Debt-Free College Act of 2026

This Act may be cited as the “Debt-Free College Act of 2026”.

Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.) is amended by adding at the end the following:

The purpose of this part is to establish State-Federal partnerships that will—

“(1) increase investment in public higher education; and

(2) provide students the opportunity to attain higher education at in-State public institutions of higher education without debt (“debt-free college”).

In this part:

(1) Cost of attendance.— The term cost of attendance has the meaning given the term in section 472.

(2) Debt-free college commitment.— The term debt-free college commitment means a commitment by a State participating in the State-Federal partnership under this part to cover the unmet financial need for all eligible students.

(3) Eligible student.— The term eligible student means an individual who—

(A) is enrolled, or is eligible to enroll, in a public institution of higher education in the State in which the individual resides; and

(B) completes a Free Application for Federal Student Aid or demonstrates eligibility for a Federal Pell Grant through State or institutional financial aid eligibility forms.

(4) Headcount.— The term headcount means the unduplicated number of students enrolled over a 12-month period, which shall be defined and calculated in the manner determined most appropriate by the Secretary.

(5) Net State operating support.— The term net State operating support means an amount that is equal to the amount of State funds and local government appropriations used to support public higher education annual operating expenses and financial aid programs in the State, calculated in accordance with subparagraphs (A) and (B).

(A) Calculation.— A State’s net State operating support shall, for a fiscal year, be an amount that is equal to the difference resulting from the gross amount of State funds appropriated and disbursed by the State and expended by the recipient institutions in the fiscal year for public higher education operating expenses in the State, minus—

(i) such appropriations that are returned to the State;

(ii) State-appropriated funds derived from Federal sources, including funds provided under this part;

(iii) local government funds not appropriated for operating support for public higher education;

(iv) amounts that are portions of multi-year appropriations to be distributed over multiple years that are not to be spent for the year for which the calculation is being made;

(v) tuition charges remitted to the State to offset State appropriations;

(vi) State funding for students in non-credit continuing or adult education courses and non-credit extension courses;

(vii) sums appropriated to private nonprofit institutions of higher education, or to proprietary institutions of higher education, for capital outlay or operating expenses; and

(viii) any other funds excluded under subparagraph (B).

(B) Exclusions.— Net State operating support does not include funds for—

(i) student aid programs that provide grants to students attending out-of-State institutions of higher education, proprietary institutions of higher education, and institutions of higher education not accredited by an agency or association recognized by the Secretary pursuant to section 496;

(ii) capital outlays;

(iii) deferred maintenance;

(iv) financial aid to students awarded predominantly on the basis of merit;

(v) hospitals, athletics, or other auxiliary enterprises;

(vi) research and development; or

(vii) any other funds that the Secretary determines shall not be included in the calculation of net State operating support for higher education for such State.

(6) Net State operating support per student.— The term net State operating support per student means, for a fiscal year—

(A) the net State operating support for the previous fiscal year; divided by

(B) the headcount for the previous fiscal year.

(7) Partnership Office.— The term Partnership Office means the Office created under section 499A–4(a).

(8) Public institution of higher education.— The term public institution of higher education means an educational institution in any State that—

(A) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate, or persons who are eligible students;

(B) is legally authorized within such State to provide a program of education beyond secondary education;

(C) provides an educational program for which the institution awards a bachelor’s degree or provides not less than a 2-year program that is acceptable for full credit toward such a degree, or awards a degree that is acceptable for admission to a graduate or professional degree program, subject to review and approval by the Secretary;

(D) has the full faith and credit of the State; and

(E) is accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted preaccreditation status by such an agency or association that has been recognized by the Secretary for the granting of preaccreditation status, and the Secretary has determined that there is satisfactory assurance that the institution will meet the accreditation standards of such an agency or association within a reasonable time.

(9) Relevant committees of congress.— The term relevant committees of Congress means the Committee on Health, Education, Labor, and Pensions and the Committee on Appropriations of the Senate and the Committee on Education and Workforce and the Committee on Appropriations of the House of Representatives.

(10) Student success program.— The term student success program means a program or service at an institution of higher education that is dedicated to addressing barriers to degree attainment, particularly for low-income students, for the purpose of increasing the percentage of students completing programs of study in their entirety and attaining related degrees.

