[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2557 Introduced in Senate (IS)]

<DOC>






118th CONGRESS
  1st Session
                                S. 2557

  To amend the Higher Education Act of 1965 to eliminate interest on 
   student loans, establish the Education Affordability Trust Fund, 
   increase annual and aggregate loan limits, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 27, 2023

   Mr. Welch introduced the following bill; which was read twice and 
  referred to the Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
  To amend the Higher Education Act of 1965 to eliminate interest on 
   student loans, establish the Education Affordability Trust Fund, 
   increase annual and aggregate loan limits, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Student Loan 
Interest Elimination Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
TITLE I--LOAN MODIFICATION AND REFINANCING FOR EXISTING FEDERAL STUDENT 
                                 LOANS

Sec. 101. Program authority.
Sec. 102. Program for the loan modification of eligible Federal Direct 
                            loans, and refinancing of other Federal 
                            student loan.
      TITLE II--TERMS AND CONDITIONS FOR NEW FEDERAL STUDENT LOANS

Sec. 201. Applicable rates of interest for loans made on or after July 
                            1, 2024.
Sec. 202. Termination of interest subsidized loans.
Sec. 203. Annual and aggregate loan limits.
                         TITLE III--TRUST FUND

Sec. 301. Supplemental Federal Pell Grant Program.
Sec. 302. Use of funds from the repayment of Federal student loans.
Sec. 303. Education Affordability Trust Fund.
                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Implementation.

TITLE I--LOAN MODIFICATION AND REFINANCING FOR EXISTING FEDERAL STUDENT 
                                 LOANS

SEC. 101. PROGRAM AUTHORITY.

    Section 451(a) of the Higher Education Act of 1965 (20 U.S.C. 
1087a(a)) is amended--
            (1) by striking ``There are hereby made available'' and 
        inserting ``After using funds available from the Education 
        Affordability Trust Fund in accordance with section 494A, there 
        are hereby made available'';
            (2) by striking ``and (2)'' and inserting ``(2)''; and
            (3) by inserting ``; and (3) to make loans under section 
        460A(b)'' after ``section 459A''.

SEC. 102. PROGRAM FOR THE LOAN MODIFICATION OF ELIGIBLE FEDERAL DIRECT 
              LOANS, AND REFINANCING OF OTHER FEDERAL STUDENT LOANS.

    (a) Loan Modification and Refinancing.--Part D of title IV of the 
Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by 
adding at the end the following:

``SEC. 460A. PROGRAM FOR THE LOAN MODIFICATION OF ELIGIBLE FEDERAL 
              DIRECT LOANS, AND REFINANCING OF OTHER FEDERAL STUDENT 
              LOANS.

