Sponsors
The bill expands and preserves need‑based aid eligibility for many dependent students (by lowering expected parental contribution and requiring transparency) while increasing federal aid costs, adding administrative/reporting burdens, raising privacy and targeting limitations, and leaving some borrowers unassisted.
Parents with federal student loans and their dependent children will see the FAFSA expected parental contribution reduced by up to $4,000, increasing students' eligibility for need‑based aid and grants.
Lower- and middle‑income households (AGI below $200k single / $400k married) are prioritized because the allowance excludes higher‑income parents, focusing limited federal aid on families likelier to need it.
The allowance is indexed to inflation annually, preserving its real value over time so the benefit does not erode.
Taxpayers may face higher federal student aid costs if more students qualify for need‑based aid because of the allowance, potentially increasing federal spending or requiring offsets.
Parents who hold only non‑Title IV private student loans receive no benefit from this allowance, leaving some borrowers unassisted despite similar financial situations.
Collecting and reporting detailed SAI and loan‑allowance data could raise privacy risks for students and families if records are not properly anonymized or protected.
Based on analysis of 3 sections of legislative text.
Adds a new parent "student loan allowance" to the FAFSA needs-analysis starting with the 2027–2028 award year that lowers the amount of parental income counted when calculating a dependent student’s Student Aid Index (SAI). The allowance equals the lesser of $4,000 or 15% of the parent(s)' outstanding Federal student loan debt, is not available to parents above set AGI thresholds, and is adjusted annually for inflation. Directs the Department of Education to publish annual CPI-adjusted allowance tables beginning for award year 2028–2029 and to submit an initial report to Congress by July 1, 2028 (and annually thereafter) describing how many students benefit, average allowance amounts, and Pell-eligibility breakdowns.
Introduced January 22, 2026 by Haley Stevens · Last progress January 22, 2026