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Student Loan Interest Elimination Act
Introduced Mar 24, 2026 · Last action Mar 24, 2026 — Referred to the Committee on Education and Workforce, and in addition to the Committee on the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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Summary
The Student Loan Interest Elimination Act would eliminate interest on existing federal student loans and make new federal student loans interest-free. Families with student loan debt would save money on interest payments, and the government would establish a trust fund to help make college more affordable.
Full bill text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8045 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 8045
To amend the Higher Education Act of 1965 to eliminate interest on
student loans, establish the Education Affordability Trust Fund,
increase annual and aggregate loan limits, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 24, 2026
Mr. Courtney (for himself and Ms. Norton) introduced the following
bill; which was referred to the Committee on Education and Workforce,
and in addition to the Committee on the Budget, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee
concerned
_______________________________________________________________________
A BILL
To amend the Higher Education Act of 1965 to eliminate interest on
student loans, establish the Education Affordability Trust Fund,
increase annual and aggregate loan limits, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Student Loan
Interest Elimination Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--LOAN MODIFICATION AND REFINANCING FOR EXISTING FEDERAL STUDENT
LOANS
Sec. 101. Program authority.
Sec. 102. Program for the loan modification of eligible Federal direct
loans, and refinancing of other Federal
student loan.
TITLE II--TERMS AND CONDITIONS FOR NEW FEDERAL STUDENT LOANS
Sec. 201. Applicable rates of interest for loans made on or after July
1, 2026.
Sec. 202. Termination of interest subsidized loans.
Sec. 203. Annual and aggregate loan limits.
TITLE III--TRUST FUND
Sec. 301. Supplemental Federal Pell Grant Program.
Sec. 302. Use of funds from the repayment of Federal student loans.
Sec. 303. Education Affordability Trust Fund.
TITLE IV--GENERAL PROVISIONS
Sec. 401. Implementation.
TITLE I--LOAN MODIFICATION AND REFINANCING FOR EXISTING FEDERAL STUDENT
LOANS
SEC. 101. PROGRAM AUTHORITY.
Section 451(a) of the Higher Education Act of 1965 (20 U.S.C.
1087a(a)) is amended--
(1) by striking ``There are hereby made available'' and
inserting ``After using funds available from the Education
Affordability Trust Fund in accordance with section 494A, there
are hereby made available'';
(2) by striking ``and (2)'' and inserting ``(2)''; and
(3) by inserting ``; and (3) to make loans under section
460A(b)'' after ``section 459A''.
SEC. 102. PROGRAM FOR THE LOAN MODIFICATION OF ELIGIBLE FEDERAL DIRECT
LOANS, AND REFINANCING OF OTHER FEDERAL STUDENT LOANS.
(a) Loan Modification and Refinancing.--Part D of title IV of the
Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by
adding at the end the following:
``SEC. 460A. PROGRAM FOR THE LOAN MODIFICATION OF ELIGIBLE FEDERAL
DIRECT LOANS, AND REFINANCING OF OTHER FEDERAL STUDENT
LOANS.
``(a) Federal Direct Loan Modification.--The Secretary shall
establish and implement, with respect to each borrower of an eligible
Federal direct loan, procedures to--
``(1) modify, without any action from the borrower, the
terms of such loan so that beginning on July 1, 2026, no
interest shall accrue on such loan; and
``(2) allow the borrower, at any time, to opt out of the
loan modification under paragraph (1) for such loan.
``(b) Refinancing Eligible Non-Federal Direct Loans as Federal
Direct Consolidation Loans.--
``(1) In general.--The Secretary shall establish and
implement, with respect to each borrower of an eligible non-
Federal direct loan, procedures to--
``(A) refinance such loan in accordance with
procedures listed in paragraph (2); and
``(B) allow the borrower, at any time, to opt out
of the loan refinancing under subparagraph (A) for such
loan.
``(2) Procedures.--In refinancing an eligible non-Federal
direct loan with respect to a borrower of such loan, the
Secretary shall carry out the following:
``(A) The Secretary shall make a Federal Direct
Consolidation Loan under this subsection, in an amount
equal to the sum of the unpaid principal, accrued
unpaid interest, and late charges of the eligible non-
Federal direct loan.