    ``(a) Federal Direct Loan Modification.--The Secretary shall 
establish and implement, with respect to each borrower of an eligible 
Federal direct loan, procedures to--
            ``(1) modify, without any action from the borrower, the 
        terms of such loan so that beginning on July 1, 2024, no 
        interest shall accrue on such loan; and
            ``(2) allow the borrower, at any time, to opt out of the 
        loan modification under paragraph (1) for such loan.
    ``(b) Refinancing Eligible Non-Federal Direct Loans as Federal 
Direct Consolidation Loans.--
            ``(1) In general.--The Secretary shall establish and 
        implement, with respect to each borrower of an eligible non-
        Federal direct loan, procedures to--
                    ``(A) refinance such loan in accordance with 
                procedures listed in paragraph (2); and
                    ``(B) allow the borrower, at any time, to opt out 
                of the loan refinancing under subparagraph (A) for such 
                loan.
            ``(2) Procedures.--In refinancing an eligible non-Federal 
        direct loan with respect to a borrower of such loan, the 
        Secretary shall carry out the following:
                    ``(A) The Secretary shall make a Federal Direct 
                Consolidation Loan under this subsection, in an amount 
                equal to the sum of the unpaid principal, accrued 
                unpaid interest, and late charges of the eligible non-
                Federal direct loan.
                    ``(B) The Secretary shall pay the proceeds of such 
                Federal Direct Consolidation Loan to the holder of the 
                eligible non-Federal direct loan, in order to discharge 
                the borrower from any remaining obligation with respect 
                to such eligible non-Federal direct loan.
            ``(3) Terms and conditions of refinanced loans.--
                    ``(A) In general.--A Federal Direct Consolidation 
                Loan made under this subsection shall have the same 
                terms and conditions as a Federal Direct Consolidation 
                Loan that was not made under this subsection, except--
                            ``(i) that the Secretary may adjust such 
                        terms and conditions as necessary to enable the 
                        borrower to access loan forgiveness or other 
                        benefits available to the borrower under the 
                        loan before refinancing under this subsection, 
                        in any case where such benefits are more 
                        generous than provided under a Federal Direct 
                        Consolidation Loan; and
                            ``(ii) as otherwise provided in this 
                        subsection.
                    ``(B) No origination fees.--Notwithstanding section 
                455(c), the Secretary may not charge a borrower of a 
                loan made under this subsection an origination fee for 
                such loan.
                    ``(C) Interest rates.--No interest shall accrue on 
                a loan that is made under this subsection.
                    ``(D) No automatic extension of repayment period.--
                A loan made under this subsection shall not result in 
                the extension of the duration of the repayment period 
                of the original loan, and the borrower shall retain the 
                same repayment term that was in effect on the original 
                loan. Nothing in this paragraph shall be construed to 
                prevent a borrower from electing a different repayment 
                plan at any time in accordance with section 455(d)(3).
                    ``(E) Rule of construction.--Nothing in this 
                section shall be construed to prevent a borrower of a 
                Federal student loan described in subparagraph (B) or 
                (C) of subsection (d)(2) from consolidating such loans 
                with other loans eligible for consolidation under this 
                section, or to require such a borrower to consolidate 
                such loans with other Federal student loans into a 
                single consolidation loan under this section.
    ``(c) Report.--Not later than 1 year after the date of the 
enactment of Student Loan Interest Elimination Act, and on an annual 
basis thereafter, the Secretary shall submit a report to the 
authorizing committees that includes--
            ``(1) the total number of borrowers whose loans have been 
        modified or refinanced under this section during the preceding 
        year; and
            ``(2) the number of such borrowers who are delinquent in 
        making payments on such a loan.
    ``(d) Definitions.--In this section:
            ``(1) Eligible federal direct loan.--The term `eligible 
        Federal direct loan' means--
                    ``(A) a loan made under this part, and first 
                disbursed before July 1, 2024;
                    ``(B) a loan made, insured, or guaranteed under 
                part B, and which is held by the Secretary;
                    ``(C) a loan made under part E, and which is held 
                by the Secretary; or
                    ``(D) a loan made under subpart 1 of part A of 
                title VII of the Public Health Service Act (42 U.S.C. 
                292 et seq.), and which is held by the Secretary.
            ``(2) Eligible non-federal direct loan.--The term `eligible 
        non-Federal direct loan' means a loan--
                    ``(A) made, insured, or guaranteed under part B, 
                and which is not held by the Secretary;
                    ``(B) made under part E, and which is not held by 
                the Secretary; or
                    ``(C) made under--
                            ``(i) subpart I of part A of title VII of 
                        the Public Health Service Act (42 U.S.C. 292 et 
                        seq.), and which is not held by the Secretary;
                            ``(ii) subpart II of part A of title VII of 
                        the Public Health Service Act (42 U.S.C. 292q 
                        et seq.), and in the case of a loan made under 
                        section 723 of such Act (42 U.S.C. 292s), only 
                        if the borrower of the loan has completed the 
                        full period of service, practice, or training 
                        that was imposed as a condition on receipt of 
                        such loan; or
                            ``(iii) part E of title VIII of the Public 
                        Health Service Act (42 U.S.C. 297a et seq.), 
                        and in the case of a loan made under section 
                        846A of such Act (42 U.S.C. 297n-1), only if 
                        the borrower has completed the 4-years of full-
                        time employment as a faculty member at a school 
                        of nursing as described in subsection (c)(3) of 
                        such section 846A.
            ``(3) Original loan.--The term `original loan', used with 
        respect to a Federal Direct Consolidation Loan made under 
        subsection (b), means a loan for which a borrower's liability 
        is discharged by such Federal Direct Consolidation Loan.''.
    (b) Income-Contingent Repayment.--Section 455(e) of the Higher 
Education Act of 1965 (20 U.S.C. 1087e(e)) is amended by adding at the 
end the following new paragraph:
            ``(9) Special rule for refinanced loans.--For purposes of 
        paragraph (7), the period of time during which a borrower of a 
        Federal Direct Consolidation Loan made under section 460A(b) 
        has made monthly payments shall be calculated in the manner 
        described in section 493C(f).''.
    (c) Income-Based Repayment.--Section 493C of the Higher Education 
Act of 1965 (20 U.S.C. 1098e) is amended by adding at the end the 
following:
    ``(f) Special Rule for Refinanced Loans.--
            ``(1) Refinanced federal direct consolidation loans.--In 
        calculating the period of time during which a borrower of a 
        Federal Direct Consolidation Loan that is made under section 
        460A(b) has made monthly payments for the purposes of 
        subsection (b)(7), the Secretary shall--
                    ``(A) review the borrower's payment history to 
                identify each component loan of such Federal Direct 
                Consolidation Loan;
                    ``(B) for each such component loan--
                            ``(i) calculate the weighted factor of the 
                        component loan, which shall be the factor that 
                        represents the portion of such Federal Direct 
                        Consolidation Loan that is attributable to such 
                        component loan; and
                            ``(ii) determine the number of qualifying 
                        monthly payments made on such component loan 
                        before consolidation;
                    ``(C) calculate the number of qualifying monthly 
                payments determined under subparagraph (B)(ii) with 
                respect to a component loan that shall be deemed as 
                qualifying monthly payments made on the Federal Direct 
                Consolidation Loan by multiplying--
                            ``(i) the weighted factor of such component 
                        loan as determined under subparagraph (B)(i); 
                        by
                            ``(ii) the number of qualifying monthly 
                        payments made on such component loan as 
                        determined under subparagraph (B)(ii); and
                    ``(D) calculate and inform the borrower of the 
                total number of qualifying monthly payments with 
                respect to the component loans of the Federal Direct 
                Consolidation Loan that shall be deemed as qualifying 
                monthly payments made on the refinanced Federal 
                Consolidation Loan, by--
                            ``(i) adding together the result of each 
                        calculation made under subparagraph (C) with 
                        respect to each such component loan; and
                            ``(ii) rounding the number determined under 
                        clause (i) to the nearest whole number.
            ``(2) Component loan defined.--In this subsection, the term 
        `component loan', used with respect to a Federal Direct 
        Consolidation Loan, means a loan for which the liability was 
        discharged by the proceeds of such Federal Direct Consolidation 
        Loan.''.
    (d) Conforming Amendments.--The Higher Education Act of 1965 (20 
U.S.C. 1001 et seq.) is amended--
            (1) in section 428C(a)(3)(B)(i)(V) (20 U.S.C. 1078-
        3(3)(B)(i)(V))--
                    (A) by striking the period at the end of item (cc) 
                and inserting a semicolon;
                    (B) by striking the period at the end of item (dd) 
                and inserting ``; or''; and
                    (C) by adding at the end the following:
                                            ``(ee) for the purpose of 
                                        obtaining a Federal Direct 
                                        Consolidation Loan under 
                                        section 460A(b).''.

