Student Loan Interest Elimination Act
- Bill Number
- H.R. 8045
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Education
- Status
- Introduced
- Latest Action
- 2026-03-24: 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.
- Last Updated
- 2026-07-10T08:05:52Z
AI-Generated Summary
Summary of H.R. 8045: Student Loan Interest Elimination Act
Purpose
The legislation aims to make federal student loans more affordable by eliminating interest on both existing and new loans starting July 1, 2026, creating a self-sustaining trust fund to support loan programs, increasing loan limits, and providing supplemental grants to students.
Key Provisions
- Loan Modifications for Existing Loans (Title I):
- Automatically modifies eligible Federal Direct Loans (and similar loans held by the Department of Education) to 0% interest from July 1, 2026; borrowers can opt out.
- Allows refinancing of other federal student loans (not held by the Department) into zero-interest Federal Direct Consolidation Loans, paying off original holders; retains original repayment terms and access to forgiveness programs; no origination fees.
- Annual reports to Congress on participation and delinquency.
- Terms for New Loans (Title II):
- Sets interest rate at 0% for Federal Direct Unsubsidized Stafford, PLUS, and Consolidation Loans first disbursed on/after July 1, 2026.
- Ends new subsidized Stafford Loans after June 30, 2026; increases unsubsidized loan limits to cover prior subsidized amounts.
- Raises annual and aggregate loan limits, with automatic inflation adjustments starting July 1, 2027 based on Consumer Price Index changes.
- Education Affordability Trust Fund (Title III):
- Deposits all federal student loan repayments into the fund without needing new appropriations.
- A 6-member presidentially appointed Board (Senate-confirmed, with expertise requirements and ethics rules) oversees investments in high-rated bonds (e.g., municipal, Treasury; limits on certain types).
- Investment returns fund Department of Education loan-making costs (scaled by fund size: 100% at $500B+, down to 0% below $300M over 180 days).
- Excess returns can fund supplemental Pell Grants (proportional to existing Pell awards, exceeding caps) or student success grants for institutions with low tuition growth or small endowments.
- Requires audits, annual reports to Congress, and public disclosure.
- Implementation (Title IV):
- Waives master calendar and negotiated rulemaking requirements for quick rollout.
Significant Changes to Existing Law
- Amends the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) to eliminate interest accrual on federal loans, terminate subsidized loans, and introduce zero-interest rates—reversing prior variable rates (e.g., 2013-2026 formulas).
- Creates new sections (e.g., 460A for modifications/refinancing, 494A/B for trust fund) with special rules preserving prior payments toward forgiveness in income-driven plans.
- Shifts loan funding from general appropriations to trust fund investments, treating earnings on an accrual basis for budgeting.
Potential Impacts
- On Citizens: Reduces lifetime borrowing costs for millions of borrowers (no interest growth); enables higher borrowing with inflation-adjusted limits; provides extra Pell Grants to low-income students, potentially increasing college access and completion.
- On Government Agencies: Department of Education gains self-funding mechanism via trust fund but must manage modifications for ~44 million borrowers, refinancing, and reporting; new Board adds oversight layer with fiduciary duties.
- On International Relations: Minimal direct impact, though trust fund investment limits exclude sanctioned countries/entities.
- Fiscal: Could save borrowers billions in interest but requires trust fund to grow via investments for sustainability; risks if returns underperform.
Main Stakeholders Affected
- Student Loan Borrowers: Current (~44M) and future students/parents benefit from zero interest and higher limits.
- Low-Income Students: Via supplemental Pell Grants.
- Higher Education Institutions: Eligible for student success grants if meeting tuition/endowment criteria; increased enrollment potential.
- Department of Education and Trust Fund Board: New administrative/investment responsibilities.
- Taxpayers: Indirectly, as trust fund aims for self-sufficiency without new spending.
Notable Legal, Constitutional, or Political Implications
- Legal: Establishes independent board with strict ethics/fiduciary standards (prudent investor rule), potential challenges on waiver of rulemaking; preserves forgiveness eligibility via payment history calculations.
- Constitutional: Relies on Congress's spending power; trust fund's accrual accounting may affect budget scoring under acts like the Congressional Budget Act.
- Political: Shifts policy toward interest-free loans (step toward affordability without full forgiveness); requires bipartisan board appointments (staggered terms, party balance); mandates congressional oversight/testimony on fund use, inviting debate on fiscal risks vs. education equity.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (6)
Del. Norton, Eleanor Holmes [D-DC-At Large], Rep. Evans, Dwight [D-PA-3], Rep. Lieu, Ted [D-CA-36], Rep. Levin, Mike [D-CA-49], Rep. Pingree, Chellie [D-ME-1], Rep. Scott, Robert C. "Bobby" [D-VA-3]
Recent Actions
- 2026-03-24: 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.
- 2026-03-24: 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.
- 2026-03-24: Introduced in House
- 2026-03-24: Introduced in House
Bill Versions
- Student Loan Interest Elimination Act — issued 2026-03-24 — PDF (36 pages)