Sponsors
The bill increases federal student aid eligibility and awards for dependent students by reducing counted parental federal loan burdens (helping many low- and moderate-income families), while raising federal costs, excluding private-loan borrowers, and adding administrative and reporting burdens for agencies and applicants.
Dependent students whose parents have federal student loans will see up to $4,000 or 15% of parental federal student loan principal excluded from parental aid calculations, increasing eligibility and award amounts beginning award year 2027–2028 and especially helping low- and moderate-income families below the $200k/$400k AGI thresholds.
The allowance will be adjusted annually by CPI, preserving the allowance's real value over time so inflation does not erode the benefit to families.
Annual, disaggregated reporting (including counts of recipients, average allowance, and Pell-eligibility breakdowns) increases transparency and gives Congress and policymakers evidence to evaluate the law's effects and better target future higher-education aid to low-income students.
More dependent students may receive larger federal aid awards, which could increase spending on Pell and other aid programs and raise costs for taxpayers.
Calculating and verifying outstanding loan principal, interest, and fees for the allowance and preparing the required annual disaggregated reports will increase administrative burden, paperwork, and costs for the Department of Education (and potentially applicants), straining agency resources.
Families whose loan burdens are primarily private (non‑federal) student loans receive no recognition under this allowance, so many borrowers with substantial private debt will not benefit.
Based on analysis of 3 sections of legislative text.
Adds a parent loan allowance to reduce the Student Aid Index equal to the lesser of $4,000 or 15% of parents' federal student loan debt, with income caps.
Creates a new parent student loan allowance that reduces the Student Aid Index (SAI) for dependent students whose parents owe federal student loans. Starting in award year 2027–2028 the allowance will equal the lesser of $4,000 or 15% of parents’ outstanding federal student loan debt, with income caps that exclude single parents above $200,000 AGI and married parents above $400,000 AGI. The Department of Education must publish annual CPI-indexed allowance tables beginning for award year 2028–2029 and report to Congress each year on the allowance’s use and average size.
Introduced January 22, 2026 by Haley Stevens · Last progress January 22, 2026