LOAN Act of 2023

The LOAN Act of 2023 eliminates interest on new federal student loans issued after July 1, 2024, replacing it with financing fees (20% for most undergraduate/graduate loans, 35% for PLUS loans). It creates a new income-based repayment plan where annual payments equal 10% of income above 150% of the federal poverty line, calculated using tax data from the Treasury. Borrowers with loans made after enactment must use this plan unless they opt for a 10-year fixed plan, and prepayment can reduce financing fees by up to 15 percentage points. The bill directly affects new federal student loan borrowers and requires annual repayment statements and tax data sharing between Treasury and Education.