      TITLE II--TERMS AND CONDITIONS FOR NEW FEDERAL STUDENT LOANS

SEC. 201. APPLICABLE RATES OF INTEREST FOR LOANS MADE ON OR AFTER JULY 
              1, 2024.

    Section 455(b)(8) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(b)(8)) is amended--
            (1) in the paragraph heading, by inserting ``and before 
        july 1, 2024'' after ``July 1, 2013'';
            (2) in subparagraph (A), by inserting ``and before July 1, 
        2024'' after ``July 1, 2013'';
            (3) in subparagraph (B), by inserting ``and before July 1, 
        2024'' after ``July 1, 2013'';
            (4) in subparagraph (C), by inserting ``and before July 1, 
        2024'' after ``July 1, 2013'';
            (5) in subparagraph (D), by inserting ``and before July 1, 
        2024'' after ``July 1, 2013'';
            (6) by redesignating subparagraph (F) as subparagraph (G); 
        and
            (7) by inserting after subparagraph (E) the following:
                    ``(F) New loans on or after july 1, 2024.--
                            ``(i) In general.--Notwithstanding the 
                        preceding subparagraphs of this paragraph, for 
                        Federal Direct Unsubsidized Stafford Loans, 
                        Federal Direct PLUS Loans, and Federal Direct 
                        Consolidation Loans for which the first 
                        disbursement is made, or the application is 
                        received, on or after July 1, 2024, the 
                        applicable rate of interest shall be as 
                        follows:
                                    ``(I) Zero percent.--For a loan 
                                that is disbursed to a borrower with a 
                                total adjusted available income (as 
                                determined for the most recent award 
                                year for which data is available) that 
                                is not more than 400 percent of the 
                                applicable area median income, 0 
                                percent on the unpaid principal balance 
                                of the loan.
                                    ``(II) One percent.--For a loan 
                                that is disbursed to a borrower with a 
                                total adjusted available income (as 
                                determined for the most recent award 
                                year for which data is available) that 
                                is more than 400 percent of the 
                                applicable area median income, but not 
                                more than 500 percent of such 
                                applicable median income, 1 percent on 
                                the unpaid principal balance of the 
                                loan.
                                    ``(III) Two percent.--For a loan 
                                that is disbursed to a borrower with a 
                                total adjusted available income (as 
                                determined for the most recent award 
                                year for which data is available) that 
                                is more than 500 percent of the 
                                applicable area median income, but not 
                                more than 600 percent of such 
                                applicable median income, 2 percent on 
                                the unpaid principal balance of the 
                                loan.
                                    ``(IV) Three percent.--For a loan 
                                that is disbursed to a borrower with a 
                                total adjusted available income (as 
                                determined for the most recent award 
                                year for which data is available) that 
                                is more than 600 percent of the 
                                applicable area median income, but not 
                                more than 700 percent of such 
                                applicable median income, 3 percent on 
                                the unpaid principal balance of the 
                                loan.
                                    ``(V) Four percent.--For a loan 
                                that is disbursed to a borrower with a 
                                total adjusted available income (as 
                                determined for the most recent award 
                                year for which data is available) that 
                                is more than 700 percent of the 
                                applicable area median income, 4 
                                percent on the unpaid principal balance 
                                of the loan.
                            ``(ii) Applicable area median income.--The 
                        term `applicable area median income'--
                                    ``(I) when used with respect to an 
                                independent student, means the area 
                                median income for the area in which the 
                                student resides; and
                                    ``(II) when used with respect to a 
                                dependent student, means--
                                            ``(aa) except as otherwise 
                                        specified in items (bb) through 
                                        (ee), the area median income 
                                        for the area in which the 
                                        parents of the student reside;
                                            ``(bb) in a case in which 
                                        the parents of the student are 
                                        divorced or living in different 
                                        areas, the area median income 
                                        for the area of the parent who 
                                        provides the greater portion of 
                                        the student's financial 
                                        support, as determined based on 
                                        criteria described in section 
                                        475(f);
                                            ``(cc) in a case in which 
                                        one parent has died, the area 
                                        median income for the area of 
                                        the surviving parent;
                                            ``(dd) in a case in which 
                                        both parents have died, the 
                                        area median income for the area 
                                        in which the student resides; 
                                        and
                                            ``(ee) in a case in which a 
                                        parent has remarried, the 
                                        location of that parent's 
                                        spouse (if different from the 
                                        location of the remarried 
                                        parent) has no impact on the 
                                        determination of area median 
                                        income under this subclause.
                            ``(iii) Area median income.--The term `area 
                        median income' means the median family income 
                        for an area, as determined for purposes of the 
                        United States Housing Act of 1937 (42 U.S.C. 
                        1437 et seq.).
                            ``(iv) Total adjusted available income 
                        defined.--The term `total adjusted available 
                        income', for purposes of award year 2024-2025, 
                        and each subsequent award year--
                                    ``(I) when used with respect to a 
                                dependent student, means the amount 
                                equal to, with respect to such student, 
                                the sum of--
                                            ``(aa) the assessment of 
                                        parents' adjusted available 
                                        income computed under section 
                                        475(b)(1);
                                            ``(bb) the student's total 
                                        income (determined in 
                                        accordance with section 480); 
                                        and
                                            ``(cc) the student's assets 
                                        computed under section 475(h);
                                    ``(II) when used with respect to an 
                                independent student without dependents, 
                                means the amount equal to, with respect 
                                to such student, the sum of--
                                            ``(aa) the family's 
                                        available income computed under 
                                        section 476(b)(1)(A); and
                                            ``(bb) the family's 
                                        available assets computed under 
                                        section 476(c)(1); and
                                    ``(III) when used with respect to 
                                an independent student with dependents, 
                                means the amount equal to, with respect 
                                to such student, the adjusted available 
                                income computed under section 
                                477(a)(1)(A).''.

