AID Act

To amend the Higher Education Act of 1965 to provide a student loan allowance calculation for purposes of determining the student aid index. 1. Short title This Act may be cited as the Alleviating Intergenerational Debt Act AID Act 2. Student loan allowance calculation for award year 2025–2026 and each succeeding award year (a) In general Section 475(c) of the Higher Education Act of 1965 ( 20 U.S.C. 1087oo(c) Public Law 116–260 (1) in paragraph (1)— (A) by striking and (B) by striking the period at the end of subparagraph (D) and inserting ; and (C) by adding at the end the following: (E) beginning with award year 2025–2026, a student loan allowance, determined in accordance with paragraph (5). ; and (2) by adding at the end the following: (5) Student loan allowance (A) In general The student loan allowance is equal to the lesser of $4,000 or 15 percent of the single parent’s outstanding student loan debt or married parents’ combined outstanding student loan debt (as adjusted under section 478(i)). (B) Exceptions A single parent with an adjusted gross income of more than $200,000 (as adjusted under section 478(i)), or married parents with a combined adjusted gross income of more than $400,000 (as so adjusted), may not receive a student loan allowance under this paragraph. (C) Definitions In this paragraph: (i) Federal student loan The term Federal student loan (ii) Outstanding student loan debt The term outstanding student loan debt . (b) Adjustment Section 478 of the Higher Education Act of 1965 ( 20 U.S.C. 1087rr Public Law 116–260 (i) Student loan expense allowance For award year 2026–2027 and each succeeding award year, the Secretary shall publish in the Federal Register a revised table of student loan allowances for the purpose of section 475(c)(5). Such revised table shall be developed by increasing the dollar amounts specified in subparagraphs (A) and (B) of section 475(c)(5) by a percentage equal to the percentage increase in the Consumer Price Index, as defined in subsection (f), between April 2020 and the April in the year prior to the beginning of the award year and rounding the result to the nearest $10. . 3. Report to Congress (a) In general Not later than July 1, 2026, and on an annual basis thereafter, the Secretary of Education shall prepare and submit to Congress a report on the impacts of the amendments made by this Act, which shall include the following information with respect to the most recent award year for which information is available: (1) The number and percentage of dependent students whose student aid index computations under subsection (a) of section 475 of the Higher Education Act of 1965 ( 20 U.S.C. 1087oo (A) by students who are eligible for a Federal Pell Grant under section 401 of the Higher Education Act of 1965 ( 20 U.S.C. 1070a (B) by students who are not eligible for such a Federal Pell Grant. (2) The average amount of the student loan allowance described in paragraph (1).

Summary: Alleviating Intergenerational Debt Act or the AID Act This bill creates a new student loan allowance calculation for determining the Student Aid Index (SAI). The SAI is an eligibility index number that is used to determine the amount of federal student aid a student is eligible to receive. In particular, the bill revises the SAI formula to create a new allowance against income for dependent students' parents who have their own outstanding federal student loan debt, subject to income limitations. The Department of Education (ED) must annually publish a revised table of student loan allowances. The bill requires ED to submit an annual report to Congress on the impacts of the bill, including (1) the number and percentage of students whose SAI include the subtraction of this allowance, separated out by eligibility for Federal Pell Grants; and (2) the average amount of the allowance.