Student Loan Reform Act

The Student Loan Reform Act requires colleges to act as guarantors for student loans starting in July 2026, meaning schools would become directly responsible for repaying the debt if a student fails to pay. Under this program, institutions that agree to cosign loans would see their default rate thresholds raised from 30 percent to 40 percent, providing them with more flexibility regarding student repayment performance. If a borrower defaults and the loan remains unpaid for 90 days, the school must begin a ten-year repayment plan for the outstanding balance, though they can stop this obligation if the debt is rehabilitated or fully paid. Additionally, loans with institutional cosigners would receive a lower interest rate determined by the Secretary of Education based on the reduced risk to the lender.