SEC. 202. TERMINATION OF INTEREST SUBSIDIZED LOANS.

    (a) Program Authority.--Section 451(a) of the Higher Education Act 
of 1965 (20 U.S.C. 1087a(a)) is amended by adding at the end the 
following: ``No new Federal Direct Stafford Loans, as referenced under 
section 455(a)(2)(A), may be made under this part after June 30, 2024, 
and no funds are authorized to be appropriated, or may be expended, 
under this Act or any other Act to make such Federal Direct Stafford 
Loans for which the first disbursement is after June 30, 2024.''.
    (b) Termination of Authority.--Section 455(a) of the Higher 
Education Act of 1965 (20 U.S.C. 1087e(a)) is amended by adding at the 
end the following:
            ``(4) Termination of authority to make interest subsidized 
        loans to any student.--Notwithstanding any provision of this 
        part or part B, for any period of instruction beginning on or 
        after July 1, 2024--
                    ``(A) a student shall not be eligible to receive a 
                Federal Direct Stafford loan under this part; and
                    ``(B) the maximum annual amount of Federal Direct 
                Unsubsidized Stafford loans such a student may borrow 
                in any academic year (as defined in section 481(a)(2)) 
                or its equivalent shall be the maximum annual amount 
                for such student determined under section 428H, plus an 
                amount equal to the amount of Federal Direct Stafford 
                loans the student would have received in the absence of 
                this paragraph.''.

SEC. 203. ANNUAL AND AGGREGATE LOAN LIMITS.

    Section 455(a) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(a)) is further amended by adding at the end the following:
            ``(5) Annual and aggregate loan limits.--
                    ``(A) In general.--Subject to subparagraph (B), for 
                academic year 2024-2025 and each succeeding academic 
                year, section 428H(d) shall be applied--
                            ``(i) in paragraph (2)(A)--
                                    ``(I) in clause (i), by 
                                substituting `$14,550' for `$12,000'; 
                                and
                                    ``(II) in clause (ii)--
                                            ``(aa) in subclause (I), by 
                                        substituting `$8,250' for 
                                        `$7,000'; and
                                            ``(bb) in subclause (II), 
                                        by substituting `$8,250' for 
                                        `$7,000'; and
                            ``(ii) in paragraph (3)--
                                    ``(I) in subparagraph (A), by 
                                substituting `$2,550, in the case of a 
                                student described in clause (i) of 
                                section 428(b)(1)(A), $2,650, in the 
                                case of a student described in clause 
                                (ii) of such section, and $2,750, in 
                                the case of a student described in 
                                clause (iii) of such section' for 
                                `$2,000'; and
                                    ``(II) in subparagraph (B), by 
                                substituting `$34,100' for `$31,000';
                            ``(iii) in paragraph (4)--
                                    ``(I) in subparagraph (A)--
                                            ``(aa) in clause (i)(I), by 
                                        substituting `$6,950 for the 
                                        first year such year and $7,050 
                                        for the second such year' for 
                                        `$6,000';
                                            ``(bb) in clause (ii)(I), 
                                        by substituting `$8,250' for 
                                        `$7,000'; and
                                            ``(cc) in clause (iii)--

