GRADUATE Act

The GRADUATE Act (HR7536), introduced by Rep. Goldman (D-NY-10) and 8 cosponsors, was referred to the House Committee on Ways and Means on February 12, 2026. This bill proposes to amend the Internal Revenue Code of 1986 to broaden the deduction for student loan interest to encompass payments made towards the principal of qualified education loans. Additionally, it seeks to increase the maximum deduction amount to $10,000 plus $500 per dependent, with modified adjusted gross income (MAGI) phase-out thresholds set at $125,000 for individuals and $250,000 for joint filers. This legislation does not involve direct government funding or appropriations. Instead, it modifies the tax code, which would effectively reduce the tax liability for eligible individuals. The mechanism is a tax deduction, meaning individuals would see a reduction in their taxable income, leading to higher disposable income. This could indirectly benefit consumer spending and potentially impact the student loan servicing industry by altering borrower behavior, though the bill does not directly allocate funds to these entities. Structural winners, if this bill were to pass, would primarily be individuals with student loan debt, who would experience increased tax savings. This could lead to increased consumer spending across various sectors. Companies involved in student loan servicing, while not directly funded, could see changes in payment patterns or borrower financial health. As the bill is in its early stages, with only a referral to committee, there are no immediate market-wide implications or specific company tickers to highlight based on current data. The bill's progression through the Ways and Means Committee will be critical for any potential future impact. The legislative path for HR7536 involves committee consideration, potential markups, and then a vote by the full House. If passed by the House, it would then move to the Senate for similar consideration. Given its early stage and the current date of April 7, 2026, significant legislative steps remain, and passage is not guaranteed. The sponsorship by a Democratic representative and a committee referral are standard initial steps.