Student Protection and Success Act

Key Points

• Starting in fiscal year 2028, colleges where 15% or fewer of borrowers reduce their loan principal by at least $1 within two years would lose eligibility for federal student aid programs, including Direct Loans and Pell Grants. This effectively cuts off federal funding to schools that leave students with unmanageable debt.
• Colleges would be required to make "risk-sharing" payments to the government based on how much of their students' loan balances go unrepaid. The payment equals 2% of the school's cohort nonrepayment loan balance, adjusted for the national unemployment rate, giving schools a direct financial stake in student outcomes.
• A new College Opportunity Bonus Program would reward schools with repayment rates above 25% that serve low-income students well. These schools could use grant funds for need-based financial aid, academic support services, and accelerated learning opportunities.
• The bonus grant program would be entirely funded by the risk-sharing payments collected from colleges, meaning the worst-performing schools would effectively subsidize investments in the best-performing ones.
• Borrowers in certain situations — such as active-duty military service, Peace Corps volunteering, graduate school enrollment, or rehabilitation programs — would be excluded from repayment rate calculations so that schools are not unfairly penalized.
• The Education Department would be required to collect and publish new data distinguishing how much schools spend on student services versus marketing and recruitment, giving prospective students better insight into how schools invest their resources.

Votes

No votes have been recorded for this legislation yet.