                                                    ``(AA) in subclause 
                                                (I), by substituting 
                                                ``$6,850' for `$6,000'; 
                                                and

                                                    ``(BB) in subclause 
                                                (II), by substituting 
                                                `$7,962' for `$7,000'; 
                                                and

                                    ``(II) in subparagraph (B), by 
                                substituting `$63,250' for `$57,500'.
                    ``(B) Adjustment for inflation.--
                            ``(i) In general.--Each amount specified in 
                        subparagraph (A) for academic year 2025-2026 
                        and each succeeding academic year shall be 
                        deemed increased by a percentage equal to the 
                        annual adjustment percentage.
                            ``(ii) Annual adjustment percentage 
                        defined.--In this subparagraph, the term 
                        `annual adjustment percentage', as applied to 
                        an academic year, means the estimated 
                        percentage change in the Consumer Price Index 
                        (as determined by the Secretary, using the 
                        definition in section 478(f) or the most recent 
                        calendar year ending prior to the beginning of 
                        that academic year).''.

                         TITLE III--TRUST FUND

SEC. 301. SUPPLEMENTAL FEDERAL PELL GRANT PROGRAM.

    Section 401(b) of the Higher Education Act of 1965 (20 U.S.C. 
1070a(b)), as amended by section 703 of the FAFSA Simplification Act 
(title VII of division FF of Public Law 116-260) and the FAFSA 
Simplification Act Technical Corrections Act (Public Law 117-103), is 
further amended by adding at the end the following:
            ``(10) Supplemental pell grants using excess trust fund 
        amounts.--For any award year for which the Secretary elects to 
        use the excess amounts (or a portion of such excess amounts) 
        described in section 494A(c) to carry out a Supplemental Pell 
        Grant Program under this paragraph, the Secretary shall--
                    ``(A) award each student that receives a Federal 
                Pell grant under this subpart for such award year, an 
                additional Federal Pell Grant in an amount that--
                            ``(i) bears the same relationship to such 
                        excess amount (or such portion) as the amount 
                        of the Federal Pell Grant such student receives 
                        under this subpart (excluding this paragraph) 
                        for such award year bears to the total amount 
                        awarded in Federal Pell Grants under this 
                        subpart (excluding this paragraph) for such 
                        award year; and
                            ``(ii) may--
                                    ``(I) exceed the total maximum 
                                Federal Pell Grant available for such 
                                award year; and
                                    ``(II) be lower than the minimum 
                                Federal Pell Grant (as defined in 
                                section (a)(2)(F)) for such award year; 
                                and
                    ``(B) ensure that--
                            ``(i) in the case of a student awarded an 
                        additional Federal Pell Grant under 
                        subparagraph (A) for an award year, the total 
                        amount of Federal Pell Grants awarded to such 
                        student under this subpart (including such 
                        additional Federal Pell Grant) for such award 
                        year may exceed the total maximum Federal Pell 
                        Grant available for such award year; and
                            ``(ii) any period of study covered by an 
                        additional Federal Pell Grant awarded under 
                        subparagraph (A) shall not be included in 
                        determining a student's duration limit under 
                        subsection (d)(5).''.

SEC. 302. USE OF FUNDS FROM THE REPAYMENT OF FEDERAL STUDENT LOANS.

    Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1088 et seq.) is amended by adding at the end the following:

``SEC. 494A. USE OF FUNDS FROM THE REPAYMENT OF FEDERAL STUDENT LOANS.

