Sponsors (7)
Introduced March 26, 2026 by Richard Blumenthal · Last progress March 26, 2026
The bill restores prior statutory and regulatory rules—bringing clarity and predictable tax treatment for institutions and government—but it reverses recent borrower‑favorable changes, risking loss of relief for many borrowers and creating transitional legal, administrative, and fiscal costs for students, taxpayers, and schools.
Students, loan servicers, schools, and the Department of Education will return to prior statutory and regulatory standards, restoring legal and regulatory clarity about eligibility, repayment, and program coverage.
Students and institutions in Title IV programs get clearer, consistent definitions of which programs are covered, improving targeted oversight, predictable compliance, and administration of federal student aid.
Private colleges and universities gain predictable tax planning because the endowment excise rate is fixed at 1.4% after 2025 and cross‑references are simplified, reducing tax and compliance uncertainty for institutions and the IRS.
Students, former borrowers, and low‑income borrowers who had benefited from expanded repayment, forbearance, forgiveness credits, borrower‑defense, or closed‑school discharges could lose relief, face higher monthly payments, renewed collections, or loss of forgiveness.
Individuals, businesses, schools, and state governments will face legal and administrative uncertainty during the transition as agencies and courts determine which rules apply, likely delaying benefit or compliance determinations and prompting litigation.
Taxpayers and institutions could incur significant administrative and litigation costs from reversing enacted changes, updating systems, reprocessing claims, and defending or pursuing disputes over the transition.
Based on analysis of 7 sections of legislative text.
Restores prior student-aid and borrower rules by repealing parts of the reconciliation law, defines "covered educational program," and sets private colleges' endowment excise tax at 1.4%.
Repeals several provisions of the recent reconciliation law that changed federal student loan rules and federal student aid, restores prior legal treatment of borrower-defense and closed-school relief, and clarifies which postsecondary programs are covered by a key Higher Education Act rule. It also fixes the excise tax rate on net investment income of certain private colleges and universities at 1.4 percent for taxable years beginning after December 31, 2025. The bill mainly reverses specific changes made by the prior reconciliation act so federal student-aid and loan rules revert to their earlier forms, updates statutory language to define “covered educational program,” and sets a clear endowment tax rate for private higher education institutions going forward.