H.R. 8045

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8045 Introduced in House (IH)]

<DOC>

119th CONGRESS
2d Session
H. R. 8045

To amend the Higher Education Act of 1965 to eliminate interest on 
student loans, establish the Education Affordability Trust Fund, 
increase annual and aggregate loan limits, and for other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

March 24, 2026

Mr. Courtney (for himself and Ms. Norton) introduced the following 
bill; which was referred to the Committee on Education and 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

_______________________________________________________________________

A BILL

To amend the Higher Education Act of 1965 to eliminate interest on 
student loans, establish the Education Affordability Trust Fund, 
increase annual and aggregate loan limits, and for other purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Student Loan 
Interest Elimination Act''.
(b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
TITLE I--LOAN MODIFICATION AND REFINANCING FOR EXISTING FEDERAL STUDENT 
LOANS

Sec. 101. Program authority.
Sec. 102. Program for the loan modification of eligible Federal direct 
loans, and refinancing of other Federal 
student loan.
TITLE II--TERMS AND CONDITIONS FOR NEW FEDERAL STUDENT LOANS

Sec. 201. Applicable rates of interest for loans made on or after July 
1, 2026.
Sec. 202. Termination of interest subsidized loans.
Sec. 203. Annual and aggregate loan limits.
TITLE III--TRUST FUND

Sec. 301. Supplemental Federal Pell Grant Program.
Sec. 302. Use of funds from the repayment of Federal student loans.
Sec. 303. Education Affordability Trust Fund.
TITLE IV--GENERAL PROVISIONS

Sec. 401. Implementation.

TITLE I--LOAN MODIFICATION AND REFINANCING FOR EXISTING FEDERAL STUDENT 
LOANS

SEC. 101. PROGRAM AUTHORITY.

Section 451(a) of the Higher Education Act of 1965 (20 U.S.C. 
1087a(a)) is amended--
(1) by striking ``There are hereby made available'' and 
inserting ``After using funds available from the Education 
Affordability Trust Fund in accordance with section 494A, there 
are hereby made available'';
(2) by striking ``and (2)'' and inserting ``(2)''; and
(3) by inserting ``; and (3) to make loans under section 
460A(b)'' after ``section 459A''.

SEC. 102. PROGRAM FOR THE LOAN MODIFICATION OF ELIGIBLE FEDERAL DIRECT 
LOANS, AND REFINANCING OF OTHER FEDERAL STUDENT LOANS.

(a) Loan Modification and Refinancing.--Part D of title IV of the 
Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by 
adding at the end the following:

``SEC. 460A. PROGRAM FOR THE LOAN MODIFICATION OF ELIGIBLE FEDERAL 
DIRECT LOANS, AND REFINANCING OF OTHER FEDERAL STUDENT 
LOANS.

