The Affordable Loans for Students Act would reduce the interest rate on federal student loans to 1 percent for both existing and new borrowers. For current federal student loans held by the Department of Education, the bill would automatically lower interest rates to 1 percent starting the first July after enactment without requiring borrowers to take any action. For federal student loans held by private lenders, borrowers would be automatically refinanced into federal consolidation loans at 1 percent interest, though they could opt out of this process. All new federal student loans disbursed after the bill's enactment would also carry a 1 percent interest rate. The Department of Education would be required to report annually on the number of borrowers whose loans were modified or refinanced and how many of those borrowers become delinquent on their payments.
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