Student Loan Interest Elimination Act

Plain-English Summary

This bill would make significant changes to how federal student loans work. Most notably, it would eliminate interest on student loans entirely, meaning borrowers would only need to pay back the actual amount of money they borrowed — nothing more. Currently, interest causes the total amount owed to grow over time, often leading borrowers to repay far more than they originally received. Under this bill, that would no longer happen.

The bill would also create a new government fund called the Education Affordability Trust Fund, which would likely be used to help cover the costs of eliminating interest and supporting student loan programs. Additionally, the bill would raise the limits on how much students can borrow each year and over the course of their education. This means students would have access to more federal loan money to help pay for college, though the specific new dollar amounts are not detailed in the available information.

The people most directly affected would be current and future student loan borrowers — particularly college students and recent graduates carrying federal student debt. Eliminating interest could save borrowers thousands of dollars over the life of their loans. Higher borrowing limits could also help students cover rising tuition and education costs. Taxpayers and the federal government would also be affected, since eliminating interest means the government collects less money back from loans, which could have significant budget implications.

The bill has been introduced in the House of Representatives and referred to two committees — Education and Workforce, and Budget — where it will be reviewed before any further action is taken.