``(B) The Secretary shall pay the proceeds of such
Federal Direct Consolidation Loan to the holder of the
eligible non-Federal direct loan, in order to discharge
the borrower from any remaining obligation with respect
to such eligible non-Federal direct loan.
``(3) Terms and conditions of refinanced loans.--
``(A) In general.--A Federal Direct Consolidation
Loan made under this subsection shall have the same
terms and conditions as a Federal Direct Consolidation
Loan that was not made under this subsection, except--
``(i) notwithstanding any other provision
of this title, a borrower of a Federal Direct
Consolidation Loan made under this subsection
may repay such loan under any repayment plan or
program described in section 455(d)(1);
``(ii) that the Secretary may adjust such
terms and conditions as necessary to enable the
borrower to access loan forgiveness or other
benefits available to the borrower under the
loan before refinancing under this subsection,
in any case where such benefits are more
generous than provided under a Federal Direct
Consolidation Loan under this subsection; and
``(iii) as otherwise provided in this
subsection.
``(B) No origination fees.--Notwithstanding section
455(c), the Secretary may not charge a borrower of a
loan made under this subsection an origination fee for
such loan.
``(C) Interest rates.--No interest shall accrue on
a loan that is made under this subsection.
``(D) No automatic extension of repayment period.--
A loan made under this subsection shall not result in
the extension of the duration of the repayment period
of the original loan, and the borrower shall retain the
same repayment term that was in effect on the original
loan. Nothing in this paragraph shall be construed to
prevent a borrower from electing a different repayment
plan at any time in accordance with section 455(d)(3).
``(E) Rule of construction.--Nothing in this
section shall be construed to prevent a borrower of a
Federal student loan described in subparagraph (B) or
(C) of subsection (d)(2) from consolidating such loans
with other loans eligible for consolidation under this
section, or to require such a borrower to consolidate
such loans with other Federal student loans into a
single consolidation loan under this section.
``(c) Report.--Not later than 1 year after the date of the
enactment of the Student Loan Interest Elimination Act, and on an
annual basis thereafter, the Secretary shall submit a report to the
authorizing committees that includes--
``(1) the total number of borrowers whose loans have been
modified or refinanced under this section during the preceding
year; and
``(2) the number of such borrowers who are delinquent in
making payments on such a loan.
``(d) Definitions.--In this section:
``(1) Eligible federal direct loan.--The term `eligible
Federal direct loan' means--
``(A) a loan made under this part, and first
disbursed before July 1, 2026;
``(B) a loan made, insured, or guaranteed under
part B, and which is held by the Secretary;
``(C) a loan made under part E, and which is held
by the Secretary; or
``(D) a loan made under subpart 1 of part A of
title VII of the Public Health Service Act (42 U.S.C.
292 et seq.), and which is held by the Secretary.
``(2) Eligible non-federal direct loan.--The term `eligible
non-Federal direct loan' means a loan--
``(A) made, insured, or guaranteed under part B,
and which is not held by the Secretary;
``(B) made under part E, and which is not held by
the Secretary; or
``(C) made under--
``(i) subpart I of part A of title VII of
the Public Health Service Act (42 U.S.C. 292 et
seq.), and which is not held by the Secretary;
``(ii) subpart II of part A of title VII of
the Public Health Service Act (42 U.S.C. 292q
et seq.), and in the case of a loan made under
section 723 of such Act (42 U.S.C. 292s), only
if the borrower of the loan has completed the
full period of service, practice, or training
that was imposed as a condition on receipt of
such loan; or
``(iii) part E of title VIII of the Public
Health Service Act (42 U.S.C. 297a et seq.),
and in the case of a loan made under section
846A of such Act (42 U.S.C. 297n-1), only if
the borrower has completed the 4 years of full-
time employment as a faculty member at a school
of nursing as described in subsection (c)(3) of
such section 846A.
``(3) Original loan.--The term `original loan', used with
respect to a Federal Direct Consolidation Loan made under
subsection (b), means a loan for which a borrower's liability
is discharged by such Federal Direct Consolidation Loan.''.
