Congress zeroes out student loan interest, bets on trust fund to sustain it
H.R. 8045 — Student Loan Interest Elimination Act · Filed by Joe Courtney (D-CT) · 8 cosponsors · Introduced Mar 24, 2026 · Referred to committee
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What it does
This bill eliminates interest on federal student loans starting July 1, 2026, and allows borrowers to refinance private student loans into zero-interest federal consolidation loans. It also ends subsidized loans for new borrowers after June 30, 2026, and creates an Education Affordability Trust Fund that invests repayments from existing loans to fund supplemental Pell Grants and other student aid programs.
Why we flagged it
The bill's core mechanism is eliminating interest on federal student loans and creating a self-sustaining trust fund from loan repayments. While it includes provisions on loan limits and Pell Grants, the dominant functional purpose is debt relief and a new federal financial vehicle.
- Section 302 repurposes Trust Fund excess assets for a competitive grant program to institutions with tuition caps or small endowments—substantively unrelated to zero-interest loan mechanics.
- Section 203 adds automatic annual inflation adjustments to borrowing limits, a policy change not directly tied to interest elimination or trust fund operations.
What the text implies
- The Trust Fund's investment mandate (bonds only, no equities) and asset thresholds create a complex mechanism that may limit growth and require ongoing congressional attention to remain solvent if loan repayment rates decline.
- Elimination of subsidized loans for new borrowers after June 2026 shifts the subsidy burden entirely to the Trust Fund model; if repayments fall short, the program's sustainability is at risk and may require future appropriations.
The full analysis lists 5 implications of this text.
Who stands to gain
Student loan borrowers (primary); Lower-income students (Pell Grant expansion); Private student loan servicers (through refinancing discharge)