The Student Protection and Success Act would penalize colleges with low student loan repayment rates by making them ineligible for federal student aid programs starting in 2027. Specifically, institutions where 15 percent or fewer borrowers repay at least one dollar of their loans within two years would lose access to federal grants and loans for three years, though they could appeal this determination. The bill would also require colleges to make "risk-sharing payments" to the federal government equal to 2 percent of unpaid loan balances from students who fail to make progress on their loans, with a cap at 2.5 percent of institutional revenues. In return, colleges that maintain repayment rates above 25 percent would become eligible for federal grants to support need-based financial aid, academic support services, and accelerated learning programs for low-income students. The legislation also directs the Education Secretary to report on best practices for improving repayment rates and establishes new data collection standards for tracking how colleges spend money on student services.
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