(b) Income-Contingent Repayment.--Section 455(e) of the Higher
Education Act of 1965 (20 U.S.C. 1087e(e)) is amended by adding at the
end the following new paragraph:
``(9) Special rule for refinanced loans.--For purposes of
paragraph (7), the period of time during which a borrower of a
Federal Direct Consolidation Loan made under section 460A(b)
has made monthly payments shall be calculated in the manner
described in section 493C(f).''.
(c) Repayment Assistance Plan.--Section 455(q)(1) of the Higher
Education Act of 1965 (20 U.S.C. 1087e(q)(1)) is amended by adding at
the end the following:
``(H) For purposes of subparagraph (E), the period
of time during which a borrower of a Federal Direct
Consolidation Loan made under section 460A(b) has made
monthly payments shall be calculated in the manner
described in section 493C(f).''.
(d) Income-Based Repayment.--
(1) Exclusion from excepted consolidation loan.--Section
493C(a)(2)(B) of the Higher Education Act of 1965 (20 U.S.C.
1098e(a)(2)(B)) is amended by inserting ``a Federal Direct
Consolidation Loan under section 460A, and does not include''
after ``does not include''.
(2) Calculation of qualifying payments.--Section 493C of
the Higher Education Act of 1965 (20 U.S.C. 1098e) is amended
by adding at the end the following:
``(f) Special Rule for Refinanced Loans.--
``(1) Refinanced federal direct consolidation loans.--In
calculating the period of time during which a borrower of a
Federal Direct Consolidation Loan that is made under section
460A(b) has made monthly payments for the purposes of
subsection (b)(7), the Secretary shall--
``(A) review the borrower's payment history to
identify each component loan of such Federal Direct
Consolidation Loan;
``(B) for each such component loan--
``(i) calculate the weighted factor of the
component loan, which shall be the factor that
represents the portion of such Federal Direct
Consolidation Loan that is attributable to such
component loan; and
``(ii) determine the number of qualifying
monthly payments made on such component loan
before consolidation;
``(C) calculate the number of qualifying monthly
payments determined under subparagraph (B)(ii) with
respect to a component loan that shall be deemed as
qualifying monthly payments made on the Federal Direct
Consolidation Loan by multiplying--
``(i) the weighted factor of such component
loan as determined under subparagraph (B)(i);
by
``(ii) the number of qualifying monthly
payments made on such component loan as
determined under subparagraph (B)(ii); and
``(D) calculate and inform the borrower of the
total number of qualifying monthly payments with
respect to the component loans of the Federal Direct
Consolidation Loan that shall be deemed as qualifying
monthly payments made on the refinanced Federal
Consolidation Loan, by--
``(i) adding together the result of each
calculation made under subparagraph (C) with
respect to each such component loan; and
``(ii) rounding the number determined under
clause (i) to the nearest whole number.
``(2) Component loan defined.--In this subsection, the term
`component loan', used with respect to a Federal Direct
Consolidation Loan, means a loan for which the liability was
discharged by the proceeds of such Federal Direct Consolidation
Loan.''.
(e) Conforming Amendments.--The Higher Education Act of 1965 (20
U.S.C. 1001 et seq.) is amended--
(1) in section 455(d)(1), by striking ``shall offer a
borrower of a loan'' and inserting ``shall offer a borrower of
a Federal Direct Consolidation Loan under section 460A (with
respect to the Federal Direct Consolidation Loan under such
section only, and without regard to when other loans may have
been received), and shall offer a borrower of a loan'';
(2) in section 455(d)(7)--
(A) in the matter preceding subparagraph (A), by
striking ``Beginning'' and inserting ``Subject to
subparagraph (F), beginning'';
(B) in subparagraph (C), by striking ``A borrower
is required'' and inserting ``Subject to subparagraph
(F), a borrower is required'';
(C) in subparagraph (E)(ii)(II), by inserting
``(excluding such loans under section 460A)'' after ``a
Federal Direct Consolidation Loan''; and
(D) by adding at the end the following:
``(F) Consolidation loans under section 460a.--
Notwithstanding any other provision of this title,
including this subsection, a borrower of a Federal
Direct Consolidation Loan under section 460A shall be
eligible to repay the Federal Direct Consolidation Loan
under such section only under any repayment plan or
program described under paragraph (1), without regard
to when other loans may have been received.''; and
(3) in section 428C(a)(3)(B)(i)(V) (20 U.S.C. 1078-
3(3)(B)(i)(V))--
(A) by striking the period at the end of item (cc)
and inserting a semicolon;
(B) by striking the period at the end of item (dd)
and inserting ``; or''; and
(C) by adding at the end the following:
``(ee) for the purpose of
obtaining a Federal Direct
Consolidation Loan under
section 460A(b).''.
