# Plain Language Summary: Higher Education Reform and Opportunity Act

This bill makes major changes to how federal student loans work, starting in 2026. The most significant change is that it eliminates most existing federal student loan programs and replaces them with a simpler loan option called "Federal Direct Simplification Loans." Beginning July 1, 2026, new borrowers can only take out these new simplified loans. The bill also phases out loan forgiveness programs—meaning students who borrow after July 1, 2026 will no longer be eligible for programs that cancel their remaining loan balance after a certain number of years of payments or public service work.

The new simplified loans come with specific terms that differ from current federal loans. Interest rates will be tied to Treasury note rates but capped at 8.25 percent for undergraduate students and 9.5 percent for graduate students. Undergraduate students can borrow a maximum of $7,500 per year (up to $30,000 total), while independent undergraduates can borrow $15,000 per year (up to $60,000 total). Graduate students can borrow up to $18,500 per year (up to $74,000 total). Importantly, interest starts accruing immediately when the loan is disbursed, and repayment begins after students finish their program. Undergraduate loans must be repaid within 15 years, while graduate loans have 25 years. There are no origination fees, and borrowers can pay off their loans early without penalty.

The bill also creates a new system allowing states to set up their own accreditation standards for colleges and training programs, rather than relying solely on traditional regional accreditors. This could make it easier for alternative education providers—like apprenticeship programs, online schools, and workforce training programs—to qualify for federal student aid if their state approves them under this new system.

Higher Education Reform and Opportunity Act

Roy, Chip

Higher Education Reform and Opportunity ActThis bill revises requirements governing student loans and&nbsp;the accreditation of institutions of higher education (IHEs).Specifically, the bill consolidates federal student loans into one student loan program and phases out loan forgiveness for borrowers.Additionally, the bill makes postsecondary education courses and programs (e.g., apprenticeship programs) that provide credits toward a postsecondary certification, credential, or degree eligible for federal student aid funding if the courses and programs are accredited by a state that has an alternative accreditation agreement with the Department of Education (ED).The bill requires IHEs to publish certain enrollment and financial aid information, including (1) the percentage of former financial aid recipients who are employed at various intervals following graduation, and (2) the average amount of total federal student loan debt accrued upon graduation. The Government Accountability Office must compile, study, and report on all such information published by IHEs. Further, the bill prohibits the disclosure of personally identifiable information and directs ED to establish penalties for violations. Lastly, the bill requires an IHE to pay a default rate fine for a fiscal year in an amount that is equal to the applicable percentage of outstanding federal student loans (i.e., the total amount of loans issued to students for attendance at the IHE for which regular on-time payments are not being made). An IHE shall receive a $400 credit for each graduate of the IHE who received a Federal Pell Grant while enrolled at the IHE during the fiscal year.