Sponsors (11)
The bill makes repayment much more affordable and accelerates cancellation for many low‑income and qualifying student borrowers, but it narrows repayment choices, raises implementation risks for the Department of Education, and increases fiscal costs that affect taxpayers.
Borrowers who meet service/time criteria (short programs: 10 years/120 payments; others: 15 years/180 payments) receive automatic loan cancellation, cutting long-term student debt for qualifying borrowers.
Low‑ and moderate‑income borrowers can substantially lower monthly payments because the plan excludes income up to 250% of the poverty line (resulting in many $0 payments for eligible borrowers).
Half of each required monthly payment is applied to principal, accelerating principal reduction and likely lowering long‑term interest costs for borrowers who make payments.
New enrollees lose access to PAYE and ICR after a two‑year phase‑out (and cannot re‑enroll after leaving), reducing repayment options and potentially trapping some borrowers in less‑favorable plans.
Capping payments and producing many $0 payments, combined with accelerated cancellation, will reduce near‑term federal loan receipts and may increase long‑term federal costs, creating budgetary pressure for taxpayers.
The statute requires substantial new administrative work (180‑day implementation deadline and new procedures), which may strain the Department of Education and loan servicers and risk enrollment errors, delayed income verification, or incorrect crediting of payments.
Based on analysis of 2 sections of legislative text.
Adds a new income-contingent repayment plan for federal student loans, requires offering it within 180 days, and phases out new enrollment in PAYE and ICR after two years.
Introduced April 23, 2026 by Rosa L. Delauro · Last progress April 23, 2026
Creates a new income-contingent repayment option for federal student loans that adjusts annual payments based on borrower income and extends repayment up to 25 years; the Department of Education must offer the plan within 180 days of enactment. The bill also phases out future enrollment in two existing income-driven plans (PAYE and ICR): borrowers must enroll in those plans within two years of enactment to keep using them, with limited grandfathering for existing participants.