TITLE II--TERMS AND CONDITIONS FOR NEW FEDERAL STUDENT LOANS
SEC. 201. APPLICABLE RATES OF INTEREST FOR LOANS MADE ON OR AFTER JULY
1, 2026.
Section 455(b)(8) of the Higher Education Act of 1965 (20 U.S.C.
1087e(b)(8)) is amended--
(1) in the paragraph heading, by inserting ``and before
july 1, 2026'' after ``July 1, 2013'';
(2) in subparagraph (A), by inserting ``and before July 1,
2026'' after ``July 1, 2013'';
(3) in subparagraph (B), by inserting ``and before July 1,
2026'' after ``July 1, 2013'';
(4) in subparagraph (C), by inserting ``and before July 1,
2026'' after ``July 1, 2013'';
(5) in subparagraph (D), by inserting ``and before July 1,
2026'' after ``July 1, 2013'';
(6) by redesignating subparagraph (F) as subparagraph (G);
and
(7) by inserting after subparagraph (E) the following:
``(F) New loans on or after july 1, 2026.--
Notwithstanding the preceding subparagraphs of this
paragraph, for Federal Direct Unsubsidized Stafford
Loans, Federal Direct PLUS Loans, and Federal Direct
Consolidation Loans for which the first disbursement is
made, or the application is received, on or after July
1, 2026, the applicable rate of interest shall be 0
percent on the unpaid principal balance of the loan.''.
SEC. 202. TERMINATION OF INTEREST SUBSIDIZED LOANS.
(a) Program Authority.--Section 451(a) of the Higher Education Act
of 1965 (20 U.S.C. 1087a(a)) is amended by adding at the end the
following: ``No new Federal Direct Stafford Loans, as referenced under
section 455(a)(2)(A), may be made under this part after June 30, 2026,
and no funds are authorized to be appropriated, or may be expended,
under this Act or any other Act to make such Federal Direct Stafford
Loans for which the first disbursement is after June 30, 2026.''.
(b) Termination of Authority.--Section 455(a) of the Higher
Education Act of 1965 (20 U.S.C. 1087e(a)) is amended by adding at the
end the following:
``(9) Termination of authority to make interest subsidized
loans to any student.--Notwithstanding any provision of this
part or part B, for any period of instruction beginning on or
after July 1, 2026--
``(A) a student shall not be eligible to receive a
Federal Direct Stafford Loan under this part; and
``(B) the maximum annual amount of Federal Direct
Unsubsidized Stafford Loans such a student may borrow
in any academic year (as defined in section 481(a)(2))
or its equivalent shall be the maximum annual amount
for such student determined under section 428H, plus an
amount equal to the amount of Federal Direct Stafford
Loans the student would have received in the absence of
this paragraph.''.
SEC. 203. ANNUAL AND AGGREGATE LOAN LIMITS.
Section 455(a) of the Higher Education Act of 1965 (20 U.S.C.
1087e(a)) is amended--
(1) in paragraph (4)--
(A) in subparagraph (A), in the matter preceding
clause (i), by striking ``and (8)'' and inserting ``,
(8), and (9)''; and
(B) in subparagraph (B), in the matter preceding
clause (i), by striking ``and (8)'' and inserting ``,
(8), and (9)'';
(2) in paragraph (6), by striking ``paragraph (8)'' and
inserting ``paragraphs (8) and (9)''; and
(3) by adding at the end the following:
``(9) Adjustment for inflation.--
``(A) In general.--Each amount specified in
paragraphs (4) and (6) shall, for any period of
instruction beginning on or after July 1, 2027, be
deemed increased by a percentage equal to the annual
adjustment percentage.
