Sponsor
Scott Perry
Representative · R-PA
Representative · R-PA
The bill expands access to lower-cost federal loans for students through institutional cosigning and gives participating schools short-term regulatory predictability, but it shifts significant default risk and administrative burdens onto colleges (and potentially taxpayers), can harm borrowers' credit while institutions assume payments, and may incentivize higher costs or narrower access.
Students at participating institutions can borrow Federal Direct loans at a lower interest rate, reducing their total borrowing costs.
Students who lack a private cosigner gain access to federal loan credit because institutions can cosign on their loans, improving affordability and access to higher education.
Participating institutions are publicly disclosed, increasing transparency so students and families can identify which schools offer the institutional cosigner benefit.
Colleges that cosign become liable for full repayment after 90 days of borrower default, exposing institutions to potentially large financial losses.
Borrowers remain reported as in default while the institution pays, which can damage students' credit histories and access to future credit during that period.
Institutions may raise tuition, fees, or cut or limit programs to offset cosigner-related costs, increasing higher-education costs for students and families.
Based on analysis of 3 sections of legislative text.
Creates an optional institutional cosigner program for federal Direct loans and ties CDR thresholds to participation (40% for participants, 30% for nonparticipants).
Official title: To amend the Higher Education Act of 1965 to direct the Secretary of Education to carry out a program under which an institution of higher education may elect to cosign Federal student loans made to students attending the institution, and for other purposes.
Introduced May 12, 2026 by Scott Perry · Last progress May 12, 2026
Creates an optional institutional cosigner program that allows colleges and universities to elect to cosign new Federal Direct student loans for enrolled students beginning July 1, 2026. Participating institutions accept legal repayment liability if loans they cosign go into default and remain unrehabilitated for 90 days, and the Secretary of Education will set a reduced interest rate for those loans and publish a list of participating institutions. Changes the cohort default rate (CDR) accountability thresholds so that institutions that join the cosigner program are measured against a 40% CDR threshold while institutions that do not participate remain subject to a 30% CDR threshold, effective July 1, 2026.