(11) Unmet need.— The term unmet need means the difference between a student’s cost of attendance to attend an in-State public institution of higher education and the student’s student aid index plus any Federal, State, or local sources of grant aid.

(a) Grants authorized.— The Secretary shall award grants to States to establish State-Federal partnerships with a goal of providing debt-free college for all eligible students at in-State public institutions of higher education.

(b) Application.— A State that desires to participate in the State-Federal partnership under this part shall submit an application to the Secretary at such time, in such manner, and accompanied by such information as the Secretary may require.

(c) Amount of grants.—

(1) In general.— The Secretary shall award a grant to a State that submits an application under subsection (b) for a fiscal year in an amount that is equal to State's net State operating support.

(2) Ratable reduction.— If the amount appropriated to carry out this part for a fiscal year is insufficient to award each State the State's full grant amount pursuant to paragraph (1), the Secretary shall establish procedures for ratably reducing each State's award amount for such fiscal year.

(d) Amounts not expended.— Any amount of a grant awarded under this part that is not expended on allowable expenditures by the end of the fiscal year for which the grant was awarded shall be applied to the following year’s grant award amount, if the State remains eligible to receive a grant under this part for such following year. If such State is not eligible to receive a grant under this part for such following year, the State shall return the unexpended balance amount to the Federal Government.

(a) Federal activities.—

(1) In general.— The Secretary shall create an office in the Department of Education to administer the State-Federal partnerships established under this part. Such Partnership Office shall be responsible for—

(A) administering grant awards;

(B) monitoring compliance with partnership requirements;

(C) providing technical assistance to States in applying for participation in, and implementing, a partnership; and

(D) providing information to students in participating States.

(2) Evaluations.— The Partnership Office shall develop metrics of evaluation and perform an annual evaluation of each State participating in a State-Federal partnership under this part. The evaluation shall assess the State's success in meeting the partnership’s goals, including—

(A) providing debt-free college for all eligible students;

(B) increasing State investment in higher education;

(C) maintaining access to in-State public institutions of higher education for low-income and underserved students;

(D) maintaining and improving rates of student success and academic quality;

(E) maintaining or reducing the cost of public higher education and the price charged to students; and

(F) investing in improving capacity, access, quality, and student achievement of in-State public institutions of higher education.

(3) Annual report.— The Partnership Office shall submit an annual report to the relevant committees of Congress and include information gained from the annual evaluation under paragraph (2).

(4) Website.— The Partnership Office shall create a public, consumer-oriented website with information about State-Federal partnerships established under this part, including information from the annual evaluation under paragraph (2).

(b) State activities.—

(1) In general.— A State that receives a grant under this part to establish a State-Federal partnership shall—

(A) distribute the grant funds according to the allowable uses of funds described in section 499A–5 in a manner designed to best achieve the partnership’s goal of providing debt-free college for all eligible students at in-State public institutions of higher education;

(B) maintain access at each in-State public institution of higher education for low-income and underserved students;

(C) cap tuition and fees at public institutions of higher education in the State at levels as of the date of enactment of the Debt-Free College Act of 2026, with a yearly increase allowed based on the Consumer Price Index (as determined by the Secretary);

(D) commit to working with in-State public institutions of higher education to reduce tuition and fees as the net State operating support increases;

(E) maintain State need-based financial aid programs in effect on the date of enactment of the Debt-Free College Act of 2026 or use State funds for such programs to further the debt-free commitment made under the State-Federal partnership;

(F) maintain or increase levels of net State operating support in effect on the date of enactment of the Debt-Free College Act of 2026, subject to the maintenance of effort provisions contained in this part;

(G) develop, adopt, and implement a State formula for calculating the cost of attendance at in-State public institutions of higher education;

(H) develop statewide credit transfer policies to—

(i) facilitate credit transfers among in-State public institutions of higher education; and

(ii) provide students with clear and timely information about credit transfer policies at in-State public institutions of higher education; and

(I) clearly communicate to prospective students, their families, and the general public how the State plans to implement the State-Federal partnership and how eligible students can attend a public institution of higher education in the State without debt, including early notification for students of their eligibility for financial aid under the partnership.