``(B) Annual adjustment percentage defined.--In
this paragraph, the term `annual adjustment
percentage', as applied to an academic year, means the
estimated percentage change in the Consumer Price Index
(as determined by the Secretary, using the definition
in section 478(f) or the most recent calendar year
ending prior to the beginning of that academic
year).''.
TITLE III--TRUST FUND
SEC. 301. SUPPLEMENTAL FEDERAL PELL GRANT PROGRAM.
Section 401(b) of the Higher Education Act of 1965 (20 U.S.C.
1070a(b)) is amended by adding at the end the following:
``(10) Supplemental pell grants using excess trust fund
amounts.--For any award year for which the Secretary elects to
use the excess amounts (or a portion of such excess amounts)
described in section 494A(c) to carry out a Supplemental Pell
Grant Program under this paragraph, the Secretary shall--
``(A) award each student that receives a Federal
Pell Grant under this subpart for such award year, an
additional Federal Pell Grant in an amount that--
``(i) bears the same relationship to such
excess amount (or such portion) as the amount
of the Federal Pell Grant such student receives
under this subpart (excluding this paragraph)
for such award year bears to the total amount
awarded in Federal Pell Grants under this
subpart (excluding this paragraph) for such
award year; and
``(ii) may--
``(I) exceed the total maximum
Federal Pell Grant available for such
award year; and
``(II) be lower than the minimum
Federal Pell Grant (as defined in
section (a)(2)(F)) for such award year;
and
``(B) ensure that--
``(i) in the case of a student awarded an
additional Federal Pell Grant under
subparagraph (A) for an award year, the total
amount of Federal Pell Grants awarded to such
student under this subpart (including such
additional Federal Pell Grant) for such award
year may exceed the total maximum Federal Pell
Grant available for such award year; and
``(ii) any period of study covered by an
additional Federal Pell Grant awarded under
subparagraph (A) shall not be included in
determining a student's duration limit under
subsection (d)(5).''.
SEC. 302. USE OF FUNDS FROM THE REPAYMENT OF FEDERAL STUDENT LOANS.
Part G of title IV of the Higher Education Act of 1965 (20 U.S.C.
1088 et seq.) is amended by adding at the end the following:
``SEC. 494A. USE OF FUNDS FROM THE REPAYMENT OF FEDERAL STUDENT LOANS.
``(a) In General.--The Secretary of Education shall, without
further appropriation, deposit all amounts repaid on loans made,
insured, or guaranteed under this title into the Education
Affordability Trust Fund established under section 494B (referred to in
this section as the `Trust Fund').
``(b) Use of Trust Fund Assets.--
``(1) In general.--The Trust Fund Board shall transfer the
assets from the investments of the Trust Fund to the Secretary
of Education, to pay for the administrative costs of the
Department of Education in making loans under part D, including
loans under section 460A(b), to all eligible students (and the
eligible parents of such students) in attendance at
participating institutions of higher education selected by the
Secretary, to enable such students to pursue their courses of
study at such institutions, in the following amounts:
``(A) During any period of time when the Trust Fund
has assets under management of $500,000,000 or more
over a 180-day period, 100 percent of such assets.
``(B) During any period of time when the Trust Fund
has assets of less than $500,000,000, but more than or
equal to $400,000,000 over a 180-day period, 40 percent
of such assets.
``(C) During any period of time when the Trust Fund
has assets of less than $400,000,000 but more than or
equal to $300,000,000 over a 180-day period, 10 percent
of such assets.
``(D) During any period of time when the Trust Fund
has assets of less than $300,000,000 over a 180-day
period, 0 percent of such assets.
``(2) Assets defined.--In this subsection, the term
`assets' means the amount that the return on investment from
bond investments made by the Trust Fund exceeds the amount
repaid on loans and deposited into the Trust Fund under
subsection (a).
