Student Loan and Debt Relief Act, 2025
Chapter I – Preliminary
1. Section 1. Short Title
This Act may be cited as the "Student Loan and Debt Relief Act, 2025."
2. Section 2. Definitions
In this Act, unless the context otherwise requires—
(a) "Student Loan" means any loan granted for financing higher education
expenses, including but not limited to tuition, fees, and living costs.
(b) "Borrower" means any individual who has received one or more student loans.
(c) "Lender" means any public or private entity, duly authorized to provide student
loans under applicable law.
(d) "Income-Driven Repayment Plan" means a repayment arrangement whereby
the monthly payment is determined as a fixed percentage of the borrower's
discretionary income.
(e) "Public Service Employment" means full-time employment with a federal, state,
local, or tribal governmental entity or with a not-for-profit organization
qualifying under Section 501(c)(3) of the Internal Revenue Code.
(f) "Default" means failure to comply with the agreed repayment terms under the
loan agreement, as defined in regulations prescribed by the Department of
Education.
Chapter II – Student Loan Provisions
3. Section 3. Interest Rates
(a) All federally backed student loans shall bear a fixed interest rate determined
annually by the appropriate authority, subject to a statutory cap designed to
protect borrowers from excessive financial burden.
(b) Private lenders are encouraged to adopt competitive fixed interest rates and to
clearly disclose all terms and conditions to borrowers.
4. Section 4. Income-Driven Repayment
(a) Every student loan provided under this Act shall be eligible for an income-
driven repayment plan.
(b) Under such a plan, the monthly payment shall not exceed a predetermined
percentage of the borrower’s discretionary income, as defined by regulations
promulgated by the Department of Education.
(c) In the event that the borrower makes timely payments for a period of not less
than twenty (20) or twenty-five (25) years, as prescribed by regulation, any
remaining principal balance shall be forgiven.
5. Section 5. Public Service Loan Forgiveness
Any borrower employed in qualifying public service who has made one hundred and
twenty (120) qualifying monthly payments under an eligible repayment plan shall be
entitled to forgiveness of any outstanding balance on the student loan.
6. Section 6. Borrower Education and Information
(a) Prior to the disbursement of any student loan, the lender shall provide the
borrower with clear, comprehensive, and understandable information regarding
the loan terms, repayment options, and all obligations.
(b) Such information shall include details on the availability and terms of income-
driven repayment, grace periods, deferment, forbearance, and any forgiveness
programs.
7. Section 7. Grace Period
A grace period of six (6) months shall be granted to borrowers following graduation,
cessation of enrollment, or any other qualifying event, during which repayment of the
student loan is not required.
8. Section 8. Deferment and Forbearance
(a) Borrowers experiencing economic hardship, unemployment, or other specified
circumstances may apply for a deferment or forbearance period.
(b) The conditions, duration, and application procedures for deferment or
forbearance shall be established by the Department of Education through
appropriate regulation.
Chapter III – Debt Relief Measures
9. Section 9. Targeted Loan Forgiveness Programs
(a) The Department of Education shall establish additional loan forgiveness
programs for borrowers employed in sectors experiencing critical workforce
shortages, including but not limited to healthcare, education, and public service.
(b) The terms and eligibility criteria for such programs shall be prescribed in
regulations and may include, inter alia, service duration and performance
benchmarks.
10. Section 10. Discharge for Disability or Death
(a) In the event of a borrower’s total and permanent disability, as certified by an
appropriate medical authority, the outstanding balance of the student loan shall
be discharged.
(b) In the event of the death of a borrower, any outstanding student loan balance
shall be discharged, and the lender shall be notified accordingly.
11. Section 11. Bankruptcy Discharge Provisions
The provisions of this Act shall not preclude, and shall be construed to permit, the
discharge of student loans under bankruptcy proceedings in cases where the borrower
can demonstrate undue hardship, subject to conditions and standards prescribed by law
and regulation.
Chapter IV – Institutional Accountability and Risk Sharing
12. Section 12. Institutional Information Disclosure
(a) Educational institutions shall be required to provide prospective and current
students with accurate and timely information regarding program costs,
graduation rates, and employment outcomes.
(b) Failure to comply with such disclosure requirements may result in
administrative sanctions and be considered in the assessment of the institution’s
risk profile.
13. Section 13. Risk Sharing Provisions
Institutions that consistently exhibit high default rates on student loans may be required to
contribute to a risk-sharing fund, thereby incentivizing improved student support services
and academic program quality. The details of such risk sharing shall be determined by the
Department of Education.
Chapter V – Administration, Oversight, and Consumer Protection
14. Section 14. Administration and Implementation
(a) The Department of Education shall be responsible for administering and
enforcing the provisions of this Act.
(b) The Department shall issue guidelines, procedural rules, and any necessary
regulations to effectuate the purposes of this Act.
15. Section 15. Annual Reporting and Audit
(a) The Department of Education shall submit an annual report to the legislature
detailing the status of student loan repayment, default rates, and the
effectiveness of debt relief measures implemented under this Act.
(b) An independent audit shall be conducted periodically to assess the
administration of the Act and to recommend improvements.
16. Section 16. Consumer Protection Measures
(a) Regulations shall be adopted to protect borrowers from predatory lending
practices, ensuring transparency and fairness in all aspects of loan origination,
servicing, and collection.
(b) A dedicated borrower assistance program shall be established to address
grievances, provide counseling, and facilitate dispute resolution.
17. Section 17. Complaint Resolution and Redress Mechanism
(a) Borrowers shall have access to an administrative review process for any dispute
arising from the interpretation or implementation of this Act.
(b) Remedies for non-compliance, including penalties and corrective measures,
shall be available to affected borrowers.
Chapter VI – Financial Provisions and Appropriations
18. Section 18. Appropriations
(a) The legislature shall authorize the appropriation of funds necessary for the
implementation, administration, and enforcement of this Act.
(b) Such appropriations shall cover the costs of borrower education, administrative
operations, enforcement actions, and the management of risk-sharing programs.
19. Section 19. Financial Management and Reporting
The Department of Education shall establish protocols for the financial management of
funds allocated under this Act and shall report annually on the utilization and
effectiveness of such funds.
Chapter VII – Rulemaking and Revisions
20. Section 20. Rulemaking Authority
The Department of Education is hereby empowered to promulgate all rules and
regulations necessary for the implementation of this Act, including but not limited to
definitions, procedures, and eligibility criteria.
21. Section 21. Periodic Review and Amendment
(a) A review of the Act and its regulatory framework shall be conducted every five
(5) years to assess its impact and to recommend any necessary amendments.
(b) Amendments to this Act may be proposed by the Department of Education or
any member of the legislature and shall be subject to legislative approval.\
Chapter VIII – Miscellaneous Provisions
22. Section 22. Severability
If any provision of this Act or its application is held invalid or unenforceable, the
remainder of the Act, including the application of such provision to other persons or
circumstances, shall not be affected.
23. Section 23. Repeals and Savings
(a) Any inconsistent provisions contained in prior legislation are hereby repealed
to the extent of the inconsistency.
(b) Notwithstanding the repeal, any rights or obligations accrued under the repealed
provisions shall be saved.
24. Section 24. Effective Date
This Act shall come into force six (6) months following its enactment.