(2) 5-year plan.—

(A) In general.— In order to receive a grant under this part, a State shall provide to the Secretary a 5-year plan for achieving the goals of the State-Federal partnership that is approved by the Secretary under subparagraph (C). A State shall update and resubmit a plan every 5 years thereafter.

(B) Plan to meet goals.— The 5-year plan shall detail how the State plans to meet the goal of providing debt-free college for all eligible students at in-State public institutions of higher education within 5 years and increase the State’s investment in higher education, with specific benchmarks detailed for each year.

(C) Approval by the secretary.— In order to receive grant funds under the State-Federal Partnership award—

(i) the State shall have a 5-year plan approved by the Secretary; and

(ii) the State shall demonstrate annual progress.

(D) Waiver of 5-year deadline.— A State may apply for a waiver from the deadline of meeting all of the State-Federal partnership’s goals within 5 years if the State—

(i) provides a credible plan for making progress towards the goals; and

(ii) is able to demonstrate that the State will, at a minimum, provide debt-free college within 5 years to eligible students who are Federal Pell Grant recipients under subpart 1 of part A.

(3) Reforms and innovative practices.— After receiving a grant under this part, a State shall provide to the Secretary a description of the promising and evidence-based institutional reforms and innovative practices to improve student outcomes, including transfer and completion rates, that have been or will be adopted by each public institution of higher education in the State that will receive grant funds, such as—

(A) providing comprehensive academic, career, and student support services (including mentoring, advising, case management services, and career pathway navigation), especially for low-income, first-generation, and adult students, and other students belonging to racial and other groups that are historically underrepresented in higher education; or

(B) providing direct support services, or assistance in applying for such services, such as—

(i) child care, transportation, and emergency financial assistance;

(ii) assistance in obtaining health insurance coverage and accessing health care services, including behavioral and mental health services;

(iii) assistance in obtaining affordable housing; and

(iv) nutrition assistance programs or free or discounted food; and

(C) helping to enroll eligible students in means-tested Federal benefit programs, or similar State, tribal, or local benefit programs, including—

(i) the Medicaid program under title XIX of the Social Security Act (42 U.S.C. 1396 et seq.);

(ii) the supplemental nutrition assistance program under the Food and Nutrition Act of 2008 (7 U.S.C. 2011 et seq.);

(iii) the program of block grants for States for temporary assistance for needy families established under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.);

(iv) the special supplemental nutrition program for women, infants, and children established by section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786); and

(v) benefits through the Child Care Development Fund under the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9857 et seq.).

(4) No additional eligibility requirements.— A State that receives a grant under this part to establish a State-Federal partnership may not impose additional eligibility requirements on students other than those contained in this part.

(a) In general.—

(1) Need-based aid for pell recipients.— From amounts remaining after reserving funds in accordance with subsections (b) through (d), a State that receives a grant under this part to establish a State-Federal partnership shall disburse funds from the net State operating support and the partnership grant funds on the basis of need, as determined by the Free Application for Federal Student Aid or an institutional financial aid eligibility form, to cover the unmet need for each eligible student who receives a Federal Pell Grant under subpart 1 of part A.

(2) Disbursement of remaining funds.—

(A) In General.— Any funds that remain after a State disburses funds in accordance with paragraph (1) shall be used by the State to cover part or all of the unmet need for eligible students who do not receive a Federal Pell Grant under subpart 1 of part A, with priority based on student financial need, in a manner determined by the State.

(B) Private aid not taken into account.— In disbursing funds under this paragraph, the State shall not take into account any private sources of aid or loans available to an eligible student.

(b) Student success programs.—

(1) In general.— A State that receives a grant under this part for a fiscal year to establish a State-Federal partnership shall use 4 percent of the grant funds for such fiscal year to establish or increase funding for student success programs.

(2) Distribution.— From the total amount of grant funds available under paragraph (1) for a fiscal year, the State shall provide to each public institution of higher education in the State that is eligible to participate in programs under this title for such fiscal year an amount that bears the same relation to such total amount as the number of students enrolled in such institution of higher education who are eligible to receive a Federal Pell Grant bears to the number of students enrolled in all public institutions of higher education in the State who are eligible to receive a Federal Pell Grant.