``(c) Use of Excess Amounts.--If the amounts required to be
transferred under subsection (b) are in excess of the amounts needed to
pay for the costs of the Department of Education described under
subsection (b), the Secretary of Education may elect to use such excess
amounts (or a portion of such excess amounts)--
``(1) to carry out the Supplemental Federal Pell Grant
Program under section 401(b)(10); and
``(2) for the Postsecondary Student Success Program
authorized under part B of title VII and for which the
Department issued a notice inviting applications in the Federal
Register on August 12, 2022 (87 Fed. Reg. 49811 et seq.),
except that, notwithstanding the terms and condition of such
program described in the notice--
``(A) any institution of higher education defined
in section 101 or 102(a)(1)(B) is eligible to receive a
grant under the program if--
``(i) the average cost of tuition to attend
such institution for the 3 most recent academic
years has not increased by more than 3 percent;
``(ii) the institution provides an
assurance that the average cost of tuition to
attend such institution for the succeeding 3
academic years will not increase by more than 3
percent; or
``(iii) the size of the endowment fund (as
defined in section 312(c)) of the institution
on the first day of the previous calendar year
was not greater than $100,000,000; and
``(B) grants under the program will be awarded on a
competitive basis, and the amount of any such grant
will be not less than $600,000, and not more than
$1,000,000.
``(d) Report and Testimony to Congress.--If the Secretary of
Education elects to use excess amounts described under subsection (c),
the Secretary shall provide to Congress a report on the use of such
amounts (and provide testimony on such use) not later than 180 days
after making use of such funds.''.
SEC. 303. EDUCATION AFFORDABILITY TRUST FUND.
Part G of title IV of the Higher Education Act of 1965 (20 U.S.C.
1088 et seq.) is further amended by adding at the end the following:
``SEC. 494B. EDUCATION AFFORDABILITY TRUST FUND.
``(a) Establishment.--There is established within the Department a
trust fund to be known as the `Education Affordability Trust Fund'
(referred to in this section as the `Trust Fund').
``(b) Board.--
``(1) In general.--The head of the Trust Fund shall be a 6-
member Education Affordability Trust Fund Board (referred to in
this section as the `Board').
``(2) Appointment of members.--The members of the Board
shall be appointed by the President, by and with the advice and
consent of the Senate, from among individuals who--
``(A) have experience and expertise in the
management of financial investments;
``(B) have at least 10 years of experience in the
financial investment field;
``(C) at least 3 of which have experience working
with rural lenders, historically disenfranchised
groups, or low-income communities; and
``(D) are not currently an elected official.
``(3) Disqualifications for appointments.--
``(A) Lobbying.--No individual required to register
as a lobbyist under section 4 of the Lobbying
Disclosure Act of 1995 (2 U.S.C. 1603) may be appointed
to, or serve on, the Board.
``(B) Incompatible office.--No member of the Board
may hold or may have held the position of Member of the
House of Representatives or Senator, may hold the
position of officer or employee of the House of
Representatives, Senate, or instrumentality or other
entity of the legislative branch, or may have held such
a position within 4 years of the date of appointment.
``(4) Term.--
``(A) In general.--The members of the Board shall
serve 6-year terms, staggered such that the terms of 2
members end every 2 years.
``(B) Political affiliation.--The 2 members serving
terms that end at the same time may not be members of
the same political party.
``(C) Members take office together.--With respect
to the 2 individuals appointed to fill terms ending at
the same time, neither individual may begin serving as
a member of the Board until both have been appointed
and confirmed by the Senate.
``(D) Authority to serve until a successor is
appointed.--Upon the expiration of a term of a member
of the Board, that member shall continue to serve until
a successor is appointed.
``(E) Limitation.--An individual may only serve as
a member of the Board for a maximum of 2 terms.
``(F) Removal for cause.--The President may remove
a member of the Board only for inefficiency, neglect of
duty, or malfeasance in office.
``(5) Deadline for initial appointments.--The initial
members of the Board shall be appointed no later than 90 days
after the date of enactment of this section.
``(6) Chair.--Each member of the Board shall serve as the
Chair of the Board during the final year of the term for which
the member is appointed.
``(7) Conflicts of interest.--Each member of the Board
shall, with respect to entities in which the Trust Fund
invests, either divest any interest in such entities or place
such interests into a blind trust.
``(8) Meetings.--
``(A) In general.--The Board shall meet no less
than once per quarter.
