Section 1. Short title

This Act may be cited as the Student Loan Reform Act.

Sec. 2. Institutional cosigner program

Part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by inserting after section 454 the following:

454A. Institutional cosigner program

(a) Program required

Beginning on July 1, 2026, the Secretary shall carry out a program under which an institution of higher education may elect to cosign all eligible direct loans made to students enrolled at the institution for an academic year.

(b) Agreement with Secretary

To be eligible to participate in the program under this section for an academic year, an institution of higher education shall enter into an agreement with the Secretary under which the institution agrees to the following:

(1)

The institution will cosign all new eligible direct loans made to students enrolled at the institution for such academic year.

(2)

With respect to each such loan, the institution will abide by the terms and conditions of cosigner liability described in subsection (d).

(c) Master promissory note

As part of the program under this section, the Secretary shall—

(1)

revise the master promissory note applicable to each eligible direct loan to include—

(A)

the terms and conditions of cosigner and borrower liability described in subsection (d);

(B)

the interest rate for the loan, as determined under subsection (e); and

(C)

a field in which an authorized representative of an institution participating in the program may cosign the note on behalf of the institution; and

(2)

ensure that each institution participating in the program signs the note applicable to each new eligible direct loan made to a student at the institution for the academic year concerned.

(d) Cosigner and borrower liability

(1) In general

Notwithstanding any other provision of law, an institution of higher education that is a cosigner of an eligible direct loan of a borrower shall assume the obligation to repay, in accordance with paragraph (2), the outstanding balance of principal and interest due on the loan if—

(A)

the borrower defaulted on the loan;

(B)

a period of 90 days has elapsed since the date on which the loan entered default; and

(C)

the loan has not been rehabilitated.

(2) Amount and schedule of repayment

An institution that is obligated to repay an eligible direct loan under paragraph (1) shall make payments on the loan pursuant to a standard repayment plan under section 455(d)(1)(A) with a repayment period of 10 years.

(3) Termination of obligation

The obligation of an institution to repay an eligible direct loan under paragraph (1) shall terminate on the earlier of—

(A)

the date on which the loan is rehabilitated; or

(B)

the date on which the total outstanding balance of principal and interest due on the loan has been repaid.

(4) Effect on default status of borrower

A borrower who has defaulted on an eligible direct loan on which an institution is making payments under paragraph (1) shall be considered in default on such loan for purposes of adverse credit reporting and delinquent debt collection procedures under Federal law.

(5) Recovery from borrower

Any amounts recovered from the borrower of an eligible direct loan during a period in which an institution is making payments on the loan under paragraph (1) shall be subtracted from the total outstanding balance of principal and interest due on the loan.

(6) Rule of construction

Nothing in this subsection shall be construed to limit the remedies available under this part against the borrower of an eligible Federal student loan.

(e) Reduced interest rate

Notwithstanding any other provision of law, the interest rate applicable to an eligible direct loan cosigned by an institution participating in the program under this section shall be a rate determined by the Secretary that is—

(1)

lower than the standard rate applicable to the loan under section 455(b); and

(2)

reduced below such standard rate by a percentage that is proportionate to the reduced risk posed by the loan, as determined by the Secretary.

(f) List of participating institutions

On an annual basis, the Secretary shall publish, on a publicly accessible website of the Department of Education, a list that identifies each institution participating in the program under this section for an academic year.

(g) Eligible direct loan defined

In this section, the term eligible direct loan means a loan made under this part on or after July 1, 2026.

Sec. 3. Modification of cohort default rate threshold