(3) Allowable uses.— An institution of higher education that receives funds under paragraph (2) shall use such funds to establish, implement, or expand a student success program, including for the following purposes:

(A) Providing information to prospective and current students to assist and improve completion, including creating materials clarifying different program completion requirements and costs, holding seminars for prospective or current students on course schedules and program costs, and updating school websites to make information publically available.

(B) Hiring additional counselors and advisors to focus on student completion support and training existing personnel to implement the student success program.

(C) Increasing academic support programs, such as writing coaches, tutors, prerequisite skill courses, and study materials, and enhancing academic facilities for students.

(D) Providing microgrants for students participating in the student success program who maintain good academic standing and progress toward on-time graduation.

(4) Reporting.—

(A) Reports from institutions.— An institution of higher education that receives funds under paragraph (2) shall submit to the State in which the institution is located at the end of each fiscal year a report that details the uses of funds, changes in the ratios of students to counselors, and 2-year and 4-year degree attainment rates, disaggregated by race and Federal Pell Grant recipient status.

(B) Suspension.— If a State determines that an institution of higher education that receives funds under paragraph (2) for a fiscal year used such funds for activities that were not allowable uses under paragraph (3), the State may suspend distribution of funds to the institution for the following fiscal year and require the institution to submit proposed expenditures for approval before receiving funds again under paragraph (2).

(C) Report from state.— A State that receives a grant under this part for a fiscal year to establish a State-Federal partnership shall submit to the Secretary at the end of each fiscal year a report that details the uses of grant funds under this subsection in public institutions of higher education in the State that are eligible to participate in programs under this title, changes in the ratio of students to counselors in such institutions in the State, and 2-year and 4-year degree attainment rates in such institutions in the State, disaggregated by race and Federal Pell Grant recipient status.

(c) Higher education related activities.— A State that receives a grant under this part to establish a State-Federal partnership may use not more than 5 percent of the grant funds for the following higher education related activities:

(1) Increasing the capacity within the public higher education system of the State, including through the following:

(A) Construction of new facilities.

(B) Renovation of existing facilities.

(C) Hiring of faculty.

(D) Student support services.

(2) Increasing the enrollment of low-income and underserved students.

(3) Improving student outcomes, including meeting student learning goals, increasing completion rates, and improving post-graduate job placement, in consultation with faculty and staff at in-State public institutions of higher education.

(4) Providing information to prospective students and families.

(5) Developing new higher education programs to meet the State’s workforce needs, in consultation with faculty and staff at in-State public institutions of higher education, employers, and other relevant stakeholders.

(6) Programs and student support services at public secondary schools if those programs and services directly support an activity described in any of paragraphs (1) through (5).

(7) Other activities as approved by the Secretary to improve the State’s public higher education system, particularly for low-income and underserved students.

(d) Administration and other uses.— A State that receives a grant under this part to establish a State-Federal partnership may use not more than 1 percent of the grant funds—

(1) to administer the partnership; and

(2) for—

(A) higher education research and data tools, such as those that link education and employment data systems;

(B) forming agreements with other States participating in the partnership for reciprocal student eligibility; and

(C) developing and implementing systems to provide early notification to students and families of their eligibility for financial aid.

(e) Prohibition on use of funds.— A State that receives a grant under this part to establish a State-Federal partnership may not use grant funds for—

(1) endowments; or

(2) the construction of athletic or commercial venues.

A State that receives a grant under this part to establish a State-Federal partnership shall maintain net State operating support for a fiscal year at a level that is not less than the level that is equal to the average of such net State operating support per full-time equivalent student for the 3 most recent consecutive State fiscal years preceding such fiscal year.

(a) In general.— If a State that receives a grant under this part to establish a State-Federal partnership breaches a term of the partnership, the Partnership Office shall notify the State and provide the State an opportunity to correct the record or cure the breach within 30 days of the notification.

(b) Recommendation.— Based on the State’s response to a notification under subsection (a), the Partnership Office shall recommend that the Secretary—

(1) take no action;

(2) place the State on probation; or

(3) deem the State ineligible to continue to participate in the partnership.

(c) Implementation.—

(1) In general.— Except as provided in paragraph (2), the Secretary shall implement the recommendation of the Partnership Office under subsection (b).

(2) Exception.—

(A) In general.— Subject to subparagraph (B), the Secretary may choose not to implement the recommendation of the Partnership Office under subsection (b).