``(B) Participation by fund managers.--The fund
manager appointed under subsection (c) shall attend not
less than 2 meetings of the Board each year, to discuss
forecasting and current investment performance.
``(C) Emergency meeting requirement.--If, once the
assets under management of the Trust Fund have reached
$500,000,000,000, the assets under management of the
Trust Fund drop below $300,000,000,000, the Board shall
immediately hold an emergency meeting to discuss
ensuring the long-term solvency of the Trust Fund.
``(9) Voting.--Investment guidelines shall be adopted by a
unanimous vote of the entire Board. All other decisions of the
Board shall be decided by a majority vote. All decisions of the
Board shall be entered upon the records of the Board.
``(10) Compensation.--While serving on the business of the
Board (including travel time), a member of the Board shall be
entitled to compensation at the per diem equivalent of the rate
provided for level IV of the Executive Schedule under section
5315 of title 5, United States Code, and while so serving away
from home and the member's regular place of business, a member
may be allowed travel expenses, as authorized by the Chair of
the Board.
``(c) Powers and Responsibilities of the Board.--
``(1) Appointment of fund managers.--
``(A) In general.--The Board shall appoint
independent fund managers from among individuals who
have met such ethics vetting requirements as the Board
may establish.
``(B) Failure to make a unanimous appointment.--If
the Board fails to make an appointment under
subparagraph (A), the Chair shall, not later 10 days
after the date of such failure, make the appointment.
``(C) Initial fund managers.--The Board shall make
the initial appointment of independent fund managers
under subparagraph (A) not later than 60 days after the
date on which all members of the Board are first
appointed.
``(2) Other duties.--The Board shall--
``(A) retain independent advisers to assist it in
the formulation and adoption of its investment
guidelines;
``(B) pay the administrative expenses of the Trust
Fund from the assets in the Trust Fund; and
``(C) discharge their duties (including the voting
of proxies) with respect to the assets of the Trust
Fund solely in the interest of the Trust Fund and
through it, the participants and beneficiaries of the
programs funded under this Act--
``(i) for the exclusive purpose of--
``(I) providing zero-interest
Federal student loans to existing and
future borrowers; and
``(II) defraying reasonable
expenses of administering the functions
of the Trust Fund;
``(ii) with the care, skill, prudence, and
diligence under the circumstances then
prevailing that a prudent person acting in a
like capacity and familiar with such matters
would use in the conduct of an enterprise of a
like character and with like aims;
``(iii) by diversifying investments so as
to minimize the risk of large losses and to
avoid disproportionate influence over a
particular industry or firm, unless under the
circumstances it is clearly prudent not to do
so; and
``(iv) in accordance with Trust Fund
governing documents and instruments insofar as
such documents and instruments are consistent
with this Act.
``(3) Prohibitions with respect to members of the board.--
No member of the Board shall--
``(A) deal with the assets of the Trust Fund in the
member's own interest or for the member's own account;
``(B) in an individual or in any other capacity act
in any transaction involving the assets of the Trust
Fund on behalf of a party (or represent a party) whose
interests are adverse to the interests of the Trust
Fund or the interests of borrowers; or
``(C) receive any consideration for the member's
own personal account from any party dealing with the
assets of the Trust Fund.
``(4) Audit and report.--
``(A) Audit.--The Board shall annually engage an
independent qualified public accountant to audit the
financial statements of the Trust Fund.
``(B) Report to congress.--
``(i) In general.--The Board shall submit
an annual management report to the Secretary of
Education, the Secretary of the Treasury, the
President, and the Congress not later than 180
days after the end of each fiscal year,
including--
``(I) a statement of financial
position, including the total amount in
the Trust Fund;
``(II) a statement of operations;
``(III) a statement of cash flows;
``(IV) a breakdown of the
investments made by the Trust Fund,
including by type;
``(V) a statement on internal
accounting and administrative control
systems;
``(VI) the report resulting from an
audit of the financial statements of
the Trust Fund conducted under
subparagraph (A); and
``(VII) any other comments and
information necessary to inform the
Congress about the operations and
financial condition of the Trust Fund.
``(ii) Public availability of report.--The
Board shall make each report required under
this subparagraph available to the public,
including on the website of the Department of
Education.
