H.R. 9166: Student Loan Refinancing Act of 2026 (119th Congress) Bill Summary

This bill would create a new federal program allowing certain borrowers to refinance eligible federal student loans into new federal Direct loans with updated interest rates.

What loans could be refinanced

The program would apply to:

Federal Direct Loans already held by borrowers, including Stafford, Unsubsidized Stafford, PLUS, and Consolidation loans.
Older FFEL loans made, insured, or guaranteed under the Federal Family Education Loan program, which would be paid off and replaced with new federal Direct loans.

How the refinancing would work

A borrower would have to apply for refinancing. If approved, the Department of Education would pay off the existing loan balance, including unpaid principal, accrued unpaid interest, and late charges, and issue a new refinanced loan for the same amount.

The bill says these refinanced loans would generally keep the same type of loan as the original one, but FFEL loans would be converted into federal Direct loans.

Interest rates

The refinanced loans would have an interest rate tied to the rates available on the date the refinancing happens. In general:

Borrowers would get the current rate for the same type of federal student loan.
For consolidation loans, the new rate would be a weighted average based on the loans that were originally combined, with some limits so the rate cannot be higher than the original rate for each component loan.
The interest rate would be fixed for the life of the refinanced loan.

Terms of the refinanced loans

The bill says refinancing would not automatically extend the repayment period. Borrowers would generally keep the same repayment term and plan they already had, unless they choose a different eligible repayment plan later.

It would also:

Not charge origination fees for the refinancing.
Not apply regular federal loan limits to the refinanced amount.
Limit a loan to being refinanced no more than twice in a 10-year period.

Effects on existing repayment benefits

The bill would change how certain forgiveness or repayment programs count past payments on refinanced loans:

For some loans refinanced before July 1, 2028, past payments on the original loan would count toward income-contingent repayment calculations.
For Public Service Loan Forgiveness and income-based repayment, payments made on the original loan could still count in some cases.
For loans originally made under the FFEL program and then refinanced, only payments made after refinancing would count for certain public service repayment purposes.

Borrower notification

The Department of Education, working with the Consumer Financial Protection Bureau, would have to run a campaign to inform borrowers that refinancing is available. Loan servicers would also have to provide borrowers with consumer information about the program.