(B) Reasons and report.— If the Secretary chooses not to implement the recommendation of the Partnership Office under subsection (b), the Secretary shall—

(i) provide an explanation for such decision; and

(ii) notify the relevant committees of Congress in a report.

(d) Probation.—

(1) In general.— If a State is placed on probation by the Secretary due to a breach of a term of the partnership, the State shall develop a plan to remedy the breach.

(2) Withholding.— With respect to a State that is placed on probation by the Secretary due to a breach of a term of the partnership, the Secretary shall withhold half of the State’s partnership grant award until the breach has been remedied or the State has demonstrated credible progress towards remedying the breach.

(e) Ineligibility.—

(1) In general.— If a State is determined to be ineligible to continue to participate in a partnership due to a breach of a term of the partnership, the State shall not receive its partnership grant award for the subsequent year.

(2) Remaining ineligible.— A State that is determined to be ineligible to continue to participate in a partnership due to a breach of a term of the partnership, shall remain ineligible for participation until the State has demonstrated that the State meets the partnership’s requirements.

(a) In general.— If a State that receives a grant under this part to establish a State-Federal partnership intends to withdraw from the partnership or becomes ineligible to continue participation under this part, the State shall comply with the requirements of this section, including, if the State intends to withdraw, notifying the Secretary and the Partnership Office 60 days prior to the withdrawal.

(b) Continued coverage.—

(1) In general.— Any unexpended balance from a State-Federal partnership grant award that remains after a State notifies the Partnership Office of the State intention to withdraw from the partnership or becomes ineligible to continue participation under this part shall be placed into an escrow account at the Department and used solely to provide need-based grant aid to an eligible student who has received a Federal Pell Grant under subpart 1 of part A and who was enrolled before the State notified the Partnership Office of the State’s intention to withdraw from the partnership or the State became ineligible.

(2) Coverage until students finish program.—

(A) In general.— A State that withdraws from a State-Federal partnership or becomes ineligible to continue participation under this part shall continue to cover the unmet need for each eligible student who received a Federal Pell Grant under subpart 1 of part A and who was enrolled before the State notified the Partnership Office of the State's intention to withdraw from the partnership or became ineligible until each such student completes the student’s program of study at the institution or until the allotted time for completion of such program of study expires.

(B) Priority.— In carrying out subparagraph (A), a State shall prioritize funding based on students’ financial need.

(3) Communication of information.— A State that withdraws from a State-Federal partnership or becomes ineligible to continue participation under this part shall communicate its withdrawal or ineligibility, as appropriate, to students and families in the State and provide clear information to eligible students described in paragraph (2)(A) that the students may continue to have their cost of attendance at an in-State public institution of higher education covered.

(a) In general.— There are authorized to be appropriated to carry out this part—

(1) $84,000,000,000 for fiscal year 2027; and

(2) such sums as may be necessary for each of fiscal years 2027 through 2036.

(b) Availability.— Funds made available under subsection (a) shall be available for obligation through September 30 of the fiscal year succeeding the fiscal year for which such sums were appropriated.”.

Part F of title III of the Higher Education Act of 1965 (20 U.S.C. 1067q et seq.) is amended by adding at the end the following:

“372. Debt-free college grant program for HBCUs and MSIs.—

(a) Definition of eligible institution.—

(1) In general.— In this section, except as provided in paragraph (2), the term eligible institution means an institution of higher education that is—

(A) a private, nonprofit 2-year or 4-year part B institution (as defined in section 322);

(B) a Tribal College or University (as defined in section 316); or

(C) a private, nonprofit 2-year or 4-year institution—

(i) that is—

(I) a Hispanic-serving institution (as defined in section 502);

(II) an Alaska Native-serving institution (as defined in section 317(b));

(III) a Native Hawaiian-serving institution (as defined in section 317(b));

(IV) a Predominantly Black Institution (as defined in section 318);

(V) an Asian American and Native American Pacific Islander-serving institution (as defined in section 320(b)); or

(VI) a Native American-serving, nontribal institution (as defined in section 319); and

(ii) in which not less than 35 percent of the students enrolled at the institution are eligible to receive a Federal Pell Grant.