``(a) Federal Direct Loan Modification.--The Secretary shall 
establish and implement, with respect to each borrower of an eligible 
Federal direct loan, procedures to--
``(1) modify, without any action from the borrower, the 
terms of such loan so that beginning on July 1, 2026, no 
interest shall accrue on such loan; and
``(2) allow the borrower, at any time, to opt out of the 
loan modification under paragraph (1) for such loan.
``(b) Refinancing Eligible Non-Federal Direct Loans as Federal 
Direct Consolidation Loans.--
``(1) In general.--The Secretary shall establish and 
implement, with respect to each borrower of an eligible non-
Federal direct loan, procedures to--
``(A) refinance such loan in accordance with 
procedures listed in paragraph (2); and
``(B) allow the borrower, at any time, to opt out 
of the loan refinancing under subparagraph (A) for such 
loan.
``(2) Procedures.--In refinancing an eligible non-Federal 
direct loan with respect to a borrower of such loan, the 
Secretary shall carry out the following:
``(A) The Secretary shall make a Federal Direct 
Consolidation Loan under this subsection, in an amount 
equal to the sum of the unpaid principal, accrued 
unpaid interest, and late charges of the eligible non-
Federal direct loan.
``(B) The Secretary shall pay the proceeds of such 
Federal Direct Consolidation Loan to the holder of the 
eligible non-Federal direct loan, in order to discharge 
the borrower from any remaining obligation with respect 
to such eligible non-Federal direct loan.
``(3) Terms and conditions of refinanced loans.--
``(A) In general.--A Federal Direct Consolidation 
Loan made under this subsection shall have the same 
terms and conditions as a Federal Direct Consolidation 
Loan that was not made under this subsection, except--
``(i) notwithstanding any other provision 
of this title, a borrower of a Federal Direct 
Consolidation Loan made under this subsection 
may repay such loan under any repayment plan or 
program described in section 455(d)(1);
``(ii) that the Secretary may adjust such 
terms and conditions as necessary to enable the 
borrower to access loan forgiveness or other 
benefits available to the borrower under the 
loan before refinancing under this subsection, 
in any case where such benefits are more 
generous than provided under a Federal Direct 
Consolidation Loan under this subsection; and
``(iii) as otherwise provided in this 
subsection.
``(B) No origination fees.--Notwithstanding section 
455(c), the Secretary may not charge a borrower of a 
loan made under this subsection an origination fee for 
such loan.
``(C) Interest rates.--No interest shall accrue on 
a loan that is made under this subsection.
``(D) No automatic extension of repayment period.--
A loan made under this subsection shall not result in 
the extension of the duration of the repayment period 
of the original loan, and the borrower shall retain the 
same repayment term that was in effect on the original 
loan. Nothing in this paragraph shall be construed to 
prevent a borrower from electing a different repayment 
plan at any time in accordance with section 455(d)(3).
``(E) Rule of construction.--Nothing in this 
section shall be construed to prevent a borrower of a 
Federal student loan described in subparagraph (B) or 
(C) of subsection (d)(2) from consolidating such loans 
with other loans eligible for consolidation under this 
section, or to require such a borrower to consolidate 
such loans with other Federal student loans into a 
single consolidation loan under this section.
``(c) Report.--Not later than 1 year after the date of the 
enactment of the Student Loan Interest Elimination Act, and on an 
annual basis thereafter, the Secretary shall submit a report to the 
authorizing committees that includes--
``(1) the total number of borrowers whose loans have been 
modified or refinanced under this section during the preceding 
year; and
``(2) the number of such borrowers who are delinquent in 
making payments on such a loan.
``(d) Definitions.--In this section:
``(1) Eligible federal direct loan.--The term `eligible 
Federal direct loan' means--
``(A) a loan made under this part, and first 
disbursed before July 1, 2026;
``(B) a loan made, insured, or guaranteed under 
part B, and which is held by the Secretary;
``(C) a loan made under part E, and which is held 
by the Secretary; or
``(D) a loan made under subpart 1 of part A of 
title VII of the Public Health Service Act (42 U.S.C. 
292 et seq.), and which is held by the Secretary.
``(2) Eligible non-federal direct loan.--The term `eligible 
non-Federal direct loan' means a loan--
``(A) made, insured, or guaranteed under part B, 
and which is not held by the Secretary;
``(B) made under part E, and which is not held by 
the Secretary; or
``(C) made under--
``(i) subpart I of part A of title VII of 
the Public Health Service Act (42 U.S.C. 292 et 
seq.), and which is not held by the Secretary;
``(ii) subpart II of part A of title VII of 
the Public Health Service Act (42 U.S.C. 292q 
et seq.), and in the case of a loan made under 
section 723 of such Act (42 U.S.C. 292s), only 
if the borrower of the loan has completed the 
full period of service, practice, or training 
that was imposed as a condition on receipt of 
such loan; or
``(iii) part E of title VIII of the Public 
Health Service Act (42 U.S.C. 297a et seq.), 
and in the case of a loan made under section 
846A of such Act (42 U.S.C. 297n-1), only if 
