Higher Education Reform and Opportunity Act

The Higher Education Reform and Opportunity Act (HR 5042) would phase out most federal student loan programs after September 30, 2028, replacing them with standardized "Federal Direct simplification loans" that have fixed interest rates, borrowing limits, and set repayment terms. It eliminates student loan forgiveness programs for loans made after July 1, 2024, while allowing limited forgiveness for students who started programs before that date. The bill requires colleges to publish detailed financial and outcome data on their websites, including completion rates, earnings information, and default rates, disaggregated by program of study. Additionally, it introduces a "default rate fine" for institutions with high student loan default rates, calculated as a percentage of outstanding loans minus the national unemployment rate.