEDERAL PELL GRANTS
SEC. 101. DOUBLING FEDERAL PELL GRANTS AND PROVIDING ALL FEDERAL PELL
GRANTS THROUGH MANDATORY FUNDING.
(a) Amount of Minimum Federal Pell Grants.--Section 401 of the
Higher Education Act of 1965 (20 U.S.C. 1070a) is amended--
(1) in subsection (a)(2)(F), by striking ``10 percent'' and
inserting ``5 percent'';
(2) in subsection (b)--
(A) in paragraph (1)(B)(i), by striking ``paragraph
(5)(A)'' and inserting ``paragraph (5)'';
(B) by striking paragraph (5) and inserting the
following:
``(5) Total maximum federal pell grant.--
``(A) Award year 2026-2027.--For award year 2026-
2027, the total maximum Federal Pell Grant award shall
be $10,000.
``(B) Award year 2027-2028.--For award year 2027-
2028, the total maximum Federal Pell Grant award shall
be $11,000.
``(C) Award year 2028-2029.--For award year 2028-
2029, the total maximum Federal Pell Grant award shall
be $12,000.
``(D) Award year 2029-2030.--For award year 2029-
2030, the total maximum Federal Pell Grant award shall
be $13,000.
``(E) Award year 2030-2031.--For award year 2030-
2031, the total maximum Federal Pell Grant award shall
be $14,000.
``(F) Award year 2031-2032 and subsequent years.--
For award year 2031-2032, and each subsequent award
year, the total maximum Federal Pell Grant award shall
be $14,000--
``(i) increased by the adjustment
percentage for the award year for which the
amount under this subparagraph is being
determined; and
``(ii) rounded to the nearest $50.
``(G) Definition of adjustment percentage.--In this
paragraph, the term `adjustment percentage,' as applied
to an award year, is equal to the percentage increase
in the Consumer Price Index, as defined in section
478(f), for the most recent calendar year ending prior
to the beginning of the award year.'';
(C) by striking paragraphs (6) and (7) and
inserting the following:
``(6) Appropriation of funds.--There are authorized to be
appropriated, and there are appropriated, out of any money in
the Treasury not otherwise appropriated, such sums as may be
necessary for fiscal year 2026 and each subsequent fiscal year
to provide the total maximum Federal Pell Grant for which a
student shall be eligible under this section during an award
year.''; and
(D) by redesignating paragraphs (8) and (9) as
paragraphs (7) and (8), respectively;
(3) in subsection (d)(5)(B)(ii)--
(A) in subclause (I)(bb), by striking ``or'' after
the semicolon;
(B) in subclause (II)(bb)(CC), by striking the
period and inserting ``; or''; and
(C) by adding at the end the following:
``(III) during a period for which
the student did not receive a loan
under this title but for which, if the
student had received such a loan, such
loan would have been discharged under
the circumstances described in
subclause (II)(bb)(CC).'';
(4) by striking subsections (g) and (h); and
(5) by redesignating subsections (i) and (j) as subsections
(g) and (h), respectively.
(b) Repeal of Scoring Requirement.--
(1) In general.--Section 406 of H. Con. Res. 95 (109th
Congress) is amended--
(A) by striking subsection (b); and
(B) by striking ``(a) In General.--Upon'' and
inserting the following: ``Upon''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect beginning on July 1, 2026.
(c) Student Support Services.--Section 402D(d)(1) of the Higher
Education Act of 1965 (20 U.S.C. 1070a-14(d)(1)) is amended by striking
``the minimum'' and inserting ``10 percent of the maximum''.
(d) Scholarship Component.--Section 404E(d) of the Higher Education
Act of 1965 (20 U.S.C. 1070a-25(d)) is amended by striking ``less than
the minimum'' and inserting ``less than 10 percent of the maximum''.
SEC. 102. PROVIDING INCREASED FEDERAL PELL GRANTS AND OTHER ASSISTANCE
FOR RECIPIENTS OF MEANS-TESTED BENEFITS.
(a) Increased Amount of Maximum Federal Pell Grants for Students
With Negative Student Aid Indexes.--Section 401(b)(1) of the Higher
Education Act of 1965 (20 U.S.C. 1070a(b)(1)), as amended by section
101 of this Act, is amended--
(1) in subparagraph (A)--
(A) in the matter preceding clause (i), by striking
``A student'' and inserting ``Except in the case of a
student with a student aid index of less than zero, a
student'';
(B) by striking clause (i); and
(C) by redesignating clauses (ii) and (iii) as
clauses (i) and (ii), respectively;
(2) by redesignating subparagraphs (B) through (E) as
subparagraphs (C) through (F), respectively;
(3) by inserting after subparagraph (A) the following:
``(B) A student with a student aid index of less
than zero shall be eligible for a Federal Pell Grant
award that exceeds the total maximum Federal Pell Grant
by an amount equal to the amount by which the student's
student aid index is less than zero.'';
(4) in subparagraph (C), as redesignated by paragraph (2)--
(A) in the matter preceding clause (i), by striking
``subparagraph (A) for an academic year,'' and
inserting ``subparagraph (A), or an increased Federal
Pell Grant under subparagraph (B), for an academic
year,''; and
(B) in clause (ii), by striking ``, except that a
student aid index of less than zero shall be considered
to be zero for the purposes of this clause'';
(5) in subparagraph (D), as redesignated by paragraph (2),
by striking ``(A) or (B)'' and inserting ``(A), (B), or (C)'';
(6) in subparagraph (E), as redesignated by paragraph (2),
by inserting ``or an increased Federal Pell Grant under
subparagraph (B)'' after ``subparagraph (A)''; or
(7) in subparagraph (F), as redesignated by paragraph (2),
by striking ``or a minimum Federal Pell Grant under
subparagraph (C)'' and inserting ``an increased Federal Pell
Grant under subparagraph (B), or a minimum Federal Pell Grant
under subparagraph (D)''.