the borrower has completed the 4 years of full-
time employment as a faculty member at a school 
of nursing as described in subsection (c)(3) of 
such section 846A.
``(3) Original loan.--The term `original loan', used with 
respect to a Federal Direct Consolidation Loan made under 
subsection (b), means a loan for which a borrower's liability 
is discharged by such Federal Direct Consolidation Loan.''.
(b) Income-Contingent Repayment.--Section 455(e) of the Higher 
Education Act of 1965 (20 U.S.C. 1087e(e)) is amended by adding at the 
end the following new paragraph:
``(9) Special rule for refinanced loans.--For purposes of 
paragraph (7), the period of time during which a borrower of a 
Federal Direct Consolidation Loan made under section 460A(b) 
has made monthly payments shall be calculated in the manner 
described in section 493C(f).''.
(c) Repayment Assistance Plan.--Section 455(q)(1) of the Higher 
Education Act of 1965 (20 U.S.C. 1087e(q)(1)) is amended by adding at 
the end the following:
``(H) For purposes of subparagraph (E), the period 
of time during which a borrower of a Federal Direct 
Consolidation Loan made under section 460A(b) has made 
monthly payments shall be calculated in the manner 
described in section 493C(f).''.
(d) Income-Based Repayment.--
(1) Exclusion from excepted consolidation loan.--Section 
493C(a)(2)(B) of the Higher Education Act of 1965 (20 U.S.C. 
1098e(a)(2)(B)) is amended by inserting ``a Federal Direct 
Consolidation Loan under section 460A, and does not include'' 
after ``does not include''.
(2) Calculation of qualifying payments.--Section 493C of 
the Higher Education Act of 1965 (20 U.S.C. 1098e) is amended 
by adding at the end the following:
``(f) Special Rule for Refinanced Loans.--
``(1) Refinanced federal direct consolidation loans.--In 
calculating the period of time during which a borrower of a 
Federal Direct Consolidation Loan that is made under section 
460A(b) has made monthly payments for the purposes of 
subsection (b)(7), the Secretary shall--
``(A) review the borrower's payment history to 
identify each component loan of such Federal Direct 
Consolidation Loan;
``(B) for each such component loan--
``(i) calculate the weighted factor of the 
component loan, which shall be the factor that 
represents the portion of such Federal Direct 
Consolidation Loan that is attributable to such 
component loan; and
``(ii) determine the number of qualifying 
monthly payments made on such component loan 
before consolidation;
``(C) calculate the number of qualifying monthly 
payments determined under subparagraph (B)(ii) with 
respect to a component loan that shall be deemed as 
qualifying monthly payments made on the Federal Direct 
Consolidation Loan by multiplying--
``(i) the weighted factor of such component 
loan as determined under subparagraph (B)(i); 
by
``(ii) the number of qualifying monthly 
payments made on such component loan as 
determined under subparagraph (B)(ii); and
``(D) calculate and inform the borrower of the 
total number of qualifying monthly payments with 
respect to the component loans of the Federal Direct 
Consolidation Loan that shall be deemed as qualifying 
monthly payments made on the refinanced Federal 
Consolidation Loan, by--
``(i) adding together the result of each 
calculation made under subparagraph (C) with 
respect to each such component loan; and
``(ii) rounding the number determined under 
clause (i) to the nearest whole number.
``(2) Component loan defined.--In this subsection, the term 
`component loan', used with respect to a Federal Direct 
Consolidation Loan, means a loan for which the liability was 
discharged by the proceeds of such Federal Direct Consolidation 
Loan.''.
(e) Conforming Amendments.--The Higher Education Act of 1965 (20 
U.S.C. 1001 et seq.) is amended--
(1) in section 455(d)(1), by striking ``shall offer a 
borrower of a loan'' and inserting ``shall offer a borrower of 
a Federal Direct Consolidation Loan under section 460A (with 
respect to the Federal Direct Consolidation Loan under such 
section only, and without regard to when other loans may have 
been received), and shall offer a borrower of a loan'';
(2) in section 455(d)(7)--
(A) in the matter preceding subparagraph (A), by 
striking ``Beginning'' and inserting ``Subject to 
subparagraph (F), beginning'';
(B) in subparagraph (C), by striking ``A borrower 
is required'' and inserting ``Subject to subparagraph 
(F), a borrower is required'';
(C) in subparagraph (E)(ii)(II), by inserting 
``(excluding such loans under section 460A)'' after ``a 
Federal Direct Consolidation Loan''; and
(D) by adding at the end the following:
``(F) Consolidation loans under section 460a.--
Notwithstanding any other provision of this title, 
including this subsection, a borrower of a Federal 
Direct Consolidation Loan under section 460A shall be 
eligible to repay the Federal Direct Consolidation Loan 
under such section only under any repayment plan or 
program described under paragraph (1), without regard 
to when other loans may have been received.''; and
(3) in section 428C(a)(3)(B)(i)(V) (20 U.S.C. 1078-
3(3)(B)(i)(V))--
(A) by striking the period at the end of item (cc) 
and inserting a semicolon;
(B) by striking the period at the end of item (dd) 
and inserting ``; or''; and
(C) by adding at the end the following:
``(ee) for the purpose of 
obtaining a Federal Direct 
Consolidation Loan under 
section 460A(b).''.