    ``(a) In General.--The Secretary of Education shall, without 
further appropriation, deposit all amounts repaid on loans made, 
insured, or guaranteed under this title into the Education 
Affordability Trust Fund established under section 494B (referred to in 
this section as the `Trust Fund').
    ``(b) Use of Trust Fund Assets.--
            ``(1) In general.--The Trust Fund Board shall transfer the 
        profits from the investments of the Trust Fund to the Secretary 
        of Education, to pay for the administrative costs of the 
        Department of Education in making loans under part D, including 
        loans under section 460A(b), to all eligible students (and the 
        eligible parents of such students) in attendance at 
        participating institutions of higher education selected by the 
        Secretary, to enable such students to pursue their courses of 
        study at such institutions, in the following amounts:
                    ``(A) During any period of time when the Trust Fund 
                has assets under management of $500,000,000 or more 
                over a 180-day period, 100 percent of such profits.
                    ``(B) During any period of time when the Trust Fund 
                has profits of less than $500,000,000, but more than or 
                equal to $400,000,000 over a 180-day period, 40 percent 
                of such profits.
                    ``(C) During any period of time when the Trust Fund 
                has profits of less than $400,000,000 but more than or 
                equal to $300,000,000 over a 180-day period, 10 percent 
                of such profits.
                    ``(D) During any period of time when the Trust Fund 
                has profits of less than $300,000,000 over a 180-day 
                period, 0 percent of such profits.
            ``(2) Profits defined.--In this subsection, the term 
        `profits' means the amount that the return on investment from 
        bond investments made by the Trust Fund exceeds the amount 
        repaid on loans and deposited into the Trust Fund under 
        subsection (a).
    ``(c) Use of Excess Amounts.--If the amounts required to be 
transferred under subsection (b) are in excess of the amounts needed to 
pay for the costs of the Department of Education described under 
subsection (b), the Secretary of Education may elect to use such excess 
amounts (or a portion of such excess amounts)--
            ``(1) to carry out the Supplemental Federal Pell Grant 
        Program under section 401(b)(10); and
            ``(2) for the Postsecondary Student Success Program 
        authorized under part B of title VII and for which the 
        Department issued a notice inviting applications in the Federal 
        Register on August 12, 2022 (87 Fed. Reg. 49811 et seq.), 
        except that, notwithstanding the terms and condition of such 
        program described in the notice--
                    ``(A) any institution of higher education defined 
                in section 101 or 102(a)(1)(B) is eligible to receive a 
                grant under the program if--
                            ``(i) the average cost of tuition to attend 
                        such institution for the 3 most recent academic 
                        years has not increased by more than 3 percent;
                            ``(ii) the institution provides an 
                        assurance that the average cost of tuition to 
                        attend such institution for the succeeding 3 
                        academic years will not increase by more than 3 
                        percent; or
                            ``(iii) the size of the endowment fund (as 
                        defined in section 312(c)) of the institution 
                        on the first day of the previous calendar year 
                        was not greater than $100,000,000; and
                    ``(B) grants under the program will be awarded on a 
                competitive basis, and the amount of any such grant 
                will be not less than $600,000, and not more than 
                $1,000,000.
    ``(d) Report and Testimony to Congress.--If the Secretary of 
Education elects to use excess amounts described under subsection (c) 
the Secretary shall provide to Congress a report on the use of such 
amounts (and provide testimony on such use) not later than 180 days 
after making use of such funds.''.

SEC. 303. EDUCATION AFFORDABILITY TRUST FUND.

    Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1088 et seq.) is further amended by adding at the end the following:

``SEC. 494B. EDUCATION AFFORDABILITY TRUST FUND.

