The AID Act modifies how federal financial aid is calculated for college students by allowing parents' outstanding student loan debt to reduce the amount of expected family contribution toward college costs. Starting with the 2027–2028 school year, parents can subtract from their income either $4,000 or 15 percent of their outstanding federal student loan debt (whichever is less) when applying for federal student aid, but this benefit is capped for higher-income families—those earning more than $200,000 (single) or $400,000 (married) are ineligible. The bill also requires the Department of Education to automatically adjust these dollar amounts annually based on inflation starting in 2028–2029. Additionally, the Secretary of Education must report to Congress by July 1, 2028, and annually thereafter, detailing how many students benefit from this change and the average allowance received, broken down by eligibility for Pell Grants. The legislation aims to ease the financial burden on families struggling with student loan debt while helping their children access federal financial aid.
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