TITLE II--TERMS AND CONDITIONS FOR NEW FEDERAL STUDENT LOANS

SEC. 201. APPLICABLE RATES OF INTEREST FOR LOANS MADE ON OR AFTER JULY 
1, 2026.

Section 455(b)(8) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(b)(8)) is amended--
(1) in the paragraph heading, by inserting ``and before 
july 1, 2026'' after ``July 1, 2013'';
(2) in subparagraph (A), by inserting ``and before July 1, 
2026'' after ``July 1, 2013'';
(3) in subparagraph (B), by inserting ``and before July 1, 
2026'' after ``July 1, 2013'';
(4) in subparagraph (C), by inserting ``and before July 1, 
2026'' after ``July 1, 2013'';
(5) in subparagraph (D), by inserting ``and before July 1, 
2026'' after ``July 1, 2013'';
(6) by redesignating subparagraph (F) as subparagraph (G); 
and
(7) by inserting after subparagraph (E) the following:
``(F) New loans on or after july 1, 2026.--
Notwithstanding the preceding subparagraphs of this 
paragraph, for Federal Direct Unsubsidized Stafford 
Loans, Federal Direct PLUS Loans, and Federal Direct 
Consolidation Loans for which the first disbursement is 
made, or the application is received, on or after July 
1, 2026, the applicable rate of interest shall be 0 
percent on the unpaid principal balance of the loan.''.

SEC. 202. TERMINATION OF INTEREST SUBSIDIZED LOANS.

(a) Program Authority.--Section 451(a) of the Higher Education Act 
of 1965 (20 U.S.C. 1087a(a)) is amended by adding at the end the 
following: ``No new Federal Direct Stafford Loans, as referenced under 
section 455(a)(2)(A), may be made under this part after June 30, 2026, 
and no funds are authorized to be appropriated, or may be expended, 
under this Act or any other Act to make such Federal Direct Stafford 
Loans for which the first disbursement is after June 30, 2026.''.
(b) Termination of Authority.--Section 455(a) of the Higher 
Education Act of 1965 (20 U.S.C. 1087e(a)) is amended by adding at the 
end the following:
``(9) Termination of authority to make interest subsidized 
loans to any student.--Notwithstanding any provision of this 
part or part B, for any period of instruction beginning on or 
after July 1, 2026--
``(A) a student shall not be eligible to receive a 
Federal Direct Stafford Loan under this part; and
``(B) the maximum annual amount of Federal Direct 
Unsubsidized Stafford Loans such a student may borrow 
in any academic year (as defined in section 481(a)(2)) 
or its equivalent shall be the maximum annual amount 
for such student determined under section 428H, plus an 
amount equal to the amount of Federal Direct Stafford 
Loans the student would have received in the absence of 
this paragraph.''.

SEC. 203. ANNUAL AND AGGREGATE LOAN LIMITS.

Section 455(a) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(a)) is amended--
(1) in paragraph (4)--
(A) in subparagraph (A), in the matter preceding 
clause (i), by striking ``and (8)'' and inserting ``, 
(8), and (9)''; and
(B) in subparagraph (B), in the matter preceding 
clause (i), by striking ``and (8)'' and inserting ``, 
(8), and (9)'';
(2) in paragraph (6), by striking ``paragraph (8)'' and 
inserting ``paragraphs (8) and (9)''; and
(3) by adding at the end the following:
``(9) Adjustment for inflation.--
``(A) In general.--Each amount specified in 
paragraphs (4) and (6) shall, for any period of 
instruction beginning on or after July 1, 2027, be 
deemed increased by a percentage equal to the annual 
adjustment percentage.
``(B) Annual adjustment percentage defined.--In 
this paragraph, the term `annual adjustment 
percentage', as applied to an academic year, means the 
estimated percentage change in the Consumer Price Index 
(as determined by the Secretary, using the definition 
in section 478(f) or the most recent calendar year 
ending prior to the beginning of that academic 
year).''.

