Lowering Student Loans Act

This bill sets the interest rate for most federal student loans at 2 percent, starting July 1, 2026, and applies to both new loans and existing loans with higher rates, with an opt-out option for borrowers.

Sec. 2, Interest rates for federal student loans: For new Direct Stafford, Unsubsidized Stafford, and PLUS loans first disbursed on or after July 1, 2026, the interest rate is set at 2 percent. For existing loans of these types with a rate above 2 percent, the rate is reduced to 2 percent starting July 1, 2026. New Direct Consolidation Loans with applications received on or after July 1, 2026, also get a 2 percent rate. Existing consolidation loans with a rate above 2 percent are reduced to 2 percent starting July 1, 2026. Borrowers of existing loans must receive notice at least 90 days before July 1, 2026, and can opt out of the rate reduction within 90 days of that notice. The 2 percent rate is fixed for the life of the loan. The Secretary must notify loan servicers at least 90 days before July 1, 2026, and set up a complaint process for errors or delays. The bill also allows borrowers of certain FFEL consolidation loans to consolidate them into Direct Consolidation Loans to get the 2 percent rate.