``(5) Rules and administrative powers.--The Board shall
have the authority to make rules to govern the operations of
the Trust Fund, employ professional staff, and contract with
outside advisers to provide legal, accounting, investment
advisory, or other services necessary for the proper
administration of this section. In the case of contracts with
investment advisory services, compensation for such services
may be on a fixed contract fee basis or on such other terms and
conditions as are customary for such services.
``(6) Financial disclosure reports.--Each Member and
employee of the Board shall file with the Secretary of
Education and appropriate committees of Congress financial
disclosure reports that comply with the requirements under
subchapter I of chapter 131 of title 5, United States Code.
``(7) Funding.--The expenses of the Trust Fund and the
Board incurred under this section shall be paid from the Trust
Fund.
``(d) Duties of the Fund Managers.--
``(1) In general.--The fund managers shall invest the
assets of the Trust Fund in a manner consistent with the
investment guidelines adopted by the Board.
``(2) Instruments.--The fund managers shall invest the
amounts in the Trust Fund in bonds that consist of the
following:
``(A) Municipal bonds.
``(B) Bonds issued by the Department of the
Treasury, which may not make up more than 40 percent of
the total investments of the Trust Fund.
``(C) Other Federal bonds.
``(D) Bonds issued by the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage
Association, or a Federal Home Loan Bank.
``(E) International bonds, which may not make up
more than 10 percent of the total investments of the
Trust Fund.
``(F) Corporate bonds, which may not make up more
than 10 percent of the total investments of the Trust
Fund.
``(3) Investment requirements.--
``(A) Ratings.--The investments of the Trust Fund
shall consist--
``(i) only of investments rated at least
Baa1 or BBB+ by Moody's, S&P, or Fitch Ratings;
``(ii) at least 80 percent of investments
rated at least A3 or A- by Moody's, S&P, or
Fitch Ratings;
``(iii) at least 60 percent of investments
rated at least Aa1 or AA+ by Moody's, S&P, or
Fitch Ratings; and
``(iv) at least 40 percent of investments
rated at least Aaa or AAA by Moody's, S&P, or
Fitch Ratings.
``(B) Diversification.--The investments of the
Trust Fund shall be diversified to minimize the risk of
large losses and to avoid disproportionate influence
over a particular region, industry, or firm, unless
under the circumstances it is clearly prudent not to do
so.
``(C) Limitation on investing in certain
countries.--The Trust Fund may not invest in entities
or subsidiaries of entities that are--
``(i) based in any country that does not
have diplomatic relations with the United
States;
``(ii) based in any country, the government
of which is subject to sanctions by the United
States; or
``(iii) on a sanctions list of the
Department of the Treasury.
``(4) Short-term initial investments.--During the 10-year
period beginning on the date of enactment of this section, the
fund managers shall prioritize investments in bonds with a
maturity date of less than 10 years.
``(e) Means of Financing.--For purposes of the Congressional Budget
Act of 1974 (2 U.S.C. 621 et seq.), the Balanced Budget and Emergency
Deficit Control Act of 1985 (2 U.S.C. 900 et seq.), and chapter 11 of
title 31, United States Code, and notwithstanding section 20 of Office
of Management and Budget Circular No. A-11, or any successor thereto,
earnings of the Trust Fund shall be calculated on an accrual basis.''.
TITLE IV--GENERAL PROVISIONS
SEC. 401. IMPLEMENTATION.
In carrying out the amendments made by titles I, II, and III, the
Secretary of Education may waive the application of--
(1) the master calendar requirements under section 482 of
the Higher Education Act of 1965 (20 U.S.C. 1089); and
(2) negotiated rulemaking under section 492 of the Higher
Education Act of 1965 (20 U.S.C. 1098a).
<all>Official legislative text sourced from the public record (cached on CivicsHQ).
Official source
View the original bill, actions, and full legislative record on Congress.gov.
Status
In Committee
- 1Introduced
- 2Committee
- 3Floor
- 4Passed
- 5Signed
Timeline reflects current normalized status only. Full action history is not yet stored in the API.
Topics
EducationTax & Budget
Sponsors
- Rep. Courtney, Joe [D-CT-2]DHouseCT
Votes
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