TITLE III--TRUST FUND

SEC. 301. SUPPLEMENTAL FEDERAL PELL GRANT PROGRAM.

Section 401(b) of the Higher Education Act of 1965 (20 U.S.C. 
1070a(b)) is amended by adding at the end the following:
``(10) Supplemental pell grants using excess trust fund 
amounts.--For any award year for which the Secretary elects to 
use the excess amounts (or a portion of such excess amounts) 
described in section 494A(c) to carry out a Supplemental Pell 
Grant Program under this paragraph, the Secretary shall--
``(A) award each student that receives a Federal 
Pell Grant under this subpart for such award year, an 
additional Federal Pell Grant in an amount that--
``(i) bears the same relationship to such 
excess amount (or such portion) as the amount 
of the Federal Pell Grant such student receives 
under this subpart (excluding this paragraph) 
for such award year bears to the total amount 
awarded in Federal Pell Grants under this 
subpart (excluding this paragraph) for such 
award year; and
``(ii) may--
``(I) exceed the total maximum 
Federal Pell Grant available for such 
award year; and
``(II) be lower than the minimum 
Federal Pell Grant (as defined in 
section (a)(2)(F)) for such award year; 
and
``(B) ensure that--
``(i) in the case of a student awarded an 
additional Federal Pell Grant under 
subparagraph (A) for an award year, the total 
amount of Federal Pell Grants awarded to such 
student under this subpart (including such 
additional Federal Pell Grant) for such award 
year may exceed the total maximum Federal Pell 
Grant available for such award year; and
``(ii) any period of study covered by an 
additional Federal Pell Grant awarded under 
subparagraph (A) shall not be included in 
determining a student's duration limit under 
subsection (d)(5).''.

SEC. 302. USE OF FUNDS FROM THE REPAYMENT OF FEDERAL STUDENT LOANS.

Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1088 et seq.) is amended by adding at the end the following:

``SEC. 494A. USE OF FUNDS FROM THE REPAYMENT OF FEDERAL STUDENT LOANS.

``(a) In General.--The Secretary of Education shall, without 
further appropriation, deposit all amounts repaid on loans made, 
insured, or guaranteed under this title into the Education 
Affordability Trust Fund established under section 494B (referred to in 
this section as the `Trust Fund').
``(b) Use of Trust Fund Assets.--
``(1) In general.--The Trust Fund Board shall transfer the 
assets from the investments of the Trust Fund to the Secretary 
of Education, to pay for the administrative costs of the 
Department of Education in making loans under part D, including 
loans under section 460A(b), to all eligible students (and the 
eligible parents of such students) in attendance at 
participating institutions of higher education selected by the 
Secretary, to enable such students to pursue their courses of 
study at such institutions, in the following amounts:
``(A) During any period of time when the Trust Fund 
has assets under management of $500,000,000 or more 
over a 180-day period, 100 percent of such assets.
``(B) During any period of time when the Trust Fund 
has assets of less than $500,000,000, but more than or 
equal to $400,000,000 over a 180-day period, 40 percent 
of such assets.
``(C) During any period of time when the Trust Fund 
has assets of less than $400,000,000 but more than or 
equal to $300,000,000 over a 180-day period, 10 percent 
of such assets.
``(D) During any period of time when the Trust Fund 
has assets of less than $300,000,000 over a 180-day 
period, 0 percent of such assets.
``(2) Assets defined.--In this subsection, the term 
`assets' means the amount that the return on investment from 
bond investments made by the Trust Fund exceeds the amount 
repaid on loans and deposited into the Trust Fund under 
subsection (a).
``(c) Use of Excess Amounts.--If the amounts required to be 
transferred under subsection (b) are in excess of the amounts needed to 
pay for the costs of the Department of Education described under 
subsection (b), the Secretary of Education may elect to use such excess 
amounts (or a portion of such excess amounts)--
``(1) to carry out the Supplemental Federal Pell Grant 
Program under section 401(b)(10); and
``(2) for the Postsecondary Student Success Program 
authorized under part B of title VII and for which the 
Department issued a notice inviting applications in the Federal 
Register on August 12, 2022 (87 Fed. Reg. 49811 et seq.), 
except that, notwithstanding the terms and condition of such 
program described in the notice--
``(A) any institution of higher education defined 
in section 101 or 102(a)(1)(B) is eligible to receive a 
grant under the program if--
``(i) the average cost of tuition to attend 
such institution for the 3 most recent academic 
years has not increased by more than 3 percent;
``(ii) the institution provides an 
assurance that the average cost of tuition to 
attend such institution for the succeeding 3 
academic years will not increase by more than 3 
percent; or
``(iii) the size of the endowment fund (as 
defined in section 312(c)) of the institution 
on the first day of the previous calendar year 
was not greater than $100,000,000; and
``(B) grants under the program will be awarded on a 
competitive basis, and the amount of any such grant 
will be not less than $600,000, and not more than 
$1,000,000.
``(d) Report and Testimony to Congress.--If the Secretary of 
Education elects to use excess amounts described under subsection (c), 
the Secretary shall provide to Congress a report on the use of such 
amounts (and provide testimony on such use) not later than 180 days 
after making use of such funds.''.

