The Lowering Student Loans Act would reduce the interest rate on federal student loans to 2 percent, effective July 1, 2026. This applies to new loans issued after that date as well as existing federal student loans, including Direct Stafford Loans, Direct Unsubsidized Stafford Loans, Direct PLUS Loans, and Direct Consolidation Loans. Borrowers with existing loans currently charging more than 2 percent interest would see their rates automatically reduced to 2 percent starting July 1, 2026, though the bill allows borrowers to opt out of this reduction within 90 days of receiving notice. The bill also permits borrowers of older FFEL consolidation loans to consolidate them into Direct Consolidation Loans to become eligible for the new 2 percent rate. The Department of Education must notify borrowers and loan servicers at least 90 days before the July 2026 implementation date and establish a complaint resolution process to address any errors.
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