    ``(a) Establishment.--There is established within the Department a 
trust fund to be known as the `Education Affordability Trust Fund' 
(referred to in this section as the `Trust Fund').
    ``(b) Board.--
            ``(1) In general.--The head of the Trust Fund shall be a 6-
        member Education Affordability Trust Fund Board (referred to in 
        this section as the `Board').
            ``(2) Appointment of members.--The members of the Board 
        shall be appointed by the President, by and with the advice and 
        consent of the Senate, from among individuals who--
                    ``(A) have experience and expertise in the 
                management of financial investments;
                    ``(B) have at least 10 years of experience in the 
                financial investment field;
                    ``(C) at least 3 of which have experience working 
                with rural lenders, historically disenfranchised 
                groups, or low-income communities; and
                    ``(D) are not currently an elected official.
            ``(3) Disqualifications for appointments.--
                    ``(A) Lobbying.--No individual required to register 
                as a lobbyist under section 4 of the Lobbying 
                Disclosure Act of 1995 (2 U.S.C. 1603) may be appointed 
                to, or serve on, the Board.
                    ``(B) Incompatible office.--No member of the Board 
                may hold or may have held the position of Member of the 
                House of Representatives or Senator, may hold the 
                position of officer or employee of the House of 
                Representatives, Senate, or instrumentality or other 
                entity of the legislative branch, or may have held such 
                a position within 4 years of the date of appointment.
            ``(4) Term.--
                    ``(A) In general.--The members of the Board shall 
                serve 6-year terms, staggered such that the terms of 2 
                members ends every 2 years.
                    ``(B) Political affiliation.--The 2 members serving 
                terms that end at the same time may not be members of 
                the same political party.
                    ``(C) Members take office together.--With respect 
                to the 2 individuals appointed to fill terms ending at 
                the same time, neither individual may begin serving as 
                a member of the Board until both have been appointed 
                and confirmed by the Senate.
                    ``(D) Authority to serve until a successor is 
                appointed.--Upon the expiration of a term of a member 
                of the Board, that member shall continue to serve until 
                a successor is appointed.
                    ``(E) Limitation.--An individual may only serve as 
                a member of the Board for a maximum of 2 terms.
                    ``(F) Removal for cause.--The President may remove 
                a member of the Board only for inefficiency, neglect of 
                duty, or malfeasance in office.
            ``(5) Deadline for initial appointments.--The initial 
        members of the Board shall be appointed no later than 90 days 
        after the date of enactment of this section.
            ``(6) Chair.--Each member of the Board shall serve as the 
        Chair of the Board during the final year of the term for which 
        the member is appointed.
            ``(7) Conflicts of interest.--Each member of the Board 
        shall, with respect to entities in which the Trust Fund 
        invests, either divest any interest in such entities or place 
        such interests into a blind trust.
            ``(8) Meetings.--
                    ``(A) In general.--The Board shall meet no less 
                than once per quarter.
                    ``(B) Participation by fund managers.--The fund 
                manager appointed under subsection (c) shall attend not 
                less than 2 meetings of the Board each year, to discuss 
                forecasting and current investment performance.
                    ``(C) Emergency meeting requirement.--If, once the 
                assets under management of the Trust Fund have reached 
                $500,000,000,000, the assets under management of the 
                Trust Fund drops below $300,000,000,000, the Board 
                shall immediately hold an emergency meeting to discuss 
                ensuring the long-term solvency of the Trust Fund.
            ``(9) Voting.--Investment guidelines shall be adopted by a 
        unanimous vote of the entire Board. All other decisions of the 
        Board shall be decided by a majority vote. All decisions of the 
        Board shall be entered upon the records of the Board.
            ``(10) Compensation.--While serving on the business of the 
        Board (including travel time), a member of the Board shall be 
        entitled to compensation at the per diem equivalent of the rate 
        provided for level IV of the Executive Schedule under section 
        5315 of title 5, United States Code, and while so serving away 
        from home and the member's regular place of business, a member 
        may be allowed travel expenses, as authorized by the Chair of 
        the Board.
    ``(c) Powers and Responsibilities of the Board.--
            ``(1) Appointment of fund managers.--
                    ``(A) In general.--The Board shall appoint 
                independent fund managers from among individuals who 
                have met such ethics vetting requirements as the Board 
                may establish.
                    ``(B) Failure to make a unanimous appointment.--If 
                the Board fails to make an appointment under 
                subparagraph (A), the Chair shall, not later 10 days 
                after the date of such failure, make the appointment.
                    ``(C) Initial fund managers.--The Board shall make 
                the initial appointment of independent fund managers 
                under subparagraph (A) not later than 60 days after the 
                date on which all members of the Board are first 
                appointed.
            ``(2) Other duties.--The Board shall--
                    ``(A) retain independent advisers to assist it in 
                the formulation and adoption of its investment 
                guidelines;
                    ``(B) pay the administrative expenses of the Trust 
                Fund from the assets in the Trust Fund; and
                    ``(C) discharge their duties (including the voting 
                of proxies) with respect to the assets of the Trust 
                Fund solely in the interest of the Trust Fund and 
                through it, the participants and beneficiaries of the 
                programs funded under this Act--
                            ``(i) for the exclusive purpose of--
                                    ``(I) providing zero-interest 
                                Federal student loans to existing and 
                                future borrowers; and
                                    ``(II) defraying reasonable 
                                expenses of administering the functions 
                                of the Trust Fund;
                            ``(ii) with the care, skill, prudence, and 
                        diligence under the circumstances then 
                        prevailing that a prudent person acting in a 
                        like capacity and familiar with such matters 
                        would use in the conduct of an enterprise of a 
                        like character and with like aims;
                            ``(iii) by diversifying investments so as 
                        to minimize the risk of large losses and to 
                        avoid disproportionate influence over a 
                        particular industry or firm, unless under the 
                        circumstances it is clearly prudent not to do 
                        so; and
                            ``(iv) in accordance with Trust Fund 
                        governing documents and instruments insofar as 
