Lowering Student Loans Act
Sponsored By: Representative Thompson (CA)
Introduced
Summary
Would set a fixed 2 percent interest rate for many federal student loans starting July 1, 2026. It would reset higher-rate direct loans and many consolidation loans to 2 percent and require borrower notices, an opt-out option, and servicer procedures to implement the change.
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- Families & students: Students and families who take new Federal Direct Stafford, Direct Unsubsidized, or Direct PLUS loans on or after July 1, 2026 would face a 2 percent interest rate on unpaid principal. The rate would be fixed for the life of each loan.
- Existing borrowers & consolidations: Borrowers with eligible direct loans or direct consolidation loans that currently carry rates above 2 percent would have those loans reset to 2 percent beginning July 1, 2026. Eligible borrowers must receive notice at least 90 days before and would have 90 days to opt out after receiving the notice.
- Servicers & FFEL borrowers: The Department of Education would notify loan servicers at least 90 days before July 1, 2026 and establish a complaint-resolution process for errors or delays related to the adjustments. Federal Family Education Loan consolidation loans may be consolidated into the Direct Consolidation system and treated under the 2 percent framework.
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Bill Overview
Analyzed Economic Effects
2 provisions identified: 2 benefits, 0 costs, 0 mixed.
2% fixed rate for student loans
If enacted, borrowers would get a 2% fixed annual interest rate on many Federal Direct loans starting July 1, 2026. This would apply to Stafford, Unsubsidized Stafford, and PLUS loans first disbursed on or after July 1, 2026, and to Direct consolidation loans with applications received on or after July 1, 2026. For qualifying existing Direct loans and qualifying Direct consolidation loans with earlier dates, rates above 2% would be reset to 2% beginning July 1, 2026. The bill would also let some FFEL consolidation loans move into the Direct program so they can get the same 2% treatment, and it would leave other loan terms and borrower benefits unchanged unless the bill says otherwise.
Notices and opt-out for borrowers
If enacted, the Department of Education would notify affected borrowers about the July 1, 2026 rate changes by the date 90 days before July 1, 2026. You would be able to opt out of the rate adjustment not later than 90 days after you get that notice. The Department would also notify loan servicers by that same date and set up a complaint resolution process for errors or delays.
Sponsors & CoSponsors
Sponsor
Thompson (CA)
CA • D
Cosponsors
Del. Moylan, James C. [R-GU-At Large]
GU • R
Sponsored 3/4/2026
Del. Norton, Eleanor Holmes [D-DC-At Large]
DC • D
Sponsored 4/9/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov