LOAN Act

The LOAN Act would significantly reform federal student loan programs by doubling Federal Pell Grants for eligible students (from $5,000 to $14,000 over several years), eliminating origination fees on new federal loans, and creating two new repayment plans: a fixed repayment plan and an Income-Driven Repayment Plan. It would automatically enroll borrowers who are delinquent or rehabilitating defaulted loans into income-driven repayment plans, eliminate interest capitalization (preventing interest from being added to the principal balance), and streamline Public Service Loan Forgiveness requirements. The bill would also provide refinancing options for existing federal student loans and private student loans with interest rates capped at 5%. These changes would directly affect millions of current and future student loan borrowers and Pell Grant recipients across the United States.