This bill amends the Higher Education Act of 1965 to establish a new student loan allowance for purposes of calculating the Student Aid Index (SAI), starting with the 2027-2028 award year. This provision aims to reduce the parental contribution component of the SAI for dependent students whose parents carry federal student loan debt. The allowance is set at the lesser of $4,000 or 15 percent of a parent's outstanding federal student loan debt. However, it includes income limitations, excluding single parents with an adjusted gross income over $200,000 and married parents with a combined adjusted gross income over $400,000. These dollar amounts for the allowance and income thresholds will be adjusted annually for inflation based on the Consumer Price Index, beginning in award year 2028-2029. By incorporating this allowance, the bill seeks to acknowledge the financial burden of parental student loan debt, potentially increasing eligibility for federal student aid. Furthermore, the Secretary of Education is mandated to submit annual reports to Congress, starting July 1, 2028, detailing the impact of these amendments, including the number of students benefiting and the average allowance amount received.