YourVoice.Now Summary
Average Household ImpactTransparency & AccountabilityCuts the interest rate on federal student loans to 2% — existing loans rewritten automatically, no borrower action needed.
Average Household Impact
- Federal student loan interest rate — Set at 2.0% on existing and newly issued loans
- Automatic refinancing — Loans held by other lenders moved to federal terms, with an opt-out
- Origination fees — Removed on loans refinanced through this program
Transparency & Accountability
- Reporting requirements — Annual report on borrowers modified, refinanced, and delinquent
The details
Federal student loans would carry a flat 2 percent interest rate. The Education Department would rewrite the terms of loans it already holds. Borrowers would not have to apply or take any action. Loans held by other lenders would be refinanced into federal consolidation loans at the same 2 percent. Borrowers can opt out of that step. There would be no origination fee. The repayment period would not get longer. New loans issued after the following July 1 would also carry 2 percent. The department must report each year on how many borrowers were moved and how many fell behind.
Congressional Summary
Affordable Loans for Students ActThis bill sets the interest rate at 2% for new and existing federal student loans. (Currently, interest rates on federal student loans range from 6.53% to 9.08%, depending on the loan type.)Specifically, the bill directs the Department of Education (ED) to establish and implement procedures to modify the terms of federal student loans held by ED so the applicable rate of interest shall be 2% on the unpaid principal balance of the loan. ED must modify the interest rate without any action from the borrower.Additionally, ED must establish and implement procedures to (1) refinance eligible loans that are not held by ED (e.g., privately held Federal Family Education Loans and Perkins Loans) as consolidation loans, and (2) allow a borrower to opt out of this loan refinancing. The bill outlines the terms and conditions of these refinanced loans, including by prohibiting ED from charging origination fees and by setting the interest rate at 2% on these loans.The bill applies the 2% interest rate to new loans (i.e., federal student loans made beginning on the first July 1 after the bill's enactment) and also applies this rate retroactively to existing loans.
Legislative Subjects
Details
- Congress
- 119th
- Chamber
- House
- Status
- summarized
- Action
- Introduced in House
- Action Date
- 2025-03-10
- Date Added
- 2026-07-30
- Source
- Congress.gov →
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