Lowering Student Loans Act

Key Points

• This bill would set a fixed 2% interest rate on all new federal student loans — including Stafford Loans, Unsubsidized Stafford Loans, PLUS Loans for parents, and Consolidation Loans — for loans first disbursed on or after July 1, 2026.
• Existing borrowers with rates above 2% would also see their interest rates automatically lowered to 2% starting July 1, 2026. This applies to both regular federal loans and consolidation loans already being repaid.
• Borrowers would get a 90-day advance notice before the rate change takes effect and could opt out if they prefer to keep their current loan terms. The bill also allows borrowers with older FFEL consolidation loans to reconsolidate into a Direct Consolidation Loan to get the new lower rate.
• The Department of Education must notify loan servicers 90 days in advance and set up a borrower complaint resolution process to handle any errors or delays in applying the new rate.
• The new 2% rate is fixed for the life of the loan, meaning it won't fluctuate with market conditions. This replaces the current formula-based system that ties rates to the 10-year Treasury note, which has produced rates as high as 7-8% for some borrowers.

Votes

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Related Bills

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