                        such documents and instruments are consistent 
                        with this Act.
            ``(3) Prohibitions with respect to members of the board.--
        No member of the Board shall--
                    ``(A) deal with the assets of the Trust Fund in the 
                member's own interest or for the member's own account;
                    ``(B) in an individual or in any other capacity act 
                in any transaction involving the assets of the Trust 
                Fund on behalf of a party (or represent a party) whose 
                interests are adverse to the interests of the Trust 
                Fund or the interests of borrowers; or
                    ``(C) receive any consideration for the member's 
                own personal account from any party dealing with the 
                assets of the Trust Fund.
            ``(4) Audit and report.--
                    ``(A) Audit.--The Board shall annually engage an 
                independent qualified public accountant to audit the 
                financial statements of the Trust Fund.
                    ``(B) Report to congress.--
                            ``(i) In general.--The Board shall submit 
                        an annual management report to the Secretary of 
                        Education, the Secretary of the Treasury, the 
                        President, and the Congress not later than 180 
                        days after the end of each fiscal year, 
                        including--
                                    ``(I) a statement of financial 
                                position, including the total amount in 
                                the Trust Fund;
                                    ``(II) a statement of operations;
                                    ``(III) a statement of cash flows;
                                    ``(IV) a breakdown of the 
                                investments made by the Trust Fund, 
                                including by type;
                                    ``(V) a statement on internal 
                                accounting and administrative control 
                                systems;
                                    ``(VI) the report resulting from an 
                                audit of the financial statements of 
                                the Trust Fund conducted under 
                                subparagraph (A); and
                                    ``(VII) any other comments and 
                                information necessary to inform the 
                                Congress about the operations and 
                                financial condition of the Trust Fund.
                            ``(ii) Public availability of report.--The 
                        Board shall make each report required under 
                        this subparagraph available to the public, 
                        including on the website of the Department of 
                        Education.
            ``(5) Rules and administrative powers.--The Board shall 
        have the authority to make rules to govern the operations of 
        the Trust Fund, employ professional staff, and contract with 
        outside advisers to provide legal, accounting, investment 
        advisory, or other services necessary for the proper 
        administration of this section. In the case of contracts with 
        investment advisory services, compensation for such services 
        may be on a fixed contract fee basis or on such other terms and 
        conditions as are customary for such services.
            ``(6) Financial disclosure reports.--Each Member and 
        employee of the Board shall file with the Secretary of 
        Education and appropriate committees of Congress financial 
        disclosure reports that comply with the requirements under 
        subchapter I of chapter 131 of title 5, United States Code.
            ``(7) Funding.--The expenses of the Trust Fund and the 
        Board incurred under this section shall be paid from the Trust 
        Fund.
    ``(d) Duties of the Fund Managers.--
            ``(1) In general.--The fund managers shall invest the 
        assets of the Trust Fund in a manner consistent with the 
        investment guidelines adopted by the Board.
            ``(2) Instruments.--The fund managers shall invest the 
        amounts in the Trust Fund in bonds that consist of the 
        following:
                    ``(A) Municipal bonds.
                    ``(B) Bonds issued by the Department of the 
                Treasury, which may not make up more than 40 percent of 
                the total investments of the Trust Fund.
                    ``(C) Other Federal bonds.
                    ``(D) Bonds issued by the Federal Home Loan 
                Mortgage Corporation, the Federal National Mortgage 
                Association, or a Federal Home Loan Bank.
                    ``(E) International bonds, which may not make up 
                more than 10 percent of the total investments of the 
                Trust Fund.
                    ``(F) Corporate bonds, which may not make up more 
                than 10 percent of the total investments of the Trust 
                Fund.
            ``(3) Investment requirements.--
                    ``(A) Ratings.--The investments of the Trust Fund 
                shall consist--
                            ``(i) only of investments rated at least 
                        Baa1 or BBB+ by Moody's, S&P, or Fitch Ratings;
                            ``(ii) at least 80 percent of investments 
                        rated at least A3 or A- by Moody's, S&P, or 
                        Fitch Ratings;
                            ``(iii) at least 60 percent of investments 
                        rated at least Aa1 or AA+ by Moody's, S&P, or 
                        Fitch Ratings; and
                            ``(iv) at least 40 percent of investments 
                        rated at least Aaa or AAA by Moody's, S&P, or 
                        Fitch Ratings.
                    ``(B) Diversification.--The investments of the 
                Trust Fund shall be diversified to minimize the risk of 
                large losses and to avoid disproportionate influence 
                over a particular region, industry, or firm, unless 
                under the circumstances it is clearly prudent not to do 
                so.
                    ``(C) Limitation on investing in certain 
                countries.--The Trust Fund may not invest in entities 
                or subsidiaries of entities that are--
                            ``(i) based in any country that does not 
                        have diplomatic relations with the United 
                        States;
                            ``(ii) based in any country, the government 
                        of which is subject to sanctions by the United 
                        States; or
                            ``(iii) on a sanctions list of the 
                        Department of the Treasury.
            ``(4) Short-term initial investments.--During the 10-year 
        period beginning on the date of enactment of this section, the 
        fund managers shall prioritize investments in bonds with a 
        maturity date of less than 10 years.
    ``(e) Means of Financing.--For purposes of the Congressional Budget 
Act of 1974 (2 U.S.C. 621 et seq.), the Balanced Budget and Emergency 
Deficit Control Act of 1985 (2 U.S.C. 900 et seq.), and chapter 11 of 
title 31, United States Code, and notwithstanding section 20 of Office 
of Management and Budget Circular No. A-11, or any successor thereto, 
earnings of the Trust Fund shall be calculated on an accrual basis.''.

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. IMPLEMENTATION.

    In carrying out the amendments made by titles I, II, and III, the 
Secretary of Education may waive the application of--
            (1) the master calendar requirements under section 482 of 
        the Higher Education Act of 1965 (20 U.S.C. 1089); and
            (2) negotiated rulemaking under section 492 of the Higher 
        Education Act of 1965 (20 U.S.C. 1098a).
                                 <all>