SEC. 303. EDUCATION AFFORDABILITY TRUST FUND.

Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1088 et seq.) is further amended by adding at the end the following:

``SEC. 494B. EDUCATION AFFORDABILITY TRUST FUND.

``(a) Establishment.--There is established within the Department a 
trust fund to be known as the `Education Affordability Trust Fund' 
(referred to in this section as the `Trust Fund').
``(b) Board.--
``(1) In general.--The head of the Trust Fund shall be a 6-
member Education Affordability Trust Fund Board (referred to in 
this section as the `Board').
``(2) Appointment of members.--The members of the Board 
shall be appointed by the President, by and with the advice and 
consent of the Senate, from among individuals who--
``(A) have experience and expertise in the 
management of financial investments;
``(B) have at least 10 years of experience in the 
financial investment field;
``(C) at least 3 of which have experience working 
with rural lenders, historically disenfranchised 
groups, or low-income communities; and
``(D) are not currently an elected official.
``(3) Disqualifications for appointments.--
``(A) Lobbying.--No individual required to register 
as a lobbyist under section 4 of the Lobbying 
Disclosure Act of 1995 (2 U.S.C. 1603) may be appointed 
to, or serve on, the Board.
``(B) Incompatible office.--No member of the Board 
may hold or may have held the position of Member of the 
House of Representatives or Senator, may hold the 
position of officer or employee of the House of 
Representatives, Senate, or instrumentality or other 
entity of the legislative branch, or may have held such 
a position within 4 years of the date of appointment.
``(4) Term.--
``(A) In general.--The members of the Board shall 
serve 6-year terms, staggered such that the terms of 2 
members end every 2 years.
``(B) Political affiliation.--The 2 members serving 
terms that end at the same time may not be members of 
the same political party.
``(C) Members take office together.--With respect 
to the 2 individuals appointed to fill terms ending at 
the same time, neither individual may begin serving as 
a member of the Board until both have been appointed 
and confirmed by the Senate.
``(D) Authority to serve until a successor is 
appointed.--Upon the expiration of a term of a member 
of the Board, that member shall continue to serve until 
a successor is appointed.
``(E) Limitation.--An individual may only serve as 
a member of the Board for a maximum of 2 terms.
``(F) Removal for cause.--The President may remove 
a member of the Board only for inefficiency, neglect of 
duty, or malfeasance in office.
``(5) Deadline for initial appointments.--The initial 
members of the Board shall be appointed no later than 90 days 
after the date of enactment of this section.
``(6) Chair.--Each member of the Board shall serve as the 
Chair of the Board during the final year of the term for which 
the member is appointed.
``(7) Conflicts of interest.--Each member of the Board 
shall, with respect to entities in which the Trust Fund 
invests, either divest any interest in such entities or place 
such interests into a blind trust.
``(8) Meetings.--
``(A) In general.--The Board shall meet no less 
than once per quarter.
``(B) Participation by fund managers.--The fund 
manager appointed under subsection (c) shall attend not 
less than 2 meetings of the Board each year, to discuss 
forecasting and current investment performance.
``(C) Emergency meeting requirement.--If, once the 
assets under management of the Trust Fund have reached 
$500,000,000,000, the assets under management of the 
Trust Fund drop below $300,000,000,000, the Board shall 
immediately hold an emergency meeting to discuss 
ensuring the long-term solvency of the Trust Fund.
``(9) Voting.--Investment guidelines shall be adopted by a 
unanimous vote of the entire Board. All other decisions of the 
Board shall be decided by a majority vote. All decisions of the 
Board shall be entered upon the records of the Board.
``(10) Compensation.--While serving on the business of the 
Board (including travel time), a member of the Board shall be 
