The Parents Opt-in Protection Act aims to make federal student loans more affordable by eliminating interest, allowing loan refinancing, and creating a tiered interest rate system. It also establishes an Education Affordability Trust Fund to help cover administrative costs and potentially fund additional grants.
Latest Action
Referred to the Committee on Education and the Workforce, and in addition to the Committee on the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
AI Summary
Plain-English explanation of this bill
The Parents Opt-in Protection Act aims to make federal student loans more affordable by eliminating interest, allowing loan refinancing, and creating a tiered interest rate system. It also establishes an Education Affordability Trust Fund to help cover administrative costs and potentially fund additional grants.
Last updated: 12/30/2025
Official Summary
Congressional Research Service summary
<p><strong>Student Loan Interest Elimination Act</strong></p><p>This bill makes changes to federal student loans, including to interest rates. </p><p>Specifically, the bill directs the Department of Education (ED) to establish and implement procedures to (1) modify the terms of Federal Direct Loans so that beginning on July 1, 2024, no interest shall accrue on such a loan; and (2) allow a borrower to opt out of this loan modification.</p><p>Additionally, ED must establish and implement procedures to (1) refinance eligible loans that are not Federal Direct Loans (e.g., privately held Federal Family Education Loans and Perkins Loans), and (2) allow a borrower to opt out of this loan refinancing. The bill outlines the terms and conditions of these refinanced loans, including by prohibiting ED from charging origination fees and specifying that no interest shall accrue on these loans.</p><p>Next, the bill creates a tiered interest rate (based on the borrower's total adjusted available income) for federal student loans made on or after July 1, 2024. The bill caps this interest rate at 4%.</p><p>The bill establishes the Education Affordability Trust Fund. ED must deposit all payments made on federal student loans into this trust fund. The Trust Fund Board, as established by this bill, must transfer the profits from investments of this trust fund to ED to pay for the administrative costs of carrying out federal student loan programs.</p><p>The bill allows ED to use excess amounts of funds in the trust fund to carry out a Supplemental Pell Grant Program.</p>
Key Points
Main provisions of the bill
Eliminates interest on federal student loans starting in July 2024, allowing borrowers to opt out if they choose
Allows refinancing of non-federal student loans with no origination fees and no interest
Establishes a tiered interest rate system for new federal student loans, capped at 4%
Creates an Education Affordability Trust Fund to cover administrative costs and potentially fund additional grants
How This Impacts Americans
Potential effects on citizens and communities
If passed, this bill would significantly reduce the long-term costs of federal student loans for millions of borrowers. It would especially benefit lower-income students and graduates by eliminating interest and providing more affordable repayment options. The Trust Fund could also lead to increased financial aid and grant opportunities, further improving college affordability.
Policy Areas
Primary Policy Area
Education
Scope & Jurisdiction
Jurisdiction Level
federal
Congressional Session
119th Congress
Citation Reference
4986, 119th Congress (2025). "Parents Opt-in Protection Act". Source: Voter's Right Platform. https://votersright.org/bills/118-hr-4986
