H.R. 7232: Alleviating Intergenerational Debt Act

The Alleviating Intergenerational Debt Act (AID Act) proposes amendments to the Higher Education Act of 1965. Its primary focus is on calculating student loan allowances to help offset the financial burden of student loans on parents who support dependent students.

Key Provisions

Student Loan Allowance Calculation

Starting from the award year 2027-2028, the bill introduces a student loan allowance that will be part of the process used to determine a student's aid index. This allowance will be calculated as the lesser of:

• $4,000
• 15% of the outstanding student loan debt held by single parents or married parents combined.

There are specific rules regarding eligibility for this allowance:

• Single parents with an adjusted gross income exceeding $200,000 will not qualify.
• Married parents with a combined adjusted gross income over $400,000 will also be ineligible.

Definitions

Under the bill:

• Federal student loan refers to any loan made, insured, or guaranteed under the Higher Education Act.
• Outstanding student loan debt is defined as the total amount of principal, interest, and fees owed on Federal student loans as of the time the allowance is determined.

Adjustment to Allowance Amounts

Beginning with the award year 2028-2029 and for each subsequent year, the Secretary of Education will publish a revised table outlining updated student loan allowances. The new figures will account for inflation as indicated by the percentage increase in the Consumer Price Index from April 2022 to the preceding April each year. Adjusted amounts will be rounded to the nearest $10.

Reporting Requirements

The Secretary of Education must report annually to Congress, starting by July 1, 2028, on the impacts of these amendments. The reports will include:

• The number and percentage of dependent students whose aid index calculations include the student loan allowance.
• Breakdown of this data by those eligible and not eligible for Federal Pell Grants.
• The average amount of the student loan allowance utilized.

Summary

The AID Act aims to provide financial relief for families with student loan debt by integrating a student loan allowance into financial aid formulas. It sets parameters around eligibility and mandates annual reporting on outcomes related to the changes proposed.

Relevant Companies

• None found