(2) For-profit institution that converted to a nonprofit institution.— Notwithstanding paragraph (1), an institution of higher education is not an eligible institution if the institution was a for-profit institution of higher education that converted to a nonprofit institution of higher education and less than 25 years have passed since the date of such conversion.

(b) Grant program authorized.—

(1) In general.— The Secretary shall award grants to eligible institutions to enable the institutions to provide need-based financial aid to cover unmet need for students enrolled at the institutions.

(2) Duration.— Grants awarded under this section shall be for a period of 5 years.

(c) Application.— An eligible institution that desires a grant under this section shall submit an application to the Secretary at such time, in such manner, and accompanied by such information as the Secretary may require, including a plan detailing how—

(1) the eligible institution will use grant funds to provide debt-free college to the students enrolled at the institution; and

(2) the institution plans to meet the requirements of the grant program.

(d) Awarding of grants.—

(1) In general.—

(A) In general.— A grant amount awarded to an eligible institution under this section for a year—

(i) shall be in an amount equal to the amount of the institution's expenditures on student undergraduate instruction and academic support for the year; and

(ii) shall not be disbursed for the year until the Partnership Office created under section 499A–4(a) reviews and approves the annual update submitted by the institution pursuant to subsection (f).

(B) Ratable reduction.— If the amount appropriated to carry out this section for a fiscal year is insufficient to award each eligible institution the institution's full grant amount pursuant to subparagraph (A), the Secretary shall establish procedures for ratably reducing each institution's award amount for such fiscal year.

(2) Waivers.—

(A) In general.— Subject to subparagraph (B), if the percentage of students eligible to receive a Federal Pell Grant who are enrolled at an eligible institution that receives a grant under this section decreases to less than 35 percent after the first year of the grant award, such institution may apply to the Secretary for a waiver of the requirement that an institution to be eligible to receive a grant under this section have not less than 35 percent of the students enrolled at the institution eligible to receive a Federal Pell Grant.

(B) Restrictions on waiver.— The Secretary shall grant a waiver under subparagraph (A)—

(i) only if the decrease in percentage is—

(I) small relative to the size of the student body; or

(II) the result of unexpected or uncontrollable circumstances; and

(ii) not more than 2 times during the 5-year grant period.

(e) Use of grant funds.—

(1) In general.— An eligible institution that receives a grant under this section shall use the grant funds as follows:

(A) 95 percent of the grant funds shall be—

(i) used to cover the unmet need for financial assistance to attend the institution of students who have not yet earned a bachelor’s degree; and

(ii) disbursed according to financial need.

(B) 5 percent of the grant funds shall be used for the following activities:

(i) Increasing capacity through construction or renovation of facilities.

(ii) Hiring faculty.

(iii) Student support services.

(iv) Other activities to increase enrollment of low-income and underserved students, improve student outcomes, and provide information to prospective students and families, and other activities as approved by the Secretary to improve access, affordability, or quality of the education provided by the institution.

(2) Prohibition on use of funds.— An eligible institution that receives a grant under this section may not use grant funds for endowments or the construction of athletic or commercial venues.

(f) Annual update.— An eligible institution that receives a grant under this section shall submit to the Secretary an annual update—

(1) with any changes to the institution's expenditures on student instruction and academic support; and

(2) on how the institution is fulfilling the terms of the grant.

(g) Terms of the grant.—

(1) Grantee commitment.— An eligible institution that receives a grant under this section shall carry out the following:

(A) Cap tuition and fees at the institution at the level as of the date of enactment of the Debt-Free College Act of 2026, with a yearly increase allowed based on the Consumer Price Index (as determined by the Secretary).

(B) Maintain expenditures on instruction and academic support at the institution at a level that is not less than the average of such expenditures at the institution over the period of 3 years preceding the date of enactment of the Debt-Free College Act of 2026.

(C) Maintain the enrollment of low-income students, as defined by the Secretary, at the institution at a level that is not less than the level of such enrollment as of the date of enactment of the Debt-Free College Act of 2026.

(D) Maintain institutional aid at a level that is not less than the average of such aid over the period of 3 years preceding the date of enactment of the Debt-Free College Act of 2026.

(E) Submit to the Secretary for approval the institution’s calculation of the cost of attendance at such institution.

(F) Clearly communicate to prospective students and their families the following:

(i) How students can attend the institution without debt.