(b) Special Student Aid Index Rule for Recipients of Means-Tested
Benefits.--Section 473 of the Higher Education Act of 1965 (20 U.S.C.
1087mm) is amended by adding at the end the following:
``(d) Special Rule for Means-Tested Benefit Recipients.--
Notwithstanding subsection (b), for an applicant (or, as applicable, an
applicant and spouse, or an applicant's parents) who, at any time
during the previous 24-month period, received a benefit under a means-
tested Federal benefit program (or whose parent or spouse received such
a benefit, as applicable), the Secretary shall for the purposes of this
title consider the student aid index as equal to -$1,500 for the
applicant.''.
SEC. 103. FEDERAL AID ELIGIBILITY FOR DREAMER STUDENTS.
Section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091) is
amended--
(1) in subsection (a)(5), by inserting ``, or be a Dreamer
student, as defined in subsection (u)'' after ``becoming a
citizen or permanent resident''; and
(2) by adding at the end the following:
``(u) Dreamer Students.--
``(1) In general.--In this section, the term `Dreamer
student' means an individual who--
``(A)(i) is not a citizen or national of the United
States; and
``(ii) is inadmissible or deportable under the
Immigration and Nationality Act (8 U.S.C. 1101 et
seq.); and
``(B)(i) in the case of such an individual who was
younger than 18 years of age on the date on which the
individual initially entered the United States--
``(I) has earned a high school diploma, the
recognized equivalent of such diploma from a
secondary school, or a high school equivalency
diploma recognized by State law, or is
scheduled to complete the requirements for such
a diploma or equivalent before the next
academic year begins;
``(II) is enrolled at an institution of
higher education pursuant to subsection (d);
``(III) has served in the uniformed
services (as such term is defined in section
101 of title 10, United States Code) for not
less than 2 years and, if discharged, received
an honorable discharge;
``(IV) has acquired a degree, certificate,
or recognized postsecondary credential from an
institution of higher education or area career
and technical education school (as such term is
defined in section 3 of the Carl D. Perkins
Career and Technical Education Act of 2006 (20
U.S.C. 2302)); or
``(V) has completed not less than 2 years
in a postsecondary program at an institution of
higher education, or area career and technical
education school, in the United States and has
made satisfactory academic progress, as defined
in subsection (c), during such time period; or
``(ii)(I) is, or at any time was, eligible for a
grant of deferred action pursuant to--
``(aa) the memorandum of the Department of
Homeland Security entitled `Exercising
Prosecutorial Discretion with Respect to
Individuals Who Came to the United States as
Children' issued on June 15, 2012; or
``(bb) the memorandum of the Department of
Homeland Security entitled `Exercising
Prosecutorial Discretion with Respect to
Individuals Who Came to the United States as
Children and with Respect to Certain
Individuals Who Are the Parents of U.S.
Citizens or Permanent Residents' issued on
November 20, 2014; or
``(II) would have been eligible for such a grant of
deferred action if the applicable memorandum described
in subclause (I) had been fully in effect since the
date on which it was issued.
``(2) Hardship exception.--The Secretary shall issue
regulations that direct when the Department shall waive the age
requirement of paragraph (1)(B)(i) for an individual to qualify
as a Dreamer student under such paragraph, if the individual
demonstrates compelling circumstances, such as economic
hardship (as defined in section 435(o)).''.
SEC. 104. RESTORING THE TOTAL SEMESTERS OF FEDERAL PELL GRANT
ELIGIBILITY.
Section 401(d)(5)(A) of the Higher Education Act of 1965 is amended
by striking ``12'' each place the term appears and inserting ``18''.
SEC. 105. REDUCING FINANCIAL AID PENALTIES FROM SATISFACTORY ACADEMIC
PROGRESS DETERMINATIONS.
Section 484(c) of the Higher Education Act of 1965 (20 U.S.C.
1091(c)) is amended to read as follows:
``(c) Satisfactory Progress.--
``(1) Definitions.--In this subsection:
``(A) Appeal.--The term `appeal' means a process by
which a student who is not meeting the institution's
satisfactory academic progress standards petitions the
institution for reconsideration of the student's
eligibility for assistance under this title.
``(B) Financial aid probation.--The term `financial
aid probation' means a status assigned by an
institution to a student who fails to make satisfactory
academic progress and who has appealed and has had
eligibility for aid reinstated.
``(C) Financial aid warning.--The term `financial
aid warning' means a status assigned to a student who
fails to make satisfactory academic progress at the end
of the semester or equivalent period in which the
student first fails to make such progress.
``(D) Payment period.--The term `payment period'
means the applicable payment period described in
section 668.4 of title 34, Code of Federal Regulations,
or any successor regulation.
``(2) Satisfactory academic progress policy.--An
institution shall establish a reasonable satisfactory academic
progr