entitled to compensation at the per diem equivalent of the rate 
provided for level IV of the Executive Schedule under section 
5315 of title 5, United States Code, and while so serving away 
from home and the member's regular place of business, a member 
may be allowed travel expenses, as authorized by the Chair of 
the Board.
``(c) Powers and Responsibilities of the Board.--
``(1) Appointment of fund managers.--
``(A) In general.--The Board shall appoint 
independent fund managers from among individuals who 
have met such ethics vetting requirements as the Board 
may establish.
``(B) Failure to make a unanimous appointment.--If 
the Board fails to make an appointment under 
subparagraph (A), the Chair shall, not later 10 days 
after the date of such failure, make the appointment.
``(C) Initial fund managers.--The Board shall make 
the initial appointment of independent fund managers 
under subparagraph (A) not later than 60 days after the 
date on which all members of the Board are first 
appointed.
``(2) Other duties.--The Board shall--
``(A) retain independent advisers to assist it in 
the formulation and adoption of its investment 
guidelines;
``(B) pay the administrative expenses of the Trust 
Fund from the assets in the Trust Fund; and
``(C) discharge their duties (including the voting 
of proxies) with respect to the assets of the Trust 
Fund solely in the interest of the Trust Fund and 
through it, the participants and beneficiaries of the 
programs funded under this Act--
``(i) for the exclusive purpose of--
``(I) providing zero-interest 
Federal student loans to existing and 
future borrowers; and
``(II) defraying reasonable 
expenses of administering the functions 
of the Trust Fund;
``(ii) with the care, skill, prudence, and 
diligence under the circumstances then 
prevailing that a prudent person acting in a 
like capacity and familiar with such matters 
would use in the conduct of an enterprise of a 
like character and with like aims;
``(iii) by diversifying investments so as 
to minimize the risk of large losses and to 
avoid disproportionate influence over a 
particular industry or firm, unless under the 
circumstances it is clearly prudent not to do 
so; and
``(iv) in accordance with Trust Fund 
governing documents and instruments insofar as 
such documents and instruments are consistent 
with this Act.
``(3) Prohibitions with respect to members of the board.--
No member of the Board shall--
``(A) deal with the assets of the Trust Fund in the 
member's own interest or for the member's own account;
``(B) in an individual or in any other capacity act 
in any transaction involving the assets of the Trust 
Fund on behalf of a party (or represent a party) whose 
interests are adverse to the interests of the Trust 
Fund or the interests of borrowers; or
``(C) receive any consideration for the member's 
own personal account from any party dealing with the 
assets of the Trust Fund.
``(4) Audit and report.--
``(A) Audit.--The Board shall annually engage an 
independent qualified public accountant to audit the 
financial statements of the Trust Fund.
``(B) Report to congress.--
``(i) In general.--The Board shall submit 
an annual management report to the Secretary of 
Education, the Secretary of the Treasury, the 
President, and the Congress not later than 180 
days after the end of each fiscal year, 
including--
``(I) a statement of financial 
position, including the total amount in 
the Trust Fund;
``(II) a statement of operations;
``(III) a statement of cash flows;
``(IV) a breakdown of the 
investments made by the Trust Fund, 
including by type;
``(V) a statement on internal 
accounting and administrative control 
systems;
``(VI) the report resulting from an 
audit of the financial statements of 
the Trust Fund conducted under 
subparagraph (A); and
``(VII) any other comments and 
information necessary to inform the 
Congress about the operations and 
financial condition of the Trust Fund.
``(ii) Public availability of report.--The 
Board shall make each report required under 
this subparagraph available to the public, 
