The bill would require certain colleges with endowment funds worth at least $2.5 billion to pay penalties if their former students have high rates of federal student loan default, delinquency, or underpayment. The penalty thresholds would decrease from 2025 through 2030. It would also raise the tax on investment income for certain large colleges that charge tuition above an inflation-adjusted 2025 level. The bill says an institution’s penalty would not change borrowers’ rights or obligations. It has been referred to House committees and is not described as enacted.
If you borrowed federal student loans to attend a covered college, the proposed penalties would not change your loan obligations. The bill does not specify a direct change to student aid or loan repayment terms.
Covered colleges could owe penalties based on the outstanding balances of loans counted in the relevant rates. Some large colleges that meet the bill’s tuition and asset tests could face a 25% tax rate on net investment income instead of 1.4%. The bill provides no estimate of total payments.
No publicly available information.
No publicly available information.