This bill would cap the interest rates on federal student loans at 3 percent for most borrowers. The cap applies to Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, Federal Direct PLUS Loans, and Federal Direct Consolidation Loans for which the first disbursement or application is made on or after July 1, 2024. The legislation affects millions of current and future student loan borrowers by reducing the amount of interest they pay on their federal loans compared to current rates, which can reach 8 percent or higher depending on the loan type. The bill does not specify additional funding requirements, as the interest rate reduction would primarily lower future interest collections rather than require new appropriations. The bill was introduced in August 2024 and referred to the House Committee on Education and the Workforce for consideration.
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