including on the website of the Department of 
Education.
``(5) Rules and administrative powers.--The Board shall 
have the authority to make rules to govern the operations of 
the Trust Fund, employ professional staff, and contract with 
outside advisers to provide legal, accounting, investment 
advisory, or other services necessary for the proper 
administration of this section. In the case of contracts with 
investment advisory services, compensation for such services 
may be on a fixed contract fee basis or on such other terms and 
conditions as are customary for such services.
``(6) Financial disclosure reports.--Each Member and 
employee of the Board shall file with the Secretary of 
Education and appropriate committees of Congress financial 
disclosure reports that comply with the requirements under 
subchapter I of chapter 131 of title 5, United States Code.
``(7) Funding.--The expenses of the Trust Fund and the 
Board incurred under this section shall be paid from the Trust 
Fund.
``(d) Duties of the Fund Managers.--
``(1) In general.--The fund managers shall invest the 
assets of the Trust Fund in a manner consistent with the 
investment guidelines adopted by the Board.
``(2) Instruments.--The fund managers shall invest the 
amounts in the Trust Fund in bonds that consist of the 
following:
``(A) Municipal bonds.
``(B) Bonds issued by the Department of the 
Treasury, which may not make up more than 40 percent of 
the total investments of the Trust Fund.
``(C) Other Federal bonds.
``(D) Bonds issued by the Federal Home Loan 
Mortgage Corporation, the Federal National Mortgage 
Association, or a Federal Home Loan Bank.
``(E) International bonds, which may not make up 
more than 10 percent of the total investments of the 
Trust Fund.
``(F) Corporate bonds, which may not make up more 
than 10 percent of the total investments of the Trust 
Fund.
``(3) Investment requirements.--
``(A) Ratings.--The investments of the Trust Fund 
shall consist--
``(i) only of investments rated at least 
Baa1 or BBB+ by Moody's, S&P, or Fitch Ratings;
``(ii) at least 80 percent of investments 
rated at least A3 or A- by Moody's, S&P, or 
Fitch Ratings;
``(iii) at least 60 percent of investments 
rated at least Aa1 or AA+ by Moody's, S&P, or 
Fitch Ratings; and
``(iv) at least 40 percent of investments 
rated at least Aaa or AAA by Moody's, S&P, or 
Fitch Ratings.
``(B) Diversification.--The investments of the 
Trust Fund shall be diversified to minimize the risk of 
large losses and to avoid disproportionate influence 
over a particular region, industry, or firm, unless 
under the circumstances it is clearly prudent not to do 
so.
``(C) Limitation on investing in certain 
countries.--The Trust Fund may not invest in entities 
or subsidiaries of entities that are--
``(i) based in any country that does not 
have diplomatic relations with the United 
States;
``(ii) based in any country, the government 
of which is subject to sanctions by the United 
States; or
``(iii) on a sanctions list of the 
Department of the Treasury.
``(4) Short-term initial investments.--During the 10-year 
period beginning on the date of enactment of this section, the 
fund managers shall prioritize investments in bonds with a 
maturity date of less than 10 years.
``(e) Means of Financing.--For purposes of the Congressional Budget 
Act of 1974 (2 U.S.C. 621 et seq.), the Balanced Budget and Emergency 
Deficit Control Act of 1985 (2 U.S.C. 900 et seq.), and chapter 11 of 
title 31, United States Code, and notwithstanding section 20 of Office 
of Management and Budget Circular No. A-11, or any successor thereto, 
earnings of the Trust Fund shall be calculated on an accrual basis.''.

TITLE IV--GENERAL PROVISIONS

SEC. 401. IMPLEMENTATION.

In carrying out the amendments made by titles I, II, and III, the 
Secretary of Education may waive the application of--
(1) the master calendar requirements under section 482 of 
the Higher Education Act of 1965 (20 U.S.C. 1089); and
(2) negotiated rulemaking under section 492 of the Higher 
Education Act of 1965 (20 U.S.C. 1098a).
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