Student Loan Interest Elimination Act

The Student Loan Interest Elimination Act (S 2557) eliminates interest accrual on existing Federal Direct student loans starting July 1, 2024, without requiring borrower action, while allowing borrowers to opt out if they choose. It establishes income-based interest rates for new loans (0-4% depending on income relative to area median income), terminates interest-subsidized loans for new borrowers after June 30, 2024, and creates an Education Affordability Trust Fund to manage repaid loan funds. The trust fund will use investment profits to cover administrative costs and fund supplemental Pell Grants, with specific investment guidelines requiring high-rated bonds and diversification. This bill directly affects current and future student loan borrowers by changing interest structures and repayment terms.