Student Protection and Success Act

Key Points

• Colleges where fewer than 15% of borrowers reduce their loan principal by at least one dollar within two years would lose eligibility for all federal student aid programs starting in fiscal year 2028, including Pell Grants, Direct Loans, and Perkins Loans. Schools that lose eligibility are locked out for three years.
• Starting in 2028, all colleges participating in the federal loan program must make risk-sharing payments to the government based on how much of their students' loan debt is not being repaid. The payment equals 2% of an institution's nonrepayment loan balance, adjusted for the national unemployment rate, and is capped at 2.5% of the school's total revenues.
• Risk-sharing payments collected from schools would fund a new College Opportunity Bonus Program that awards grants to colleges with repayment rates above 25% and strong records of helping low- and moderate-income students succeed. Schools can use grant money for need-based financial aid, academic support services, and accelerated learning opportunities.
• The bill requires the Department of Education to publish cohort repayment rates for all institutions and to notify schools with rates at or below 15% that they risk losing eligibility, giving them advance warning before the 2028 enforcement date.
• New reporting rules redefine what counts as student service spending by colleges, specifically excluding marketing, recruitment, and intercollegiate athletics. This gives the government a clearer picture of which schools are actually investing in student outcomes versus advertising.