Loan Repayment

What the document says

“The Secretary of Education shall take such steps as may be necessary to ensure that before July 1, 2028, each borrower who has one or more loans that are in a repayment status in accordance with, or an administrative forbearance associated with, an income contingent repayment plan authorized under section 455(e) of the Higher Education Act of 1965”

The section requires the Secretary of Education to make sure that before July 1, 2028 every borrower with a loan in repayment or administrative forbearance under an income contingent repayment plan picks the Repayment Assistance Plan, the income-based plan under section 493C, or another plan under section 455(d)(1). Repayment under the chosen plan starts July 1, 2028 or earlier if the borrower wants. A borrower who does not pick is enrolled by the Secretary in the Repayment Assistance Plan, or in the section 493C plan for loans not eligible for it, and must start repaying on July 1, 2028.

What the document says

“the Secretary shall offer a borrower of a loan made”

The section amends section 455(d) of the Higher Education Act of 1965 so the older plans apply only to loans made before July 1, 2026, and bars the Secretary from offering, carrying out or changing any other plan for a later loan. From July 1, 2026 a borrower gets two choices: a standard plan with a fixed monthly amount over 10 years for a balance under $25,000, 15 years to $50,000, 20 years to $100,000 and 25 years above that, or the Repayment Assistance Plan. A borrower who does not choose gets the standard plan, may switch either way at any time, and may prepay without penalty.

What the document says

“the Secretary shall require a borrower who has received an excepted loan made on or after such date (including such a borrower who also has an excepted loan made before such date) to repay each excepted loan, including principal and interest on those excepted loans, under the standard repayment plan under subparagraph (A)(i).”

The section requires, from July 1, 2026, a borrower with an excepted loan made on or after that date to repay each excepted loan under the standard plan, with the right to prepay without penalty. An excepted loan is a Federal Direct PLUS Loan made on behalf of a dependent student, or a Federal Direct Consolidation Loan used to pay off an excepted PLUS loan or an excepted consolidation loan. A borrower otherwise repays every loan under the same chosen plan.

What the document says

“Subsection (e) of section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e(e)) is repealed.”

The section repeals subsection (e) of section 455 of the Higher Education Act of 1965 and strikes references to income contingent repayment from sections 428, 428C, 485 and 494 of that Act, putting income-based repayment under section 455(q) or section 493C in its place. Those changes take effect on July 1, 2028.

What the document says

“the Secretary shall carry out an income-based repayment plan (to be known as the `Repayment Assistance Plan')”

The section adds a new subsection (q) to section 455 of the Higher Education Act of 1965 requiring the Secretary, from July 1, 2026, to run an income-based Repayment Assistance Plan. The monthly amount is the applicable monthly payment, applied first to interest, then fees, then principal, with unpaid principal deferred. The borrower pays until the balance is zero or 360 qualifying monthly payments are made, and the Secretary must then cancel any balance left. Eligibility is checked yearly under the section 493C procedures.

What the document says

“not more than $10,000, is $120;”

The section sets the applicable base payment by adjusted gross income: $120 where income is $10,000 or less, then 1 percent of income above $10,000 rising a point for each $10,000 band to 10 percent above $100,000. The monthly payment is that figure divided by 12, less $50 for each dependent, with a floor of $10 a month. A final payment may be the remaining balance, and a borrower who will not give the Secretary the information owes what a 10 year standard plan would charge until they do.

What the document says

“the amount of interest accrued and not paid for the month shall not be charged to the borrower.”

The section provides that where a borrower makes an on-time payment under the plan that does not cover the month's interest, the unpaid interest is not charged. Where such a payment cuts total principal by less than $50, the Secretary must reduce principal by the lesser of $50 or the amount paid, less whatever of that payment already went to principal.

What the document says

“A Federal Direct Consolidation Loan offered to a borrower under this part on or after July 1, 2026, may only be repaid pursuant to a repayment plan described in clause (i) or (ii) of subsection (d)(7)(A) of this section, as applicable, and the repayment schedule of such a Consolidation Loan shall be determined in accordance with such repayment plan.”

The section adds a new paragraph (3) to section 455(g) of the Higher Education Act of 1965 so a Federal Direct Consolidation Loan offered on or after July 1, 2026 may be repaid only under the standard plan or the Repayment Assistance Plan, with its schedule set by that plan.

What the document says

“means 15 percent of the result obtained by calculating, on at least an annual basis, the amount by which--”

The section rewrites section 493C(a)(3) of the Higher Education Act of 1965 so the applicable amount is 15 percent of the sum by which the borrower's and any spouse's adjusted gross income exceeds 150 percent of the poverty line for the family size. It lets any borrower of a covered loan elect a monthly payment of that amount divided by 12, caps the payment at the 10 year standard amount where the calculation runs higher or the borrower drops the election, and allows repayment beyond 10 years. It also drops the partial financial hardship test from section 428(b)(9)(A)(v).

What the document says

“The Secretary shall establish procedures for annually determining, in accordance with paragraph (2), the borrower's eligibility for income-based repayment, including the verification of a borrower's annual income”

The section rewrites section 493C(c) of the Higher Education Act of 1965 requiring the Secretary to set yearly eligibility procedures and, for anyone on an income-based plan under that section or under section 455(q), to use tax return information disclosed under section 6103(l)(13) of the Internal Revenue Code of 1986 to set the repayment obligation without further action by the borrower. The borrower or spouse may opt out at any time and supply the information instead or leave the plan, and must be able to update the disclosed information first. The changes take effect on enactment and reach any borrower in repayment.