(ii) That a debt-free college education provided pursuant to this section is conditioned upon institutional eligibility and participation under this section and may not apply for each year that the student is enrolled at the institution.

(2) Breach of terms of grant.—

(A) In general.— If an eligible institution that receives a grant under this section breaches a term of the grant, the Partnership Office created under section 499A–4(a) shall notify the institution and provide the institution with an opportunity to correct the record or cure the breach not later than 30 days after the date of the notification.

(B) Recommendation.— The Partnership Office created under section 499A–4(a) shall, after considering the eligible institution's response to a notification under subparagraph (A) or lack of response, make a recommendation to the Secretary that the Secretary—

(i) take no action with respect to the eligible institution;

(ii) place the eligible institution on probation; or

(iii) revoke the eligible institution’s eligibility for the grant program under this section.

(C) Probation.— An eligible institution that is placed on probation by the Secretary shall develop a plan to remedy the breach of the term of the grant. If the eligible institution does not remedy the breach, the Secretary may levy a fine against the institution of an amount not to exceed 1 percent of the annual grant amount.

(D) Ineligibility.— If an eligible institution's eligibility for the grant program under this section has been revoked by the Secretary, such institution shall—

(i) place into escrow any unexpended grant funds described in subsection (e)(1)(A) to be disbursed directly to students enrolled at the institution;

(ii) return to the Secretary any unexpended funds described in subsection (e)(1)(B);

(iii) remain ineligible to receive a grant under this section during the 3-year period after the date eligibility was revoked; and

(iv) notify prospective and enrolled students at the institution and their families of such ineligibility for participation in the grant program under this section.

(h) Withdrawal.— An eligible institution that receives a grant under this section that intends to withdraw from the grant program under this section shall—

(1) notify the Partnership Office created under section 499A–4(a) not less than 60 days prior to the withdrawal;

(2) place into escrow any unexpended grant funds to be disbursed directly to students enrolled at the institution; and

(3) notify prospective and enrolled students at the institution and their families of such withdrawal.

(i) Authorization of appropriations.—

(1) In general.— There are authorized to be appropriated to carry out this section—

(A) $3,000,000,000 for fiscal year 2027; and

(B) such sums as may be necessary for each of fiscal years 2027 through 2036.

(2) Availability.— Funds made available under paragraph (1) shall be available for obligation through September 30 of the fiscal year succeeding the fiscal year for which such sums were appropriated.”.

Section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091) is amended—

(1) in subsection (a)(5), by inserting “, or be a Dreamer student, as defined in subsection (u)” after “becoming a citizen or permanent resident”; and

(2) by adding at the end the following:

“(u) Dreamer students.—

(1) In general.— In this section, the term Dreamer student means an individual who—

(A) was younger than 16 years of age on the date on which the individual initially entered the United States;

(B) has provided a list of each secondary school that the student attended in the United States; and

(C)

(i) has earned a high school diploma, the recognized equivalent of such diploma from a secondary school, or a high school equivalency diploma in the United States or is scheduled to complete the requirements for such a diploma or equivalent before the next academic year begins;

(ii) has acquired a degree from an institution of higher education or has completed not less than 2 years in a program for a baccalaureate degree or higher degree at an institution of higher education in the United States and has made satisfactory academic progress, as defined in subsection (c), during such time period;

(iii) at any time was eligible for a grant of deferred action under—

(I) the June 15, 2012, memorandum from the Secretary of Homeland Security entitled “Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children”; or

(II) the November 20, 2014, memorandum from the Secretary of Homeland Security entitled “Exercising Prosecutorial Discretion with Respect to Individuals Who Came to the United States as Children and with Respect to Certain Individuals Who Are the Parents of U.S. Citizens or Permanent Residents”; or

(iv) has served in the uniformed services, as defined in section 101 of title 10, United States Code, for not less than 4 years and, if discharged, received an honorable discharge.

(2) Hardship exception.— The Secretary shall issue regulations that direct when the Department shall waive the requirement of subparagraph (A) or (B), or both, of paragraph (1) for an individual to qualify as a Dreamer student under such paragraph, if the individual—

(A) demonstrates compelling cir­cum­stances for the inability to satisfy the requirement of such subparagraph (A) or (B), or both; and

(B) satisfies the requirement of paragraph (1)(C).”.