HR-4862-119
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.
Sponsored by Robert Scott (D-VA)
What it does
The LOAN Act would expand federal student financial aid in several ways: it would increase the maximum Pell Grant award and extend Pell Grant eligibility to income-eligible graduate students pursuing their first graduate degree. It would make it easier to qualify for Public Service Loan Forgiveness by reducing the required number of monthly payments and removing the requirement that borrowers be employed in public service at the moment of forgiveness. The bill would also make DACA recipients ("Dreamers") who entered the U.S. before age 18 eligible for federal financial aid, establish refinancing programs for both federal and private student loans, create a new income-driven repayment plan, eliminate origination fees on Direct Subsidized, Unsubsidized, and PLUS loans, and repeal the student aid provisions enacted in the One Big Beautiful Bill Act (P.L. 119-21).
Who benefits
Current and prospective undergraduate students who would receive larger Pell Grants. Graduate students from lower-income backgrounds who would gain new Pell Grant access. Public service workers (teachers, nurses, government employees, nonprofit workers) who would qualify for loan forgiveness sooner and without needing to be employed at the moment of forgiveness. DACA recipients who meet educational criteria and would gain access to federal financial aid for the first time. Borrowers with existing federal or private student loans who could refinance at potentially lower rates. Borrowers who would save money by eliminating origination fees. Students and borrowers who would have faced stricter loan limits or terms under P.L. 119-21.
Who is hurt
Federal taxpayers who would bear the cost of expanded grants, loan forgiveness, and eliminated fees. Lenders and servicers in the private student loan market who may face increased competition from a federal refinancing program. Colleges and universities that critics argue may raise tuition in response to expanded federal aid availability. Borrowers who chose repayment strategies optimized under the current PSLF rules and may face transition uncertainty. Fiscal hawks and deficit-reduction advocates who would see increased mandatory spending. Those who supported the loan provisions in P.L. 119-21 — including students who may have structured borrowing decisions around those rules — would see those changes reversed.
Supporters argue
Supporters argue that the current student loan system leaves millions of borrowers in long-term financial distress, with federal student loan debt exceeding $1.7 trillion and average balances rising steadily. They contend that expanding Pell Grants — which have not kept pace with tuition inflation — and eliminating origination fees directly reduces the cost of higher education for the lowest-income students. They further argue that easing PSLF requirements addresses documented administrative failures that have caused eligible public servants to be wrongly denied forgiveness, and that extending aid to DACA recipients who grew up in the U.S. and meet educational criteria is both economically productive and consistent with their integration into American society.
Opponents argue
Opponents argue that expanding grants, broadening loan forgiveness, and eliminating fees would add substantially to the federal deficit at a time of record national debt, with costs borne by all taxpayers — including those who never attended college or already repaid their loans. They contend that increased federal aid historically correlates with tuition increases, as institutions raise prices to capture available subsidies — a dynamic known as the "Bennett Hypothesis" — meaning expanded aid may benefit institutions more than students. They further argue that extending federal benefits to DACA recipients raises legal and policy questions about the use of federal funds for individuals without permanent legal status, and that repealing P.L. 119-21's loan provisions destabilizes rules that borrowers and institutions have already begun to rely upon.
Constitutional context
Congress's authority to fund and condition federal student aid rests on the Spending Clause (Art. I, §8, cl. 1), and the five-part test from South Dakota v. Dole (1987) governs whether conditions attached to that funding are constitutional. Extending federal aid to DACA recipients could face Tenth Amendment challenges if it is seen as directing state-administered programs, and may also implicate equal protection arguments under the Fourteenth Amendment regarding differential treatment based on immigration status.
Checks and balances
Congress would expand the executive branch's (Department of Education's) authority to administer new repayment, refinancing, and grant programs; oversight checks include congressional appropriations authority, GAO audits, and judicial review of agency implementation under the major questions doctrine post-West Virginia v. EPA (2022).
Historical precedent
The College Cost Reduction and Access Act of 2007 similarly expanded Pell Grants and created the original Public Service Loan Forgiveness program, establishing the federal framework this bill would significantly modify.