Scott Pitches LOAN Act to Tackle Rising College Costs
By Hugh T. Ferguson, NASFAA Managing Editor
Congressional Democrats have reintroduced their legislative approach to tackling rising college costs. Rep. Bobby Scott (D-Va.), ranking member of the House Education & Workforce Committee, on Friday reintroduced his Lowering Obstacles to Achievement Now (LOAN) Act as a framework to “shield” students from the financial barriers of higher education.
According to Scott, the bill’s reintroduction comes in response to Republicans' enactment of the "One Big Beautiful Bill Act," which will implement substantial changes to programs authorized by the Higher Education Act (HEA).
Scott’s proposal, first introduced in 2022, would also change HEA programs, including updates to Pell Grant funding and the Public Service Loan Forgiveness (PSLF) program. It would also seek to expand access to subsidized loans, provide more protections and simplification to an income-driven repayment plan, and reduce student loan interest rates.
Among the bill’s main provisions, it would increase the annual Pell Grant to $10,000 for the 2026-27 award year and then, over the next five-year period, double the maximum Pell Grant to $14,000 and index the maximum award to inflation. The bill would also move all Pell Grant funding to mandatory funding.
“The LOAN Act will help confront the student debt crisis. This legislation would lower the cost of college for students and families by doubling the Pell Grant, improving the Public Service Loan Forgiveness program, lowering interest rates, and making other critical reforms to fix our student loan system,” Scott said. “By making loans cheaper to take out and easier to pay off, the LOAN Act will help improve the lives of student loan borrowers—both now and in the future.”
In terms of Pell Grant eligibility, the program would be made available to undocumented students, the eligibility period would be expanded from 12 to 18 semesters, and graduate students would be able to use any remaining Pell Grant from their undergraduate program.
The bill also shortens the timeline to PSLF from the current 120 to 96 on-time payments and codifies the limited PSLF waiver.
Scott’s updated bill would also create a new income-driven repayment plan with major provisions from the Saving on a Valuable Education (SAVE) plan, including reducing undergraduate loan payments by half, reinstating $0 repayments for low- and middle-income borrowers, and providing early forgiveness for low-balance borrowers. It would also include a standard option, while also enabling borrowers to remain in a current plan should they choose to.
Additionally, graduate and professional students attending public and non-profit institutions would have access to subsidized loans at the same interest rate available to these students for unsubsidized loans.
The bill would also eliminate interest capitalization, cap federal student loans made on or after July 1, 2026, at 5% and allow all borrowers (with federal or private loans) to refinance their loans based on this new rate calculation.
Publication Date: 8/5/2025
Jeff T | 8/5/2025 3:53:43 PM
This is a bold step forward. I hope it gets the traction it deserves, hopefully the media won't ignore it.
Joe B | 8/5/2025 10:29:49 AM
"... graduate students would be able to use any remaining Pell Grant from their undergraduate program."
This would be such a smart move to encourage faster graduation rates for students that plan to go to grad school after undergrad, as well as be a much-needed source of funding to replace the loss of Grad PLUS (and of course replacing a loan with free money is never bad for students).
You must be logged in to comment on this page.