Amends title IV (Student Assistance) the Higher Education Act of 1965 to establish a part I Federal Supplemental Loan program under which the Secretary of Education provides fixed and variable interest rate loans to undergraduates and graduates who attend institutions of higher education (IHEs) on a full-time basis.
Requires the rate for fixed loans and the margin for variable loans to be set at a level that results in the lowest rate for a borrower that will result in no net cost to the government.
Sets the maximum Supplemental loan amount at a student's cost of attending an IHE minus the financial aid awarded to such student and the amount such student is eligible for but does not receive under the Federal Family Education Loan program.
Directs the Secretary to offer Supplemental loan borrowers the same repayment plans offered under the Direct Loan program.